WTI (Apr) $70.40 -$2.17, Brent (Apr) $74.43 -$2.05, Diff -$4.03 +3c
USNG (Mar) $4.23 +8c, UKNG (Mar) 110.52p -3.34p, €46.63 -€1.095

Oil price

Oil fell sharply on Friday as President Trump got involved in the pipeline dispute between Iraq and Turkey, he wants Iraq back up to offset Iran if he plays hard ball there.

Petrofac

Further to its release on 23 December 2024 announcing a comprehensive financial restructuring plan, and its subsequent market update on 25 January 2025, the Company provides the following updates:

• The Company has finalised agreements with key stakeholders to enable it to commence the court proceedings in relation to the Restructuring. Accordingly, the Convening Hearing will be held on 28 February 2025. The Sanction Hearing remains scheduled for 26 March 2025 and the Restructuring Effective Date is expected to take place on or around 31 March 2025.
• The Group has now secured agreements with financial investors to facilitate the release of US$80 million of cash collateral which will be used to secure a performance bond in respect of a key E&C contract. This arrangement replaces the provision of New Guarantee Facilities by a Funded Creditor as described in the 23 December 2024 announcement.
• Based on interest, the Group expects to upsize the equity raise by US$30 million, taking the total equity raise to US$224 million. This would increase the total new funding raised as part of the Restructuring to US$355 million.
• In addition, in consultation with key investors and Bondholders, the Group will offer certain creditors the opportunity to participate in the equity raise by up to an incremental US$25 million, at the same price as other investors.
• On the Restructuring Effective Date, the existing shareholders of the Company are expected to be allocated 2.2% of the Company’s total share capital (versus the 2.5% outlined in the 23 December announcement).
• 73.7% of Bondholders have now committed to support the restructuring plan by acceding to the Lock-Up agreement. This represents an increase of c. 16.7% since the launch of the restructuring and constitutes over half of the secured creditor class. Discussions with other secured creditors continue.

Following the Convening Hearing, the Company will commence the subscription period during which secured creditors can elect to participate in the new money options available to them under the terms of the Restructuring. Further information regarding the process, timing and documentation will be made available through Kroll Issuer Services Limited as information agent.

A Supplementary Practice Statement Letter will be made available to the Company’s creditors later today. The Company will continue to update stakeholders as appropriate in line with its disclosure obligations, including provision of dates for the forthcoming General and Creditor Meetings.

2.2% of the total share capital doesn’t sound brilliant but when the Bondholders have got you by the short and curlies your hearts and minds will surely follow. Right now whilst I still rate the business uncertainty will be the enemy. On a day when Saipem and Subsea 7 merge life could remain tough.

NTOG

Nostra Terra has provided the following update.

Highlights

• Company total oil production is currently averaging ca.130 bopd net.
• Three of the five Pine Mills Phase 2 well workovers now complete.
• Since the start of the Phase 2 work-over program, Production at Pine Mills recently hit a new peak rate of 106 bopd (WI 100%), a near doubling since workover programs commenced.
• Production at the Fouke area continues to produce at 100 bopd gross (WI 32.5%), with no decline since May 2024.
• Early signs show a positive waterflood response in the north end of the field.
• The company continues to be cashflow positive at corporate and operational levels.

Paul Welch, Nostra Terra’s Chief Executive Officer, said:
“We are very excited to be producing a total of 130 bopd net that includes production of over 100 bopd from Pine Mills for the first time in many years, almost double the rate the field produced before the start of the workover programs. This gives us confidence in our decision to focus investment in our Pine Mills asset where we have a 100% working interest.

“Additionally, the Fouke area in which we have a 32.5% working interest continues to produce at 100 bopd gross, with no decline since May 2024.  We have initiated a technical discussion with our partner on the location of a potential Fouke 3 well.  We expect this technical discussion to move quickly, with a decision on a location expected to be made in Q2 2025.

“I am very excited about the future potential of the Pine Mills asset, and I look forward to reporting on the results of the remainder of the workover program and results of the Fouke area technical work with our partner.”

This is a difficult one to read, ironically at a very low level it is talking up the production increases but it is still small beer, deckchairs stuff. I’ve known Paul Welch for a long time and whilst there is nothing in the statement about inorganic growth I simply cannot believe that this company is merely the platform for something significantly more substantial. 

If I get anything more I will write again, at this size it offers no real opportunity except to grow by acquisition or merger, let’s wait and see. 

Star Energy Group

Star has provided the following trading update for the year to 31 December 2024. The figures have not been audited and are subject to change.

Key highlights:

• Net production for the year averaged 1,989 boe/d, in line with guidance. The Company anticipates production of c.2,000 boe/d in 2025
• Cash at 31 December 2024 was £4.7 million, excluding restricted cash, and Star Energy had drawn £12.2 million under its loan facility. Restricted cash was £4.3 million and relates to the cash backing of performance bonds for licence commitments of the Company’s Croatian subsidiary relating to the Sječe and Pčelić exploration licences
• Exchanged contracts for the sale of non-core land for £6.3 million. Completion and proceeds expected in H1 2025
• The Company invested £5.6 million in its oil and gas assets during 2024 including upgrades and a pipeline replacement at its Gainsborough site, optimisation projects across its portfolio to offset declines, rationalisation and decommissioning at its Holybourne site and general improvements across its fields.
• 2025 forecast capital expenditure is c£11.0 million. This includes £5.8 million on the Singleton gas-to-wire project which is forecast to come online in late 2025 with production of 74 boe/d. Star Energy also plans to invest £0.8 million to improve water injection at its Stockbridge fields, £1.7 million on quick returning incremental projects and the balance on regulatory improvements, site resilience and projects to reduce operating costs going forward
• Hedging in place for 400bbl/d for H1 2025 and H2 2025 with swaps at an average price of $79.8/bbl and $73.0/bbl, respectively
• Good progress on G&A costs reduction expected to generate savings of c.£1.5 million in 2025
• Energy Profits Levy of £1.0 million to be paid in February 2025 based on the taxable profits for the year ended 31 December 2023. The Company estimates a charge of £2.1 million for 2024 which is payable in October 2025

Oil & Gas

• Work has begun on the Singleton gas-to-wire project which will deliver c.74 boe/d, utilising gas which is currently being flared. The project, which satisfies the regulatory requirements for the facility, now has planning consent and a secured grid connection. Procurement for long lead items is underway, with a first export of electricity from the site expected late 2025

Geothermal

• Ernestinovo licence commitments have been fulfilled and the acquisition of magnetotelluric data across the Sjece and Pcelic geothermal licence blocks in Croatia is complete, with the incorporation of this data into the geological models underway.  Work is ongoing on the technical analysis to rank the optimal sequencing of their commercial development
• Seismic data was acquired and analysed for the Salisbury NHS Foundation Trust project, and  pre-applications have been submitted for planning and permitting for both Salisbury and the Wythenshawe Hospital projects
• The Company has also progressed its wider pipeline of projects, in particular in the Manchester and Southampton areas, and also expect to take part in an upcoming NHS tender for decarbonisation of a number of additional NHS trusts.

Commenting today, Ross Glover, Chief Executive Officer, said:
“During 2024, we focused on strengthening our balance sheet, improving the profitability and sustainability of our oil and gas operations, and positioning the group to take advantage of the growth opportunities in geothermal in order to deliver value to our shareholders. The debt facility arranged with Kommunalkredit Austria AG, whilst primarily providing funding for our geothermal activities, gives us the opportunity to reinvest some of our operating cashflows into our oil and gas business.  In this area we are prioritising quick returning optimisation projects and activities that will help to drive down operating costs going forward, though regulatory obligations continue to be a considerable burden on the business. 2025 is a year in which we will be focused on maximising the benefit of every pound we invest in our assets, not chasing production for its own sake, and building and strengthening the platform for our geothermal business in both the UK and Croatia.

We have carried out a review of our costs and have made organisational changes and other savings which will lead to significant G&A cost reductions going forward. We have also made savings in operating costs and are continuing to make progress in this area through changes in operational practices and targeted capital spend.

We see exciting opportunities for growth in our geothermal business, both in the UK and Croatia. The International Energy Agency’s report on geothermal energy in December 2024 recognised the huge potential for geothermal energy and concluded that, if geothermal can follow in the footsteps of innovation success stories such as solar PV, wind, EVs and batteries, it can become a cornerstone of tomorrow’s electricity and heat systems as a dispatchable and clean source of energy. In a UK context, the decarbonisation of heat utilising the geothermal resource beneath our feet will deliver a sustainable, low carbon reliable energy source that can help make Britain a clean energy superpower and kickstart economic growth whilst helping the country achieve its legally binding net zero targets. With our extensive UK onshore expertise, transferable skills and subsurface database, we are in a strong position to deliver low carbon heat energy for the country.

In Croatia, there is now significant activity in the geothermal sector, with over 100MW of geothermal power capacity projected to come online in 2028.  As well as this, the Croatian government is drilling five geothermal exploration wells in 2025. This, along with a clear regulatory framework, has seen the emergence of the Pannonian Basin, in which our licences are located, as a key European geothermal hotspot.  Our increased stake in A14 Limited provides us with greater flexibility in our plans to farm down an interest in our Croatian geothermal licences and to accelerate the development of our Croatian assets. The increased interest does not expose us to material additional costs in the short to medium term due to the existing carry arrangements.

The work undertaken in 2024 has set the foundation for continuing to improve the profitability and resilience of the oil and gas business whilst positioning us for significant growth in geothermal as we look to leverage our expertise to maximise potential commercial opportunities in the UK and Croatia and help decarbonise both nations who are equally committed to their net zero targets.”

I have a huge amount of time for Ross Glover, if anyone ever received a hospital pass this was one of the biggest after having seen a good business being ground into the earth. He’s doing a great job getting production back but right now its only flat. 

I think the geothermal investment is good and whilst no one can predict its chances enough bright people are looking closely, just a shame that Ross is having to clear out the Augean stables en route…

Borders & Southern

Borders has announced that the Retail Offer launched on 20 February 2025 has now closed. It received strong support from existing shareholders and was almost 3 times oversubscribed. The Retail Offer raised in aggregate £0.2 million through the issuance of 4,210,526 Retail Offer Shares at a price of 4.75 pence each.

Allocations were made to existing Shareholders, applying the principles of soft pre-emption. Existing Shareholders received 100 per cent. of their soft pre-emptive allowance, when their order matched or exceeded their soft pre-emptive allowance. Given the level of demand, where the order was greater than the soft pre-emptive allowance shareholders received approximately 23.37 per cent. of their additional demand1.

1 Soft Pre-emptive allowance Calculation: Existing shares X 5.5571% (Dilution from total new shares being issued) = Soft Pre-emptive allowance shares. Soft Pre-emptive allowance shares X 100% = Soft Pre-emptive allowance allocated shares. Additional demand allocation share calculation: (Total order shares – Soft pre-emptive allowance allocation shares) X approximately 23.37%.

Accordingly, conditional on the passing of the Resolutions at the General Meeting and admission of the Placing Shares, Subscription Shares and Retail Offer Shares the Company has conditionally raised total gross proceeds of approximately £2.2 million in aggregate by way of the Fundraising.

Harry Baker, Chief Executive Officer of Borders & Southern, commented:
“I would like to thank all investors for their support at this pivotal time for the Company. We are hoping that increased engagement with potential partners will result in the right deal or deals being announced in due course. These funds give us the time and firepower to complete the right transaction for shareholders.”

Three times oversubscribed is a good verdict on the new kid on the block, right now he has a mandate from the retail shareholders as well as last week’s friends, family and institutions. The next deal will indeed be the right deal as he said and also a partner to dance with would be nice…

Admission and Total Voting Rights

Application will be made to the London Stock Exchange for admission of the Retail Offer Shares, a total of 4,210,526 new Ordinary Shares, to trading on AIM. It is expected that Admission will become effective and dealings in the Placing Shares, Subscription Shares and Retail Offer Shares will commence on AIM at 8.00 a.m. on or around 20 March 2025 (or such later date as may be agreed between the Company and the Joint Bookrunners, but no later than 31 March 2025) (“Admission”).

The Placing Shares, Subscription Shares and Retail Offer Shares will be issued fully paid and will rank pari passu in all respects with the Company’s existing Ordinary Shares.

Following Admission, the total number of Ordinary Shares in the capital of the Company in issue will be 877,630,245 with voting rights. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company’s share capital pursuant to the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.

Update on Placing and Subscription

Further to the RNS announcement issued by the Company at 7.49am on 20 February 2025 (“Result of Placing and Subscription, PDMR Dealing”), the Company announces that 210,526 New Ordinary Shares which were due to be issued as part of the Placing to Will Hodson will now be issued via the Subscription, The total number of New Ordinary Shares to be issued under the Placing and Subscription, and funds raised for the Company thereof, remains unchanged and as previously announced.

Corcel

Corcel has announced the successful completion and initial results of the EI-1 well workover as reported by the operator,  Petroborn Óleo e Gás S.A. (“Petroborn”), in the IRAI field, where the Company holds an Option to acquire an initial 20% interest, as previously announced on 18th November 2024.

Highlights:

• EI-1 well workover in the IRAI field, Brazil, confirms sustained gas production at 20,000m³/day (120 BOEPD / 706 Mscf), aligning with historical production rates
• The well is set to be brought online within the next 7 days, reinforcing Corcel’s strategy of acquiring cash-generating assets
• Corcel’s first production milestone in Brazil (should it decide to exercise the Option), just three months after securing the IRAI opportunity, demonstrates the company’s rapid execution capability and disciplined capital strategy
• With a Right-of-First-Refusal (ROFR) over 80% of the IRAI field and 100% of the adjacent TUC-T-172 block, Corcel has positioned itself to expand its presence in a proven gas-producing region with low-cost, high-margin assets
• Video interview with Corcel’s Chief Commercial and Strategy Officer, Geraldine Geraldo: https://tinyurl.com/3jvfkysv

The EI-1 well was re-entered for testing at the gas zone, where a gas production rate of 20,000m3/day (120 BOEPD / 706 Mscf) was observed during testing operations. As announced on 18th November 2024, the workover of the EI-1 well, located onshore Brazil in the state of Bahia, is part of a two-well workover program where the Company, through its wholly-owned subsidiary CRCL Brazil Ltd., holds an option to acquire i) a 20% interest in the IRAI gas field, ii) a Right-of-First Refusal (“ROFR”) over the remaining 80%, and iii) another ROFR for 100% of the adjacent TUC-T-172 exploration block (“IRAI Opportunity”), also located in the state of Bahia, onshore Brazil.

Geraldine Geraldo, Corcel’s Chief Commercial and Strategy Officer, commented: 
“We announced the IRAI Opportunity in November last year to pave the way for an accelerated journey in acquiring producing opportunities in Brazil – in 3 months, from signing to production, we have delivered the first step in that journey, with the first well meeting expectations. This achievement highlights our ability to execute with precision both commercially and operationally, while strategically securing high-quality opportunities. Our focus now turns to further evaluating the IRAI opportunity through the second workover well and other ongoing studies. Should we decide to exercise the option following the results of the next workover and a final investment decision, this will mark a significant milestone for Corcel: revenue from gas sales. We thank our operational partner, Petroborn, and we remain committed to leveraging this successful strategy to build a robust oil and gas production base for the company in Brazil, while derisking our exploration upside in Angola.”

Whilst this well appears to be quite a good result it won’t be until the next workover that we will find out if they are to exercise the option at IRAI. Will Brazil be part of the portfolio or not?

EI-1 Well Workover Results:

Petroborn has completed the initial workover activities at the EI-1 well, in the IRAI field in Brazil. The EI-1 well was drilled in 1963 to a total depth of 576m and was temporarily abandoned by the operator at the time. EI-1 was then re-entered in 2019 and a gas bearing sandstone at 417m was tested and brought online for 22 months between 2020 and 2022. After producing a total of 19.8MMm3 of gas (120,000 barrels of oil equivalent) the well was shut-in for operational and commercial reasons.

The EI-1 well has now been re-entered again where the gas zone at 417m was tested and completed for production. During the testing operations (2 separate tests of 7 hours and 6.5 hours) a gas production rate of 20,000m3/day (120 BOEPD / 706 Mscf – at a stabilised rate) was reported by the operator. This rate compares to the historical production performance of the well where EI-1 produced an average of 20,000 m3/day in the last 3 months of production (March-May 2022) before it was shut-in.

The operator is now working on the above ground gas production facilities and to connect the EI-1 well to the existing gas production infrastructure at IRAI. It is expected that the well will be brought online within the next 7 days, immediately generating revenue to Petroborn, and subsequently to Corcel should it exercise the Option.

IRAI Asset Overview:

The IRAI gas field is located in the Tucano Sul Basin, about 110km NW of Salvador, Brazil. IRAI is particularly attractive due to the shallow nature of the gas reservoirs, with producing gas zones ranging in depth from 220-825m across the field area. This, combined with the relatively high gas production rates seen in the field, with the EI-3 well peaking at >40,000m3/day (250 BOEPD) of gas, provides the Company with a unique opportunity to materially increase production and revenue generation at low rates of expenditure. Gas reservoirs at IRAI are of good quality, with an average of 13m of net pay and 23% porosity.

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