Serica

Serica has announced that, as a result of issues resulting from Storm Éowyn, production from the Triton FPSO has been suspended. During the storm on 24 January, sea spray triggered the fire and gas detection system, causing an automatic production shutdown. Following an initially successful restart on 28 January, it was established that the storm had caused minor damage to one of the cargo tanks which required repair. While preparing to conduct the necessary repairs, Dana Petroleum (‘Dana’) identified an integrity issue with a coupling in the inert gas line required for purging the tanks prior to carrying out the repairs. Triton has remained offline subsequently pending identification of the root cause of the issue and the best means of resolving it.

Serica is supporting Dana in this process including the secondment of its own representative into the operator’s team dealing with this issue.

We currently expect that these safety critical repairs will result in the recommencement of production in mid-to-late March. The extent of annual maintenance work in the summer, currently scheduled for 40 days, is also under review. Work continues in parallel on the second gas compressor which, as previously notified, is on track to be available by the end of Q1.

The Triton JV has recently received the final draft of a comprehensive third-party engineering study, commissioned by the JV to consolidate prior work, to assess the scope and costs associated with extending the life of the Triton FPSO to a range of Cessation of Production dates up to 2040. The report has confirmed that, subject to the continuation of the programme of maintenance and upgrades, the FPSO has the  potential to continue producing well into the next decade.

The Company’s production for January 2025 averaged 37 kboepd, with February averaging 27 kboepd to date. This has included strong production from the Bruce Hub into a robust gas market, with February NBP prices averaging 134p/therm, as well as solid contributions from our other assets.

The Company’s 2025 production guidance is under review, and will be restated or revised pending further clarity on the timeline and implications for the necessary Triton activities.

Chris Cox, Serica’s CEO, stated:
“Given that the Triton FPSO was recovering strongly from the operational issues of 2024, with material production from new wells, the impact of Storm Éowyn is deeply frustrating. Safety is of course always the number one priority, and we fully support the operator’s actions in ensuring that this supersedes other considerations.

Recent drilling results illustrate the significant value of proven hydrocarbons in the Triton area. We will continue working with the operator and discussing with them at the highest level all options to secure a lasting improvement in the operating performance of the FPSO.”

Frustrating news from Serica today, as Triton is offline – this time due to storm damage. On the positives, Serica is producing its gas from BKR in a robust way while the gas price remains strong, and the ongoing success of the drilling programme at Triton could help make up some of the shortfall from the latest outage.

The key thing is that this is value deferred rather than lost, indeed the new wells in the programme noted above are performing above expectations and the ‘material dividend’ as the company puts it is not necessarily under threat. 

I remain convinced that Serica is in a very strong position with robust cash generation and a powerful and flexible balance sheet. Accordingly it is amongst my favourites in the recently updated Bucket List particularly as gas prices remain strong.

Challenger Energy Group

Challenger has announced that it has entered into a transaction for the sale of all of the Company’s remaining business in Trinidad and Tobago (the “Transaction”), for a total transaction value to the Company of $6 million (which could increase to up to $8 million under certain future production criteria). The Transaction represents a complete exit of the Company from its operations in Trinidad and Tobago, including from all liabilities and potential exposures associated with those operations.

The Transaction constitutes a fundamental change of business pursuant to AIM Rule 15 and is contingent upon obtaining the consent of the Company’s shareholders at a general meeting. A circular to shareholders (the “Circular”) is expected to be posted in due course containing details of the disposal and notice convening the general meeting.

Eytan Uliel, Chief Executive Officer of Challenger Energy, said:
“As previously advised, for some time we have been considering the future for our business in Trinidad and Tobago, ultimately concluding that our capital and efforts can be better deployed. Through this Transaction we receive both upfront and deferred consideration, we retain an ability to benefit from future upside performance of the assets sold, we remove various liabilities, provisions and exposures from our balance sheet, and we streamline our activities. Most importantly, exiting from Trinidad and Tobago allows full focus on our core assets in Uruguay, where we believe the opportunity to create near-term value for our shareholders is considerably greater, as we execute on our busy work programme in both AREA OFF-1 and AREA OFF-3 in 2025. We look forward to updating the market in due course.”

Not much to add to this, it is very good news for CEG and pretty much what I expected. It means that the company can go ‘all in’ on Uruguay and I expect that to far outweigh any value from the Trinidad assets. If I glean any more at the Challenger CMD today I will add more.

Details of the Transaction

• The Company has agreed to sell 100% of its St Lucia domiciled subsidiary company, Columbus Energy (St. Lucia) Limited (“CEG Trinidad”), which in turn holds various subsidiary entities that collectively represent all of the Company’s business, assets and operations in Trinidad and Tobago.
• The purchaser is Caribbean Rex Limited, an entity jointly owned by T-Rex Resources (Trinidad) Limited (51%), a wholly owned subsidiary of Predator Oil & Gas Holding Plc (“POGH”), and the West Indian Energy Group Limited (49%), a Trinidadian company active in the domestic oil industry (“WEIGL”).

Consideration represents a total transaction value of $6 million, whereby:

• the Company will receive cash and liquid securities of $1.75 million, to be applied to general working capital and further strengthening the Company’s balance sheet:
• an initial deposit of $0.25 million in POGH shares (approximately 4.4 million POGH shares to be issued to the Company);
• $0.75 million on completion – $0.25 million in cash and $0.5 million in POGH shares (the number of POGH shares to be issued will be based on the exchange rate and market price of POGH shares at the time of completion); and
• $0.75 million, in cash, in three equal instalments at year-end 2025, 2026 and 2027; and
• on completion WEIGL will assume all liabilities, provisions and potential exposures of the business, assets and operations in Trinidad and Tobago, which for the purposes of the proposed Transaction are agreed to be $4.25 million.

At year-end 2027, an additional contingent payment of potentially up to $2 million is also available, under certain conditions linked to production exceeding 750 bopd.

Completion is subject to prior approval of (i) the Company’s shareholders (as the disposal represents all of the Company’s present revenue and thus constitutes a fundamental change of business pursuant to AIM Rule 15), and (ii) appropriate regulatory approval in Trinidad and Tobago, with both approvals to be obtained prior to 30 April 2025 (or such later date as the parties may agree).

The sale reflects a complete exit of the Company from Trinidad and Tobago. For the year to 30 June 2024, CEG Trinidad made a loss of approximately $0.6 million. As at 30 June 2024, CEG Trinidad had total net assets of approximately $5.8 million. Proceeds received from the Transaction will be used for general working capital in the Company’s operations. In respect of POGH shares received as part of the consideration, the Company’s intention is to liquidate those shares for cash, but in an orderly fashion and at a time of the Company’s choosing. Further details of the effect of the operational and financial impacts of the Transaction on the Company will be included in the Circular related to the general meeting to be convened for the purpose of approving the sale.

Predator Oil & Gas

Predator has announced that it has entered into a transaction with Challenger Energy (“CEG”) for the acquisition of its St Lucia domiciled subsidiary company, Columbus Energy (St. Lucia) Limited (“CEG Trinidad”), which in turn holds various subsidiary entities collectively representing all of the CEG’s business, producing assets and operations in Trinidad and Tobago.

Caribbean Rex Limited (“CRL”), 51% owned by the Company’s wholly owned subsidiary T-Rex Resources (Trinidad) Limited (“T-Rex”), is making the acquisition to facilitate, if warranted, the amalgamation and consolidation in the future of tax losses in CEG Trinidad with the tax losses in T-Rex.

CRL is 49% owned by the West Indian Energy Group Limited (“WIEGL”) a local company with proven experience in increasing production from existing onshore fields.

The three producing fields that are being acquired are Goudron, Inniss Trinity and Icacos and are currently averaging 272 bopd of production and are held under an Enhanced Production Sharing Contract (“EPSC”) with Heritage Petroleum and in the case of Icacos, under a Ministry of Energy and Energy Industries private mining licence.

Business development rationale

• Acquiring existing operations allows the Company to potentially accelerate the drilling of the Snowcap-3 development and appraisal well, which will target 2C oil resources of 1.4M barrels in the reservoir being restored to production by the Snowcap-1 well workover and 2P oil resources of 12.91M barrels from deeper reservoirs equivalent to those in the adjacent Moruga West field formerly operated by BP
• The fixed assets (inclusive of workover rigs, plant equipment, storage tanks, vacuum truck, separator and production machinery) that form part of the CEG Trinidad assets shall be utilised over all of the T-Rex Assets, without additional costs, thus creating efficient synergies and economies of scale
• Management is also very familiar with the Inniss-Trinity field as a consequence of its CO2 EOR pilot project which enhanced oil production by up to 100% in a pilot CO2 EOR well. Several existing opportunities to increase conventional field production were previously identified by management
• The Company is confident that the application of informed subsurface geological understanding combined with the patented SGN Technology for chemical wax treatment, presently being prepared for the Jacobin-1 workover in the Cory Moruga licence, will enhance production throughout the portfolio of producing assets being acquired
• The Company’s management will work together with the highly experienced local operational staff and its preferred service contractors to merge their expertise so as to implement targeted field operations for higher reward outcomes and to lower operating and administrative costs across its portfolio of assets as it gears up to drill Snowcap-3. It alleviates the need for additional staffing for the development and commercialisation of the Cory Moruga field and to enhance production in the Bonasse field
• Enhanced production achieves a better utilisation of consolidated tax losses 

Consideration              

• an initial deposit of $250,000 – this has been satisfied via the issuance to CEG of 4,411,641 unrestricted Predator shares.
• $750,000 payable on completion – $250,000 in cash and $500,000 via the issuance of unrestricted Predator shares (the number of Predator shares to be issued to be determined based on the prevailing exchange rate and market price of Predator shares at the time of completion)
• deferred unconditional consideration payments of $750,000, payable in cash, in three instalments of $250,000, on each of 31 December 2025, 2026, and 2027
• the assumption by CRL of all liabilities, provisions and potential exposures of the business, assets and operations in Trinidad and Tobago (the “Legacy Liabilities”), which for the purposes of the sale agreement were agreed to be in the amount of $4.25 million

CRL’s shareholder WIEGL will separately assume the Legacy Liabilities for an interim period of 12 months from the Closing Date (the “Interim Period”) after which WIEGL and T-Rex will meet to negotiate new terms going forward that will consider the anticipated enhanced production from the assets being acquired during the Interim Period.

WIEGL shall have the right to acquire additional shares in the business, assets and operations in Trinidad and Tobago from CRL in the event there is a change of control of Predator Oil & Gas Holdings Plc (“POGHL”). The consideration shall be the pro-rated value of two times CRL’s gross capital investment in further developing the assets up until the date of any change of control of POGHL (the “COC Date”) and a pro rata royalty equal to 10% of enhanced oil production over a base line of 400 bopd to commence from the COC Date and to continue for a period of 5 years thereafter.

• contingent payments of up to $2 million, at the rate of $2 per barrel of oil produced by the assets sold in the period to 31 December 2027, but only for production exceeding 750 bopd, and only after capital costs incurred by the Buyer in support of that increased production are first recovered by the Buyer from production
• The consideration represents a total transaction value to CEG Trinidad of up to $8M depending on contingent payments being realised
• Completion is dependent upon the approval of Heritage Petroleum for the indirect change of ownership interests in the EPSC’s. CRL shall immediately begin to commence the process of securing approval from Heritage

CEG will proceed to immediately convene an extraordinary general meeting (“EGM”) of its shareholders given that the Trinidad operations represent 100% of the CEG’s present revenue, in accordance with the AIM rules, requiring prior approval of the Company’s shareholders for the disposal being required.

• Completion of the sale is conditional on both approvals being obtained prior to 30 April 2025. If the sale does not complete for failure of the Heritage approval condition, the deposit will be forfeited; if the transaction does not complete because CEG shareholders do not approve the transaction, the deposit must be refunded.

Paul Griffiths, Chief Executive Officer of Predator Oil & Gas Holdings Plc commented:
“Today’s announcement allows us to build the operational team, at no additional cost and funded by production revenues, to accelerate our plans to drill the high impact Snowcap-3 well, an appraisal to the Snowcap-1 oil discovery, targeting 2C and 2P oil resources of 1.4M and 12.91M barrels respectively”

Management is very confident that it can raise production significantly from the assets being acquired over the next 12 months by applying our know-how from our previous involvement in Inniss-Trinity, new chemical wax treatment technology and an integrated management structure to streamline the decision-making process.

This is an exciting development for the Company and our shareholders that is likely to lead to more high-value drilling and workover opportunities whilst not detracting from the Company’s immediate focus on drilling for potentially large gas resources in Morocco. The Titanosaurus MOU-5 drilling  is currently scheduled to commence on or before 3 March 2025.”

Corcel

Corcel has announce a placing to raise £2.72m at a 6.7% premium to yesterday’s closing price to fund value-accretive ongoing operational activities across its assets, business development efforts to increase its interest in the Kwanza Basin, onshore Angola, and its growth strategy in   Brazil.

Highlights:

• Completion of an equity funding raising of £2.72m before expenses at a price of £0.0016 per share from strategic investors with significant experience in the oil & gas sector
• Placing price represents approximately a 6.7% premium to the closing price on 17 February 2025
• Net proceeds enable Corcel to accelerate growth initiatives in Angola and Brazil and focus on operational actives which will be catalyst for unlocking value to shareholders
• Video interview with Corcel CEO Scott Gilbert https://tinyurl.com/2zysbd47

Scott Gilbert, Corcel’s CEO, commented: 
“This capital injection strengthens Corcel’s financial position and balance sheet, enabling us to accelerate progress on our key projects with confidence. We are focused on delivering near-term catalysts that will drive significant value for our shareholders. The onshore Kwanza Basin in Angola is rapidly emerging as a highly sought-after region for energy companies worldwide. As the first London-listed independent exploration & production company to enter the onshore Kwanza Basin, we are excited about Corcel’s future in the region, the benefits our first mover advantage bring and the opportunities ahead in an area we believe has the potential to add significant material value to our business.

With a clear strategy in place, the support of our shareholders and an extensive runway, we look forward to increasing our interest in the Basin, conducting extensive subsurface studies on our core assets, and advancing preparations for the upcoming seismic program later this year. At the same time, we remain committed to delivering on our broader business plan across Angola and Brazil. We sincerely appreciate the continued backing of our shareholders and warmly welcome our new investors as we embark on this next phase of growth. I look forward to updating the market on our progress in an exciting year for Corcel.”

Fundraising:

The Company will issue 1,698,125,000 new ordinary shares of £0.0001 each (“Placing Shares”) at a price of £0.0016 per share (the “Fundraising”) to raise £2,717,000 before expenses.

Investors will receive one warrant for each Placing Share subscribed in the Fundraising (a “Warrant”).  Each Warrant will enable the holder to subscribe for one new ordinary share in the Company at a price of £0.00225 for a period of twenty-four months.  Following an initial six-month period, an accelerator clause will apply to the Warrants, such that if the volume weighted average price (“VWAP”) of the Company’s ordinary shares on AIM is equal to or exceeds £0.003 for a period of 25 consecutive trading days, then the Company shall have the right, but not the obligation, to give notice to the warrant holders that the Warrants must then be exercised within a further 30-day calendar period.

The Company is also issuing 16,218,750 shares to its broker, Auctus Advisors LLP, in consideration for its efforts in organising the Fundraising  (the “Fee Shares”).

The Company intends to use the proceeds from the Fundraising to advance its interests and operations in both Angola and Brazil.  In particular, Corcel intends to increase its interests in the Kwanza Basin, onshore Angola, and to obtain new 2D seismic data on its assets in Angola later in 2025.

Total Voting Rights:

Application will be made for the 1,698,125,000 Placing Shares and the 16,218,750 Fee Shares to be admitted (“Admission”) to trading on AIM and it is expected that Admission will occur on or around 24 February 2025.

Following Admission, the Company confirms that its total issued share capital will consist of 5,558,678,731 Ordinary Shares, with one voting right per Ordinary Share. The Company does not hold any Ordinary Shares in treasury.  This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company pursuant to the FCA’s Disclosure Guidance and Transparency Rules.

I will comment more on Corcel after I get a chance to speak to Scott Gilbert, in the meantime I remain very interested…

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