Panoro Energy (PEN NO)C; Target Price: NOK23.00: BW Energy (BWE NO) provides update in Gabon – BW indicated that 4Q20 gross production from the Tortue field was ~13,500 bbl/d, as an 11 day downtime took place in October for the annual maintenance program and to comply with Gabonese production allocations to meet OPEC quotas. A drilling contract for one development well (DTM-7H) and one exploration well has been recently awarded. There is also the option for another exploration well subject to the results of the drilling campaign.
Pharos Energy (PHAR LN)C; Target Price: £0.40: Raising US$11.7 mm of new equity – Pharos has raised US$11.7 mm of new equity price at 19.25 p per share. The proceeds will be invested in Egypt to arrest production decline and boost production ahead of securing a farm in partner.
IN OTHER NEWS
ExxonMobil (XOM US): Dry hole in Guyana – The Hassa wildcat on the Stabroek block was dry.
Gran Tierra Energy (GTE LN/CN): Transaction to divest shares in PetroTal terminated – Gran Tierra, has terminated the purchase agreement with Remus Horizons regarding the proposed sale of 218,012,500 common shares in the capital of PetroTal. In a separate announcement Gran Tierra reported that 109 mm shares with private purchasers for US$14.8 mm
Kosmos Energy (KOS US/LN): Discovery in the US Gulf of Mexico – The Winterfell well on the Green Canyon Block 944 encountered ~26 meters of net oil pay in two intervals in the sub-salt Upper Miocene. The well de-risks prospectivity in several neighbouring blocks held by Kosmos, with approximately 100 mmbbl of gross potential within Kosmos' acreage position.
Pantheon Resources (PANR LN): Acquisition of acreage in Alaska - Pantheon Resources is acquiring 10.8% WI in each of the 16 leases in the 44,463 acre Talitha Unit from Otto Energy. The consideration consists of 14,272,592 shares of Pantheon. Upon completion of the acquisition, Pantheon will own a 100% WI in the Talitha Unit.
Predator Oil & Gas (PRD LN): Operation update in Trinidad – The Pilot CO2 EOR results support pre-injection desktop production plateau forecasts of 243 -547 bbl/d from the Herrera #2 Sand. The CO2 sequestration potential is confirmed. At WTI oil price of US$50/bbl, projected EBITDA net-backs for the P50 and P10 pre-Pilot CO2 EOR production profiles at plateau production are estimated to be in the range US$15 – 25/bbl.
Trinity Exploration & Production (TRIN LN): Operating update in Trinidad – 4Q20 production was 3,206 bbl/d. Trinity held net cash of US$17.5 mm at YE20.
Westmount Energy (WTE LN): Acquiring further interest in Guyana explorer – Westmount has purchased 287,500 common shares in JHI for an aggregate cost of C$718,750. Westmount holds a total of 5,651,270 shares in JHI, representing ~7.7% of the issued common shares in JHI. Drilling operations at the first well in the Canje drilling campaign, Bulletwood-1, are ongoing, with completion of the well anticipated around mid to late February. Additional Canje drilling will follow-on in 1H21.
Aker BP (AKERBP NO): Trading update in Norway – Aker BP produced 223.1 mboe/d in 4Q20. FY20 capex was US$1.3 bn, exploration spend was US$246 mm and abandonment spend was US$178 mm. YE20 net debt was US$3.6 bn.
Cairn Energy (CNE LN): Trading update – FY20 net production at Catcher and Kraken was just over 21,000 bbl/d, in line with guidance. FY20 cash capex was US$160 mm. FY21 net production is estimated to be 16,000 – 19,000 bbl/d with capex of US$85 mm (including US$10 mm at Kraken and Catcher). At YE20 Cairn held US$570 mm in cash with no drawn debt. In 2021, Cairn is planning to drill an exploration well on Block 10 in Mexico and there is an optional drilling opportunity for an appraisal well of the Saasken discovery (Cairn 15% WI). In the UK, Cairn will participate in the Shell-operated Jaws exploration well on P2380 (Cairn 50% WI). In Côte d’Ivoire, Cairn has assumed Operatorship (90% WI) in blocks CI-301 and CI-302 from Tullow which has exited both licences. The JV has exited blocks CI-518, CI-519, CI-521 and CI-522 effective end December 2020.
ExxonMobil (XOM US): Progress at selling UK assets – Media reports indicated that ExxonMobil has entered exclusive discussions with HitecVision/NEO Energy with regards to the divestment of Central and Norther North Sea assets.
Repsol (REP SM): Trading update – 4Q20 production was 628 mboe/d.
Norway: Exploration licence award – Norway has awarded 61 licences to 30 companies. Equinor, Aker BP, Lundin Energy, DNO, Neptune Energy, Wintershall DEA, OKEA Energy, Var Energy and Spirit Energy were awarded interests in respectively 17, 10, 19, 10, 6, 16, 4, 10 and 3 licences.
Serica Energy (SQZ LN): Operating update in the UK North Sea – Estimated FY20 net production from Serica's interests in Bruce, Keith, Rhum (BKR) and Erskine averaged 23,800 boe/d. With regards to the R3 operations, the removal of the 2005 completion is taking longer than anticipated due largely to the unexpectedly poor condition of the equipment being recovered from the well. As a result, R3 operations are now expected to continue into March 2021.
Union Jack Oil (UJO LN): Further acquisition of interests in UK asset – Union Jack Union is acquiring a 15% interest in PEDL253, containing the Biscathorpe project from Humber Oil & Gas, increasing its interest to 45%. The consideration consists of £0.5 mm in cash plus a contingent payment of £0.5 mm.
FORMER SOVIET UNION
JKX Oil & Gas (JKX LN): Operating update in Ukraine and Russia – FY20 production was 10,238 boe/d including 5,389 boe/d in Russia and the balance in Ukraine. JKX held US$24.5 mm in cash at YE20. IG146 was completed to the Devonian in Ignativske (Ukraine) and encountered 2.6 m of net hydrocarbon bearing thickness. After initially testing of the IG146 well at an oil rate of 497 bbl/dd and a gas rate of ~200 boe/d in November the rate declined and the well is currently producing 35 boe/d.
MIDDLE EAST AND NORTH AFRICA
Apex International Energy: Discoveries in Egypt – The SEMZ-1X well discovered Bahariya oil with 17 feet of indicated pay and and tested at a rate of 100 bbl/d. The well will be fracced to maximize flow rate. The SEMZ-11X well encountered 65 feet of oil pay in the Cretaceous sandstones of the Bahariya and Abu Roash G formations. Testing of the Bahariya resulted in a peak rate of 2,100 bbl/d of oil and no water.
DNO (DNO NO): Operating update – FY20 WI production was 95,100 boe/d including 17,300 boe/d in Norwar and the balance in Kurdistan. FY20 capex was US$515 mm increasing to US$700 mm in 2021. DNO held US$475 mm in cash at YE20. The KRG has put a plan in place to make payments towards DNO’s arrears (US$259 mm) such that if Brent prices exceed US$50/bbl in any month, the incremental revenue will be shared 50 50 between the KRG and the Tawke license partners.
Energean (ENOG LN): Trading update – FY20 pro forma WI production was ~48.3 mboe/d with pro forma capital expenditure (including exploration expenditure) of US$558 mm. FY21 production is expected to be 35.0 40.0 mboe/d with capex of US$515 – 590 mm,
Genel Energy (GENL LN): Operating update in Kurdistan – Gross operated production from the Tawke licence averaged 110,300 bbl/d in 2020, about evenly split between the Tawke and Peshkabir fields. FY20 production at Taq Taq was 9,670 bbl/d with a production rate of 8 mbbl/d at YE20. Sarta produced 520 bbl/d. The Sarta-3 well has produced at an average of ~5,500 bbl/d so far in 2021. Production from Sarta-2 is now expected in February. The 2021 appraisal drilling campaign is targeting a material portion of the 250 mmbbl of existing contingent resources, and prospective resources, in Jurassic formations. The Qara Dagh 2 well is expected to be spudded in 1Q21. FY21 WI Production is expected to be slightly above FY20 (31,980 bbl/d) with capex of US$150-200 mm. Genel held US$354 mm in cash (net cash of US$10 mm) at YE20. The KRG has submitted a reconciliation model for repayment of the receivable relating to the US$159 mm in unpaid invoices, whereby for each cent above a monthly dated Brent average of US$50/bbl, 0.5 cent per working interest barrel shall be paid towards monies owed.
TransGlobe Energy (TGL LN): Operating update – Production averaged 12.4 mboe/d (including 11,178 boe/d in Egypt) in 4Q20 and 13.5 mboe/d during FY20. At YE20, TransGlobe held >US$30 mm in cash and had no net debt.
BW Energy (BWE NO): Equity raise – BWE has raised US$75 mm of new equity priced at NOK27 per share, representing a 9.5% discount to the previous day close. The net proceeds will be used for capital investments in the Dussafu licence in Gabon, development of the Maromba discovery in Brazil, new ventures and for other general corporate purposes.
Total (FP FP) and Royal Dutch Shell (RDSA/B LN): Divestments in Nigeria – Oil Mining Lease (OML) 17 in the Eastern Niger Delta, and associated infrastructure, have been sold to TNOG Oil and Gas for a consideration of US$533 mm net to Shell (30% WI) and US$180 mm net to Total (10%).
EVENTS TO WATCH NEXT WEEK
27/01/2021: Tullow Oil (TLW LN) – Trading update
28/01/2021: Lundin Energy (LUNE SS) – 4Q20 results
Companies: AKERBP CNE DNO ENOG XOM GENL GTE JKX KOS PEN TAL PHAR REP RDSA SQZ FP TGL
Canadian Overseas Petroleum (COPL LN): US$65m Senior Credit Facility secured | Energean Oil & Gas (ENOG LN): Comprehensive trading update | TransGlobe Energy (TGL LN): FY20 production well within guidance
Companies: XOP ENOG TGL
West Texas Intermediate (WTI) and Brent crude oil prices posted increases on the final trading day of 2020.
The February WTI futures price gained 12 cents, settling at $48.52 per barrel. The light crude marker Thursday traded within a range from $47.77 to $48.58.
Brent crude for March delivery finished Thursday's session at $51.80 per barrel, reflecting a 17-cent gain.
Although oil prices have recovered since plunging this past spring amid steep pandemic-driven demand destruction, the benchmarks are still 20-plus percent overall for the year. By comparison, the closing WTI and Brent per-barrel prices on 2 January 2021, were $61.18 (21 percent higher) and $66.25 (22 percent higher), respectively.
The price of a gallon of reformulated gasoline (RBOB) often moves in the same direction as the oil benchmarks, but such was not the case Thursday. January RBOB posted a slight loss – well under a penny – to close just below $1.41.
Henry Hub natural gas futures finished higher, with the February contract adding nearly 12 cents to settle at $2.54.
Companies: XOP TAL ENOG UOG
Energean Oil & Gas (ENOG LN): Additional gas supply contract secured | Cairn Energy (CNE LN): Return of US$250m to shareholders | Trinity E&P (TRIN LN): MoU singed with NGC presents multiple gas commercialisation opportunities
Companies: ENOG CNE TRC
Panoro Energy (PEN NO)c; Target price of NOK23.00: Revisiting Gabon - BW Energy provided an update on Dussafu with FY20 production guidance expectation marginally below previous guidance (14.25 mbbl/d versus 15 16 mbbl/d) due to COVID-19 restrictions and OPEC+ quotas. This results in FY20 opex expected to be US$19/bbl which is slightly above the previous guidance of US$17-18/bbl. The drilling of DTM-7H, and the tie-in of DTM-6H and -7H, has been deferred to mid-2021 with first oil expected in 3Q21 and our estimate of the timing of the field production ramp-up has been delayed by one quarter. BWE continues to expect production from the Dussafu area to reach >30 mbbl/d in 2023 and ~40 mbbl/d in 2024. The Hibiscus development is expected to offer 15% IRR at
Companies: TGL 88E FEC JSE LUNE NOG PANR TAL TETY TETY AOI ENOG PEN SDX EGY
Energean Oil & Gas (ENOG): Positive CPR report for offshore Israel | Reabold Resources (RBD LN): Publication of Victoria presentation | Echo Energy PLC (ECHO LN): Resumption of VAT reclaims | Bahamas Petroleum PLC (BPC LN): Perseverance #1 operations remain on track | Westmount Energy (WTE LN): Uncommercial discovery at the Tanager-1 well, offshore Guyana
Companies: ENOG RBD ECHO BPC WTE
GeoPark (GPRK US)C; Target price of US$20.00: Drilling success at first well in CPO-5 campaign - The Indico 2 appraisal well encountered 161 feet of net pay and flowed ~ 5,500 bbl/d of 35.2 degrees API light oil, with a 0.1% water cut. This appears to be a relatively low risk appraisal well. The well pays back in less than three months. The Indico 2 well could add imminently 1.5 mbbl/d net production to GeoPark’s ~40 mbbl/d (as of the end of 3Q20), which bodes well for the FY21 production guidance of 40-42 mboe/d. GeoPark expects to spud a well at the Aguila prospect by the end of November. GeoPark will then drill 5-6 wells (including 3-4 exploration wells) at CPO 5 in 1H21. Upon success and depending on oil prices, GeoPark could potentially drill additional development, appraisal or exploration wells at CPO-5 during 2H21. Even after the recent share price appreciation, the shares trade at ~50% discount to our Core NAV and ~25% discount to our 2P NAV of ~US$11 per share. Our unrisked NAV for the 2021 drilling programme is ~US$9.00 per share (mostly associated with Colombia), which represents over 100% of the current share price.
Tethys Oil (TETY SS)C; Target price of SEK75.00: Farming out exploration asset in Oman – Tethys is farming out 50% WI in Block 49 to EOG Resources. EOG will also have the option to assume operatorship of the Block and increase its interest to 85% for any operation relating to unconventional hydrocarbon resources. In return EOG will refund all costs incurred on the Block and fund the Thameen-1 exploration well, up to a combined amount of US$15 mm. The parties will retain 50% each of any operations relating to conventional hydrocarbon resources. We view this transaction as an endorsement of the quality of Tethys Oil’s asset. The Thameen prospect is expected to be spudded in December.
IN OTHER NEWS
88 Energy (88E LN): Resources update in Alaska – Total Prospective Resources of 1.77 bn boe have been estimated at the Ice Wine project. The Seabee formation is estimated to hold 1.4 bn bbl.
Alvopetro Energy (ALV CN): Update in Brazil – Gas sales at the Caburé Project was 10.8 mmcf/d (plus 84 bbl/d of condensates) in October. The company held US$2.2 mm in working capital surplus at the end of September.
Touchstone Exploration (TXP LN/CN): 3Q20 results – 3Q20 production in Trinidad was 1,310 bbl/d. The company had net debt of US$14.1 mm at the end of September. Drilling operations are ongoing at the Cascadura Deep-1 prospect.
Aker BP (AKERBP NO): Minor discovery in Norway – Exploration well 6607/12-4 on the PL 127 C licence encountered 3-6 mmboe (recoverable) at the Jurassic/Triassic primary target and 6-18 mmboe at the secondary Lower Cretaceous target.
ConocoPhillips (COP US): Discovery in Norway – Wildcat well 6507/4-1 on licence PL 1009 has encountered 55 180 mmboe of recoverable resources in the Lange Formation (primary target), with moderate but uncertain reservoir quality. The gas/water contact was not encountered.
Premier Oil (PMO LN) and Chrysaor: Operational update – Premier production from January to the end of October was 62.5 mboe/d with FY20 production guidance reduced from 65-70 mboe/d to 61-64 mboe/d on restrictions at Catcher. FY20 capex guidance is now US$325 mm (US$340 mm previously). Net debt at the end of October was US$2.05bn (up from US$1.97 bn at the end of June). Summer maintenance work at Catcher took longer than expected and production had to be shut down in early November due to a fire. Production is expected to restart next week. First gas at Tolmount remains on track for 2Q21. Chrysaor’s production averaged 175 mboe/d to the end of October. Chrysaor’s FY20 forecast remains unchanged at 170-180 mboe/d. The merger transaction between Premier and Chrysaor is expected to complete in 1Q21.
Serinus Energy (SENX LN): 3Q20 results – Production over January to September was 2,415 boe/d including 1,841 boe/d in Romania and the balance in Tunisia. The production exit rate the end of September was 2,211 boe/d including 1,730 boe/d in Romania. The duration of the Satu Mare licence in Romania has been extended by one year until October 2021 with a commitment to drill two new wells. Serinus carried a working capital deficit of US$22.3 mm (including US$15.6 mm due to the EBRD) at the end of September.
Valeura Energy 9VLE CN/VLU LN) : 3Q20 update – 3Q20 production in Turkey was 615 boe/d. The company held US$32.2 mm in working capital at the end of September. The company continues to evaluate inorganic opportunities, spanning Eastern Europe and the greater Mediterranean region. Valeura will only consider assets that would add both cash flow in the near term and opportunities for significant follow-on organic growth in the medium term.
FORMER SOVIET UNION
Zenith Energy (ZEN LN: Exiting Azerbaijan – The Contract Exploration Area of the 25-year Rehabilitation, Exploration, Development and Production Sharing Agreement has been terminated.
MIDDLE EAST AND NORTH AFRICA
Energean Oil & Gas (ENOG LN): Resources update in Israel – Gross 2P reserves at the Karish, Karish North and Tanin fields have been estimated at 3.5 tcf and 99.6 mmbbl of liquids. Approximately 241 mmboe of gross 2C resources associated with Karish North have been upgraded into the 2P category following approval of the Field Development Plan by the Israeli government. Liquids production from the fields is now expected to average 28 mbbl/d over a plateau period of approximately five years. Gross best estimate risked prospective resources across the Karish and Tanin leases and Block 12 are estimated at 2.2 tcf of gas plus 33.4 mmbbl of liquids. The Geological Probability of Success of these prospective resources ranges from approximately 15% to 79%.
Africa Energy (AEC SS, AFE CN): 3Q20 update in South Africa - The Gazania-1 exploration well on Block 2B is now expected to spud in 2Q21. At September 30, 2020, the Company had cash of US$39.1 mm and no debt.
FAR Limited (FAR AU): Selling Senegal – FAR is selling its 13.67% stake in the Sangomar project offshore Senegal to ONGC for US$45 mm in cash. In addition ONGC will repay US$66 mm in working capital. There is also a contingent payment of up to US$55 mm if the oil price increases above US$58/bbl.
Kosmos Energy (KOS US/LN): 3Q20 results – 3Q20 net production in Africa and the USA was 56,700 boe/d. FY20 production is expected to be 61,000 - 62,000 boe/d (62,000-70,000 boe/d previously) with US$140-150 mm capex. Net debt at the end of September was US$2.1 bn. Gross production rates at Jubilee averaged ~87,700 bbl/d during the quarter with FPSO uptime of around 98%. TEN production averaged ~49,600 bbl/d gross in 3Q20 with FPSO uptime of 98%. Production in Equatorial Guinea averaged ~33,000 bbl/dd gross.
Victoria Oil & Gas (VOG LN): Positive update in Cameroon – The litigation with CHL regarding the payment of a royalty has been settled. Overall, Victoria will have to pay CHL a total of US$12.5 mm at a monthly rate of US$0.09 to US$0.1 mm. The fish that prevented production at the La-1089 well has now been removed. Following the perforation of two sand intervals in the Upper Logbaba formation, the well flowed 19 mmcf/d on test. The company believes that the full potential of the well is likely to exceed the capacity of the plant, which is 20 mmcf/d.
EVENTS TO WATCH NEXT WEEK
17/11/2020: Nostrum Oil & Gas (NOG LN) - 3Q20 results
18/11/2020: BWE Energy (BWE LN) - 3Q20 results
19/11/2020: SDX Energy (SDX LN) - Capital Markets Day
Companies: 88E AKERBP ALV COP ENOG GPRK KOS PMO SEN TETY TETY TXP VLE VOG
Energean Oil & Gas (ENOG LN): Purchase of Field Support Vessel from Prime Marine Energy | Falcon Oil & Gas (FOG LN): Beetaloo project technical update
Companies: Energean Plc
Panoro Energy (PEN NO)C; Target price NOK23.00 per share: Boosting returns in Gabon, gearing for exploration - BW Energy, the operator of the Dussafu licence is reviewing the development concept of Hibiscus and Ruche with a jack-up conversion instead of a new build wellhead platform. Overall, this could reduce the break-even of the project from US$30/bbl to US$25/bbl, reflecting the current low cost of barges. The operator now estimates that the project would achieve an IRR of 15% at US$30/bbl (US$35/bbl previously). Pending more visibility on the new development plan, gross capex could be 20% lower than the previously anticipated US$400 mm. The development is expected to restart in 4Q20. Net to Panoro’s 7.5% WI, the potential net savings would represent ~US$6 mm, almost ~8% of the current market cap. Given Panoro’s high cost of capital, this could be material as Panoro could redeploy the freed-up capital on other initiatives. Panoro shares trade in line with our 2P NAV of ~NOK10 per share that does not factor in the potential lower capex in Gabon. In addition, Panoro continues to offer near term diversified and high impact exploration upside with an aggregate unrisked value for the programme of almost NOK30 per share (~3x the current share price). An enhanced balance sheet with lower development cost in Gabon provides additional fire power to the exploration drilling activities. The Salloum West appraisal well (unrisked NAV of >NOK3 per share) is expected to be drilled in 1Q21. Subject to completion of farm-out transactions with Africa Energy, the company will then drill a very high impact exploration well drilled in South Africa (unrisked NAV of NOK15 per share). Drilling the upside at the Greater Hibiscus area later in 2021 has an unrisked value of NOK10 per share.
SDX Energy (SDX LN)C; Target price £0.40 per share: Initiating Coverage - SDX Energy is a £35 mm market cap full cycle exploration and production company with low cost (6 mboe/d) and reserves (>10 mmboe) in Egypt and Morocco. In contrast to most peers, SDX’s business is insulated from oil price moves with ~90% of the production being fixed-price gas on LT contracts. Recent drilling successes have opened up additional low risk/low cost/short cycle exploration and development upside in both countries. SDX will soon embark on a multi-year exploration programme. With infrastructure already in place, any discovery will be highly accretive and can be developed from SDX’s own source of funds. SDX shares trade at EV/DACF multiples of ~1.3x in 2020. Our 2P NAV is £0.27 per share, representing 70% upside. The prospective resources already identified have an unrisked NAV of £0.12 per share for Egypt (+75%) and £1.03 per share for Morocco (+600%). The main exploration drilling programme is restarting in 2021 but the company should test the LMS-2 well in Morocco in 4Q20, should COVID-19 restrictions be lifted. A success would derisk ~5 bcf WI resources at LMS-2 (+£0.13 per share) and a further ~20 bcf WI resources in the wider La Mimouna area (+£0.50 per share). Our target price of £0.40 per share (~ our ReNAV) represents ~150% upside.
IN OTHER NEWS
Trinity Exploration and Production (TRIN LN): 1H20 results – 1H20 production in Trinidad was 3,282 bbl/d. FY20 production is still expected to be in the range of 3,100 - 3,300 bbl/d. Trinity held US$19.7 mm in cash as at 30 June 2020.
ADX Energy (ADX AU) and Reabold Resources (RBD LN): Flow test results in Romania below expectations – Following acidisation, the flow rate of the Iecea Mica-1 well was below expectations.
BP (BP LN) and ENI (ENI IM): Discovery in Egypt - The Nidoco NW-1 exploratory well discovered gas-bearing sands for a total thickness of 100 m, of which 50 m is within the Pliocene sands of the Kafr-El-Sheik formations and 50 m within the Messinian age sandstone of the Abu Madi formations. The Great Nooros Area gas in place is now be estimated > 4 tcf.
Deltic Energy (DELT LN): Resources update – The Cadence, Cordova, Bathurst and Basset prospects hold 597 bcf, 124 bcf, 275 bcf and 128 bcf prospective resources (P50) respectively. These licences were recently offered to Deltic and are located in the Southern North Sea.
IGas Energy (IGAS LN): Acquiring Geothermal business – IGas is acquiring GT Energy, a developer of deep geothermal heat projects onshore UK. GT Energy's principal project is a 14 MW deep geothermal project in the Etruria Valley, Stoke-on-Trent. IGas will make an initial payment of £500,000 to be satisfied by the issue of 2,222,223 IGas ordinary shares. There could be further payments according to milestones associated with progress at GT Energy’s project. The maximum payable consideration is £12 mm with new ordinary shares of IGas not exceeding 29.9% of the share capital of IGas. GT Energy has entered into a term sheet with Gravis Capital Management to fund a significant proportion of the ~£20 mm project through a limited-recourse debt facility.
Independent Oil & Gas (IOG LN): Potential offer to acquire Deltic Energy (DELT LN) – Independent Oil & Gas is considering a possible all-share offer for the Deltic.
Premier Oil (PMO LN): Considering transaction with Chrysaor – Premier Oil is in discussions with Chrysaor as a potential alternative to the proposed equity raise. The preferred route remains the re-financing announced previously.
Union Jack Oil (UJO LN): Equity raise – Union Jack is raising £7 mm of new equity at a price of £0.16 per share. The proceeds of the fundraising will be used to (1) pay the deferred cash consideration due on first oil production at the Wressle development in 4Q20, (2) drill a side-track well at the Biscathorpe discovery in 2021 and (3) ongoing investment in the other conventional onshore drill-ready projects including a proposed low-cost, side-track well at the producing Keddington oilfield and a proposed conventional well at North Kelsey.
FORMER SOVIET UNION
Caspian Sunrise (CASP LN): 1H20 results – 1H20 production in Kazakhstan was 1,494 boe/d with production of 1,643 boe/d at the end of June. The company held US$0.2 mm in cash at the end of June.
MIDDLE EAST AND NORTH AFRICA
Energean (ENOG LN): New gas contract in Israel– Energean has signed two new Gas Sales and Purchase Agreements which, combined, represent quantities of gas of up to 1.4 bcm/y and increase total firm contracted gas sales from the Karish project to approximately 7.0 bcm/y on plateau.
Global Petroleum (GBP LN/AU): Raising £1.4 mm of new equity – Global is raising £1.4 mm of new equity priced at 0.75p per share. Subscribers are also being issued 1 warrant per share with a strike price of 1.5p.
Companies: BP/ CASP ENOG ENI PEN PMO RBD SDX
Energean Oil & Gas (ENOG LN): Two further gas sales agreements secured | TomCo Energy (TOM LN): Significant Pre-FEED Report issued
Companies: Energean Plc (ENOG:LON)TomCo Energy plc (TOM:LON)
Oil posted its first back-to-back weekly loss since April's rout with the end of the summer driving season and concern about OPEC's production compliance weighing on prices.
Futures in New York edged up on Friday, but prices fell 6.1% this week coinciding with a retreat in U.S. equities. Traders are also examining data indicating the United Arab Emirates since July has been regularly exceeding its quota under a deal between the Organization of Petroleum Exporting Countries and its allies.
The uncertainty over how much supply OPEC+ is returning to the market adds another wrench in the recovery for oil prices still reeling from the pandemic-driven blow to consumption. While U.S. supplies had grown tighter in past months and producers were expected to restrain production amid a weak financial backdrop, stockpiles rose again last week for the first time since mid-July.
Companies: XOM HES JSE 88E ADV CAD CHAR ECHO ENOG EME I3E PMG RBD SQZ SOU TLW VGAS WTE PHAR
PetroTal (PTAL LN)C; Target price £0.40: Important development in Peru – On August 28, 2020, the Government of Peru announced a Supreme Decree approving the financial Gap Closure Plan within a number of provinces in northeast Peru, including Loreto, the area where PetroTal operates the Bretana oil field. The decree provides for a six year financial commitment of approximately US$1.7 bn to the communities. This is important as the decree specifically addresses the local community participation criteria, that have been a recurrent key area of contention for years with some communities in Peru. US$46 mm will be designated for economic development of the localities over the next four months by the Peruvian government. Since the announcement of the Decree, government and municipality representatives have been consulting with the community representatives . After meeting with the Bretana community in the coming days, it is expected that PetroTal will restart oil production shortly thereafter.
IN OTHER NEWS
88 Energy (88E LN/AU): Update in Alaska – The final petrophysical interpretation from the recently drilled Charlie-1 well provides an increase in net pay from 280’ to 398’, with the largest contribution coming from the Lima discoveries in the Seabee Formation. These improvements are despite using higher cut-offs for both reservoir and net pay.
Alvopetro (ALV CN): Update in Brazil - In August, total sales were 1,867 boe/d. Total aggregate gross prospective resources identified at the B1 prospect (block 183) and the C1 prospect (block 182) are estimated at 59.4 bcf.
Echo Energy (ECHO LN): Operating update in Argentina - Net 2020 production at Santa Cruz Sur over the period 1 January to 7 September was 2,040 boe/d.
Exxon Mobil (XOM US): New discovery in Guyana - ExxonMobil has made its 18th discovery at the Redtail-1 well on the Stabroek Block with 70 meters of high-quality oil bearing sandstone.
Total (FP FP): Dropping operatorship of Brazilian exploration blocks – Total is resigning from its role of operator for five exploration blocks, located in the Foz do Amazonas Basin. These exploration blocks are referenced as FZA-M-57, FZA-M-86, FZA-M-88, FZA-M-125 and FZA-M-127.
Westmount Energy (WTE LN): Increasing stake in JHI Associates - Westmount has purchased 1.55 mm common shares in JHI by way of the issue of 18.3 mm new ordinary shares in Westmount, which will represent approximately 12.7% of Westmount's enlarged issued share capital. JHI holds a 17.5% carried interest in the Canje Block, offshore Guyana, where ExxonMobil is the operator. At the completion of the transaction, Westmount will hold 6.9% in JHI.
Hibiscus Petroleum: Raising ~ US$480 mm to acquire upstream assets – Hibiscus is raising up to US$480 mm from a private placement of convertible redeemable preference shares to acquire oil and gas assets.
Jadestone Energy: 1H20 results – 1H20 WI production in Australia was 12,116 bbl/d. Net cash at the end of June was US$78.3 mm. FY20 production guidance has been reduced to 11.0–12.5 mbbl/d from 12.0-14.0 mbbl/d previously, as a result of a slowdown in well interventions. Jadestone reiterated its FY20 capex guidance of US$30 35 mm. A maiden interim dividend of 0.54 US cents/share has been declared, representing a total distribution of US$2.5 mm, in line with the lower end of the FY guidance of US$7.5–12.5 mm, split approximately one-third/two-thirds between interim/final. The company anticipates to be debt free by the end of 1Q21. Most approvals are now in place with regards to the New Zealand acquisition and Jadestone expects final government approvals in 4Q20 post the upcoming general election. In Vietnam, discussions are continuing with the government on the FDP and a future gas sales agreement.
Hurricane Energy (HUR LN): Reserves downgrade in the UK – 2P reserves have been reduced from 30.7 mmbbl to 9.4 mmbbl (as of 01/09/2020) with 2C contingent resources cut from 486 mmbbl to 58 mmbbl at Lancaster and from 565 mmbbl to 45 mmbbl at Lincoln. Lancaster EPS production for September to December 2020 is expected to average 12,000-14,000 bbl/d. The company held net debt of US$123 mm at the end of June.
Reabold Resources (RBD LN) and ADX Energy (ADX AU): Partner not farming in Romania assets? – Tamaska Oil & Gas has decided not to proceed with the farmin transaction relating to the EX-10 Parta Exploration licence in Western Romania held by Danube Petroleum (49% ADX, 51% Reabold). Tamaska does not intend to proceed with the planned acquisition of 3D exploration seismic.
Serica Energy (SQZ LN): 1H20 results – 1H20 production in the UK North Sea was 21,600 boe/d. First gas at Columbus continues to be expected by the end of 2021. Serica held £101 mm in cash at the end of June.
The Parkmead Group (PMG LN): Licence awards in the UK – Parkmead has been offered 50% WI in Blocks 14/20g & 15/16g situated in the Central North Sea, adjacent to Parkmead's extensive Greater Perth Area. Two further licences have been offered to Parkmead as part of the 32nd Round. Block 14/20c (Parkmead 100%) is located in the Central North Sea and contains extensions to the Lowlander oil field and the Fynn Beauly oil discovery. Block 42/28g (Parkmead 100%) is situated in the Southern North Sea near the Tolmount gas discovery.
FORMER SOVIET UNION
Cadogan Petroleum (CAD LN): 1H20 results – 1H20 production in Ukraine was 230 bbl/d. The company held US$11.6 mm in cash at the end of June.
MIDDLE EAST AND NORTH AFRICA
Chariot Oil & Gas (CHAR LN): Resources update in Morocco – Anchois is now expected to hold 361 bcf of contingent resources (2C) and 690 bcf of prospective resources (P50).
Energean (ENOG LN): 1H20 results – 1H20 pro forma production (including Edison E&P) was 52.1 mboe/d, with FY20 production guidance unchanged at 44.5 - 51.5 mboe/d. The acquisition of Edison E&P is expected to be completed during 4Q20. The FY20 pro forma capex guidance has been reduced by US$75-125 mm to US$635 - 705 mm, primarily due to (i) the rescheduling of expected milestone payments under the Karish EPCIC contract; and (ii) expected timing of capital expenditure on Edison E&P in Egypt. Net debt at the end of June was US$597 mm.
ShaMaran Petroleum (SNM CN): Receives payment from Kurdistan – ShaMaran has received a net payment of US$6.5 mm from the Kurdistan Regional Government for Atrush oil sales invoice entitlements for the month of July 2020.
Tethys Oil (TETY SS): Production update in Oman – WI production in August was 10.8 mbbl/d.
Zenith Energy (ZEN LN): Acquisition in Tunisia – Zenith is acquiring a 26% interest in the North Kairouan permit and the Sidi El Kilani Concession, which contains the Sidi El Kilani oilfield for US$0.3 mm.
Africa Oil (AOI/SS CN): Extension of Kenya licences – The partners on the 10BB and 13T licences have been given the right to extend the second exploration period until 31 December 2020, with a further extension until 31 Dec 2021.
Kosmos Energy (KOS US/ LN): Selling frontier exploration assets for US$100-200 mm – Kosmos is selling interests in blocks offshore São Tomé & Príncipe, Suriname, Namibia, and South Africa to Shell. The consideration consists of an upfront cash payment of ~US$100 mm, plus contingent payments of US$50 mm payable upon each commercial discovery from the first four exploration wells drilled across the assets, capped at US$100 mm in aggregate. Three of the four wells are currently planned for 2021.
Tullow Oil (TLW LN): 1H20 results – 1H20 production was 77 mboe/d. Net debt at the end of June was US$3.0 bn. FY20 production guidance has been narrowed from 71-78 mbbl/d to 73-77 mbbl/d following good well performance in Ghana. During 1H20, Jubilee and TEN produced 84,700 bbl/d and 50,900 bbl/d gross respectively. This strong performance is a result of (1) increased gas offtake nominations, (2) permission to temporarily increase flaring, (3) higher than forecast facility uptime of over 95% at both FPSOs and (3) greater reliability and redundancy in the water injection facilities on the Jubilee FPSO. The Ntomme-09 production well came on stream in August and is adding c.5,000 bbl/d gross to TEN oil production. FY20 free cash flow is forecast to break even at the current Brent forward curve. The semi-annual RBL debt capacity redetermination is expected to complete in early October 2020. The next redetermination will be in January 2021. Drilling of the Goliathberg-Voltzberg North well in Block 47, Suriname, is planned for 1Q21.
Companies: 88E AOI ALV ENOG XOM HUR JSE KOS PMG TAL RBD SQZ SNM TPL FP TLW
U.S. futures and European stocks dropped on Friday as investors mulled a reported conflict among policy makers over a stimulus package for the single-currency region, as well as political upheaval in France.
The Stoxx 600 Index fell after Bloomberg News reported the European Central Bank is facing a potential rift over how much their emergency bond-purchase program should stay weighted toward weaker countries such as Italy. The euro fluctuated following French President Emmanuel Macron's decision to name a new prime minister after asking his government to resign. Rolls-Royce Holdings Plc slumped after the British jet-engine maker said its exploring options to raise funds to strengthen its balance sheet.
The dollar was slightly down, posting its first weekly drop in a month, while American cash equity and bond markets were shut for Independence Day. President Donald Trump will attend an early July 4 celebration at Mount Rushmore with thousands of guests who won't be required to wear masks, while his U.K. counterpart Boris Johnson urged Britons to act responsibly as pubs prepare to re-open and the government lifts quarantine rules on travel for 60 countries.
The friction at the ECB highlights the risk to markets should promised stimulus measures fall short. Investors continue to weigh policy support and upbeat economic data against relentless new outbreaks of the virus. U.S payrolls figures Thursday fuelled optimism of a V-shaped recovery in the world's biggest economy, even as Florida reported that infections and hospitalizations jumped the most yet, and Houston had a surge in intensive-care patients. Emerging-market stocks posted the biggest weekly gain in a month.
Elsewhere, crude oil dipped but remained on track for a weekly gain.
Companies: TGL JSE IAE ADME BP/ DGOC ENOG NTQ NTOG PMO RBD ZPHR RDSA UKOG TRIN
Union Jack Oil* (UJO LN), STRONG BUY, TP: 0.82p: Increase in stake at Wressle, note published | Energean Oil & Gas (ENOG LN): Trading update, work in Singapore set to recommence | Echo Energy (ECHO LN): Reserve and resource update at Santa Cruz Sur
Companies: UJO ENOG ECHO
88 Energy (88E LN/AU): Update in Alaska | Echo Energy (ECHO LN): Operation update in Argentina | Subsidies to the oil industry in Argentina | Energean Oil & Gas (ENOG LN): Neptune Energy not acquiring Edison UK and Norway | EnQuest (ENQ LN): 1Q20 update | Equinor (EQNR NO): Dry hole in Norway | Hurricane Energy (HUR LN): Problem with a well at Lancaster in the UK, FY20 production will be “substantially” lower than expected | Lundin Energy (LUP SS): Reduced FY20 production on guidance of Norwegian government curtailment |SDX Energy (SDX LN): 1Q20 results | Total (FP FP): Not buying Ghana from Occidental Petroleum
Companies: 88E AOI ECHO ENOG ENQ EQNR HUR LUNE SDX TLW
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Shanta Gold (AIM: SHG), the East Africa-focused gold producer has, this morning, released a production and operational update for Q4 2020 and, last week, a group-wide reserves and resources update. Overall, it was a robust quarter leading to FY20 gold production of 82,978 oz bang in line with 2020 production guidance (80-85koz, Tamesis est. 83.3koz) – the third year in a row they have hit unchanged guidance which is especially impressive in the face of the pandemic. They have also increased net reserves. It was another very busy quarter for the company at the corporate level too with a successful equity raise to fund drilling and technical studies at the exciting West Kenya Project.
Companies: Shanta Gold Limited
Trinity has proven the sustainability and resilience of the Company's business model, increasing both production and cash despite significant challenges in 2020. FY20 average production volumes increased 7% on 2019 to 3,226bopd despite no new drilling activity in 2020. Cash at 31 December 2020 was US$20.2m, a 27% YoY increase – driven by strong operating cash flow, and achieved despite a 36% reduction in average oil price realisations versus 2019. Average production volumes in Q4/20 increased by 2% on Q3/20 to 3,206bopd, with Trinity offsetting natural production declines through its rigorous approach to production management. Post-period, the Trinidad and Tobago Government lifted the threshold for the imposition of SPT for small onshore producers from US$50/bbl to US$75/bbl in 2021 and 2022, providing a considerable boost to Trinity's cash generation potential. With a high number of growth initiatives underway across the energy spectrum, Trinity is well positioned to broaden its portfolio and create further value as it looks to further scale the business. We increase our price target to 34p (from 32p), almost 3x the current share price and reiterate our BUY recommendation.
Companies: Trinity Exploration & Production Plc
Gas composition data from the Kyalla 117 well has confirmed the presence of liquids-rich gas within the Lower Kyalla Shale, with less than 1% CO2. Analysis of the Kyalla 117 well has shown that the gas stream contains c65% methane gas, with c33% being other liquid gases such as ethane and butane. The analysis also supports the view that the Kyalla gas stream will have elevated LPG and condensate yields. Operations are scheduled to recommence at Kyalla 117 at the beginning of the dry season in Q2/21 and will initially focus on flowing back sufficient hydraulic fracture stimulation water to allow the Kyalla 117 well to flow continually without assistance.
Companies: Falcon Oil & Gas Ltd.
Oil slid by the most in three weeks as a stronger dollar and weak US economic data stoked concerns over an economic rebound.
Futures in New York tumbled 2.3% on Friday after a rally in oil earlier in the week pushed the benchmark into overbought territory. The US dollar strengthened, reducing the appeal of commodities priced in the currency. US consumer sentiment cooled more than forecast in January and other economic data such as sluggish retail sales and producer prices also portray the obstacles still facing the country as it emerges from the pandemic.
Meanwhile, President-elect Joe Biden said he will ask Congress for $1.9 trillion to fund immediate relief for the US economy that has been pummelled by the pandemic. But the large price tag and inclusion of initiatives opposed by many Republicans set up the aid package for a drawn out legislative battle.
Despite the pullback in oil futures, vaccine breakthroughs and Saudi Arabia's pledge earlier this month to deepen output cuts are expected to support prices. JPMorgan Chase & Co said a “nasty deficit” could emerge in the oil market later this year.
Meanwhile, technical indicators had been flashing warnings signs all week. The 14-day Relative Strength Index for both US and global benchmark crude futures traded above 70 this week in a sign they were overbought, though both slipped under that level Friday.
West Texas Intermediate for February delivery fell $1.21 to settle at $52.36 a barrel. Futures rose less than 1% this week.
Brent for March settlement lost $1.32 to end the session at $55.10 a barrel. The contract fell 1.6% during the week.
The market's structure has also softened. Brent's prompt timespread dipped back into contango on Friday, a bearish structure where nearby prices are cheaper than later-dated ones.
This week has seen the annual commodity index rebalancing take place -- a move that was expected to see as much as $9 billion flow into the oil market. Since it began last Friday, there has been a surge in so called trading-at-settlement volumes, an instrument often used by participants with index exposure. For Brent, average volumes over the last five days have reached a record.
Other oil-market news:
Companies: FO PRP 88E DGOC EME TRIN UOG
Foresight Group , the award-winning infrastructure and private equity investment manager to IPO on the Main Market (premium). The Offer will primarily comprise a sale of shares by existing shareholders (c.80% of the Offer) with a smaller offering of new shares (c.20% of the Offer) to be issued by the Company. Details TBA. Cornish Metals (TSX-V: CUSN) intends to list on AIM. The Company is proposing to raise £5 million by way of private placement of new Common Shares (the "Fundraising") to advance the United Downs copper-tin project. The Company expects that Admission will become effective in February 2021. The Company's Common Shares will continue to be listed and trade on the TSX-V in Canada. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb.
Companies: TYM W7L BEG CRPR EUZ IRR CMCL FARN KETL AUG
Anglo Asian Mining* (AAZ LN) – STRONG BUY – Update on Restored Contract Areas
Chaarat Gold* (CGH LN) – Kapan production beats guidance and delivers $19m EBITDA
Sunstone Metals (STM AU) – Drilling results from the Espiritu gold-silver prospect in Ecuador
Tertiary Minerals* (TYM LN) – Sale of data on Finnish project
Versarien* (VRS LN) – Interim results
W Resources (WRES LN) – La Parilla Q4 production
Companies: AAZ CGH WRES TYM VRS STM
Jubilee put out an intraday press release yesterday updating on the performance in the first half (ending Dec 2020) of the FY 2021. Once again Jubilee delivers; significantly increased revenues and profits from its chrome and PGM division in South Africa and a small, but important, contribution from Zambia. Notably this improvement isn't just from commodity price performance; rather increased production, productivity, throughput, renegotiated contracts and all set alongside the strong performance of commodity prices –rhodium, palladium and platinum. We see this as still only the start for Jubilee as we look forward to the first copper oxide concentrates from the Roan project in Zambia to the Sable Refinery – where the Roan plant is currently under construction. Once again we are struck by the speed at which Jubilee moves to advance its projects and, with its South African cash engine showing no signs of slowing down. Jubilee can choose to move its wider ambitions in Zambia forward from internally generated cash flow. On the back of the strong performance we put our forecasts under review.
Companies: Jubilee Metals Group PLC
Companies: AAZ AAU CNR GLEN RIO TSG CCZ IRR
Bluejay Mining* (JAY LN) – BUY, Valuation 29.4p – Bluejay agrees jv with Rio Tinto over the Enonkoski Project in Finland
Bushveld Minerals* (BMN LN) – BUY - Valuation 37.7p – Ferro-Vanadium prices jump 11.6% in the US
Edenville Energy* (EDL LN) – Funding agreement refinanced and £900k raised
Kodal Minerals* (KOD LN) – Further progress at West African gold assets
Lucara Diamonds (LUC CN) – Karowe mine yields 341 carat diamond
Serabi Gold* (SRB LN) –Q4 production results continue modest recovery of Q3
Companies: LUC JAY BMN EDL KOD SRB
Salt Lake Potash Lake Way Project is nearing completion with the Process Plant and NPI well advanced. The overall project, including all on-lake infrastructure, was 81% complete on 31 December 2020.
The Project remains on track for first SOP production in March 2021 and first SOP sales in April, with the project capital budget unchanged at A$264m. Funds from the first US$105m tranche of the Project Development Facility have been received enabling repayment of the US$45m Bridge Facility and completion of project construction.
The Process Plant was 88% complete on 31 December 2020 (on an earned value basis). Approximately 27kt of potassium rich kainite and schoenite salts have been harvested for commissioning plant feed from the Train 1 cells. Harvesting activities will re-commence in March ahead of plant commissioning. Process Plant commissioning is expected to commence in February with introduction of first feed salts to the plant in March.
Companies: Salt Lake Potash Limited
Botswana Diamonds (BOD LN) – Raising £363,000
Eurasia Mining* (EUA LN) – West Kytlim Definitive Feasibility Study approved
Power Metal Resources* (POW LN) – Three highly prospective gold projects acquired in Canada
Serabi Gold* (SRB LN) – Initial drilling results from Sao Domingo
Vast Resources* (VAST LN) – Baita Plai General Manager appointment
Companies: BOD EUA POW SRB VAST
AEX Gold Inc (AEXG LN) –Operational update
Cornish Metals* (CUSN LN) – AIM Admission – Writing the next chapter in Cornwall's long mining history
Cornish Metals* (CUSN CN) – CLICK FOR PDF
Europa Metals Limited (EUZ LN) – Drilling starts at Europa's Toral zinc, lead, silver project in Spain
Caledonia Mining* (CMCL LN) – Record mine production at Blanket
GoldStone Resources (GRL LN) – Settlement of Claim by Former Director
IronRidge Resources* (IRR LN) – Further results from Zaranou gold exploration project, Cote d'Ivoire
Oriole Resources (ORR LN) – Exploration projects update
Tertiary Minerals* (TYM LN) – New copper exploration project in Nevada
Companies: CUSN CMCL AEX GRL ORR TYM EUZ IRR
Central Asia Metals (CAML LN) has reported Q4 2020 production with 3,365t of copper taking full year output to 13,855 in line with our forecast of 13.9kt and at the top end of guidance. Q4 lead output was 7,442t meaning 29,741t over the full year, up 2% YoY and in line with our forecast of 30kt while zinc output of 5,848t took full year output to 23,815t again in line with our forecast of 24kt and up 2% YoY despite the disruption at Sasa which CAML has overcome rapidly as we expected.
Companies: Central Asia Metals Plc
Pantheon announced that it is acquiring the 10.8% of the Talitha Unit it does not already own, bringing its interest to 100% in the unit. The vendor, Otto Energy Alaska, will be provided with 14,272,592 shares in Pantheon Resources as consideration. The company continues to drill ahead with the Talitha#A well. The transaction is value accretive for Pantheon and we increase our fair value estimate to 89p from 83p. As a reminder, our fair value estimate includes 25% of our successcase valuations in respect of two of the four targets that the Talitha#A well is intended to evaluate, namely, the Talitha Brookian Shelf Margin Deltaic and the Talitha Kuparuk
Companies: Pantheon Resources plc
Today's news & views, plus announcements from RIO, EXPN, BLND, GLEN, PFD, HMSO, WG, WJG, HOTC, KAPE, QTX, BOOM
Companies: Rio Tinto plc