WTI (Sep) $69.26 -74c, Brent (Oct)* $71.70 -18c, Diff -$2.44 -80c*
USNG (Sep) $3.11 +6c, UKNG (Sep) 86.45p +0.345p, TTF (Sep) €35.055 +€0.08.

Oil price

Oil will be up around 5% on the week and thats down to the Tariff deadline today and the Russian sanctions.

Petrofac

Petrofac today issues an update on its Restructuring Plan and the progress of the business in the six months ending 30 June 2025.

Restructuring update

• The Group announces the extension of the original Lock-Up Agreement. The Group’s bondholders, investors and those creditors party to the Lock-Up Agreement have reinforced their support for the Group by committing to an extension until 30 November 2025.
• The Board has identified and is actively progressing a number of routes to deliver the Restructuring, including through a Plan that addresses the narrow grounds on which the Court of Appeal issued its judgment on 1 July 2025. The Board welcomes the extension of the Lock-Up Agreement and the ongoing support of key clients which provide the Group with a stable platform to continue to pursue the Restructuring.
• Additionally, the Group will today apply to the Supreme Court for leave to appeal the judgment handed down by the Court of Appeal on 1 July.

First Half Business highlights

• All business units continued to execute contracts despite the Group’s financial constraints:
  • Progress was maintained on the current ADNOC and TenneT contracts;
  • Legacy contracts continued to be closed out and now represent a small proportion of E&C’s contract backlog.
• First Half Business Performance Revenue and EBIT are expected to be significantly ahead of the prior year despite financial constraints impacting project costs and schedules.
• E&C secured two major new contracts with ADNOC:
  • US$330 million EPC contract for new gas compressor plant at the Habshan complex;
  • EPC Management Services contract for a US$1.2 billion project to expand gas production facilities on Das Island.
• Asset Solutions secured around US$500 million new orders.
• Group backlog(1)(3) was US$6.7 billion at 30 June, broadly in line with the 2024 year-end.
• The Group has been able to maintain liquidity to support its operations, reflecting,
  • suspension of debt service payments;
  • commercial settlements and associated collections secured as part of the close out of legacy contracts;
  • supportive supply chain and customer relationships, and careful cash flow management.
• US$40 million of net liquidity(2)(3) was generated in the First Half, increasing Group’s net liquidity to US$192 million at 30 June 2025 (31 December 2024: US$152 million).
• Group’s pipeline remains strong, largely focused on the MENA region and ETP opportunities.

Tareq Kawash, Petrofac’s Group Chief Executive, commented:
“The agreement of stakeholders to extend the Lock-Up demonstrates their support for the work underway to address the narrow grounds on which the Court of Appeal upheld the challenge to our Restructuring Plan. While the need for the balance sheet restructuring remains clear, the commitments formalised today give me confidence that we can deliver a successful outcome.

“Petrofac’s operational capability remains intact, and the business continues to deliver for its clients. We have secured new contract awards and have a strong pipeline of future opportunities. This is in no small part thanks to the dedication of our people, and the continued support of our clients and suppliers. Following a prolonged period of challenge for the Group, I am more focused than ever on delivering the best possible outcome for all stakeholders.”

With the extension of the lock up to November 2025 Petrofac carries on ‘progressing routes deliver the restructuring’. Operationally business continues as normal with new contract awards and a ‘strong pipeline of future opportunities’ with the continued support of clients and suppliers.

Predator Oil & Gas

Predator has announced a preliminary update for the rigless testing operations at the MOU-3 well at Guercif in Morocco. 

Operations summary

The “A” Sand was successfully perforated using for the first time the larger 27/8” power jet NOVA perforating guns.

A Coiled Tubing Unit pumped nitrogen into the well to assist well clean-up by lifting to the surface heavier drilling mud filtrate (SG 1.26 density), used to control gas inflow from the “A” Sand whilst setting the 95/8” casing at 779 metres measured depth from surface. The “A” Sand section was initially drilled with lighter mud (SG 1.15 density). Potential sands from the perforated reservoir interval could also be identified if present.

Whilst drilling through the “A” Sand in 2023 natural gas flow into the well was noted, with the well approximately 50 psi under-balanced at 341 metres measured depth from surface. 

Initial results

Samples recovered at surface by nitrogen lift contained progressively less dense drilling mud filtrate and eventually very fine grained, unconsolidated sand. Comparison of the sand samples with well cuttings collected whilst drilling MOU-3 gave a high level of confidence that the “A” Sand had been successfully perforated.

The perforations may however have extended close to, but not beyond, the maximum limit of probable formation damage caused during drilling.

The well is currently filled with nitrogen and shut in to facilitate any potential slow pressure build-up and clean up close to the possible limits of the formation damage. 

Forward programme

Drilling

Desktop studies have commenced to generate a new well design and drilling mud programme incorporating the valuable information gathered from the drilling of MOU-1, MOU-2, MOU-3 and MOU-4 and testing of some of the wells. These wells were designed based on the established drilling history of the Gharb Basin.

Current well design, mud programmes and drilling practices are not optimal for the nature of the reservoir geology now established. Formation damage is a key issue.

Preparations are progressing to drill and log this year an MOU-6  well, with a surface location at the MOU-3 well pad. The well will evaluate all the sands seen in MOU-3 above 950 metres.

Focus will be on minimising formation damage in respect of the reservoir’s ability to produce hydrocarbons by using specialised drilling fluids, if necessary, and drilling as far as possible on balance to account for the fine grained and unconsolidated sand intervals that are susceptible to wash out.

Choice of perforating guns

The MOU-3 testing programme has shown that only the larger 27/8” perforating guns are suitable for rigless testing in this area. Sandjet is not being considered any more as a perforating option.

Budget 

The MOU-3 rigless testing programme was executed under budget.

Paul Griffiths, Chief Executive Officer of Predator Oil & Gas Holdings Plc commented:
“We are pleased that by accessing the larger perforating guns for the first time that we have managed to collect valuable information to improve our understanding of the extent and nature of the formation damage caused by over-balanced drilling.

Whilst the perforating has been successful, thus far it has not been able to completely overcome the formation damage to allow the well to flow. Pressure build up in the well is being monitored to see if with time the damage can be overcome.

The new well, MOU-6, is being designed to mitigate for formation damage and is crucial for evaluating potential well productivity  and reservoir performance at several levels.

We will seek to execute the MOU-6 drilling programme at the earliest opportunity this year in order to maintain momentum.”

Obviously this is at best a mixed result from MOU-3 and the new well, MOU-6 is going to have to be redesigned with different muds and drilling practices after formation damage has been confirmed. The statement says that preparations are underway to drill and log an MOU-6 well which can be drilled from the same pad as MOU-3 and as swiftly as is possible ‘to maintain momentum’. 

The shares have taken a bit of a fall today but all is not over and the CEO is indefatigable in his belief in the Guercif in Morocco and all options will be tried to deliver primarily to mitigate the formation damage. Until then shareholders will remain as dedicated as ever in their support of Predator and of course Paul Griffiths. 

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