WTI (Dec) $75.33 -$2.04, Brent (Jan) $79.54 -$2.07, Diff -$4.21 -3c
USNG (Dec) $3.11 -3c, UKNG (Dec) 114.5p -1.52p, TTF (Dec) €47.015 +€1.295

Oil price

Oil took a turn down yesterday as recessionary worries around the world gripped prices, in China and the USA data was mixed but the EU is looking decidedly peaky. In addition to this the API stats were bad for crude with a build of 11.9m barrels but a small draw in gasoline of 400/- and unsurprisingly a big draw of 2m distillates. 

The other question is about Iranian exports, as a result of Sleepy Joe ‘relaxing’ sanctions on the QT there is probably at least 1.5m b/d on international markets when it shouldn’t have been. Of course if Iran turns out to be involved in the Middle East conflict then the oil Biden has released in order to get the gasoline price down to win votes will have to be stopped as it should have been in the first place…

Genel Energy

Genel has today issued an update on licence activity.

Following closure of the Iraq-Türkiye Pipeline in March, the Operator gradually reopened the Tawke and Peshkabir fields and stepped up deliveries to local trading companies in the Kurdistan Region of Iraq.

The Tawke field was reopened on 18 July, and gross production from the Tawke licence in Q3 2023 totalled 25,984 bopd. Production continues to increase; so far in the fourth quarter output is averaging double the level of the third quarter, with the Peshkabir field having restarted production on 16 October.

The DNO-Genel contractual entitlement, currently around one-half of volumes produced, is sold at prices that vary narrowly in the mid $30s per barrel, and payments are made in advance before any oil is delivered. These payments more than covered operational spend in Q3.

Genel will issue its trading and operations update in respect of the third quarter of 2023 next Tuesday, 14 November 2023. Genel will host a live presentation on the Investor Meet Company (‘IMC’) platform on the day at 1000 GMT. The presentation is open to all existing and potential shareholders. Questions can be submitted in advance and investors can sign up to IMC via: https://www.investormeetcompany.com/genel-energy-plc/register-investor

Just an update on production and sales at Tawke ahead of trading update next week, and after the DNO release. With Q3 at 26/- b/d and continues to increase quite substantially, the company also states that the Peshkabir field restarted on 16th October. Prices of mid $30’s in the period covered the G&A number. 

Afentra

Afentra has announced that it has received approval from the Government of Angola for the acquisition from Sonangol Pesquisa e Producao S.A. of a 14% non-operating interest in Block 3/05 and a 40% non-operating interest in Block 23, offshore Angola pursuant to a sale and purchase agreement between Sonangol and Afentra’s wholly-owned subsidiary, Afentra (Angola) Ltd, dated 20 April 2022, as amended and restated on 18 July 2023.

The Company is now working with Sonangol to finalise the formal completion of this acquisition which, as previously announced, is anticipated to occur within Q4 2023.

Azule Acquisition update
The Government approval process for Afentra to purchase further non-operated interests in Block 3/05 (12%) and Block 3/05A (16%), offshore Angola from Azule Energy Angola Production B.V. (‘Azule’) remains ongoing. We expect that this approval process and subsequent formal completion will take place in Q4 2023 as previously guided.

The completion of both the Sonangol and Azule acquisitions, combined with current interests, will result in Afentra having a 30% equity interest in Block 3/05 and a 21.33% in Block 3/05A providing Afentra with net working interest production of around 6,000 bopd.

Approval of Block 3/05 PSA fiscal terms
Following our announcement on 17 May 2023 of the publication of an Executive Decree formally approving the extension of the term of the Block 3/05 production sharing agreement (‘PSA’) to 31 December 2040, Afentra is pleased to announce that a subsequent Executive Decree has been published in the Diário da República on 4 October 2023 approving the revised fiscal terms that will apply to the PSA for the remainder of its term.

The revised fiscal terms will become effective from the execution of an addendum to the PSA by the Block 3/05 contractor group and Agência Nacional de Petróleo (ANPG), which is expected in December 2023. The improved fiscal terms will enhance the economics of the Block 3/05 PSA as set out in an independent report produced for the Company by ERCE Equipoise Limited. This report indicates the Entitlement reserves and NPV10 associated with the 30% equity in Block 3/05 increase to 22.8 mmbo and US$ 254.9 million respectively. The full report will be uploaded to Afentra’s website in due course.

CSI Update
Further to the disclosure in the Company’s Admission document published on 18 September 2023, The redistribution of the interests of China Sonangol International in Block 3/05A has been formally approved by the Government of Angola. On completion of the redistribution, it will result in Afentra’s current interest in Block 3/05A increasing from 4% to 5.33%; this interest will increase to 21.33% upon the completion of the Azule acquisition.

We look forward to providing shareholders with further updates in due course.

Commenting on the update, CEO Paul McDade said:
“The receipt of the Government of Angola approval of the Sonangol Acquisition is a key step in the acquisition process and we continue to look forward to completing both the Sonangol and Azule acquisitions before year end. The combination of these interests with our current interests in Block 3/05 and 3/05A will provide Afentra with a material equity position in this world class production asset. The approval of the new fiscal terms and the redistribution of the CSI interests further enhances the value of these acquisitions and also demonstrates the Government of Angola’s commitment to providing an attractive and stable fiscal environment that encourages further investment in its oil & gas industry.

We continue to work with the operator Sonangol and our joint venture partners to ensure that we maximise the production, reserves and value of this quality long life asset for the benefit of all stakeholders whilst also reducing the emissions profile.”

Afentra has risen by around 10% this morning but in my view remains one of the most attractive stocks in the sector. These transformative deals when completed will massively boost the value of the company something that has already happened as during the wait for approvals the production and the fiscal terms have only got better.

The best is without doubt yet to come from Afentra and with more activity on the acquisition front I am happy to have a conservative Target Price of 100p on the shares.

United Oil & Gas

United Oil & Gas issues the following update in relation to our Jamaican and Egyptian assets.  

Jamaica Update
The Company is currently engaged in discussions with a preferred potential partner that has been identified through the farm-out process, to participate alongside United in the Walton Morant Licence in Jamaica. Furthermore, the Company is engaging with the Jamaican authorities to secure an extension to the current licence period which expires at the end of January 2024, so as to provide sufficient time to progress additional technical work on the block to support the drilling of an exploration well. Additional updates on both the farm-out process and licence extension will be provided in due course.

Egypt Update
The Group’s working interest production averaged 1024 boepd (946 bopd oil and 78 boepd gas) for the year to 5 November 2023, which is in line with full-year 2023 production guidance of between 930 and 1,030 boepd, which remains unchanged. The full-year guidance includes production from the current wells and contributions from workover activity currently being undertaken on the fields.

Kuwait Energy Egypt, (“Kec”) as the operator of the Abu Sennan licence, has notified the Joint Venture partners that drilling of the ASD S-1X well is expected to commence over the coming days, using the ECDC-6 rig. This exploration well is the final well of the 2023 drilling campaign and is targeting an un-risked STOIIP estimated by United at c. 10 mmbbls gross across multiple reservoirs intervals, including the primary Abu Roash-C and Abu Roash-E intervals. The ASD S Prospect has been de-risked by the ASD Field, located ca. 2km to the north, which currently produces oil from the same primary reservoirs that are targeted in the well. The well is expected to take ca. 40 days to drill and log, and if positive indicators for the presence of moveable hydrocarbons are seen, the well will be completed and tested.

As previously announced, the macroeconomic issues in the Egyptian economy have resulted in reduced USD liquidity and have impacted the Company’s ability to repatriate funds from Egypt. This situation has further deteriorated over the last month with the onset of renewed conflict in the region which has exacerbated challenges to repatriate funds. Whilst EGPC has continued to make regular payments to the Company against the receivable balance, including Egyptian pound payments equivalent to $1.8m since the 31 October, no USD payments have been received since August 2023.

United Chief Executive Officer, Brian Larkin commented:
“We are encouraged by the continued progress in relation to the farm-out process in Jamaica, as we look to unlock the material value contained in this block and deliver value to our stakeholders, including the people of Jamaica. We are entering a critical stage in the farm-out process and will provide an update to the market as this progresses.

“In relation to our position in Egypt, we believe our assets there hold substantial value including the potential value from the upcoming exploration well, but the current economic conditions in Egypt present challenges. We will continue to work with all our local Egyptian stakeholders including EGPC and Kec to maximise value for our shareholders from these assets.”

It is good to see that in Jamaica the company are in meaningful discussions with a ‘preferred potential partner’ and with their confidence come discussions with the Government with regard to extending the licence. 

In Egypt with the final well of the 2023 campaign about to spud there is ‘substantial value’ in the acreage and not withstanding the challenges with the economy I think that next year should see some further growth for United. 

UOG have a good record, rarely raising money and creating value from the portfolio, I think that next year with the lead from Jamaica the company will be able to show growth again. 

KeyFacts Energy Industry Directory: Malcy's Blog