WTI (Mar) $76.92 +8c, Brent (Apr) $82.00 -19c, Diff -$5.08 -27c.
USNG (Mar) $1.77 -8c, UKNG (Mar) 63.15p -0.8p, TTF (Mar) €26.345 +€0.115

Oil price

The key shaker today was the US inflation figure which at 3.1% came in above the 2.9% whisper. The markets fell sharply but bond yields rose as did the greenback. Oil itself is up around 50 cents a barrel. 

In Paris the IEA are holding a ‘Ministerial Meeting’ to celebrate the 50th year of pure….and have said that oil demand is good this year but are still alleging that peak oil is before 2030, how we laughed…

And whilst not endorsing anything said by President Trump I have to say that his comments about NATO may have more than a grain of truth to them, after all France, Germany, Italy and Spain all fail to make the due minimum payments as do several others….

Kistos

Kistos notes the announcement made this morning by Var Energi ASA, confirming that the upgrade of the Joutun FPSO is 90% complete and that first oil is now anticipated to be the end of Q4 2024.

Kistos is encouraged by recent activity, in particular the progress the Operator has made in working to convert more of the established 2C resources into sanctioned reserves through the ongoing drilling programme. The Company will continue to update the market in line with the Operator.

In the event that first production is not achieved until 2025, due to the structure agreed upon through the acquisition of Mime Petroleum A.S. in 2023, the economics of the acquisition mitigate any effects of a delay by reducing the contingent consideration payable by Kistos to the Mime Petroleum bondholders.

Kistos have the put and the call here and into the bargain the upgrade to the FPSO is catching up and now 90% complete giving a first oil date of Q4 2024. With the conversion of 2C into sanctioned reserves Kistos looks in a very strong position.

And the other side of the option protects, or hedges the upside of the acquisition ‘by reducing the contingent consideration payable by Kistos to the Mime Petroleum bondholders.’ At the current level the share price is  criminally low and with an asset base of such quality and with potential to return to the dividend list before long Kistos looks a cracking bet at these prices. 

Union Jack Oil

Union Jack has announced, further to the Company’s announcement dated 6 February 2024, that it has signed a further two farm-in agreements with Reach Oil & Gas Company Inc.

The first agreement is to acquire a 75% working interest in a well planned to be drilled in Q3 2024, to test the Footwall Fold Prospect in the Wilzetta Fault play and in an area of associated interest.

The second agreement is to acquire a 37.5% working interest in a 2D and 3D seismic acquisition programme to identify additional drillable prospects along the Wilzetta Fault, located in Pottawatomie and Lincoln Counties, Oklahoma, USA.

75% Farm-in and Drilling of the Footwall Fold Prospect in the Wilzetta Fault Play

• Main Wilzetta Fault zone target is underlain by a deeper structure that will also be tested with the first high-impact well with estimated recoverable oil in excess of 200,000 barrels
• Initial Wilzetta well planned to be drilled in Q3 2024 to a depth of 6,000 feet, with a geological chance of success, estimated by the Operator (Reach) to be 35%
• High-relief compressional fold with a large reverse fault, within the prolific Wilzetta Fault zone
• Prospect mapping supported by recently reprocessed 3D seismic data
• Planning and back costs of US$277,000 are payable by Union Jack
• Cost for drilling and completion of the well are estimated to be approximately US$1,000,000 net to Union Jack
• Going forward, the costs of further planned wells will be based on the Company's 75% working interest
• Costs will be paid from existing cash resources

The prolific Wilzetta Fault plays are the site of numerous oilfields across central Oklahoma with nearby analogous production from:

• North-East Shawnee field, three miles south of the Prospect, which has produced more than 5,800,000 barrels of oil to date
• West Bellmont field, adjacent to the Prospect, which has produced more than 580,000 barrels of oil to date
• Arlington Field, ten miles north-east of the Prospect, which has produced more than 1,800,000 barrels of oil to date

37.5% Farm-in to 2D and 3D Seismic Acquisition Programme in the Wilzetta Fault Play

• Additional potential sites for structures along the Wilzetta Fault have been identified (in addition to those on the Wilzetta Fault Footwall Fold)
• Initially, 2D seismic will be acquired to confirm sites for compressional structures
• A 3D programme will then be carried out at the most promising sites to firm up additional drilling locations
• Union Jack will pay 50% of the 2D and 3D programme costing US$280,000 net to Union Jack, to earn a 37.5% working interest in any prospects generated
• Costs will be paid from existing cash resources

David Bramhill, Executive Chairman of Union Jack, commented: 
"Further to the announcements made on 29 January 2024 and 6 February 2024 in respect of Union Jack's transactions with Reach, I am pleased to be able to bring another two, highly prospective farm-in projects to the Company's Oklahoma, USA, drilling and Mineral royalty portfolio.

"During late 2023 and early 2024, the Company assembled an initial balanced collection of value adding assets, comprising three cash yielding Mineral royalties, holding attractive upside potential, and a quality portfolio of near-term, exploration, drilling and seismic acquisition programmes that we believe have an excellent chance of success.

"We expect to see the first of our wells, being the Andrews-1 on the West Bowlegs Prospect, drilled in early Q2 2024 and we are pleased to see good progress already being made with the well location staked and site construction to commence shortly.

"Reach has also informed Union Jack that an intent to drill was submitted to the Oklahoma Corporation Commission on 8 February 2024 and that permit approval can typically be expected within 14 days.

"The Andrews-1 well will be followed by a high-impact well on the Wilzetta Fault later in 2024, where the potential rewards are significant.

"Typical wells drilled on the Wilzetta Fault can produce approximately 250 barrels of oil a day providing pay-back within three months.

"The Board is delivering on its aims of identifying and introducing potential new growth opportunities in a welcoming jurisdiction, that is highly prospective, has existing operations and infrastructure accompanied with an attractive fiscal environment, to complement the Company's already successful and profitable production activities in the UK.

"In the UK, we have planned programmes, which include the drilling and development of the Penistone Flags formation, containing material gas reserves on our flagship Wressle development. We also anticipate the "renaissance" of the West Newton gas project, which I am confident will become the focus of significant drilling and development activity during 2024 and beyond.

"Meanwhile, I also look forward to reporting on progress on Union Jack's expanded portfolio in the USA and the continuing success of the Company."

UJO are making rapid progress in its exciting expansion in the USA and today this news means that two more ‘highly prospective farm-in projects in the USA portfolio’ and are building a very impressive portfolio with an ‘excellent chance of success’.

With the programme about to kick on and the US asset base showing signs of high returns, shareholders must be pleased to see assets with such rapid payback potential which complements the UK portfolio. Indeed as a set of assets this seems to complement the UK portfolio pretty well and what is more has an excellent chance of a more than decent return. 

Jim McKenny, President of Reach, commented:
“The Wilzetta Fault is a proven oil producing area with potential for the discovery of substantial reserves in a complex structural setting.

“We are thrilled to have Union Jack as a partner in our expanding, seismic driven exploration programme.”

Wilzetta Fault Play

The Wilzetta Fault is the site of numerous producing oilfields across central Oklahoma. Strike-slip displacement (an essential component for fault systems in north-central Oklahoma) on this fault has caused areas of compressive forces that have formed the structures for oil accumulations.

Reservoirs in the immediate area are the Hunton Limestone and Wilcox Sands. These formations are highly productive in faulted and folded structural traps.

Younger Pennsylvanian sands are oil-filled in the area as stratigraphically trapped channel complexes.

Hydrocarbons are sourced from the world-class Woodford Shale source rock.

Seismic Acquisition on the Wilzetta Fault

The 2D and 3D seismic acquisition programme is designed to identify further prospects along the Wilzetta Fault.  Additional areas of probable compression have been identified.

The exploration strategy developed by Reach is to confirm areas of compression using 2D seismic data and follow on with 3D seismic where appropriate.

The areas identified for surveying appear to have been neglected due to the difficult terrain for seismic acquisition.  Reach's state-of-the-art equipment, supplied by UK based, Stryde Limited, allows for cost effective and efficient seismic acquisition.

Gneiss Energy acted as Financial Advisers on both transactions.

Jadestone Energy

Jadestone has notes recent media speculation and confirms that it is a participant in the bid process being managed by Morgan Stanley on behalf of Woodside Energy Group Ltd.  in respect of the proposed sale by Woodside of its participating interests in the Macedon and Greater Pyrenees Projects offshore Western Australia.

The Proposed Acquisition would include Woodside’s interests in the Macedon producing gas field and a cluster of producing oil fields collectively known at the Pyrenees Area. For reference, Woodside’s net working interest production from the Macedon field and Pyrenees Area in the second half of 2023 averaged c.28,000 boe/d.  

Were Jadestone to be selected as the preferred bidder and reach agreement with Woodside on acquisition terms,  the Proposed Acquisition would be classified as a reverse takeover transaction in accordance with AIM Rule 14, and accordingly, the Company’s ordinary shares will be suspended from trading on AIM with immediate effect and will remain so pending publication of an AIM admission document setting out, inter alia, details of the Proposed Acquisition, or confirmation is provided that the discussions for the Proposed Acquisition have been terminated.

There can be no assurance that agreement between the parties will be reached on mutually acceptable terms and that the Proposed Acquisition will be entered into, or if entered into, will complete. The Company will update shareholders on the Proposed Acquisition as appropriate.

Nothing like a bit of media speculation to bring out an RNS that might lead to a game changing acquisition from Jadestone which would take them into a higher league. For now no indication how it would be paid for but with the shares suspended at 23.75p and headed for a while before any return to a listing…

KeyFacts Energy Industry Directory: Malcy's Blog