WTI (Nov) $82.79 +48c, Brent (Dec) $84.58 +51c, Diff -$1.79 +3c
USNG (Nov) $3.34 u/c, UKNG (Nov) 94.0p +5.0p, TTF (Nov) €38.23 + €1.93

Africa Oil Week blog from Cape Town

Oil price

After the activity in the Middle East at the weekend it was inevitable that oil would open up higher this morning and both WTI and Brent crude are up by around $2.50 as I write.

Friday’s rig count showed more falls in activity in the US oil patch, overall units were down by 4 to 619 and in oil the number was down 5 at 497.

The buzz when I left was that Exxon are in talks with Pioneer for a monster bid, it would make good reading though if it does come off.

San Leon Energy

San Leon has announced an update on the Company’s secured US$5.0 million loan from funds managed by Toscafund Asset Management LLP.

On 8 August 2023, the Company announced, amongst other matters, that it had entered into the Loan with the Company’s largest shareholder, being certain funds managed by Toscafund. The Loan carries a coupon of 10 per cent. per annum.  The Loan was originally repayable by no later than 7 September 2023.  On 2 October 2023 the Loan repayment date was subsequently extended to 6 October 2023. As part of the Loan, San Leon entered into security arrangements with the funds managed by Toscafund that comprise both a debenture issued by the Company as well as assignments and pledges over all of its group companies’ loan and equity interests in ELI.  The Security will be released upon full repayment of the Loan. 

San Leon’s discussions with a third party in relation to securing an alternative loan facility (as mentioned in previous announcements) are now at a very advanced stage and, in order to enable them to conclude, Toscafund has provided the Company with a redemption and release letter which sets out, inter alia, the arrangements for the release of the Security. Specifically, the redemption and release letter includes a standstill provision by which Toscafund have agreed not to make any demand for repayment of the Loan or enforce the Security before 13 October 2023. All other terms of the Loan remain unchanged. The board of San Leon believes that a conclusion on an alternative loan facility will be reached in the very near term and will provide an update to shareholders and creditors at that time.

The news that the talks with a third party are now at a very advanced stage will be a significant relief to shareholders who will have feared the worst about whether the quote would ever be resumed. The breathing space afforded by Toscafund is only valid until this Friday so confidence must be high that something will happen this week. 

Jadestone Energy

Jadestone has provided the following update on the Company’s reserve-based lending (“RBL”) facility and recent operational highlights.

RBL Facility Update
The bi-annual redetermination process for Jadestone’s US$200 million RBL facility has concluded and the Company is pleased to report the following increases in borrowing capacity over the next 12 months. 

• Effective 1 October 2023 to the next redetermination date on 31 March 2024, the borrowing capacity exceeds the maximum facility amount. As such, the borrowing capacity for the upcoming 6-month period will be US$200 million (previously forecasted at c.US$190 million).
• For the subsequent 6-month period (Q2-Q3 2024), the borrowing capacity will be the lower of the approved banking model as of 31 March 2024 or US$150 million (previously forecasted at US$99 million). The current model projects a borrowing capacity for this period of c.US$150 million, excluding capex add-back and subject to changes in model assumptions.

The increases in borrowing capacity result from the approval of the Company’s waiver request to raise the Akatara development cap from 40% to 60%, effective from 1 October 2023 to the September 2024 redetermination date. The development cap represents Akatara’s maximum percentage contribution to the total borrowing base prior to the asset’s completion test, after which the Company’s borrowing base is expected to return to US$200 million.

The increase in borrowing capacity over the Q2-Q3 2024 period means that the Company’s liquidity position during this period is currently projected to be in excess of c.US$100 million, which includes the Company’s undrawn US$31.9 million working capital facility.

Operational Update
Since resuming production on 2 September 2023, Montara has averaged c.7,000 bbls/d, benefitting from some ongoing flush production and active management of the Montara H2, H3 and H4 wells to optimise the oil to gas ratio.  It is expected that, over time, average oil production rates will normalise back towards previous guidance in the 6,000 – 6,500 bbls/d range.

The Akatara development project is now c.70% complete, delivering on the end-September 2023 progress target of 65%. Long-lead time items continue to arrive at site on schedule and the project remains on track for commissioning in the first quarter of 2024 and first gas before mid-2024. 

The first well in the East Belumut infill campaign is maintaining higher than expected production levels as the drilling campaign continues.

Paul Blakeley, President and CEO commented:
“We always believed that, with time, we could resolve the temporary dip in the RBL borrowing base availability in mid-2024. The waiver approval shows the constructive working relationship we have with our RBL banks and demonstrates the banks’ confidence in Jadestone’s ability to deliver. I would like to thank the RBL banks and the wider Jadestone team for working together to deliver this successful outcome. As a result, Jadestone is projected to have significant liquidity prior to the Akatara field commencing production, after which our borrowing base availability is expected to increase further, as we move into a period of high cash generation, in turn supporting our growth ambitions.

Recent operational performance across the business has been encouraging, with total production averaging c.17,000boepd during the month of September, and also continued progress at Akatara, where we remain on budget and schedule while meeting all key milestones. We are focused on sustaining this momentum over the remainder of 2023 and into 2024, underpinning our aim of significant production and cash flow growth in the near-term.”

More good news from Jadestone today as the RBL has meant better availability to draw and ‘the current model projects a borrowing capacity for this period of c.US$150 million’, which means plenty of ammo up the sleeve for existing projects. 

With Montara producing 7/- b/d since its restart but likely to fall back to guidance levels of 6,000 – 6,500 b/d and Akatara on schedule for first gas next summer operationally the company is now in good nick and the East Belumut infill campaign is maintaining higher than expected production levels. 

Eco (Atlantic) Oil & Gas

Eco (Atlantic) Oil & Gas announce the following Board changes.

Director Appointments
Eco Atlantic is pleased to announce the appointment of Miss Alice Carroll and Miss Selma Usiku as directors of the Company with immediate effect.

Miss Alice Carroll is currently the Company’s Head of Corporate Sustainability and joins the Board as an Executive Director. Alice is an experienced international stakeholder and external relations professional, with over a decade of experience within the oil & gas industry. Alice is skilled in marketing strategy and project execution, leading communications, and external relations on country entries, asset acquisitions, and monetisation across a global portfolio. Alice previously worked with Azinor Catalyst, the UK focused Oil and Gas exploration company, before becoming the Global Marketing and Investor Relations Manager for the Seacrest Azimuth Group, managing all external and stakeholder relations across UK, Ireland, Namibia, South Africa, Brazil, Honduras and Indonesia. Miss Carroll holds a BSc First Class honours in Biology with Science and Society from the University of Manchester.

Miss Carroll joins the Board as an Executive Director with immediate effect and will continue her role as Eco’s Head of Corporate Sustainability.

Miss Selma Usiku is an experienced exploration geologist with a history of working in South Africa and in both the Namibian Oil & Energy and diamond industries. Selma’s experience is predominantly in exploration geoscience, geophysics, basin modelling, petroleum geology and earth sciences, from almost 10 years as an exploration geologist with Brazilian HRT and Azinam.  Selma was directly involved in the wild cat wells that made Namibia’s first technical discovery of hydrocarbons at the Wingat-1 Walvis Basin play opener in 2013. Selma is an active member of the Namibia Petroleum Operators Association and currently Exploration Geologist with Debmarine Namibia.

Miss Usiku holds a Master of Science (MSc) focused in Petroleum Geoscience from Royal Holloway, University of London. In 2018, Selma received the Global Women Petroleum & Energy Club Award for Excellence in Africa, and she was an Ambassador for the Geoscience Council of Namibia in 2021. 

Miss Usiku joins the Board as a Non-Executive Director with immediate effect.

Retirement of Non-Executive Director
Mr Helmut Angula will retire as a Non-Executive Director of the Company, having served on the board since November 2011, with immediate effect. Mr Angula will remain with the Company in the role of a senior advisor to the Board.  

Peter Nicol, Chairman of Eco Atlantic, commented:
“I am absolutely thrilled to welcome both Alice Carroll and Selma Usiku to the Board of Eco Atlantic, both bring fresh thinking and impressive skill sets. I am looking forward to the contribution of stakeholder and technical expertise Alice and Selma bring as we build on our latest pivotal transaction in Guyana and very busy continuation of our workstreams across the Company’s exploration portfolio in Namibia and Orange Basin South Africa.”

Gil Holzman, Co-Founder and Chief Executive Officer of Eco Atlantic, commented:
“Helmut Angula joined the Board of Eco at inception in 2011, serving on both the Audit and Compensation Committees. We have benefitted greatly from his understanding of the financial and energy sectors in Namibia. We wish him all the best with his well-deserved retirement and are grateful he will continue to support us as a senior advisor to the Board.” 

It is good to see that Eco Atlantic, who are building up to their biggest ever challenges have the ability to strengthen the board with these two appointments. As they go into the company’s most important campaigns on a number of fronts they do so with a very good quality management team.

KeyFacts Energy Industry Directory: Malcy's Blog