WTI (June) $76.48+40c, Brent (July) $83.33 +37c, Diff -$4.95 +7c
USNG (June) $2.20 +6c, UKNG (June) 77.5p +1.5p, TTF (June) €31.815 +€0.67

Oil price

Oil fell last week, WTI down $5.77 and Brent fell by $6.54 for reasons we are fully aware of, not much has changed, cease fire talks are taking place today despite the action overnight.

On Friday US jobs data were ‘good; ie they were bad and a rate fall maybe back on the cards…

Union Jack Oil

Union Jack has announced, further to the RNS published on 8 April 2024, a positive update in respect of the Andrews 1-17 well, drilled to test the West Bowlegs Prospect, located in Seminole County, Oklahoma, United States.

Union Jack holds a 45% working interest in this well, including an associated area on the licence.

HIGHLIGHTS

• The Andrews 1-17 well has been declared a commercial discovery
• Ongoing “test” production and well clean-up continues
• High quality oil being produced with an API gravity of approximately 41 degrees
• First oil sales have already been made
• The installation of permanent production facilities has commenced
• Site facilities are also being installed to allow gas production to be monetised
• A follow-up Andrews-2 well location is currently in the planning phase, in readiness for early drilling as a result of initial Andrews 1-17 success

The primary target for the Andrews 1-17 well, the Hunton Limestone, one of the main hydrocarbon reservoirs in Oklahoma, was penetrated at approximately 4,200 feet, showing high porosity, elevated gas readings, with good reservoir quality being interpreted on the wireline logs. The total depth of the Andrews 1-17 well was 4,600 feet.

The Hunton is unconformably overlain by the main oil-prone source rock, the Woodford Shale and is in an excellent position for the migration of oil.

Testing of the Andrews 1-17 well is ongoing and further announcements will be made in the coming weeks after the well has cleaned-up and oil and gas production rates are optimised, following the installation of permanent production facilities.

Union Jack has now earned its 45% working interest across the associated licence area and going forward will only pay its working interest share of any future drilling and development costs.

David Bramhill, Executive Chairman of Union Jack, commented: 
“I am delighted that the first well of our drilling campaign with Reach Oil & Gas Company Inc is a commercial success.

“Stabilised oil and gas production rates will be published in due course, following the installation of permanent production facilities and the monitoring of the Andrews 1-17 well over a period of weeks.

“In an incredibly short space of time, the Andrews 1-17 well is contributing to our revenue stream and we await with high expectations on the result of our follow-up well, currently in the planning phase, targeting the same Hunton formation, a prolific hydrocarbon producer in Oklahoma.”

To say that this is excellent news is an understatement, with Andrews 1-17 now a commercial discovery UJO have the makings of a great base in the US with a top quality partner. Obviously testing continues but the rocks look good with plenty of upside and oil at 41 degrees API is what dreams are made of and sales are already underway. 

The next moves are construction of production facilities which is already happening and the associated gas will be monetised by adding further facilities. Whilst that is going on the follow up well Andrews-2 is being planned with the intention of drilling as soon as possible with no reason at all why it won’t be another success.

I don’t think the market has any real idea of what David Bramhill and team are on to across the board at UJO. Obviously Wressle carries a big weight in the valuation but in my view there is nothing in there for the Penistone Flats or the Ashington Grit formation and there is also West Newton to bear in mind on the upside.

The move to the USA though is without doubt the piece de resistance, investing this amount in the UK would take years to come to fruition and a return might be small and decimated by fiscal greed. In the USA, returns are as we have already witnessed can be swift and substantial, state interference is minimal and profits are encouraged.

The strategic initiatives that UJO have commenced are already bearing fruit a matter of weeks since first drilling, whilst I am not running ahead of myself, these US investments can confidently be assured of a very decent, speedy return, enabling activity elsewhere in the portfolio and a handy source of income to support distribution to shareholders.

Challenger Energy Group

Challenger has announced (as foreshadowed in the Company’s RNS of 18 April 2024) that it has entered into long-form legal documentation to give effect to the term sheet for an investment in the Company by Charlestown Energy Partners LLC (together with its affiliates and assignees “Charlestown”). Accordingly, Charlestown will advance a £1.5m loan to the Company on or about 22 May 2024, on terms and conditions as previously announced.

The Company also advises that the regulatory approval process for the farm-out of a 60% interest in the AREA OFF-1 licence, offshore Uruguay, to a subsidiary of Chevron is progressing in accordance with expectations (refer to the Company’s RNS of 6 March 2024). Upon closing of the farm-out, Challenger Energy will receive $12.5 million in cash and (subject to prior completion of an agreed share consolidation) the Charlestown loan shall convert into new ordinary shares in the Company, on a basis which will result in Charlestown holding a c. 8.7% shareholding, and thus making Charlestown one of the Company’s largest shareholders.

Nothing to add here except to suggest that someone in the legion of advisors has noticed that a date has gone by without something happening and all of a sudden there is a huge work up in the corporate department and as if by magic out comes a totally unnecessary RNS. All is well at CEG and Chevron and Charlestown are firing on all cylinders putting their deals together. 

Coro Energy

Coro has announced that its application for a Wind Energy Service Contract (“WESC”) in respect of a second area of interest for the onshore Oslob Wind Power Project, previously announced by the Company on 11 March 2024, has now been approved by the Philippines Department of Energy.

This WESC is Coro’s second contract and neighbours the Company’s first project site and would be in respect of an additional installed capacity of circa 100MW. The recently installed and operational 130 metre meteorological mast installed by the Company in the Philippines will also serve this second project in gathering data and determining the wind resource available.

Further good news for Coro who are chipping away in the Philippines and when they get fully funded the project should be very profitable.

Europa Oil & Gas

Europa is hosting a retail investor ‘Meet the Team’ reception at the Ye Olde Cock Tavern, Holborn, London, EC4Y 1AA, on Thursday, 13 June 2024 between 3.00-6.00 p.m. BST.

Will Holland, CEO, and Alastair Stuart, COO, and Jamie White, Chief Geologist, will give a presentation which will be followed by a Q&A session and an informal reception where investors can meet the wider team.

I don’t always plug these meetings as they happen all the time but investors should make a note of this in the diary as EOG has some particularly interesting assets that deserve further investigation. Of these the Equatorial Guinea prospect may have significantly most to offer.

To register for the event, please click the following link: https://www.eventbrite.com/e/europa-oil-gas-meet-the-team-presentation-tickets-883223444097?aff=oddtdtcreator

Please email europa@vigoconsulting.com if you have any queries regarding the event.

KeyFacts Energy Industry Directory: Malcy's Blog