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
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
The revised threshold for the imposition of Supplemental Petroleum Tax (SPT) has now been implemented, with the threshold at which SPT is due increasing from US$50/bbl to US$75/bbl for the financial years 2021 and 2022. As a result, we expect Trinity to be exempt from SPT across all of its onshore licences below US$75/bbl. Using the forward WTI oil price curve as the basis for our model, we currently forecast Trinity paying no SPT during 2021 and 2022. We estimate that at the current forward price curve (2021: US$52/bbl) cUS$3.6m of SPT would have previously been payable by Trinity in 2021. As such, these SPT reforms represent a considerable boost to potential cash flow generation from Trinity's onshore licences should realisations average above US$50.01/bbl for any calendar quarter during 2021 and 2022. We update our model, increasing our price target to 32p (from 31p) a 160% premium to the current share price and reiterate our BUY recommendation.
Union Jack Oil* (UJO LN): Operations ramp up ahead of first oil at Wressle
Trinity Exploration & Production (TRIN LN): The Finance Act 2020 yields positive news for TRIN
Independent Oil & Gas (IOG LN): Comprehensive corporate update, development well on track for Q2 2021
Block Energy (BLOE LN): Delivery of first gas from West Rustavi within the next 30 days
88 Energy (88E LN): Acquisition of the Umiat Oil Field, located on the North Slope of Alaska
Companies: UJO TRIN IOG BLOE 88E
Oil posted the biggest weekly gain since late September as Saudi Arabia's plan to slice output spurred a surge in physical crude buying.
Futures in New York advanced $3.72 this week and Brent oil topped $55 a barrel for the first time since February. Saudi Arabia's pledge earlier this week to cut production by 1 million barrels a day in February and March has made for a tighter supply outlook sooner than anticipated. Meanwhile, prospects for additional stimulus under a Biden administration spurred broader market gains.
Saudi Arabia's surprise cut appears to have caught some Asian buyers by surprise and demand for US crude for export to Asia has gained this week. Unipec, the trading arm of China's largest refiner, bought its eighth cargo of North Sea crude in a pricing window run by S&P Global Platts this week and was seeking more in what may be the heaviest buying of its kind on record.
Brent's move above $55 a barrel caps a stellar few months for the oil market, with crude emerging as a favoured play to bet on coronavirus vaccines and global reflation. Saudi Arabia's pledge has led analysts to rethink their projections for crude's price recovery. Citigroup Inc boosted its price forecasts on Friday, saying the kingdom's actions should accelerate stockpile draws.
Meanwhile, annual commodity index rebalancing may provide another tailwind, with as much as $9 billion of oil contracts possibly being bought over the five days of activity that start Friday, Citigroup said.
Brent for March settlement advanced $1.61 to end the session at $55.99 a barrel.
West Texas Intermediate for February delivery rose $1.41 to settle at $52.24 a barrel.
Both benchmarks are at the highest since late February.
The kingdom's shock move has rippled across the oil market this week, with the difference between the price of oil for different months firming markedly in recent sessions. WTI's nearest contract traded at a premium to the following month for the first time since May, while the closely watched spread between the nearest two December contracts is at its strongest intraday level since last January.
Oil rose for a seventh straight week as efforts to pass another US virus relief package added to optimism that the vaccine's rollout will provide a long-awaited boost to demand.
Futures rose 1.5% in New York on Friday, extending this week's rally to over 5%. Talks on a relief package have made some headway, with Senate Majority Leader Mitch McConnell saying he is “even more optimistic now” that an agreement is near. Recent progress in rolling out a Covid-19 vaccine has also buoyed the outlook for consumption.
The Bloomberg Dollar Spot Index is set for a weekly decline and has been trading near its lowest since 2018. A weaker dollar raises the appeal for commodities priced in the currency.
Underlying the climb in headline crude prices, premiums on nearer-dated contracts relative to later ones are indicating improving demand. The bullish pattern known as backwardation has strengthened at the back end of oil's forward curve. West Texas Intermediate's nearest December contract trades more than a $1 a barrel higher than that for December 2022, compared to trading at a discount less than a month before.
Yet, there are signs the market's rally is due for a pause. Brent's nearest timespread ended the week at parity, compared with a premium of as much as 18 cents the week prior. At the same time, premiums for real-world barrels are easing.
West Texas Intermediate for January delivery rose 74 cents to settle at $49.10 a barrel.
Brent for February settlement gained 76 cents to $52.26 a barrel.
Both benchmarks closed at their highest since late February.
The spreading virus and lockdowns are weighing on demand, but the hit is much smaller than earlier in the year and is likely only a speed bump to rebalancing the market, according to a Goldman Sachs note. This will leave the oil market range-bound and choppy in coming weeks as vaccine enthusiasm is followed by headlines on tighten pandemic restrictions, the bank said.
Trinity has signed a MOU with The National Gas Company of Trinidad and Tobago (NGC) to explore and develop new projects to enable and accelerate the energy transition in Trinidad and potentially the wider Caribbean and Latin America. The MOU covers a range of development opportunities, including a micro LNG business, the development of renewable energy opportunities and the pursuit of stranded gas assets. These value added initiatives will contribute towards maximising the benefits from Trinidad and Tobago's natural resources, whilst also supporting the Country's ambition towards lowering greenhouse gas emissions in line with the Paris Accord. For Trinity, the collaboration with NGC is aimed to derive further value from the Company's existing assets, to establish a broader portfolio of energy assets and to further reduce the Company's carbon output.
Oil just managed a weekly gain as an impasse in Washington over pandemic relief dimmed chances of an imminent boost to demand.
Futures in New York eased off a nine-month high alongside a broader market decline as bipartisan talks on another round of US fiscal stimulus stalled. West Texas Intermediate rose less than 1% for the week. A pullback was largely expected after Brent's rally above $50 earlier in the week, with a key technical benchmark settling in overbought territory on Thursday.
With the market outlook improving, US crude futures have gained roughly 30% since the end of October. Global consumption of gasoline and diesel rose to a two-month high last week, according to an index compiled by Bloomberg, suggesting the impact of recent coronavirus lockdowns is waning. Buying by Chinese and Indian refiners also indicates Asian physical demand will likely remain supported for another month.
Still, there are some reasons to give pause, as the market this week shrugged off the second largest US crude build on record. At the same time, oil price upside could be capped early next year as concerns of virus-related lockdowns and rifts in the Organisation of Petroleum Exporting Countries present potential near-term headwinds, TD Securities wrote in a report.
West Texas Intermediate for January delivery lost 21 cents to settle at $46.57 a barrel.
Brent for February settlement declined 28 cents to end the session at $49.97 a barrel. The contract rose 1.5% this week.
The market has taken the OPEC+ alliance's recent decision to restore a small amount of output in January in stride, and the oil futures curve is signalling investors expect further gains in consumption. In the US, government data showed driving on US highways increased last week, though it still remains off for this time of year.
But amid the recuperation in oil demand, a struggle over market share could give rise to more volatility in oil markets. It will be increasingly difficult for OPEC and its allies to walk the tightrope between volume and price, with the producer group looking to both increase revenue and prevent a sizable rebound in US market share, S&P Global Platts head of analytics said in a webinar on Friday.
Other oil-market news:
Equinor ASA plans to more than double its oil production in Russia after buying a stake in a Rosneft PJSC project in East Siberia.
Saudi Aramco gave full contractual supplies of crude to at least six customers in Asia for January sales, according to refinery officials with knowledge of the information.
The number of supertankers signalling the US as their destination rose in the past week to the highest level since early September, according to ship-tracking data compiled by Bloomberg.
Oil rose for a fifth straight week with support from an OPEC+ deal and hopes for another round of US stimulus.
Futures in New York and London closed at fresh nine-month highs on Friday, with signs that momentum is building toward a fiscal stimulus plan that could provide an immediate demand boost, before a vaccine is widely available.
Prices had already been rising after OPEC+ reached a compromise agreement that offers something for members concerned about the fragility of the market, as well as nations who want to pump more to take advantage of higher prices. The agreement involves adding 500,000 barrels a day of production to the market next month, then hold monthly meetings to decide on subsequent moves.
Oil has recently reached the highest levels since March amid optimism over an impending vaccine rollout lifting demand next year. Alongside the rally in headline crude prices, the oil futures curve is signalling tighter supply as demand in Asia booms and the key North Sea market strengthens. The prompt timespread for Brent crude moved back into backwardation this week, while the nearest December contract is trading at a higher level than the same contract for December 2022.
West Texas Intermediate for January delivery advanced 62 cents to settle at $46.26 a barrel, posting a 1.6% weekly gain.
Brent for February settlement climbed 54 cents to end the session at $49.25 a barrel, with the contract rising more than 2% this week.
Both benchmarks are at the highest since early March.
While Democrats and Republicans have been at an impasse for months over another round of US fiscal stimulus, signs of progress have led broader markets to rally heading into the weekend. House Speaker Nancy Pelosi said she and Senate Majority Leader Mitch McConnell have discussed attaching the relief measures to an omnibus spending bill that the parties are working on separately to keep the government funded beyond 11 December into 2021.
Meanwhile, the rally in headline crude prices is not a welcome sign for every corner of the market. Europe's beleaguered oil refineries are struggling to pass on the higher cost to buyers as they face weak fuel demand due to the pandemic. In the US, the combined refining margin for gasoline and diesel remains near $9 a barrel at its lowest in roughly a decade for this time of year.
Brent oil edged lower but was on track for a fourth weekly gain -- amid signs of division among OPEC+ members just days before a key policy meeting on whether to extend production curbs.
Futures in London traded near $48 a barrel after falling 1.7% in the previous session. West Texas Intermediate dropped 2% from Wednesday, with prices not closing on Thursday due to the Thanksgiving holiday in the US.
While most analysts surveyed by Bloomberg are forecasting OPEC+ will postpone a planned supply hike by three months to March at a meeting early next week, some see a chance of a shorter delay amid resistance from the United Arab Emirates and Iraq, which are eager to resume oil sales.
OPEC's president said the group must remain cautious, with internal data pointing to the risk of a new surplus early next year if output is hiked in January. That came after Iraq's deputy leader criticised the cartel, saying the economic and political conditions of member countries should be considered before they are asked to withhold production. The recent rally gives leverage to members who want to pump more, Standard Chartered Plc said in a note.
Crude is up around 6% this week as signs Covid-19 vaccines could soon be rolled out brighten the consumption outlook, even as a resurgent virus led to more lockdown measures, particularly in Europe. There was also fresh evidence the demand recovery in Asia is gaining traction. Chinese industrial profits rose at the fastest pace in almost nine years in October, while Indian economic growth data due Friday is forecast to show a sharp recovery last quarter.
Brent for January delivery declined 0.4% to $47.59 a barrel on the ICE Futures Europe exchange at 7:43 a.m. in London and is up 5.8% this week.
WTI for the same month January delivery fell 2% from Wednesday to $44.80 on the New York Mercantile Exchange.
Crude futures on the Shanghai International Energy Exchange rose 0.2% to 289.1 yuan per barrel and have risen around 11% this week.
Oil rose to the highest in nearly three months with positive Covid-19 vaccine developments paving the way for a more sustained recovery in oil demand.
Futures rose 5% in New York this week for a third straight weekly gain as Pfizer Inc and BioNTech SE requested emergency authorisation of their Covid vaccine Friday. Moderna Inc also released positive interim results from a final-stage trial and said it is close to seeking emergency authorisation. Still, further gains were limited by broader market declines amid a dispute between the White House and the Federal Reserve over emergency lending programmes.
Even with vaccines on the horizon, a recovery in oil demand faces obstacles with governments under pressure to tighten restrictions and curb the spread of the virus. UK Prime Minister, Boris Johnson's officials are considering tougher pandemic rules placed on broader regions of England next month after a national lockdown is set to end and the country returns to its tiered system. Meanwhile, the shift toward working from home may have a lasting chill on gasoline demand, according to Federal Reserve Bank of Kansas City President Esther George.
The recent climb in headline prices has been accompanied by significant moves in timespreads, where traders bet on the price of oil in different months. The spread between West Texas Intermediate for December 2021 delivery and the following month moved to backwardation, while the closely watched gap between December 2021 and 2022 WTI contracts is close to also flipping.
West Texas Intermediate for December delivery, which expired Friday, rose 41 cents to settle at $42.15 a barrel.
The January contract rose 52 cents to end the session at $42.42 a barrel.
Brent for January settlement gained 76 cents to $44.96 a barrel. The contract rose 5.1% this week.
Pfizer and BioNTech's vaccine could be the first to be cleared for use, but first it must undergo a thorough vetting. The filing could enable its use by the middle to the end of December, the companies said in a statement. Yet, it could take at least three weeks for a US Food and Drug Administration decision.
Oil declined for a second session as rising Covid-19 cases threatened to derail demand with tougher restrictions in major US cities on the horizon.
Futures fell 2.4% in New York on Friday, but still posted the largest weekly gain in a month as optimism from news of a potential Covid-19 vaccine breakthrough jolted markets earlier in the week. Despite the measure of hope for the long-term, US cities from the West to East coasts have imposed stricter measures to slow surging case counts, raising concerns that the virus will further crimp demand for fuel. Gasoline futures also slumped.
Before concerns over lockdowns set in, futures also got support from signs the OPEC+ alliance is inching closer to delaying a planned output increase in January. But downbeat demand forecasts from the International Energy Agency and OPEC have clouded hopes of a recovery. At the same time, governors of states along the US West Coast issued travel advisories, following measures recently imposed in New York and Chicago.
Meanwhile, crude supply in Libya is rising. The country's production rose to 1.145 million barrels a day on Friday, according to a spokesman for its state-run National Oil Corp.
West Texas Intermediate for December delivery lost 99 cents to settle at $40.13 a barrel. The contract rose 8.1% this week.
Brent for January settlement slid 75 cents to $42.78 a barrel.
Gasoline for December delivery declined 2.7% to $1.1254 a gallon.
In Europe, where motorway traffic is down by almost 50% in some countries, demand is stuttering anew. That is impacting crude, with six supertankers of unwanted North Sea oil continuing to float in the region. Meanwhile, vehicle miles travelled on US highways fell last week in another sign Americans are keeping off the roads amid the pandemic.
Oil pared its weekly gain as a resurgent pandemic raised the risk of further demand destruction, while the market awaits the outcome of a tightly contested US election.
Futures in New York dropped 4.3% on Friday, the largest one-day decline in more than a week. Increasing expectations over OPEC+ delaying its planned output increase in January and a post-election rally in equities helped crude prices with a strong start to the week. But a string of renewed lockdowns in Europe and record case counts in the US kept any upward price momentum in check.
Conflicting themes have emerged over what the prospect of a divided government means for the oil market with Democrat Joe Biden appearing to be on the brink of victory in the US presidential race. A split Congress reduces the likelihood of President Donald Trump's tax cuts being rolled back under a Biden presidency, but also means any virus aid package may be thin and only come after a drawn out negotiation process.
The new surge in coronavirus cases has presented a fresh threat to oil's fragile demand recovery, with governments rethinking reopening plans to curb the spread of Covid-19. Meanwhile, the decision by Royal Dutch Shell Plc to shut its Convent refinery in south Louisiana as it continues to seek a buyer adds to a string of refinery closures in the wake of anaemic demand.
West Texas Intermediate for December delivery fell $1.65 to end the session at $37.14 a barrel. The benchmark rose 3.8% over the week.
Brent for January settlement lost $1.48 to end the session at $39.45 a barrel. The benchmark gained 5.3% this week.
Biden is nearing victory after taking the lead in Pennsylvania over Trump, with expectations that a new administration could attempt to impact a variety of US energy policy areas, such as fracking and relations with Iran. Still, uncertainty lingers as Trump's campaign promises legal challenges that could draw out results, though its lawsuits to challenge the count have gained little traction.
Meanwhile, as the market continues to wrestle with abundant stockpiles amid a pandemic-induced demand slump, the world's largest independent provider of oil storage said it has no space for hire at key fuel trading locations. Royal Vopak NV's total occupancy rate was the highest it has been for any three-month period since the start of 2019.
Other oil market stories:
Enbridge Inc became the largest company in the North American oil industry to set a goal of eliminating all net emissions from its operations by 2050, joining major European producers in providing climate-conscious investors with a plan to tackle global warming.
When Devon Energy Corp agreed to acquire WPX Energy Inc in September for $2.56 billion, it was the latest US shale merger to be done with little or no takeover premium, something that has become more common in the beleaguered oil industry over the past year.
Hard-pressed commodity traders will get no respite at all next week as the US electoral drama plays out ahead of a very busy agenda. There will be key insights into energy markets, a raft of top central bank speakers, and the latest on crop markets just as foodstuffs stage a powerful rally. The backdrop is the rapidly escalating coronavirus pandemic.
Bahamas Petroleum (BPC LN): Comprehensive trading update | Premier Oil (PMO LN): Chrysaor merger receives required creditor support | Trinity Exploration & Production (TRIN LN): Acquisition of seismic and well log data, onshore Trinidad | Independent Oil & Gas (IOG LN): Rig contract secured with Noble
Companies: BPC PMO TRIN IOG
Oil posted its largest monthly drop since March as renewed lockdown measures to contain the coronavirus threatened to upend a shaky demand recovery.
Futures fell 1.1% in New York on Friday to end the week below $36 a barrel taking their cue from a broader market selloff and the worst week for US stocks since March. At the same time, the US posted a record surge in daily coronavirus infections, while new restrictions in Europe could drive the region toward another recession.
A return to tougher lockdown measures will likely deter a substantive rebound in airline demand, with more restrictions in Europe prompting further cuts in airline capacity for the remainder of the year. Still, there is some support from booming freight markets and improvements in China and India. All the while, traders are looking ahead to next week's US election and an OPEC+ meeting at the end of November.
The concerns over demand come at a time when the Organisation of Petroleum Exporting Countries and its allies face a challenge in their efforts to keep supply in check with the faster-than-expected return in Libyan output. Iraq reaffirmed its support for the OPEC+ oil-production cuts and will not be seeking any exemption from the curbs next year, Oil Minister Ihsan Abdul-Jabbar said.
Meanwhile, Norway's largest oil field will pump at pre-Covid levels after receiving the government's permission last month.
West Texas Intermediate for December delivery fell 38 cents to settle at $35.79 a barrel. The contract fell 11% during the month.
Brent for December settlement, with its last trade date Friday, lost 19 cents to $37.46 a barrel
The more active January contract declined 32 cents to end the session at $37.94 a barrel
The futures curve also continued to weaken. WTI's front-month contract closed at the deepest discount to its second-month since early September. The spread between the benchmark's nearest December contracts, a closely watched gauge of market strength, also deepened its contango.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Trinity Exploration & Production Plc.
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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.
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
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
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
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
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
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
Companies: AAZ AAU CNR GLEN RIO TSG CCZ IRR
Results from the 2020 soil-till sampling campaign have been reported today and are positive with widespread anomalous gold values, including the highest soil-till assay results to date, along strike to the east and west of BAM Gold for a total length of 8 kilometres. Numerous new drill targets have been identified which have the potential of being advanced into additional resources to continue the rapid growth of the BAM Gold Project. Drilling has commenced in the area to the west and has intersected similar geological lithology and mineralisation to BAM Gold.
The drilling programme for 2020-21 at the BAM Gold Deposit is progressing as planned with a total of 6,518 metres of HQ diamond core, comprising 30 drill holes, completed to date. All drill holes have successfully intersected prospective mineralised zones associated with the BAM Gold Deposit. The drill core has been logged, processed, and sent to ALS Minerals of Thunder Bay for analysis to date. Assay results are pending, with increased exploration activity in Canada, the labs are full, with assays now taking 7-8 weeks. The current funded drilling programme is expected to complete in April 2021.
Companies: Landore Resources Limited
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
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
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
Today's news & views, plus announcements from RIO, EXPN, BLND, GLEN, PFD, HMSO, WG, WJG, HOTC, KAPE, QTX, BOOM
Companies: Rio Tinto plc
Antofagasta (ANTO LN) – Q4 production highlights strong quarter
BHP (BHP LN) – Record iron ore production, workforce reductions in Chile for Covid and continuing focus on copper exploration
IronRidge Resources* (IRR LN) – Call notice for exercise of warrants
Shanta Gold (SHG LN) – Reserves/Resources update replaces mined ounces
SolGold* (SOLG LN) – Nick Mather steps aside to allow search for new CEO to lead Alpala block-cave financing and development
Companies: ANTO BHP SHG SOLG IRR
Caledonia announces record production from its Blanket mine in Zimbabwe. The mine produced 57.9koz gold in 2020 (WHIe 55.5oz) up from the 55.2koz produced last year and beating its previous record production in 2017 of 56.1koz gold. Final quarter production of 15koz put Blanket in this position which bodes well for next year's production guidance of between 61 – 67koz (WHIe 65.8koz at the upper end of guidance) as production through the Central Shaft is expected to finally initiate.
Companies: Caledonia Mining Corporation PLC