Malcy’s Blog – Oil price, Block, Angus, Hurricane, Reabold & finally

WTI $39.93 +13c, Brent $41.77 +5c, Diff -$1.84 -28c, NG $2.12 +29c

By Malcolm Graham-Wood

Oil price

Another very mixed bag, the inventory stats should have pushed crude higher, after all it showed a draw in crude and products across the board. However the hurricanes have meant that the scribblers have something to blame on their indifferent forecasting ability apart from incompetence and they can sleep at night.

However, draws all over and with a refinery utilisation rate of 74.8% meant that product demand grew across the board. US domestic crude oil out output has fallen to 10.7m b/d echoing the rig count in recent weeks.

Block Energy

An operational and corporate update from Block this morning as the company responds to constructive dialogue had with a number of material shareholders who want to see the company moving in the right direction.

Block report ‘significant operational progress has been made at the Company’s Early Production Facility (“EPF”) with first gas on schedule for Q4 2020’, despite COVID-19 restrictions. They also say that the acquisition of Schlumberger Rustaveli Co continues towards completion.

Regarding the directorate, following successful commissioning of the EPF Roger McMechan is to stand down from the board on 30th September but will remain as a consultant to the company. Also the company has agreed that it will initiate a search for a Senior Independent Director and an Independent NED and that it has consulted with its major shareholders who have ‘ confirmed their continued support of the Company and its directors’.

So, where does that leave BLOE now? Well, a number of things stand out from this announcement not least that changes are afoot which must surely be for the good. With the appointment of the number one search firm it is clear that we are likely to see two new faces on the board in a short space of time, also one should assume that these appointments will be good news for investors.

Overall BLOE shareholders should see this as the beginning of evolutionary change at their company and It’s good to see that Block are engaging with and responding to those who own the company.

The company has cash on the balance sheet and those who panicked about the SLB situation can rest assured it wasn’t anything personal, indeed often advantage can be taken in decent amounts by taking on the distressed sales from panicking majors. The inbound investors into Georgia show that it is still very much a hydrocarbon province that companies big and small can make money in, indeed some may make potential farminees…

Finally, the chatter in the market in recent weeks has proven correct, that a group of wise investors have carefully, and from behind the scenes, without being beastly, started the process of change that this announcement only touches the surface of, at BLOE things can likely only get better…

Angus Energy

Angus announced yesterday that it was planning an equity placing and more importantly had engaged Gneiss Energy to raise up to £12m through the issue of a senior secured debt facility for redevelopment of the Saltfleetby gas field.

The equity portion, successfully completed very swiftly at 0.9p per share, raising £1m is primarily to provide a working capital buffer ‘normally expected by the debt investors’.

As for the debt portion the proceeds of the Proposed Debt Funding will be used as to:

o  £1.8 million toward pipeline installation and connection to the National Transmission System of which £1.1 million has been spent to date;

o  £5.7 million toward processing facilities;

o  £1.6 million toward site preparation, planning and contingencies;

o  £2.4 million toward a reserve for drilling the planned 2021 sidetrack of an existing well on the Field; and

o  £1.5 million toward an abandonment reserve for the Field.

Hurricane Energy

Hurricane announced yesterday that Alan Parsley, NED had resigned from the board of the company. Dr Parsley was Kerogen Capital’s shareholder director pursuant to the relationship deed signed in 2016. Mr Leonard Tao has also resigned as an alternate director to Dr Parsley.

As Kerogen Capital currently own c.16% of Hurricane stock the market was obviously somewhat concerned about this development but I think it is quite easy to interpolate the reason for the resignation.

On the 11th September 2020 the CEO designate of Hurricane, Antony Maris said this “We will be engaging with all our key stakeholders regarding our forward work programme and financing arrangements and updating the market on these efforts in due course.”

Now, with the company ‘engaging with all key stakeholders’, it would be inevitable that firstly Kerogen could be potentially a taker of any issue the company might have, especially as the debt conundrum is not that far away but that secondly they will be almost certain to be in a ‘closed period’ for much of that time and thus unable to deal in the shares.

This move by Kerogen in my view gives them the opportunity to keep open all their options and could participate in any ‘financing arrangements’ or should they wish to, sell all or part of their stake. Other thoughts turn to the fact that as a number of their investments are currently locked up, the chance to release this one by say an orchestrated sale of the company might just suit Kerogen…

Reabold Resources

Interims from RBD yesterday which meant even less than usual and with cash and equivalents of £5.5m as at 30th June there was only the Chairman’s statement to fall back on. I would advise investors take some time out and read the very long comments but somehow I managed to miss the important statements from the CEO’s, what one really wants.

And finally…

Last night in the Haribo Cup all the big sides got through without any trouble, tonight sees a possible upset at Ashton Gate where the mighty (Andy Bone) Bristol City take on Aston Villa. Elsewhere Liverpool go to Lincoln City and the Noisy Neighbours host the Cherries.

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

Malcolm Graham-Wood

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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 publication.

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