WTI (June)* $81.90 -24c, Brent (June) $87.00 -29c, Diff -$5.10 +95c*
USNG (May) $1.79 +4c, UKNG (May) 72.76p -1.25p, TTF (May) €29.12 -€0.965
*Denotes WTI May contract expiry

Oil price

Oil has picked up a bit today, the WTI May contract expired quite well and the Brent price is still only $4 off the recent peak so in a week with little data and so far little on the Middle East front all is quiet. 

The retail gasoline price in the US continues to rise ahead of the driving season next month. This week a gallon of Exxon’s finest will rush you, on average across the states, $3.668, that is up 4 cents on the week, and a healthy 61.5 cents above the years high. Ahead of an election in the fall stand by for White House action…

Kistos

Kistos has announced the completion of the acquisition of 100% of the share capital of EDF Energy (Gas Storage) Limited from EDF Energy (Thermal Generation) Limited, further to its announcement on 20 February 2024. The assets acquired comprise of two gas storage facilities onshore in the UK, Hill Top Farm  and Hole House Farm, for a total consideration of £25 million (from existing cash resources) for the Transaction.

• Following the approval of Kistos by the government under the National Security and Investment Act (NSIA), the transaction marks Kistos’ entry into the gas storage sector providing business diversity to its upstream portfolio.
• Hill Top’s working gas capacity is 17.8 million therms, with an ongoing programme to increase this volume to 21.2 million therms in the short term.
• Hill Top currently accounts for 3.1% of the UK’s total available onshore gas storage capacity and, due to the fast cycle nature of the facility, can deliver up to 11% of the UK’s flexible daily gas capacity if called upon.  
• The Hole House facility, at which operations have been suspended since 2018, provides an option to increase the Company’s proportion of the UK’s total onshore gas storage materially with reactivation. Delivering a plan to get these facilities back online is a priority post completion.
• As the UK generates increasing amounts of electricity from intermittent renewable sources, the times when fast-cycle storage assets are required to balance the system are also set to increase. This provides the basis for gas storage assets to be a key pillar of the energy transition.
• Both facilities have the potential to be repurposed for future energy storage uses, including the storage of compressed air or hydrogen, and concept studies are underway.
• Kistos has assumed operatorship of both sites.

Commenting on the acquisition, Andrew Austin, Kistos’ Executive Chairman, said:
“We look forward to working with the existing team with a view to maximising the value-accretive opportunities these gas storage facilities present, establishing Kistos’ presence across the energy value chain with a foothold in the midstream market. Over the longer term, we will also be evaluating our options to further expand operations via other energy storage sources such as compressed air or hydrogen.”

This is a fascinating deal from Kistos, buying these two gas storage facilities from EDF for just £25m gives important exposure to the fast growing requirement for short term power demand, and assuming your traders can identify the moves in the spot market then it should be highly profitable and importantly, outside the UK’s pernicious hydrocarbon taxation system.

 Operationally there is work to be done on both facilities, at Hill Top it is expansion but on a good day it could achieve as much as 11% of UK daily gas capacity which is attractive work, Hole House is mothballed at the moment but I understand that it could return before too long or with too much investment. 

An area I have looked at before, the provision of renewable and intermittent gas for power is an increasing part of the mix, is likely to be highly profitable and positioning Kistos at the front of the pack in this key market. 

Union Jack Oil

Union Jack Oil plc (AIM: UJO and (OTCQB: UJOGF), a UK and USA focused onshore hydrocarbon production, development, exploration and investment company, is pleased to announce that a new Corporate Presentation is now available at www.unionjackoil.com.

The Presentation will be shared today with New York based, Sidoti & Company Inc, ahead of Union Jack’s participation in the Sidoti Virtual MicroCap Conference on 8-9 May 2024.

Sidoti’s investor conferences serve as a leading forum for interaction between smaller companies and investors.

Sidoti is also a premier provider of independent securities research, focused specifically on small and micro-cap companies and the institutions that invest in their securities.

This is the second day that I have started a comment on UJO by saying ‘I wouldn’t normally mention this but….’

However I have had a lot of inbound comment in recent months about the investment by the company in the USA. Those people can now read this announcement and maybe even attend the virtual conference. 

Touchstone Exploration

Touchstone yesterday announced that, further to the announcement on March 4, 2024, Touchstone Exploration (Trinidad) Ltd., our wholly owned Trinidadian subsidiary, has entered into the third amended and restated loan agreement with our Trinidad based lender.

The Amended Loan Agreement provides for an additional $10 million five-year non-revolving term loan facility and an increase to our existing revolving loan facility borrowing capacity from $7 million to $10 million under the terms previously announced.

As a result, Touchstone’s credit facilities currently consist of our unchanged seven-year term loan facility, the new five-year $10 million non-revolving term loan facility, and the increased $10 million revolving loan facility. The existing seven-year non-revolving term loan facility has a current principal balance of $19.5 million, with thirteen equal and consecutive quarterly principal payments of $1.5 million outstanding through to the June 15, 2027 maturity date. We have $7 million drawn on our revolving loan facility, resulting in an aggregate $26.5 million in bank debt principal currently outstanding. 

We intend to fully draw the new $10 million non-revolving term loan facility to finance our 2024 capital program as previously set out in our December 19, 2023 announcement and expect to use the additional revolving loan facility credit capacity for general working capital purposes on an as needed basis.

This announcement yesterday went under the wire as it was deemed by me to be a confirmation of an existing, pre-announced capacity which set the company’s finances up neatly for the capital programme underway. As I wrote last week Touchstone is in a good place with further production coming up in Q3 with more to follow.

KeyFacts Energy Industry Directory: Malcy's Blog