Malcy’s Blog – Oil price, Angus Energy, Savannah Energy, Lekoil & finally

WTI $68.83 +$1.11, Brent $71.35 +$1.10, Diff -$2.52 -1c, NG $3.08 -3c, UKNG 63.57p +0.57p

By Malcolm Graham-Wood

Oil price

Continued confidence on the oil price front as news from the Opec+ meeting which was one of the fastest on record starts to filter through. They expect world wide stocks to continue to fall as the draw on Opec increases given another fall in world supply by another 200/- creates a 1.4m shortfall.

The meeting did not discuss Iran and the likelihood of an extreme slate of candidates has made some people think that after the elections might be the time for negotiations not before.

Angus Energy

Angus has announced that the Conditions Precedents to drawdown have been met, the full £12 million facility required for the re-development of the Saltfleetby Gas Field and the drilling of the side-track well is now fully available. £5.84 million has currently been drawn down with the balance to be drawn over the coming weeks against invoices in line with the Field Development Plan and the Plans for the acceleration of production through the fast-tracking of the side-track well. 

 Simultaneous with drawdown, the Company has hedged approximately 70% of the Company’s and its partners’ share of future gas sales, estimated under a conservative projection, for three years beginning in July 2022, providing Angus with downside revenue protection, all the while allowing the Company to capture upside in the event of higher gas prices.  The average achieved price under the Hedge, including all fees, costs and charges is 43 pence per therm.

Angus has initiated the following activities to implement its timeline to first gas by the end of 2021: Two gas compressors packages are currently being designed by specialist fabricators in Kent. Each unit is rated at 5 MMscf/d each with Caterpillar gas engines and Ariel reciprocating compressor sections. The engines and compressor ends have been identified and secured for the project. Delivery to site of the first pre-fabricated unit will be in October.

A condensate stabilisation system is being designed by a Hull based engineering group with extensive experience supporting gas production operations in the region. Local UK fabricators have been contacted and build slots identified to allow for equipment manufacture to fit the project schedule.  This includes associated options for the Joules-Thompson dew pointing device and a desiccant dehydration system.

Gas commercial sales meter and analyser skid incorporating state-of-the-art Honeywell equipment is completely designed and subsequently reviewed by the National Grid. The equipment is under fabrication in the UK working towards delivery in mid-July.

Detailed design of the process facility continues with Aberdeen based engineering house, Optimus. The current design in progress will be iterated to include final equipment selections and matured into the complete design package. Bulk materials will be ordered based on the specifications developed in the detail design. HSE and Regulatory review will be progressed.

Construction activities are planned over several months with multiple local specialist contractors. On site operations will commence in July with limited groundwork preparations on this pre-developed site. In situ fabrication of flowlines will commence in August and main production equipment will be connected as individual skid packages arrive.

 Further to its presentation of 24 February, and in view of the revised timeline of the funding, the Company is now targeting commissioning of the field during Q4 2021 and First Gas around the year end.

Savannah Energy

Savannah announced yesterday lunchtime that it is in discussions with Exxon, the blog had just been published, I did write a ‘Flash blog’ which is republished below in case you missed it.

Savannah has  announced that, it is in advanced exclusive discussions with ExxonMobil Corporation with respect to the proposed acquisition of its entire upstream and midstream asset portfolio in Chad and Cameroon. The RNS came out after the blog was published and to be honest doesn’t give much detail save that Andrew Knott’s ambitions remain undiminished. 

The Proposed Acquisition would include a 40% operated interest in the Doba Oil Project, and an effective c. 40% interest in the Chad-Cameroon oil transportation pipeline. For reference, in 2020 the Doba Oil Project produced an average gross 33.7 Kbopd and the Chad-Cameroon pipeline transported a gross 129.2 Kbopd.

If completed on the currently proposed terms, the Proposed Acquisition would be classified as a reverse takeover transaction in accordance with the AIM Rule 14, and accordingly, the Company has requested that its ordinary shares be suspended from trading on AIM with immediate effect and will remain so pending publication of an AIM admission document setting out, inter alia, details of the Proposed Acquisition, or confirmation is provided that discussions around the Proposed Acquisition have been terminated.

Clearly market expectations will partly revolve around how long the suspension will last and how the deal will be financed, not as long as the Seven Energy deal and doing a deal with Exxon should be a good deal easier and swifter. At first glance I would initially suggest it will be something that if Andrew Knott thinks is doable shareholders should at least for now give him the benefit of the doubt to execute.

There can be no assurance that agreement between the parties will be reached on mutually acceptable terms and that the Proposed Acquisition will complete. The Company will update shareholders as to progress made in relation to the Proposed Acquisition as appropriate.

Lekoil

LEKOIL has announced that it has ‘terminated the employment contract of its CEO, Mr. Olalekan Akinyanmi, with immediate effect, due to a corporate governance breach’.    

The Company will commence a search for a new CEO and, in the interim period, Anthony Hawkins will act as interim Executive Chairman of the Company.

As previously announced, the Company is the lender under a loan agreement with Mr. Akinyanmi.  As at 31 May 2021, the outstanding balance of the Loan was approximately US$1.5 million. The Company will commence proceedings to recover the Loan.  

And finally…

In the cricket the Black Caps showed why they are the number two in the world yesterday with a long, slow but disciplined batting display that led to 246-3 at the close with Conway Twitty not out 136 on debut.

The Kentucky Derby winner Medina Spirit failed the second phial of its drug test test taken in Kentucky but plus ca change…Bob Bafford has been banned for two years so at least out for this weekend…

And a mediocre England beat Austria 1-0 at Middlesboro, a better game from Scotland who got a 2-2 against the Netherlands away and Wales lost 2-0 in France. Tonight Northern Ireland are in the Ukraine.

(The opinions expressed here are those of the author, a columnist for Share Talk.)

Malcolm Graham-Wood

Source Link https://www.malcysblog.com/2021/06/oil-price-angus-savannah-lekoil-and-finally/

Website Link www.malcysblog.com

Disclaimer: Malcy’s Blog is provided for general information about the international oil and gas industry and the companies that operate within it. It does not constitute investment advice and Malcy does not buy or sell shares, warrants or bonds in any company written about within the blog. Information is taken from publicly available sources and any comment is that of the author who does not take any third party comment in the blog


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