WTI ( Mar) $76.64 -$1.23, Brent (Apr) $81.60 -$1.17, Diff -$4.96 -6c
USNG (Mar) $1.61 -8c,  UKNG 60.3p -0.9p, TTF (Mar) €25.375 +€0.485

Oil price

It was the inventory stats wot did it, as they said when they saw the whopping 12,018m build in crude stocks way higher than the 2.6m whisper. Indeed with run rates way down again ahead of the changes in refinery set up changes in the Spring a build was indeed expected but not this big. Add to that the very mild winter which has hit natural gas prices as well as creating surplus crude and the market was flummoxed. 

Diversified Energy Company

With DEC announcing that shareholders are entitled to elect how they receive the most recently announced dividend I thought it would be most helpful to publish the announcement in its entirety. 

Diversified has announced that, following the announcement on 15 November 2023 of the interim dividend for the three-month period ended 30 September 2023, the Company intends to offer shareholders with an opportunity to elect how they will receive the return of capital of approximately US$42 million, in aggregate. The Company will return the same amount of the previously declared Third Quarter Dividend, but shareholders will be offered the optionality as to how they receive that payment.

The Directors believe that the current trading price of the shares does not reflect the quality of the Company’s assets nor the significant opportunities for the Company’s long-term strategy. The Directors therefore consider that the repurchase of shares is a prudent use of capital for the Company and is in the best interests of the shareholders.

Following consultation with shareholders and after careful consideration of the feedback received, the Company is offering shareholders optionality as to the Return of Capital. Specifically, Qualifying Shareholders (as defined below) can elect to either:

• Do nothing, in which case they will remain unimpacted and will be paid their Third Quarter Dividend on 28 March 2024; or
• Elect to waive some or all of their Entitlement in order to have their Shares purchased in a tender offer for cash at the Tender Price (which will include a premium).

The Company will fund the Tender Offer using funds available from the Company’s cash and cash equivalents.  

This Return of Capital allows shareholders to be paid the same total amount of the previously declared Third Quarter Dividend while providing optionality for shareholders to receive that payment in the form of a cash dividend payment or a cash payment as consideration for the sale of their Shares in the Tender Offer. The aggregate amount of funds the Company will utilise in relation to the Return of Capital will be approximately US$42 million, which is the approximate amount of the Third Quarter Dividend announced on 15 November 2023.

Details of the Return of Capital

On 15 November 2023, Diversified declared an interim dividend of US$0.04375 per ordinary share of £0.01 each in respect of the three-month period ended 30 September 2023, which was adjusted to US $0.875 per ordinary share of £0.20 each following the Company’s share consolidation as announced on 7 December 2023. The total amount of the Third Quarter Dividend is approximately US$42 million.

Qualifying Shareholders are not obliged to waive their Entitlement to the Third Quarter Dividend and tender any of their Shares if they do not wish to do so. Qualifying Shareholders who do not submit any instructions to waive some or all of their Entitlement amount in order to tender their Shares, and all non-Qualifying Shareholders, will remain unimpacted and will be paid their Entitlement to the Third Quarter Dividend on 28 March 2024; they do not need to take any action.

The purchase price to be paid by the Company in the Tender Offer will be 105% of the average market value per Share for the five business days immediately preceding 27 March 2024, being the expected date on which the Shares are to be purchased and will be announced by the Company via a Regulatory Information Service on the date preceding the closing date, expected to be 26 March 2024 (the “Closing Date”). The Company also expects to announce the GBP:USD exchange rate for the Third Quarter Dividend on or around 20 March 2024. As the Third Quarter Dividend has been declared in US dollars, such exchange rate will also determine the amount of the Third Quarter Dividend in pound sterling (GBP) for shareholders who wish to waive some or all of their Entitlement in order to participate in the Tender Offer.

The Tender Offer is being made by the Company’s broker, Stifel, as principal, on the basis that all Shares that it buys under the Tender Offer will be purchased from it by the Company under its existing buy-back authority granted at the annual general meeting of the Company held on 2 May 2023. All Share purchase transactions by Stifel will be carried out through an on-market trade placed on the London Stock Exchange only. No Share repurchase transactions will be undertaken pursuant to this Tender Offer on the New York Stock Exchange. Shares purchased under the Tender Offer will be cancelled by the Company.

The Tender Offer will be subject to certain terms and conditions. Specific instructions and an explanation of the terms and the conditions of the Tender Offer will be contained in a shareholder circular to be published on or around 26 February 2024 in the United Kingdom (the “Circular”) and an offer to purchase in the United States (the “Offer to Purchase”) and related materials that will be made available to shareholders.

The Tender Offer is only available to shareholders who are on the depositary interest register at 6.00 p.m. (London time) on 1 March 2024 (the “Qualifying Shareholders”). Further, shareholders with registered addresses in certain jurisdictions are not eligible for the Tender Offer. Therefore, all Qualifying Shareholders who wish to participate in the Tender Offer should ensure that their interest in the Shares is capable of being settled in CREST at 6.00 p.m. (London time) on 1 March 2024.

Only Qualifying Shareholders will be entitled to waive some or all of their Entitlement in order to validly submit tenders for the purchase of Shares at the Tender Price up to the amount of their waived Entitlement. A Qualifying Shareholder will not be entitled to tender Shares in excess of their respective Entitlement. Applications made by Qualifying Shareholders in excess of their respective Entitlement will be scaled back to their Entitlement. A Qualifying Shareholder who elects to waive only some of their Entitlement in order to validly submit tenders for purchase of Shares at the Tender Price will be paid the remainder of the Entitlement to the Q323 Dividend that they have elected to not waive pursuant to their TTE instructions in CREST on 28 March 2024.

Qualifying Shareholders who have sold, or otherwise transferred, Shares that they held as at the Record Date prior to the Closing Date will only be entitled to validly tender such Shares that they still hold as at the Closing Date. Any such Qualifying Shareholder’s waived Entitlement will be calculated as the total number of Shares validly tendered by them multiplied by the Tender Price, and they will be paid the remainder of the Entitlement on 28 March 2024.

If the amount of Entitlement that has been waived does not result in an exact number of Shares at the Tender Price, such Entitlement amount will be correspondingly reduced to purchase the nearest whole number of Shares in the Tender Offer at the Tender Price and the remaining portion of such Entitlement shall be deemed to have been waived by the Qualifying Shareholder and will be retained by the Company. In all circumstances, any such amount retained by the Company shall not exceed the Tender Price per Share.

None of the Company, the Directors, Stifel, or any of their respective affiliates makes any recommendation as to whether any Shareholder should elect to waive their Entitlement to the Third Quarter Dividend in order to tender their Shares pursuant to the Tender Offer, and no one has been authorized by any of them to make such recommendation. Each Shareholder must make their own decisions as to whether to elect to waive their Entitlement in order to participate in the Tender Offer or do nothing and receive their Entitlement to the Third Quarter Dividend.

Certain Information Regarding the Tender

The information in this press release describing the Tender Offer is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell shares of the Company in the Tender Offer. The Tender Offer will only be made pursuant to the Circular, the Offer to Purchase and other related materials filed as part of the Tender Offer Statement on Schedule TO, in each case as may be amended or supplemented from time to time. Shareholders should read such Circular and Offer to Purchase and related materials carefully and in their entirety because they contain important information, including the various terms and conditions of the Tender Offer.

The Circular and the Offer to Purchase in each case containing the full terms and conditions of the Tender Offer and instructions to shareholders on how to tender their Shares should they wish to do so will be made available to shareholders on or around 26 February 2024. The Circular will be available on the Company’s website at ir.div.energy. Copies of the Circular will be submitted to the National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Shareholders may obtain a free copy of the Tender Offer Statement on Schedule TO, the Offer to Purchase and other documents that the Company will file with the Securities and Exchange Commission from the Securities and Exchange Commission’s website at www.sec.gov once available. Shareholders are urged to carefully read all of these materials prior to making any decision with respect to the Tender Offer, and this announcement should be read in conjunction with the full text of the Circular and the Offer to Purchase once available. Following the commencement of the Tender Offer, if you have any queries relating to the waiver of your Entitlement to the Third Quarter Dividend and participation in the Tender Offer, please contact Computershare Investor Services PLC on 0370 702 0151 (or +44 (0) 370 702 0151) if calling from outside the United Kingdom). Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 8.30 a.m. – 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. Please note that Computershare Investor Services PLC cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.

Expected Timetable of Events

The dates given in this announcement are London time and are based on the Company’s current expectations and may be subject to change. Any changes to the expected timetable will be announced via a regulatory information service.

Ithaca Energy

Ithaca today provides the following unaudited trading update for the year ended 31 December 2023, ahead of announcing its Full Year Results on 21 March 2024. 

2023 full year production of 70.2 thousand barrels of oil equivalent per day (kboe/d), in line with previously stated guidance of 68-74 kboe/d

• Underpinned by high levels of production efficiency across our operated asset base of 84%
• Production split 66% liquids and 34% gas
• Estimated 2023 net operating costs of $524 million, representing a net unit opex cost of $20.5/boe, marginally better than the lowered management guidance of $525 – $575 million
• Internal cost optimisation project driving strong cost control in an inflationary environment
• Estimated 2023 net producing asset capital cost of $392 million, in line with management guidance of $390 – $435 million
• Reflects a reduction in planned activity in the year as a direct result of the Energy Profits Levy
• Estimated 2023 net Rosebank capital spend of $97 million, in line with management guidance of $90 – $110 million and reflecting the meaningful activity in 2023 as project activity ramps up to support a targeted first oil date in 2026/27
• Estimated 2023 adjusted EBITDAX of $1.7 billion (2022: $1.9 billion)
• Strong cash flow generation supporting continued deleveraging of the balance sheet with net debt of $572 million at period end, representing an estimated Group leverage position of 0.3x
• The Group’s available liquidity stands at over $1.1 billion, including undrawn RBL availability of $835 million following completion of the latest redetermination
• Full year 2023 total dividend of $400 million reaffirmed, with remaining $134 million payment payable following the publication of the full year results
• The Group expects to publish guidance for 2024 with the full year 2023 results on 21 March 2024 together with a full Competent Persons Report (CPR), including field economic outputs, prepared by an independent reserves auditor

Gilad Myerson, Executive Chairman, commented:
“I am pleased to report a strong set of 2023 results, with trading in line with guidance. We have made significant progress across our strategic objectives in 2023, delivering against our BUY, BUILD and BOOST strategy, including the milestone sanctioning of the Rosebank development.”

Iain Lewis, Chief Financial Officer & Interim Chief Executive Officer, commented:
“We begin 2024 in a position of strength with a diverse portfolio of high-quality assets and significant investment optionality. Strict cost control and strong cash flow generation in 2023 has supported the continued deleveraging of the balance sheet with significant flexibility to support our future growth plans.“

An excellent update from Ithaca this morning where all is going to plan although I would like news of the new CEO sooner rather than later, also when that happens a well overdue meeting with the company will I’m sure be forthcoming.

Nevertheless the numbers don’t lie, production was 70,200 boe/d last year in line with guidance and opex was $20.5 p/b which beat the official guidance. Strong cash flow generation led to available liquidity of over $1.1bn if you include the $835 of undrawn RBL facilities. 

I remain confident that this excellence will continue and despite having to rein back projects a little in the medium term due to Government fiscal greed the longer term still looks promising. Don’t even get the calculator out, the yield is plenty percent and makes the shares very appealing indeed…

Tower Resources

Tower has announced that it has reached an agreement (subject to contract) for the repayment of the outstanding balance owed to Energy Exploration Capital Partners, LLC, in accordance with the terms of the investment deed announced to the market on 16 January 2023.

The Company is also announcing a subscription for approximately 3,333,333,333 ordinary shares of 0.001p each (the “Subscription Shares”) at a price of 0.018p per Subscription Share (the “Subscription”), representing a discount of approximately 10% to the closing bid price of the Company’s shares on 14 February 2024. 

The Subscription has been arranged with certain investors by the Company’s broker, Axis Capital Markets Limited.

EECP Facility Repayment and Subscription

The proposed Subscription is being made to fund working capital, including the full repayment of the outstanding balance of the EECP facility (currently comprising US$455,000 plus fees) and to progress work on the Company’s licenses; including the Thali PSC, offshore Cameroon, PEL 96 in Namibia, and the Algoa-Gamtoos license in South Africa. 

The Subscription will raise gross proceeds of £600,000 through the issue of 3,333,333,333 ordinary shares of 0.001p each at a price of 0.018p per Subscription Share, representing a discount of approximately 10% to the closing bid price of the Company’s shares on 14 February 2024. 

The Subscription Shares will be issued in two tranches with a first tranche of 1,045,833,333 shares (“First Tranche Subscription Shares”) and a second tranche of 2,287,500,000 shares (“Second Tranche Subscription Shares”).

It is intended to offer the broker, Axis Capital Markets Limited, 140,000,000 warrants over 140,000,000 new ordinary shares for arranging the Subscription (“Broker Warrants”). The period of the Broker Warrants will be three years at a strike price of 0.018p per share.

Share Capital following the Subscription

Application has been made for the Subscription Shares to be admitted to trading on AIM. It is expected that Admission of the First Tranche Subscription Shares will become effective and that dealings will commence at 8.00 a.m. on or around 22 February 2024. It is expected that Admission of the Second Tranche Subscription Shares will become effective and that dealings will commence at 8.00 a.m. on or around 8 March 2024.

Following admission of the Subscription Shares, the Company’s enlarged issued share capital will comprise 16,638,185,250 Ordinary Shares of 0.001 pence each with voting rights in the Company. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in the interest in, the share capital of the Company under the FCA’s Disclosure and Transparency Rules.

Warrants and Options in Issue

Following the issue of the Broker Warrants, the total number of warrants and options in issue is 2,068,625,814 equating to 11.1% of the Company’s enlarged share capital assuming full exercise of all warrants and share options.

Tower Resources Chairman & CEO, Jeremy Asher, commented:
“We are pleased to have completed this Subscription and to have repaid the remaining balance of the advance from EECP. We are pursuing multiple asset-level financing discussions, as previously disclosed, and this fundraising will allow us to focus on these over the coming months. We remain confident of spudding the NJOM-3 well in Cameroon this summer.”

I love Tower and Jeremy for the very fact that over so many years in the recent past as they head towards drilling in Cameroon, the pattern is the same, borrow (often from Jeremy) raise, repay, borrow, raise repay. On this occasion with the guvnor ‘confident’ about spudding Thali and even mentioning Namibia and South Africa in the statement, to be frank I can’t wait although the change might do me in!

KeyFacts Energy Industry Directory: Malcy's Blog