WTI (Oct) $70.09 +$1.44, Brent (Nov) $72.75 +$1.14, Diff -$2.66 -30c
USNG (Oct) $2.38  +7c, UKNG (Oct) 80.87p -3.88p, TTF (Oct) €34.455 -€0.29

Oil price

All eyes are on the Fed and tomorrow we will find out if the 69% of US investors are right about a 50 bp fall, the arguments are in place, recession or soft landing but either way oil is continuing to rally a bit after a sharp fall. 

Diversified Energy Company

Diversified Energy Company PLC (LSE: DEC) announced on May 9, 2024 a dividend in respect of the first quarter ended March 31, 2024 in the amount of 29 cents per share (the “Q1 2024 Dividend”.)  The Company will pay the Q1 2024 Dividend on September 27, 2024 to those shareholders on the register on August 30, 2024. 

The Company announces that shareholders who have elected to receive their dividends in GBP sterling will receive an equivalent dividend payment of 22.113 pence per share, based on the September 12, 2024 exchange rate of GBP 0.76253=US $1.00.

Always an important if short announcement for DEC shareholders and another reason to believe the story…

Zephyr Energy

Zephyr notes recent market speculation that the Company is in the process of, or planning for, an equity fundraise. The Company confirms that it has not been undertaking nor is it intending to undertake an equity fundraise, and that it knows of no notifiable reason for the Company’s recent material share price movement.

This says more than enough given recent chatter about a possible fund raise…

Jadestone Energy

Jadestone has reported its unaudited condensed consolidated interim financial statements, as at and for the six-month period ended 30 June 2024.   

Key updates:

• Akatara development project achieved mechanical completion in June 2024, with sales gas production commencing in July 2024 and reaching c.14mmscf/d. Production has been recently curtailed by a small mechanical issue in the gas processing facility’s refrigeration compressors, with repairs underway. These repairs and their associated cost remain the responsibility of the EPCI contractor.
• Positive progress on the Montara oil storage tank repair and maintenance programme, which has allowed for the permanent stationing of shuttle tanker at the field to be discontinued in late-August, earlier than expected.   
• Year-to date 2024 production (to end August 2024) has averaged c.17,500 boe/d, a c.42% increase year-on-year due to the success of both organic and acquisition driven growth over the period. Annual 2024 production guidance is reiterated at 18,500 – 21,000 boe/d, with an expected outcome towards the lower end of the range, given year-to-date production and ongoing Akatara activities.
• Operating expenditure guidance for 2024 is reiterated at US$240-280 million (excluding forecast royalties and carbon taxes of c.US$30 million),
• Capital expenditure and other cash expenditure guidance is unchanged at US$80-110 million and US$62 million respectively,
• US$31.1 million loss after tax for the first half of 2024, which includes a US$45.8 million non-cash charge to production costs related to the CWLH 2 acquisition, which closed in February 2024.
• Net debt of US$69.1 million at 30 June 2024 reflects c.US$130.9 million of consolidated Group cash balances and US$200.0 million of debt drawn under the Group’s reserves-based lending (“RBL”) facility.  As at 31 August 2024, net debt was US$94.6 million, based on consolidated Group cash balances of US$105.4 million and US$200.0 million of debt drawn under the RBL facility. The Group expects to receive c.US$57 million of proceeds in September relating to August liftings. The Group’s US$31.9 million working capital facility was undrawn at the end of the period.

Paul Blakeley, President and CEO commented:
“Increased production, coupled with robust price realisations and flat underlying operating costs, resulted in an improving financial performance in the first half of 2024, with adjusted EBITDAX and operating cash flows significantly higher year-on-year.

Our first half performance also benefited from the increasing diversification of the portfolio as we build greater reliability and resilience. The adverse weather which impacted our Australia production early in the year was offset by higher production from Malaysia, an increase in our CWLH interest and strong output from Sinphuhorm. Montara performance continues to improve with greater facility reliability year-to-date, and good progress on the FPSO tank and repair programme, which allowed us to release the temporary storage tanker at Montara a few months earlier than planned.  We also added a medium-term growth option by signing the SFA Cluster PSC offshore Malaysia, and we continue to work hard on a gas sales agreement for our Vietnam resource.

Jadestone’s primary focus so far in 2024 has been the completion and commissioning of the Akatara development project onshore Indonesia. The construction phase was completed on schedule at the end of the second quarter, followed by the start of both gas and condensate sales. Notwithstanding the current curtailment of production for a repair to the plant’s refrigeration compressors, the progress at Akatara, including an excellent safety record, is a major step forward for the Group, and will diversify our cash flow generation with more low cost and high value production.”

Jadestone shares have been weak today, down 10% as I write as the market I suspect has been panicked by the news that the Akatara gas field has come off-stream after a mechanical failure needing repair. However, talking to CEO Paul Blakeley I think that the problem really is only a commissioning issue which is not unusual and whilst it may take a little sorting out will be over soon and Akatara back onstream at full pace.

But it is worth looking at the PSC model and how it affects Jadestone, with accelerated recovery of costs the structure delivers swift payback and higher cash flows and despite these technical problems Akatara is a gem, to be enjoyed for a long time to come. 

With Montara now really delivering the goods, the SFA Cluster offshore Malaysia recognising the fine work with Petronas and is gaining economic scale and therefore value and the CWLH increased stake there is much to like about Jadestone. 

The diversification is paying off, seven producing assets ‘chasing value’ and the company moving to a period of production, net cash and increasing revenue this really is the time, time to back Paul Blakeley and his team.

Predator Oil & Gas

Predator has announced a corporate update.

Morocco

MOU-3 Sandjet rigless testing programme update

The rigless testing programme is being extended based on an initial analysis of the 2024 rigless testing data that is currently being carried out by Dr. John Tingas Petroleum and Chemical Engineer. Dr. Tingas has worked with the Company’s CEO on reservoir engineering projects offshore Ireland following the successful testing of gas at commercial rates in 2006 and 2007;  on the reservoir engineering for the Tendrara field onshore Morocco in 2013, following which an appraisal well flowed at a high rate; and on the Company’s Inniss-Trinity CO2 EOR project in Trinidad, where enhanced oil production was achieved.

The Company is fully funded to undertake all additional operations that may be considered necessary to support reservoir flow assurance for the purposes of planning a potential development option.

Appointment of Zenith Energy Limited (Aberdeen) for well engineering support

Zenith Energy Limited (Aberdeen), with their larger pool of worldwide resources to call upon in the areas of well engineering, project management, completion and well testing and well operator services, have been appointed to provide well engineering support for Morocco initially and potentially other geographic areas if and when required.

MOU-5 well and potential for helium

The geological model for the helium potential of the 187 km2 MOU-5 structure has been completed by Scorpiongeoscience. Potential helium resources estimates will be published this month.

Drilling of the high impact MOU-5 well will evaluate potential both for helium and a gas-to-power project adjacent to the Maghreb Gas Pipeline. MOU-5 is a conventional well that does not require the same specialist Rharb Basin drilling experience and expertise that was necessary to successfully complete the 2021 and 2023 drilling programmes.

Trinidad

Memorandum of Understanding for patented Saudi Arabian chemical wax treatment

The Company has executed a Memorandum of Understanding with a local company to apply a patented wax treatment originating in Saudi Arabia to the Jacobin-1 oil reservoirs.

Jacobin-1 well workover

An oil sample has been collected from Jacobin-1 well and sent to an in-country laboratory to carry out a wax analysis.

On sampling the oil in Jacobin-1 reservoir pressure was also found to have increased to over 1600 psi over time from when  two of five potential oil zones were  perforated but not produced by the previous operator. Reservoir pressure is encouragingly now similar to that of the original pressure of the adjoining Moruga West Field prior to its development.

Adjacent wells in the Moruga West oil field have initially flowed 60 bopd from just one of the above five reservoir intervals penetrated by Jacobin-1.

The proposed chemical treatment for Jacobin-1 will simultaneously apply heat and release nitrogen in the oil reservoirs to potentially provide a sustainable increase in oil flow into the well bore.

In the Saudi Arabian examples the chemical wax treatment has shown to increase oil flow rates by up to threefold.  

A successful wax treatment of Jacobin-1, followed by Snowcap-1, may have a significant implication for potentially increasing cash flow from low-cost well workovers, particularly as the Company has US$ 55 million of inherited tax losses in Trinidad to offset against Petroleum Profit Tax. Falls in oil price below WTI US$70 per barrel are offset by the disapplication of 18% Supplementary Petroleum Profit Tax below this spot price.

Increase in equity in Cory Moruga Licence approved

The Company has received the Ministry of Energy and Energy Industries consent for the acquisition of the remaining 16.2% interest in the Cory Moruga Licence for a zero cash consideration.

Paul Griffiths, Chief Executive Officer of Predator, commented:
“The Company’s operations are progressing smoothly. Maintaining fiscal discipline allows us not only to be fully funded  for all our firm commitments for the next 12 months but also provides us with discretionary cash flexibility to strengthen elements of our work programmes, if necessary, to apply different technologies to potentially enhance reservoir performance and de-risk flow assurance of oil and gas.

The Company’s foundations are based on three pillars: fiscal discipline; project diversity and flexibility from exploration through appraisal to development and production; and the ability to add near-term producing assets for minimal or zero cash consideration. 

The flexibility for drilling the giant “World Class” MOU-5 structure with the added potential of realising a helium play is an exciting near term prospect.”

Predator continues to develop its operations across the portfolio and is not without enthusiasm and a substantial portfolio which has the MOU structure and as for the helium play anything is possible.

KeyFacts Energy Industry Directory: Malcy's Blog