WTI (July) $77.90 +16c, Brent (Aug) $81.92 +29c, Diff -$4.02 +13c
USNG (July) $3.13 +22c, UKNG (July) 80.90p +0.9p, TTF (July) €34.8 -€0.05

Oil price

Oil is behaving as nothing ever happened last week, up again today after a quiet gain yesterday. With the Fed Meeting at the moment and the expected rate call this evening it will be the tone of the conference that counts.

The EIA and Opec reported with similar numbers, Opec saying that global demand still looks good, and like I said on Monday a likely stock draw anytime soon. Today the IEA will inevitably say that fossil fuel is all over….

After hours the API reported a draw in crude of 2.428m barrels against a whisper of -1.75 but also saw gasoline drawing 2.549m b’s.

Star Energy

Star Energy today provides the following trading update in advance of the Company’s AGM, which is being held at 10.30 am today. 

Ross Glover, Chief Executive Officer said:
“I am delighted to report that we are maintaining strong momentum in production and it remains in line with guidance at c. 2,000 boepd.  We will continue to optimise oil production from our existing well stock through investment in incremental opportunities which deliver quick payback and to seek further reductions in site operating costs.  Initial discussions with potential farm down partners, which should enable quicker execution of our shovel ready oil and gas projects, have been encouraging and a formal process will commence in early Q3 2024.

Our intention is to exit our shale gas licence positions in order to save the costs of licence fees and to allow greater focus on our producing assets. 

I will be working to right-size the business and to ensure we have the optimal corporate structure that is both appropriate for a business of our size, but does not compromise our ability to grow.  We have strengthened our balance sheet through the recent refinancing exercise. This gives us the opportunity to reinvest some of our operating cashflows into our oil and gas business to drive its profitability and sustainability, in a range of commodity price environments. As our geothermal projects mature we will deploy our capital appropriately.

I believe that geothermal can be a key part of the solution to decarbonise heat.  It is not grid-dependent, requires minimal surface infrastructure and once running it is a consistent renewable source that can be used for both heating and cooling.

The skills needed to develop the geothermal industry already sit within the onshore oil and gas industry in the UK – this could be a real “just transition” for oil and gas workers to a green technology that is proximal in terms of skill set.

We are in a period of political hiatus from a policy point of view, but clean energy and clean jobs are a key priority for both main parties.  Labour have said that GB Energy will be an investment vehicle for nascent renewable technologies and geothermal fits perfectly within that definition.

In Croatia, we have commenced a review of the technical data from all three secured licences, to rank the optimal sequencing of their commercial development.

While the transition over time into geothermal remains our goal, it is critical that our focus in the short term is maximising cash flow from our producing assets whilst commodity prices remain high and ensuring we are in the best shape for the future.”

A confident statement from new CEO Ross Glover who appears to have a strong grip on the portfolio and how to maximise performance. He starts with production of c.2000 boe/d in line with guidance and they are well placed to use the well stock to give a swift payback and to keep opex down, and without the shale licences around their neck.

New projects are still coming through the system which is encouraging and I like his attitude about right-sizing the business. The recent refinancing has helped this and offers flexibility on the growth front with a stronger balance sheet, optionality with regard to economics and offering upside in the portfolio.

As for geothermal, the new CEO is a believer and claims it will play a ‘key part’ in decarbonising heat without a lot of the detritus of conventional sources of energy. I will bow to him on that front as it looks to good to be true and you know what they say about that…

I’m confident that Star is on the right road and in a good place with Ross Glover in the driving seat, sticking with the oil and gas knitting in these days seems a wise move, I look forward to seeing the development of Star under new management.

KeyFacts Energy Industry Directory: Malcy's Blog