A flash blog this morning as I’m out of the office today. As usual I will be catching up on stories and wherever appropriate add in the days to come.

Jersey Oil & Gas

Jersey today advises of changes announced to the Energy Profits Levy in a policy paper published on 29 July 2024 as part of announcements made by the Chancellor of the Exchequer, the Rt Hon Rachel Reeves MP.

• EPL to increase to 38% from 1 November 2024, bringing the headline rate of tax on upstream oil and gas activities to 78%
• EPL to be extended to 31 March 2030 with the Energy Security Investment Mechanism remaining in place meaning the levy will cease to apply if prices fall consistently to, or below, historically normal levels for a sustained period
• The EPL’s main 29% investment allowance for qualifying expenditure incurred will be removed from 1 November 2024
• Capital allowance claims that can be taken into account in calculating EPL profits will be reduced; however the extent of the reduction will only be announced in the October Budget following engagement with stakeholders

The Greater Buchan Area joint venture will carefully consider the impact of the tax changes to the economics of the development and project sanction. The full implications will, however, only be clear when the level of capital allowance claims available as deductions to the EPL are provided in the October Budget.

I will be writing something about this action by the Government after having discussed with various members of the UKCS community and refer back. 

Deltic Energy

Deltic has been informed by Shell U.K. Ltd, the Operator of Licence P2437, that drilling operations on the Selene exploration well, well number 48/8b-3, have commenced.

As previously noted, it is anticipated that drilling operations will take approximately 90 days and the Company will update the market as appropriate.

Obviously good news here, this is important news for the company in its key project about which I am very positive.

Coro Energy

Coro has announced an update on its C&I rooftop solar business in Vietnam, its funding position and the Company’s Annual Report and Accounts for the year ended 31 December 2023.

The Company announced the Signature of a Power Purchase Agreement  in Vietnam with Mobile World Group  on 8 March 2024 and now announces that the first ten pilot sites (0.34MW capacity of the total 50MW project) are now operational and revenue generating. Following successful engagements with MWG last week, the Company expects to shortly broaden the current PPA to a further 430 sites (circa 15MW capacity). Construction on the next 30 sites (c. 1MW capacity) is expected to begin early August, and the Company is in advanced discussions with a number of parties regarding investing in its Vietnamese C&I rooftop solar business with a view to funding the next 430 sites and accelerating the roll out of the larger 50MW project. The Company also continues to work with HDBank to secure a local debt facility to cover 50% of the capital on the MWG project following receipt of their indicative offer letter announced on 12 April 2024.

Further to the announcement on 26 June 2024, it is expected that the 2023 Annual Report will be published before the end of August, and the Company is working with its Eurobond lenders and other funding parties to provide the Company with additional near term working capital. Following the publication of the 2023 Annual Report and once additional near term working capital has been secured, (which is necessary for the Company to continue to meet its payment obligations) the Company will seek that its suspension from trading on the AIM market of the London Stock Exchange be lifted.  

Nothing to add to this update which speaks for itself.

Eco (Atlantic) Oil & Gas

Eco has announced its audited results for the year ended 31 March 2024.

Financials (as at 31 March 2024)

• The Company had cash and cash equivalents of US$2.97 million and no debt as at 31 March 2024.
• Following a significant reduction in costs (including G&A, professional fees and operating expenses) as of the time of publication, Eco has a cash position of ca.US$1.5 million.
• The Company had total assets of US$31.3 million, total liabilities of US$1.25 million and total equity of US$30.0 million as at 31 March 2024.

Post-period end

• Following the successful farm-out deal of Block 3B/4B, Eco expects to receive a first tranche of US$8.3 million during August 2024, subject to customary closing conditions being met. The resultant proceeds are expected to give Eco a cash and cash equivalents position of c.US$10 million, with no near-term capital commitments for operational expenses.

Operations:

South Africa

Block 1 (post-period end)

• In June 2024, Eco announced a Farm-In into Block 1 Offshore South Africa Orange Basin. The Company will acquire a 75% Working Interest (“WI”) from Tosaco Energy (Proprietary) Limited (“Tosaco”) and will become Operator of a new Exploration Right.
• Block 1 has significant 2D and 3D seismic data already completed and no additional seismic acquisition or drilling of wells is committed in the three-year carried period. Eco intends to complete the interpretation and analysis required for its planned Work Program with its in-house exploration team. The Farm-in is subject, inter alia, to normal Governmental approvals and no field activity is currently planned that requires environmental permitting.

Block 3B/4B

• In March 2024, Eco and its JV partners signed a farm-out transaction with TotalEnergies EP South Africa B.V., who will become Operator (“TotalEnergies”) and QatarEnergy International E&P LLC (“QatarEnergy”). Under the agreement, Eco would retain a 13.75% Participating Interest in Block 3B/4B, offshore the Republic of South Africa.

Post-period end

• On July 29, 2024, the Company announced the signing of an agreement to sell a 1% interest in Block 3B/4B in exchange for cancellation of all of Africa Oil’s shares and warrants in Eco (worth C$ 11.5m). Upon Completion of the transaction, Eco will hold a fully carried 5.25% interest in Block 3B/4B Offshore South Africa, reducing from the current 6.25%.
• Upon closing, which is expected to occur in August 2024, Total will assume operatorship and will lead the drilling planning and preparations.

Block 2B (post-period end)

• In June 2024, the Company relinquished its 50% WI Operated offshore Block 2B where it drilled its 2022 Gazania-1 well offsetting the AJ-1 oil discovery. The Company has completed all necessary documentation, and environmental audits, and has informed the Petroleum Agency of South Africa (“PASA”), the regulator for the Government of South Africa.

Namibia

• A multi-block farmout process remains underway for all or part of Eco’s four offshore Petroleum Exploration Licences (“PEL”): 97, 98, 99, and 100.  Eco holds Operatorship and an 85% Working Interest in each PEL representing a combined area of 28,593 km2 in the Walvis Basin. 

Post-period end

• Eco added ~1,383km 2D data licensed on PEL100 (Tamar block) to its database, which is being technically evaluated and interpreted by the team to define additional seismic acquisition areas within the Block, along with new leads and prospects.

Guyana

• An active farmout process continues for the offshore Orinduik Block. Eco was encouraged to note the recent news from neighbouring Stabroek block, where the Operator ExxonMobil is planning for a seventh development at Hammerhead.

Investor Meet Company

• Gil Holzman, President and Chief Executive Officer will provide an Annual Results Investor Update via Investor Meet Company today at 14:00 BST. The presentation is open to all existing and potential shareholders and questions can be asked at any time during the live presentation. More information about the presentation can be found in the Company’s announcement of 24 July 2024.

Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented: 
“We made considerable progress across our asset portfolio during the financial year to 31 March 2024. This has been achieved at a time when we have had a strict focus on costs, which has seen the Company operate with non dilutive financings for the last two years, and agree a farm-out on Block 3B/4B which will significantly increase our cash resources, and leaves tremendous upside potential on the table in the event a discovery is drilled on the block.

“In Namibia and Guyana, we have active farm-out processes underway, and we are very upbeat about the number and calibre of the companies we have had in our data rooms. Both jurisdictions remain at the forefront of global hydrocarbon exploration and we are confident of delivering a positive update on both in due course.

“We were also pleased to announce the deal with Africa Oil yesterday, which saw us agree the sale of a 1% interest in the Block in exchange for the cancellation of all of AOI’s shares and warrants in Eco, worth C$11.5 million. We are grateful to Africa Oil for their support since 2017, and this agreement will enable us to eliminate a c.16% overhang in Eco’s shares, which are locked up until the transaction closes and the shares and warrants are cancelled. I would also add that the deal was agreed using an US$840 million valuation for Block 3B/4B, which values Eco’s 5.25% holding at ca.US$44 million.

“As ever, we continue to work hard to deliver value for all of our stakeholders and we look forward to providing further market updates in due course.”

 Results are always out of date despite being important and these are what prove the rule. After yesterday’s excellent deal Eco is in an even stronger position and for my views refer to yesterdays blog.

Zephyr Energy

In case you missed it, yesterday I had the chance to interview CEO Colin Harrington. With so much news from the Paradox Basin it was an opportunity to add some significant flesh to the bones of recent announcements. The link is below.

Core Finance CEO Interview: Colin Harrington, CEO of Zephyr Energy

KeyFacts Energy Industry Directory: Malcy's Blog