WTI (Dec) $80.51 -$1.95, Brent (Jan) $84.89 -$1.96, Diff -$4.38 -1c
USNG (Dec) $3.52 +5c, UKNG (Dec) 117.6p -8.4p, TTF (Dec) €45.95 -€3.7

Oil price

Oil had a bad week, both contracts fell by just over $5 as a combination of economic woes kept on coming, the NFP data in the states was short of the whisper whilst the unemployment rate was 3.9%, the highest since January 2022. Today was PMI day in Europe with only Spain showing anything decent form and in China numbers were mixed also. 

The rig count fell by 7 units overall and by 8 in oil, clearly not everyone is using their DUC’s…

And it seems that in tomorrow’s Kings Speech the UK Government are to mandate Annual North Sea licensing rounds. 

Union Jack Oil

Union Jack has announced that the Planning Inspectorate has upheld the appeal against the refusal of planning permission by Lincolnshire County Council for a side-track drilling operation, associated testing and long-term oil production at the Biscathorpe-2 wellsite.

The Biscathorpe project is covered by onshore UK licence PEDL253.  The PEDL253 Joint Venture partnership will review the decision notice and associated planning conditions in detail before providing an update on plans for progressing operations.  As part of this, the Operator, Egdon Resources Limited, will look to engage with the local community to ensure activities have minimal impact on local amenity.

Union Jack holds a 45% economic interest in PEDL253.

David Bramhill, Executive Chairman of Union Jack commented: 
“I am delighted to report this highly positive news in respect of Biscathorpe, one of our highest ranked projects, in which Union Jack holds a material 45% economic interest.

“While drilling the Biscathorpe-2 well, there were hydrocarbon shows, elevated gas readings and sample fluorescence observed over the entire interval from the top of the Dinantian to the Total Depth of the well, with 68 metres being interpreted as oil-bearing.

“Independent Consultants Applied Petroleum Technology also conducted analyses, confirming a hydrocarbon column of 33-34 API gravity oil, comparable with the oil produced at the nearby Keddington oilfield where Union Jack holds a 55% economic interest.

“Re-processing of 264 square kilometres of 3D seismic, indicate a material and potentially commercially viable hydrocarbon resource remaining to be appraised.

“The Operator has assessed, in accordance with the PRMS Standard, gross Mean Prospective Resources of approximately 6.5 million barrels of oil. Commercial screening has indicated break-even full cycle economics to be US$18.07per barrel of oil.

“Union Jack`s technical team believe that Biscathorpe remains one of the largest unappraised conventional onshore discoveries within the UK. I thank shareholders for their patience and remain confident that both investors and the Company will be well rewarded in due course.”

This means that Biscathorpe is a significant step nearer to becoming a meaningful part of the UK’s domestic hydrocarbon equation and given the substantial amount of work already completed the economics look pretty good. Permission extends through to production so action can now begin. 

With a pump fitted at Wressle I expect a return to significant revenues there before long and the UJO portfolio is starting to deliver on the hydrocarbons that should see it remaining one of the major players in the important UK onshore for the foreseeable future. 

Sound Energy

Sound has announced that, following discussions with certain holders of the Company’s Luxembourg listed EUR 28.8m 5.0% senior secured notes due 2027, it has today published a Consent Solicitation Memorandum in respect of a restructuring of the Notes and that a meeting of the holders of the Notes has been convened to consider the Proposal for 10:00 a.m. on 20 November 2023.

Pursuant to the Proposal, the Company is seeking the consent of the Noteholders to remove the current obligation to commence amortisation of the Notes at a rate of 5.0% of the EUR 25.3m Note principal outstanding every six months from 21 December 2023 until maturity in December 2027. Instead, and should the Proposal be approved by Noteholders, the Notes would mature in full in December 2027, with no prior amortisation. The remaining terms of the Notes would be unchanged by the Proposal, with 40% of interest accruing on the Notes continuing to be payable quarterly, with the remaining interest rolled up and payable on the redemption of the Notes.

A sensible piece of financial housekeeping by Sound which defers €1.265m every 6 months and ahead of inbound revenue next year is extremely helpful. The company continues to advance with its MicroLNG construction and impressed delegates at the recent Morocco summit including ONHYM. 

Kosmos Energy

Kosmos has announced today its financial and operating results for the third quarter of 2023. For the quarter, the Company generated a net income of $85 million, or $0.18 per diluted share. When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net income(1) of $126 million, or $0.26 per diluted share for the third quarter of 2023.

THIRD QUARTER 2023 HIGHLIGHTS

• Net Production: ~68,200 barrels of oil equivalent per day (boepd), with sales of ~73,100 boepd
• Start up of the Jubilee South East development offshore Ghana
• Post quarter-end, Tiberius infrastructure-led exploration (ILX) oil discovery offshore U.S. Gulf of Mexico
• Post quarter-end, assumption of operatorship and a greater working interest at Yakaar-Teranga offshore Senegal, subject to customary government approvals
• Repayment of Gulf of Mexico Term Loan, reducing our cost of capital and simplifying our capital structure
• Revenues: $526 million, or $78.24 per boe (excluding the impact of derivative cash settlements)
• Production expense: $139 million, or $20.63 per boe 
• Capital expenditures: $193 million

Commenting on the Company’s third quarter 2023 performance, Chairman and Chief Executive Officer Andrew G. Inglis said:
“Kosmos continues to create value for its stakeholders through the consistent delivery of its strategy to grow production, advance its advantaged oil and LNG projects, and add resource through infrastructure-led exploration.

“Production in the quarter increased by around 17% versus the second quarter following the successful startup of the Jubilee South East development, with three producers brought online taking gross field production up to around 100,000 barrels of oil per day, with continued growth expected.

“In addition, Kosmos advanced its two key development projects at Winterfell and Tortue Phase 1. When online, these projects together with Jubilee South East are expected to increase production by around 50% from the second half of 2022, generating the cash flow inflection we have been working towards. 

“Looking to options for future growth, Kosmos recently announced the Tiberius oil discovery in the U.S. Gulf of Mexico, as well as the assumption of operatorship of the Yakaar-Teranga gas fields offshore Senegal. These low cost, lower carbon oil and gas projects are expected to provide the next phase of growth for the company beyond 2024. We plan to balance the pace and working interest of these future projects to ensure we can manage our growth and generate material free cash flow.”

Kosmos has reported a cracking set of figures which are set to grow as the architecture of a really significant and high quality portfolio will take on as a mighty force with hydrocarbon prices as they are. The only fly in the ointment might be a delay at Tortue but even if that runs a bit late other developments will carry it no problem.

I’ve always been a big fan of Kosmos and these numbers show why, I remember the day that Andy Inglis took over and he has proved that an active management policy combined with rigorous control of costs can be successful, there is plenty of upside here. BP’s loss in Kosmos’ gain….

KeyFacts Energy Industry Directory: Malcy's Blog