WTI (Mar)* $75.44 -39c, Brent (Mar) $79.00 -29c, Diff -$3.56 +10c
USNG (Feb) $3.96 +1c, UKNG (Feb) 123.54p -3.46p, TTF (Feb) €49.3 -€0.61
*Denotes expiry of WTI February contract

Oil price

Oil has rallied a few cents today as Trump 2.0 walks the fine line of wanting lower oil prices for inflation purposes and yet to want to drill baby drill, at say $50 there won’t be any drill baby drilling.

And in talking to Saudi Arabia about its alleged $600bn investment he has asked for it to be topped up to 1$tn and why OPEC hasn’t dropped the oil price…

Pharos Energy

Pharos has issued the following Trading and Operations Update to summarise recent operational activities, performance in respect of the financial year to 31 December 2024, and outlook guidance for 2025. This is in advance of the Company’s Preliminary Results to be published on 26 March 2025. The information contained herein has not been audited and may be subject to further review and amendment.

Katherine Roe, Chief Executive Officer, commented:
“2024 was a year of strong operational and business delivery with stable production, robust cash flows and successful drilling in both Vietnam and Egypt. I am delighted we ended the year with the granting of our licence extensions in Vietnam, giving us the tenure to plan and pursue the full growth potential of those assets whilst continuing to support the Vietnamese Government’s energy security agenda.

“Our transformed and resilient debt-free balance sheet underpins our 2025 work programme in both Vietnam and Egypt as we focus our capital allocation towards growth and investment that delivers the highest returns for shareholders whilst remaining committed to our sustainable dividend policy. We look forward to a prosperous and successful year ahead and thank our shareholders for the ongoing support.”

That was a great year that was, to murder David Frost and team but Pharos has indeed had a good year, starting with the receipt of $10m from Egypt, then after losing a fine CEO managed to find an even better one in the transfer window and ending with licence extensions in Vietnam. 

Production of 5,801 boepd was within guidance and that brought revenue of $134m and with ‘robust’ cash flows finishing the year with $16.5m in the bank, all debt was paid off by September. In Egypt total payments during the year were $25.5m with a receivables balance of $29.5m, discussions continue as to repayment of receivables and work on the consolidation of concessions to fine tune investment in-country is equally important. 

The revenue and cash flow warranted a sustainable dividend policy in which $5.9m was returned and the share buy back programme will have invested some $3m when it ends this month. The shares have risen by some 15% on the year but deserve to do much better, my TP of 50p is quite conservative. 

So the long term looks very solid for Pharos, production guidance is roughly flat but with plans to spend more on capex, short and medium term activity is assured and investment on Block 125 in Vietnam is already being accounted for and partners being sought.

Given the positive outlook Pharos is a must for the Bucket List and I expect 2025 to continue in the path of last year, the positive momentum shows every chance of continuing.  

Operational Highlights                                

• Strong safety record with no LTIs
• Group working interest 2024 production was 5,801 boepd net, in line with guidance:
  • Vietnam 4,361 boepd
  • Egypt 1,440 bopd
• Vietnam:
  • Applications for five-year licence extensions to the TGT and CNV fields formally granted by the Vietnamese Government in December, immediately increasing year-end 2024 2P reserves in Vietnam by approximately 10% and enabling further investment in both fields
  • TGT: successful completion of two-well infill drilling programme in October on time and under budget; both wells are contributing to production
  • Blocks 125 & 126: detailed drilling engineering studies for the proposed well on Prospect A commenced in 3Q; orders placed for long lead items
• Egypt:
  • El Fayum: successful drilling of second exploration commitment well in September, encountering oil-bearing reservoirs in Abu Roach G formation
  • One El Fayum development well put on production in December
  • North Beni Suef (NBS): ongoing processing of 3D seismic data
  • Discussions with EGPC and our partner on the consolidation of our Egyptian concessions are progressing well

Financial Highlights

• Group revenue for 2024 was c.$134m:
  • Vietnam c.$115m
  • Egypt c.$19m (1)
• Cash balances as at 31 December 2024 were c.$16.5m; all debt fully repaid since September
• Payments received in Egypt totalled $25.5m in 2024, with receivables balance at 31 December 2024 of $29.5m. Continued progress in payments of receivables and consolidation of the concessions will determine the pace of our future investment in country
• Tangible returns to shareholders during the year:
  • Sustainable dividend policy delivered with interim and final dividend for the 2023 financial year, amounting to $5.9m
  • Current share buyback programme expected to conclude before the end of January 2025 following full utilisation of the latest $3m committed to the programme. Since its initiation in July 2022, 30,708,855 ordinary shares have been repurchased by the Company at an average price paid of 23.65p per share

(1) Egyptian revenues are given post government take including corporate taxes.

2025 Outlook

• Group working interest production guidance of 5,000 - 6,200 boepd net:
  • Vietnam 3,600 - 4,600 boepd
  • Egypt 1,400 - 1,600 bopd
• Vietnam production; following the approval of the TGT and CNV five-year licence extensions:
  • Planning underway for the drilling of a TGT appraisal commitment well in 4Q; appraisal success would open up an undrilled area in the field
  • Additional drilling potential in TGT and CNV to increase reserves currently under discussion with partners
  • 3D seismic reprocessing on both assets expected to commence shortly
• Vietnam exploration; Blocks 125 & 126 discussions continue with potential farm-in partners and rig contractors
• Egypt:
  • El Fayum: testing of the successful exploration commitment well planned in 1Q
  • Planning underway to commence two-well El Fayum drilling programme in 2H
  • NBS: expected completion of 3D seismic data processing in 1Q, with interpretation and mapping to follow
  • Discussions on consolidation of the Egyptian concessions continue to progress
• On track to achieve our Net Zero interim short-term three-year target (2024-2026) of 5% emission reduction
• Forecast Group cash capex in the year expected to be c.$33m, reflecting the drilling of the TGT appraisal well and long lead items for Block 125 in Vietnam and the El Fayum programme in Egypt
• Interim dividend for the 2024 financial year of 0.363 pence per share, totalling $1.8m, paid on 22 January 2025
• Drilling activities in 2025 are expected to deliver incremental production volumes in 2026 and beyond

Savannah Energy

Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter, is pleased to announce a trading update for the full year 2024. All figures are unaudited.

Andrew Knott, CEO of Savannah Energy, said:
“I am pleased to provide a FY trading update which demonstrates the continued progress we have made in 2024, a year which saw the highest level of cash collections ever recorded by our Nigerian business. 2025 is expected to be an exciting year for our Company: we have a large planned operational programme in Nigeria which is anticipated to enhance both our oil and gas production levels and capacity; we intend to progress our R3 East oil development project in Niger; we continue to pursue key acquisitions in the upstream oil and gas space; and we continue to seek to build our power business. Fundamentally, Savannah remains unequivocally an “AND” company, seeking to deliver strong performance both for the short AND long term across multiple fronts, and pursuing growth opportunities in both the hydrocarbon AND power sectors.”

This is a very good trading update in which total revenues were ahead of guidance and as importantly, Nigerian cash collections were a record with more to come. Growth is expected to be seen at Stubb Creek in the 2nd quarter with the SIPEC deal expected to complete which will have an immediate effect on production, following which there will be an expansion programme anticipated to increase production from an average of 2.7 Kbopd in 2024 to approximately 4.7 Kbopd.

Commissioning of the Uquo gas compression project is well underway with start up expected around the end of Q1.

At Uquo, the procurement process of long lead equipment progressing in Nigeria in preparation for a potential two-well drilling campaign on the Uquo Field in H2 2025, with an additional gas development well expected to add up to 80 MMscfpd of supplemental production capacity and a potential exploration well targeting an Unrisked Gross gas initially in place (“GIIP”) of 154 Bscf (25.7 MMboe) of incremental gas resources.

As at 31 December 2024, NGN 332 billion of the Accugas NGN Transitional Facility had been drawn down, with the resulting funds being converted to US$, which, along with cash held, was used to partially prepay the existing Accugas US$ Facility, leaving a balance as at 31 December 2024 of approximately US$212.3 million. This was in line with previous policy of repaying the US$ facility. 

The company continues to progress a number of renewables projects, in Niger with the 250 MW Parc Eolien de la Tarka wind farm and the hybrid hydro and solar project in Cameroon overall, with up to 696 MW of projects currently in motion. The company is targeting a portfolio of up to 2 GW+ of power projects ‘in motion by the end of 2026’ and there are further big plans for renewables looking further out. 

Work continues in Niger as per the last announcement, the R3 field is being progressed with a development plan targeting 10/- b/d of production and exported via the Niger-Benin pipeline which might actually be coming into the near term. 

So, it’s a busy quarter upcoming across the Savannah businesses, the positive vibe across the businesses should convert into strong growth and when possible a powerful share price particularly if acquisitions in the pipeline come off. 

Operational Highlights                                

• Strong safety record with no LTIs
• Group working interest 2024 production was 5,801 boepd net, in line with guidance:
  • Vietnam 4,361 boepd
  • Egypt 1,440 bopd
• Vietnam:
  • Applications for five-year licence extensions to the TGT and CNV fields formally granted by the Vietnamese Government in December, immediately increasing year-end 2024 2P reserves in Vietnam by approximately 10% and enabling further investment in both fields
  • TGT: successful completion of two-well infill drilling programme in October on time and under budget; both wells are contributing to production
  • Blocks 125 & 126: detailed drilling engineering studies for the proposed well on Prospect A commenced in 3Q; orders placed for long lead items
• Egypt:
  • El Fayum: successful drilling of second exploration commitment well in September, encountering oil-bearing reservoirs in Abu Roach G formation
  • One El Fayum development well put on production in December
  • North Beni Suef (NBS): ongoing processing of 3D seismic data
  • Discussions with EGPC and our partner on the consolidation of our Egyptian concessions are progressing well

Financial Highlights

• Group revenue for 2024 was c.$134m:
  • Vietnam c.$115m
  • Egypt c.$19m (1)
• Cash balances as at 31 December 2024 were c.$16.5m; all debt fully repaid since September
• Payments received in Egypt totalled $25.5m in 2024, with receivables balance at 31 December 2024 of $29.5m. Continued progress in payments of receivables and consolidation of the concessions will determine the pace of our future investment in country
• Tangible returns to shareholders during the year:
  • Sustainable dividend policy delivered with interim and final dividend for the 2023 financial year, amounting to $5.9m
  • Current share buyback programme expected to conclude before the end of January 2025 following full utilisation of the latest $3m committed to the programme. Since its initiation in July 2022, 30,708,855 ordinary shares have been repurchased by the Company at an average price paid of 23.65p per share

(1) Egyptian revenues are given post government take including corporate taxes.

2025 Outlook

• Group working interest production guidance of 5,000 - 6,200 boepd net:
  • Vietnam 3,600 - 4,600 boepd
  • Egypt 1,400 - 1,600 bopd
• Vietnam production; following the approval of the TGT and CNV five-year licence extensions:
  • Planning underway for the drilling of a TGT appraisal commitment well in 4Q; appraisal success would open up an undrilled area in the field
  • Additional drilling potential in TGT and CNV to increase reserves currently under discussion with partners
  • 3D seismic reprocessing on both assets expected to commence shortly
• Vietnam exploration; Blocks 125 & 126 discussions continue with potential farm-in partners and rig contractors
• Egypt:
  • El Fayum: testing of the successful exploration commitment well planned in 1Q
  • Planning underway to commence two-well El Fayum drilling programme in 2H
  • NBS: expected completion of 3D seismic data processing in 1Q, with interpretation and mapping to follow
  • Discussions on consolidation of the Egyptian concessions continue to progress
• On track to achieve our Net Zero interim short-term three-year target (2024-2026) of 5% emission reduction
• Forecast Group cash capex in the year expected to be c.$33m, reflecting the drilling of the TGT appraisal well and long lead items for Block 125 in Vietnam and the El Fayum programme in Egypt
• Interim dividend for the 2024 financial year of 0.363 pence per share, totalling $1.8m, paid on 22 January 2025
• Drilling activities in 2025 are expected to deliver incremental production volumes in 2026 and beyond

Gulf Keystone Petroleum

Gulf Keystone has provided an operational and corporate update. The information contained in this announcement has not been audited and may be subject to further review.

Jon Harris, Gulf Keystone’s Chief Executive Officer, said:
“Local sales have remained strong since our previous market update in December 2024, with 2025 year to date gross average production of c.47,900 bopd. If current demand persists in the local market, our disciplined and flexible work programme, combined with our stable low costs, should enable us to deliver gross average production in the range of 40,000 to 45,000 bopd in 2025 and generate material free cash flow, underpinning our ongoing commitment to return excess cash to shareholders. At the same time, we continue to proactively engage with government stakeholders to unlock an exports restart solution.”

Each quarter brings the same requirements for GKP but the pipeline shows no sign of opening, even the Donald hasn’t tried anything this difficult yet. But persistent slogging away by the team at GKP has got them a highly creditable 47,900 b/d which even at hooky prices makes for a decent cash flow. 

Accordingly dividends can and will be paid and the shares have a raison d’etre and have performed better than some who have fewer problems, what will happen if the pipe reopens I really don’t know, GKP might decide to stick to the wrong side of the tracks…

Operational

• Zero Lost Time Incidents (“LTIs”) for over two years, with more than 3.4 million working hours since the last LTI, underlining the Company’s continued commitment to high standards of safety
• 2024 gross average production of 40,689 bopd, an 86% increase versus the prior year (2023: 21,891 bopd)
  • Reflects a full year of local sales in 2024 following the impact of the suspension of pipeline exports in 2023
  • Despite temporary disruptions to truck availability during regional holidays and elections and the impact of the planned PF-1 shutdown in November, strong underlying local market demand from Q2 2024 onwards enabled the return to production at full well capacity in several months
  • Average realised price for 2024 sales of c.$27/bbl, with prices stabilising in a range of c.$27-$28/bbl in H2 2024
• 2025 year to 21 January gross average production of c.47,900 bopd:
  • Continued strong local market demand and robust prices since the beginning of the year

Financial

• 2024 revenue of $151 million, 22% higher relative to the prior year (2023: $124 million)
• Rigorous focus on capital and cost discipline in 2024 while maintaining and enhancing production capacity:
  • 2024 net capex of $18 million (2023: $58 million) in line with guidance, primarily reflecting safety critical upgrades at PF-1, maintenance and production optimisation expenditures
  • 2024 operating costs of $52 million (2023: $36 million), with gross Opex per barrel reducing to $4.4/bbl (2023: $5.6/bbl), reflecting higher production
  • 2024 other G&A of $11 million (2023: $11 million)
  • 2024 monthly average capex and costs, including net capital expenditure, operating costs and other G&A, below $7 million, in line with guidance
• Free cash flow enabled the Company to restart shareholder distributions while maintaining a robust balance sheet:
  • $45 million of shareholder distributions in 2024 consisting of $35 million of dividends and $10 million of share purchases completed under the buyback programme launched in May 2024
  • 2024 year-end cash balance of $102 million (31 December 2023: $82 million) and no debt

Outlook

• The near-term local sales outlook is strong, although visibility remains limited beyond the Company’s monthly contract renewals with buyers
• Should local market demand persist at current levels, 2025 gross average production is expected to be in the range of 40,000 to 45,000 bopd
  • Reflects the Company’s assumptions around plant downtime associated with the planned PF-2 shutdown, the estimated impact of regional holidays on truck availability and field declines of 6-10% per year
  • Should there be any significant unforeseen disruptions to local market demand or the restart of pipeline exports, the Company will update its production expectations as necessary
• Estimated 2025 net capex of $25-$30 million, reflecting disciplined and flexible work programme focused on safety, reliability and maintaining the capacity of existing wells:
  • c.$20 million: Safety upgrades at PF-2 and maintenance, scheduled for Q4 2025 and expected to require the shut-in of the facility for c.3 weeks, similar to PF-1 in 2024
  • $5-$10 million: Production optimisation programme consisting of low cost, quick payback well interventions
  • Exploring a range of additional plant initiatives to enhance production, including water handling, with planned reviews later in 2025 based on the Company’s liquidity position and operating environment
• Stable low costs, with expected operating costs of $50-$55 million and other G&A below $10 million in 2025
• The Company remains committed to returning excess cash to shareholders via dividends and / or share buybacks, subject to the liquidity needs of the business and the operating environment
  • Following launch on 8 October 2024, the Company’s current share buyback programme of up to $10 million remains ongoing, running to the earlier of its completion or the 2024 Full Year Results on 20 March 2025
  • As announced previously, the Board plans to review the Company’s capacity to declare an interim dividend on a semi-annual basis around its Full Year and Half Year Results, with the next review taking place in March 2025
• Gulf Keystone continues to proactively engage with government stakeholders regarding a solution to enable the restart of Kurdistan crude exports through the Iraq-Turkey Pipeline
  • Monitoring the progress of a potential amendment to the Iraqi 2023-2025 Budget Law regarding compensation for Kurdistan’s oil production and transportation costs
  • While Iraqi Parliament approval of the amendment could be an important step towards the resumption of exports, a number of key details remain outstanding regarding payment surety for future oil exports, the repayment of outstanding receivables and the preservation of current contract economics
  • Gulf Keystone remains ready to engage with the Government of Iraq and Kurdistan Regional Government to clarify key terms and finalise written agreements prior to resuming oil exports

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