WTI (Jan) $68.54 -$1.40, Brent (Feb) $72.31 -$1.31, Diff -$3.77 +9c
USNG (Jan) $3.05 u/c, UKNG (Jan) 118.0p -1.85p, TTF (Jan) €47.4 -€0.67

Oil price

Oil is quiet today as the Opec+ meeting is taking place. Yesterday’s EIA stats showed a big draw in crude oil and with refinery runs up the full 2.8% at 93.3% the Thanksgiving effect is obvious.

Pharos Energy

Pharos has issued the following Trading and Operations Update to summarise recent operational activities. The information contained herein is not audited and may be subject to further review and amendment.

Katherine Roe, Chief Executive Officer, commented:
“The second half has been busy for the Company with drilling activities commencing again in both Vietnam and Egypt, with successful results. Our strengthened balance sheet, following the repayment of all outstanding debt in September, has enabled us to support an active drilling work programme, delivered on time and on budget and in line with pre-drill expectations. These additional wells are already adding to our existing production and will help underpin exit rates as we approach the end of the year. They will also help manage production decline and contribute to next year’s guidance which we will share in the new year.

“I would like to thank our in-country teams for their dedication and strong collaborations with partners and stakeholders to achieve these successful results. With production maintained, we feel confident we can continue to fund future capital investments whilst also maintaining our sustainable returns to shareholders.”

A positive trading and operational update today in which the company show a strong balance sheet being debt free after having repaid all its facilities in September, at end of November cash was c.$18m and with EGPC still making payments, so far of $24m with the end November balance of $31.1m.

This has enabled a successful drilling programme in both Egypt and Vietnam where ‘additional wells are already adding to our existing production and will help underpin exit rates as we approach the end of the year’. Production ytd is 5,760 boepd and guidance for the full year remains at 5,200-6,500 boepd and we are told to expect 2025 guidance in January. 

With much exciting news to come next year Pharos is set fair to continue to deliver the goods. I am expecting them to continue to grow in Vietnam with 5 year licence extension discussions underway so they can up the spend there whilst booking more reserves. Meanwhile in Egypt the company are talking about consolidating their concessions which are going well and with the EGPC and the IPR ‘fully engaged and aligned’. 

With the long term planning including a rig contract, and farm-out discussions being progressed on Block 125 in Vietnam for an exploration well hopefully next year Pharos is very much on track with market expectations. In every respect the company is continuing to strengthen its position, operationally as well as financially it contains plenty of scope for long term growth and better than market shareholder returns. 

Financial Highlights

• Strengthening balance sheet: Pharos is debt free having repaid all outstanding facilities in September 2024; cash balance at 30 November 2024 of c.$18m
• Continuing receipt of payments in Egypt: received $24m from EGPC year to date, with balance at 30 November 2024 of $31.1m  

Operational Highlights                                

• Year to date average production of 5,760 boepd net, in line with 2024 annual guidance of 5,200 to 6,500 boepd. We expect full year production delivery to align with the YTD average production
• Active 2H 2024 with successful drilling campaigns in both Vietnam and Egypt

In Vietnam:

• TGT: successful completion of two-well infill drilling programme in October on time and under budget; both wells are on production with initial rates in line with pre-drill estimates
• Approval process for the TGT and CNV five-year licence extensions by the Vietnamese Government now at final stages; once received this will enable further investment in both fields
• Discussions continue with potential farm-in partners and rig contractors required to progress Block 125 & 126
• Working interest production as at 30 November 2024 of 4,324 boepd net

In Egypt:

• El Fayum: successful drilling of second exploration commitment well in September, encountering oil-bearing reservoirs in Abu Roach G formation; the well will be tested in December 2024
• One development well is being put on production
• NBS: expected completion of 3D seismic data processing in 1Q 2025, with data interpretation and mapping to follow
• Consolidation discussions of the Egyptian concessions are progressing well, with EGPC and IPR fully engaged and aligned
• Working interest production as at 30 November 2024 was 1,436 boepd net

Serica Energy

Serica has announced that, after a limited resumption of production at the Triton FPSO last week, an issue with one of the compressor seals has been discovered which has resulted in production being suspended. The FPSO operator, Dana Petroleum, is working to identify and execute the necessary repairs, which are expected to take two to four weeks to complete. Production for 2024 is now forecast to be approximately 35,000 to 36,000 boepd.

As previously stated, the operational vulnerability will remain until the ongoing works to restore two-compressor operations are completed, expected in Q1 2025. 

With production at Triton suspended, current Serica production from the Bruce Hub and other assets totals around 28,000 boepd. Of this, around 22,000 boepd of production is gas, benefitting from the current gas price of around 115-120p/therm. 

Recent compressor problems for Dana, and hence Serica, have shown how important it was to get a second one fitted and it’s just a shame that the 2-4 week suspension of production has happened now. Given that situation, Serica has said that ex-Triton, production at present from the other assets such as the Bruce Hub will be around 28,000 boepd and so 2024 guidance is 35,000-36,000 boepd.

So, two points here, firstly of this current production, some 22,000 boepd is gas which is currently priced at around 115-120p per therm giving a reasonable benefit to the company and mitigating any revenue shortfall from this operational glitch.

Secondly, a second compressor is already scheduled to be installed on the Triton FPSO in 1Q 2025 which should mean that if one drops out for any reason there is back-up for production and revenues should not be affected significantly. 

Jadestone Energy

Jadestone has announced a corporate update and changes to the Company’s Board of Directors, which are effective immediately.

• The Akatara project has achieved sustained gas sales at contractual rates of c.20 MMscf/d (the “Daily Contract Quantity”, or DCQ), with overall Akatara production benefitting from associated condensate and LPG streams.
• Group production has recently achieved record levels in excess of 25,000 boe/d when gas sales from Akatara are at DCQ.
• A. Paul Blakeley has elected to step down as Executive Director, President and Chief Executive Officer of the Company. 
• Dr Adel Chaouch, currently Non-Executive Chairman of the Company, has been appointed Executive Chairman. 
• Joanne Williams, currently an Independent Non-Executive Director of the Company, has been appointed Chief Operating Officer.
• Linda Beal, currently an Independent Non-Executive Director of the Company, has been appointed as Senior Independent Non-Executive Director. 

Adel Chaouch, Executive Chairman of Jadestone, commented:
“On behalf of the Board and Jadestone’s employees, I would like to thank Paul for his dedicated service and leadership since 2016 as he steps down from the role of Chief Executive Officer. He was instrumental in taking a business that had no production to one that is now producing from seven assets across four different countries, establishing a strong and diversified upstream platform. The latest achievement is the Akatara project, where we are now seeing gas sales sustained at contractual rates, driving overall Group production to record levels above 25,000 boe/d. In order to capitalise on these achievements, and as Jadestone enters the next phase in its development, it is an appropriate time for a new management structure to position Jadestone for future success. We wish Paul the best in his future endeavours.

A priority for the new management team will be ensuring operational excellence across the portfolio. At Akatara, we will focus on delivering high uptime to consistently meet the gas buyer’s nominations and benefit from the valuable associated condensate and LPG streams. Montara continues to perform well, with high uptime levels and increasing FPSO tank capacity. As we look to build on this positive momentum, I thank Joanne Williams for taking on greater responsibility in this area as Chief Operating Officer.

As we have previously communicated, in the near-term we will build balance sheet strength following a period of significant investment, and continue to focus on financial discipline. We will do this through the increase in cash flows from Akatara, coupled with reductions in operating costs and overheads. A stronger balance sheet will facilitate the next phase of growth for Jadestone, and allow for a resumption of shareholder returns, which remains a priority for the Board. Capital will be allocated efficiently by investing in projects and acquisitions that deliver the greatest value; we will continue to play to our core strengths of establishing material operated positions in existing upstream assets and creating value through efficient operations and selective reinvestment.

We will look to communicate our progress clearly, setting targets and delivering on them. This is essential to delivering a share price which reflects the fundamental value of Jadestone and its assets. With a refreshed management team and the unwavering support of our largest shareholder, we will, over time, build on the existing platform and establish Jadestone as the industry leading regional independent in Asia-Pacific.”

Corporate Update

The Group’s producing assets continue to perform in line with expectations, benefitting from the growth and diversification initiatives of recent years. 2024 will be a record year for Group production, with guidance unchanged from the operational update released on 11 November 2024, supported by recent Group production rates in excess of 25,000 boe/d when Akatara has been delivering gas sales at DCQ.

At Montara, there has been continued good performance due to the significant focus on facility uptime and initiatives to optimise production rates. The oil storage capacity of the Montara Venture FPSO is currently c.375kbbls and is expected to increase further in early 2025 as a result of rolling tank maintenance activity. Planning for the Skua-11 re-drill, which is likely to be the principal activity in the Group’s investment programme in 2025, is progressing well, with drilling expected to commence in the first quarter of 2025, subject to arrival of the rig on schedule.

Production also continues to run ahead of expectations at the CWLH asset and the Sinphuhorm field, with the latter recently benefitting from strong gas demand in northern Thailand.

The scheduled October 2024 redetermination of the Group’s reserve-based lending facility has been successfully completed, resulting in an unchanged borrowing capacity of US$200 million for the period ending March 2025.

The Jadestone Board has parted company with its CEO, Paul Blakeley after what seems like a most unlikely night of the long knives. Just when we thought that the Akatara project was up and running and the Montara problems were behind it and able to actually outperform, the CEO gets the Spanish Archer.

So, having brought Jadestone from 0-25,000 b/d and having taken the blame for the atrocious non-diligence at Montara, Mr Blakeley has collected his cards and the only reason I have heard is that ‘now is the time for someone else to take over the running of the company’. For someone who just put another hundred grand in cash down to buy JSE shares you can’t tell me it was a ‘mutual decision’. 

Right now it’s difficult to know quite how to approach looking at the company, sacking the CEO is like the first profit warning, it can be habit forming but more importantly the executive board for what it is is hardly well known. Indeed the Chairman has gone from NED to Executive Chairman, there is no CEO any more, there is a new COO who was a NED and the CFO is new as well, a great call…

I have always said that it’s not possible to write up a company where I haven’t met the management, that now applies to Jadestone who now have a board that are all new, certainly to me. As and when they come over and make some meetings there is nothing I would like more than to reinstate them and of course they will have to come out of the Bucket List with the same speed that Paul Blakeley had to leave the board. Oscar Wilde would have had something pithy to say I’m sure…I will just say its a squiggle…

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog