WTI (Apr) $69.76 -59c, Brent (May)* $72.81 -38c, Diff -$3.05 -64c
USNG (Apr) $3.83 -10c, UKNG (Apr) 110.6p +1.9p, TTF (Apr) €46.75 +€0.39
*Denotes expiry of April contract

Oil price

A big week ahead as tariffs are due to come in tomorrow and discussions around the re-opening of the Iraq pipeline continue. The Iraqi Minister suggested that 185/- b/d could be exported to start with out of the 450/- b/d capacity, we shall see.

Opec are still discussing output plans ahead of the April meeting but no sign that any extra oil will be brought onto the market and the Baker Hughes rig count last week showed the overall number up 1 at 593 and oil down 2 to 486, hardly drilling baby drilling eh?

Jersey Oil & Gas

Jersey Oil & Gas has provided a corporate update.  

Highlights & Outlook

Highlights & Outlook

• The Company commenced the year with a focus on two key activities: advancing the Buchan Horst ("Buchan") development project to sanction and Field Development Plan ("FDP") approval; and the pursuit of UK producing asset acquisitions that accelerate monetisation of the Company's sizeable existing tax allowances.
• The Company and its Buchan project partners continue to await clarity on the fiscal and regulatory uncertainties currently facing the UK's oil and gas industry, with work on the Buchan project having been slowed down by the Operator, NEO Energy, as previously noted.
• Following an application submitted to the North Sea Transition Authority ("NSTA") in 2024, the Second Term of the P2498 Buchan licence has now been extended by 24 months to 28 February 2027. This extension was requested in order to provide the licensees with the time required to finalise a FDP for the Buchan field.
• Completion of the Buchan Environmental Impact Assessment ("EIA") approval process by the Offshore Petroleum Regulator for the Environment and Decommissioning ("OPRED") has naturally been paused following the Supreme Court's "Finch" judgment in 2024 concerning the inclusion of Scope 3 emissions in development project EIAs.  The actions required to advance the Buchan EIA will be clarified once revised guidance is issued by OPRED, which is expected in spring 2025.
• The UK Government announced last year that a consultation will be held on the tax regime that will apply to the oil and gas industry after 2030. Satisfactory clarity on the results of this consultation is required to facilitate sanctioning of the Buchan project.  It is anticipated that the fiscal consultation will be launched shortly.
• While the majority of the required inspection, verification and pre-transfer work has been completed by Dana Petroleum on the Western Isles floating production, storage and offloading ("FPSO") vessel to satisfy the main technical requirements of the sale and purchase agreement, the agreement longstop date was reached at the end of February 2025 with work outstanding.  In light of the current slowdown in Buchan project activities as a consequence of the fiscal and regulatory consultations, along with work on the vessel still requiring completion, the parties have not terminated the agreement and are in dialogue on the optimal contractual way forward to accommodate these delays.  NEO Energy, the Buchan operator, remains a 23% owner of the vessel.
• In order to both accelerate potential value creation from JOG's existing UK tax allowances of over $100 million and bring cash flow into the business, a number of potential UK producing asset acquisitions are being actively evaluated.
• The total cash running cost of the business has been reduced by approximately 50% to £1.5 million in 2025 as a result of actions taken by the Company following the slowdown in activities on the Buchan project.  Per the terms of the farm-out agreements executed with NEO Energy and Serica Energy, the Company's 20% share of Buchan project expenditure is fully carried by our two joint venture partners.
• The Company's aggregate cash balance at the end of 2024 was approximately £12.3 million.  A further $20 million cash payment is payable under the terms of the Buchan farm-out agreements following approval of the FDP by the NSTA and receipt of the associated regulatory and legal consents.

Andrew Benitz, CEO of Jersey Oil & Gas, commented:
"With the Buchan licence having now been extended, the joint venture partnership has secured the necessary time to determine the appropriate path to project sanction, with JOG holding a 20% carried interest to first oil.  Whilst the UK Government's fiscal and regulatory consultations are creating a somewhat uncertain backdrop for the industry at the current time, the way forward on these two key areas is scheduled to be resolved over the coming months." 

"The Buchan project has the potential to create over 1,000 jobs across many parts of the UK's supply chain and over 200 project related jobs, attract private investment of around £1 billion into the UK economy and generate hundreds of millions in UK tax revenues."

The Buchan partners have secured this two year extension on the licence whilst the ongoing regulatory and fiscal consultations get resolved and the discussions with regard to the FPSO timelines continue. It also seems that there is a growing feeling that the tide is starting to turn with a growing realisation within government that energy security is of vital importance to the UK and we have to prioritise homegrown energy over imports for all the right reasons. 

Also, whisper it quietly but Government action has the chance to unlock a project that will create over 1000 jobs and provide much needed investment and economic growth into the economy and for JOG shareholders this can be unlocked via their 20% carried interest to first oil. It is also worth noting that following the recent  apparent backtrack on Rosebank and Jackdaw, Ministers have belatedly noted that there is still a more than decent tax take available in the North Sea if the can swallow their net zero pride. 

Accordingly, given that the UKCS is likely at peak tax and with over $100m of useful tax losses and a healthy debt free cash position, I see the timing as very opportune for JOG to pursue a UK producing asset deal and are actively pursuing several opportunities. 

Hunting

Hunting has today announced the completion of the sale of its 23% equity investment in Rival Downhole Tools L.C, an associate company, to a third party, for a consideration of $13.1 million. 

Following adjustments for working capital, Hunting will receive $12.0 million in cash. It has been agreed with the purchaser that an escrow account of $1.1 million will be established, which will remain in place until any outstanding matters are resolved, which is expected to be within 12 months.

Commenting on the sale, Jim Johnson, Chief Executive of Hunting, said:
“In line with the Hunting 2030 Strategy, we are committed to focusing on and strengthening our core businesses. With the proceeds from the sale of Rival, Hunting has additional funds to pursue strategic acquisitions, with management continuing to review accretive opportunities.”

Stand back, there’s nothing to see here, Rival is not in the core businesses of the Hunting family and has rightly been sold. I continue to believe that Hunting is the poster boy in the oilfield services business and that means going back to its previous high which means over 100p of upside. 

Petrofac

Further to its release on 24 February 2025, a court hearing for Petrofac’s planned financial restructuring took place today. The Convening Hearing has adjourned to either 20 or 21 March 2025 and, recognising the urgent but complex nature of the transaction, the court outlined its intention to shortly set out an expedited timetable which enables the Sanction Hearing to conclude in mid-April 2025.

The Company will continue to update stakeholders as appropriate and in line with its disclosure obligations, including provision of dates for the forthcoming General and Creditor Meetings.

This friday announcement confirmed that the restructuring happened on that day and further hearings are now scheduled for this month and next. The future looks ominous for shareholders…

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