WTI (Oct) $74.82 +$1.79, Brent (Oct) $79.02 +$1.80, Diff -$4.20 -1c
USNG (Sep) $2.03 -3c, UKNG (Sep) 90.0p +1.81p, TTF (Oct)* €38.36 +€1.44
*Indicates TTF September contract expiry

Oil price

The Chinese data and worries about the Fed kept the oil price in check and with nothing from Iran oil was in for a bad week until Friday lunchtime. Then a combination of the words from the Fed Chairman at Jackson Hole that suggested that the upside risk in inflation were ‘diminished’ so rates would definitely be falling. That triggered further weakness in the dollar and when Libya went off line to the tune of around 1m b/d and things looked better. 

Beacon Energy

Beacon has provided the following corporate and operational update.

• It has become clear that the electrical submersible pump (“ESP”) is running at the lower limit of its operating range – approximately 50 bopd – and as such the SCHB-2 well has not yet been able to achieve a stabilised flow rate
• Plans are well advanced to re-install a rod pump (at a cost of approximately €75,000) in the coming weeks which is expected to allow a stabilised flow rate to be achieved
• In order to maximise the cash generation of the Rhein Petroleum business, cost reduction measures are actively being pursued
• The Company has entered into a formal three-month process with the creditors of Rhein Petroleum, with the aim of agreeing a reduction in liabilities and a deferred payment plan based on future cash flow generation
• The Company is in the process of putting forward a restructuring plan to creditors aimed at maximising cash generation from the Rhein Petroleum business

The Company has undertaken a thorough review of the Rhein Petroleum cost base in order to maximise cash generation. Cost reduction measures are actively being pursued and these initiatives are anticipated to reduce Rhein Petroleum’s annual cash operating costs from approximately €2.5 million currently to approximately €1.3 million. Such cost reduction measures are likely to be fully implemented by year end 2024.

In order to provide more optionality for the Company as it seeks to establish the optimum route forward, the Company engaged with approximately 90% of the creditors of Rhein Petroleum with the aim of agreeing a reduction in liabilities and a deferred payment plan based on future cash flow generation of Rhein Petroleum. Unfortunately, an agreement with all creditors could not be reached and as a result the Company took the decision to place Rhein Petroleum into a formal process with its creditors (akin to US Chapter 11 bankruptcy protection). This three-month process is expected to conclude in early October. The Company is in the process of putting forward a restructuring plan aimed at stabilising production, reducing costs and maximising cash generation from the Rhein Petroleum business.

As previously disclosed, as a result of the current uncertainties outlined above and the uncertain impact on assets impairment and going concern in the accounts, the Company was not in a position to finalise and publish its Annual Report for the year to 31 December 2023 (“Annual Report”) by 30 June 2024, as stipulated by Rule 19 of the AIM Rules for Companies (the “AIM Rules”).

Given the ongoing production instability and formal creditor process, it is taking longer than originally anticipated to finalise the Annual Report. Whilst the audit is now substantially complete, and the Company continues to target the publication of the Annual Report as soon as practically possible, this is now likely to be during September 2024. 

As a result, trading in the Company’s ordinary shares on AIM will continue to be suspended. It is expected that suspension from trading will be lifted with the publication of the Annual Report.

Stewart MacDonald, CEO of the Company, said:
“The SCHB-2 well continues to perform intermittently. It has become clear that the ESP was operating at the lower end of its capacity range and as such a rod pump is viewed as the best way to stabilise production – this should be achievable in the coming weeks.

The Rhein Petroleum creditor process, which is akin to US Chapter 11, continues and we are confident (but cannot guarantee) a satisfactory outcome will be reached – likely in early October.

The operating and creditor uncertainties experienced complicate the completion of the Rhein Petroleum audit, its first year as part of a listed group. Nonetheless good progress has been made and we are confident of publication during September 2024.

Our focus is on stabilising production, implementing cost reduction measures and maximising cash generation for the benefit of all stakeholders.”

Operationally Beacon is doing pretty much all it can, swapping out the pumps but the hardest work is being done in the offices where creditors are being addressed and all being well the shareholders will come out of it well. 

Coro Energy

Coro has announce further positive developments at its C&I rooftop solar business in Vietnam.

The Company (via one of its Vietnam-domiciled subsidiaries) has signed a second binding 14 year Power Purchase Agreement (“PPA”) in Vietnam with Mobile World Group (“MWG”) to deliver power at the next 30 sites with a capacity of circa 1MW. The terms of the PPA are consistent with those announced on 8 March 2024 whereby the PPA term is extendable in certain circumstances and includes a variable price with a floor of circa US$11.2 cents / kilowatt hour. Construction work at these sites is expected to begin imminently and to conclude approximately 28 days following commencement. The Company has also signed an EPC contract for these sites and agreed upon payment arrangements with the EPC provider which will in effect provide deferred payment terms for 85% of the EPC costs, subject to a cap of US$1M. These arrangements defer payment for two months and the deferred payments are subject to a 12% annual coupon and a 2% fee. The Company’s deferred payment obligations are initially unsecured (however the EPC provider has the right to request asset security from the Company at a later stage, if it considers it necessary to do so). The Company is also in advanced PPA discussions for the next 350 sites.

Another modest PPA in Vietnam for Coro which should pay a satisfactory return with more potential behind it. The company has also announced below, with regard to the Convertible Loan Note agreement. 

Coro Energy PLC, the South East Asian energy company with a natural gas and clean energy portfolio, announces, further to the announcement on 15 August 2024, an amendment to the Convertible Loan Note agreement (the ‘Original Agreement’) entered into on 14 August 2024 between River Merchant Capital and Fenikso Limited.

The amendment was a correction to amend the Original Agreement to properly reflect the original intentions of the parties. The Original Agreement referred to the security covering the renewable business but did not correctly refer to the entity holding the Vietnam renewable assets, being Coro Clean Energy Limited. This has been corrected and an amendment to the Original Agreement has been signed between all parties. None of the other commercial terms of the agreement have changed.

United Oil & Gas

United Oil & Gas has noted the recent rumours circulating in Jamaica media regarding its Walton Morant licence.

United confirms that it has drilled no wells in the Walton Morant licence and therefore no commercial oil or gas discovery has been made. United holds a 100% working interest and is currently engaged in a farm-out process. United’s 2024 work programme is focused on conducting piston core sampling, which aims to detect any oil residue before considering future exploration drilling targets.

Brian Larkin, United Chief Executive Officer commented: 
“The Walton-Morant Licence is a vast exploration area containing numerous promising prospects. We are committed to improving our understanding of the resource potential within the licence area.

We continue working to secure a strategic partner to unlock the immense potential within the licence, including recent positive interest that has been shown by several parties. Following securing an extension to the licence, our 2024 work programme is underway, and we will update the market at the next suitable opportunity.”

When you are not even drilling, nor have farmed-out the 100% licence that you own and yet there are rumours that you may have made a discovery on it, you know something is going wrong somewhere down the line. The web site says that there is a Jamaica Country Manager but clearly the company are not getting the message across…

KeyFacts Energy Industry Directory: Malcy's Blog