Malcy’s Blog – Oil price, Chariot, Echo Energy, Capricorn Energy & finally

WTI (Oct) $86.87 +26c*, Brent (Nov) $95.74 +$2.72, Diff -$8.87 +$2.72*.

Author @mgrahamwood

USNG (Oct) $8.78 n/c*, UKNG 425.0p -91.7p, TTF €229.65 -€50.68.

  • Denotes US closed for Labor day, no trade in the US market

Oil price

With the US shut for Labor Day as expected markets were thin and oil rose, Opec+ didn’t acknowledge the holiday and decided to cut production by 100,000 b/d. This was clearly just a message to the world in general that they can do as they choose. The production increase ‘won’ by Sleepy Joe has also gone West…

Indeed it is at the heart of their raison d’etre and goes along with my own view of the market, that shorting the oil price comes with its own dangers. As the Saudi Oil Minister, who has been given the responsibility of when it is the right time to call another Ministerial meeting ‘we will use all the tools in our kit’ and so they will.


“The Consortium” composed of Chariot Limited, the Africa focused transitional energy company and Total Eren, a leading renewable energy Independent Power Producer  based in Paris, is pleased to announce that it will launch feasibility  studies in order to co-develop the “Nour Project”, a large-scale green hydrogen project to be located in Mauritania.

Key features of the Partnership:

·    Equally owned (50%/50%) partnership between Chariot and Total Eren;

·    The Consortium will benefit from the dedicated expertise of Total Eren’s teams, holding a wide range of experience and knowledge in solar, wind, hybrid and green hydrogen projects globally;

·    Chariot will co-lead on project development and permitting, local content, and stakeholder engagement;

·    The Consortium will seek to progress on the in-depth feasibility study and offtake for the green hydrogen; and

·    Chariot and Total Eren may evaluate further green hydrogen opportunities together in other African countries.

Thanks to its unique solar and wind resources, Mauritania has proved to be exceptionally well-placed to implement Power-to-X solutions, providing Nour Project the possibility to produce among the most competitive green hydrogen in the world. With a potential reaching up to 10 GW of electrolysis to be installed, it could become, once fully implemented, one of the most significant green hydrogen projects in Africa.

Through the Nour Project, the Consortium will contribute to a sustainable economic development in Mauritania, including potentially providing baseload power to the national grid, diversifying industrial activities, promoting job creation and developing local infrastructure. It will also be providing a cost-effective, transportable energy solution to replace CO2 emitting fuels for exportation to the European market.

Fabienne Demol, Executive Vice-President & Global Head of Business Development of Total Eren, stated:

“We believe that green hydrogen is going to be an essential part of the energy mix in the future, and we are delighted to enter into this new partnership on a continent where our strategic shareholder, TotalEnergies, holds a strong footprint. Our skillsets complement Chariot’s well and we intend to share our expertise throughout the project’s development. I also would like to take the opportunity to thank the Mauritanian authorities for their support and collaboration. We look forward to taking the next steps on the Project together with Chariot.”

Adonis Pouroulis, Chariot’s CEO added: 

“We are delighted to have further cemented our partnership with Total Eren, a world-class leader in renewable energies. We look forward to working together on this highly important green hydrogen development in Mauritania. Having a partner of such calibre, who shares our vision and focus for the future, is a key part of developing this valuable asset and marks an important step forward in Project Nour’s evolution. We are keen to continue to expand our green hydrogen project portfolio and, as with our renewables business, we look forward to collaborating on further opportunities alongside Total Eren in the future.”

This is another positive development from Chariot in their partnership with Total Eren, this time a green hydrogen development and with the potential of reaching up to 10 GW of electrolysis to be installed, it could become, once fully implemented, one of the most significant green hydrogen projects in Africa.

Given the conditions in Mauritania it is an ideal geography for Chariot with Total Eren to to implement Power-to-X solutions, under the circumstances Chariot are continuing to push ahead with its diverse and exciting projects across the African continent. 

Echo Energy

Echo Energy plc, the Latin American focussed full cycle energy Company, is pleased to announce its audited results for the twelve months ended ended 31 December 2021.

2021 Highlights

·    Production capacity increased during the period pursuant to Santa Cruz Sur facilities upgrades in Q1 2021

·    Average net daily production in 2021 was:

 8.0  mmscf/d of natural gas

 222 bbls/d of oil and condensate

 Total: 1,554 boepd

·    Net cumulative production in 2021 was:

 Natural gas:  2,918 mmscf

 Oil and condensate: 81,076 bbls

 Total: 567,371 boe

·    Reserves and resources at end 2021 were:

 1P (Proved): 2.53 MMboe

 2P (Proved & Probable): 3.15 MMboe

 MMboe Contingent Resources (High Estimate): 5.39 MMboe

·    Announced a five-year Cooperation Agreement with GTL International S.A., which has interests in both the hydrocarbon and renewables sector

·    Began process of reopening oil wells that had been shut-in during 2020

·    Developed new customers for liquids products

·    VAT refunds received in Argentina (US $0.5 million) and additional credit balances (approx. US$0.7m) are being amortised until the end of 2022, benefiting cashflow for 2021 and 2022

Post Period End Highlights

·    New gas contracts for 2022-2023, which was significantly above the 2021 annual pricing

·    Agreement by the Santa Cruz Sur partners to materially increase Santa Cruz Sur production by c.40% above average H1 2022 production levels

·    Post period fundraising and conditional debt restructuring

Martin Hull, Echo’s Chief Executive, commented:

“Despite significant challenges, 2021 was an important year for Echo and one which has changed the outlook for the Company for the positive, with work across a range of fronts in 2022 only reinforcing that direction of travel. With progress made on the ground operationally and supported by much higher prevailing commodity prices and premium pricing in gas contracts, the recently announced comprehensive restructuring and strengthening of our balance sheet, once completed, will ensure we have much firmer foundations for the business financially, and a platform from which we will be able to pursue the many opportunities that exist within our portfolio. We look forward to updating investors on our activities in the rest of this year and beyond.”

The share price tells a story and so far the company have yet to persuade the market that things have changed for the company and has halved in less than a year with no sign of a pick-up yet. Yesterday they announced a restructuring of the bonds and results today are historic thank goodness but do hang out some small optimistic slants. If they are validated then maybe the market will breathe some confidence into the share price…

Capricorn Energy

CAPRICORN – Half-Year Report Announcement

H1 2022 Operational and Strategic Highlights

Ø     Egypt H1 2022 Capricorn working interest production averaged ~35,500 boepd

Ø ~14,600 bopd liquids (up 6% from 2021 post acquisition average)

Ø 117mmscf/d gas (down 7% from 2021 post acquisition average)

Ø     Focus on liquids production in prevailing oil price environment; currently 41% of production

Ø     Balance sheet: Group net cash at end of H1, US$631m, comprising US$809m cash and US$178m debt

Ø     Capital expenditure of US$82m during H1

Ø     US$77m of earn out consideration received in H1 in relation to the sale of the UK North Sea producing assets

Ø     Receipt of India tax refund of US$1.06bn, enabling further shareholder returns with a ~US$500m tender offer and US$25m share buyback (which completed in July)

Ø     Safe and responsible operations – zero LTIs and zero Tier 1 process Events at BED or Obaiyed in H1

Ø     Proposed all-share combination of Capricorn and Tullow Oil plc, creating a leading African energy company


Ø     Full year forecast net capital expenditure of US$175-195m;

Ø Egypt Development & Production US$80-90m

Ø Egypt Exploration & Appraisal US$20-25m and International Exploration US$75-80m

Ø     Revised full year production guidance of 33,000 boepd to 36,000 boepd (previous guidance 37,000 boepd to 43,000 boepd)

Ø      Egypt Production – a ramp-up in H2 2022 drilling activity is underway following initial delays of the fourth and   fifth rigs into Egypt and completion of BED compression project by year end

Ø      Acquisition of 3D seismic programmes in Southeast Horus and West El Fayum concessions, Egypt

Ø      Initiation of operated exploration drilling in South Abu Sennan, Egypt

Ø      Drilling of the Yatzil prospect on Block 7 Mexico expected to commence in Q4 2022

Ø      Clear pathway to net zero by 2040 – comprehensive GHG baseline survey to be completed for Egypt by year end

Ø      Documentation on proposed merger expected to be issued in Q4 2022 ahead of a shareholder meeting

Simon Thomson, Chief Executive, Capricorn Energy PLC said:

“Almost one year since the acquisition of the Egypt business, we continue to make good progress and have been successful in prioritising oil and liquids production growth while current commodity prices remain high.

We were delighted to return more than US$500 million to shareholders following receipt of the India tax refund at the beginning of the year.

The Board continues to believe that the proposed merger with Tullow can deliver significant long-term value for shareholders through creating a leading, Africa-focused energy company.  The Board is also mindful of the impact of external factors and market conditions and is, as always, assessing all options to maximise value for shareholders. The company is exploring a number of expressions of interest relating to alternative transactions, and is engaging with those parties expressing interest to evaluate potential outcomes.”

These are unimpressive results and will only serve to reinforce the problems associated with Capricorn and that is the takeover by Tullow which was announced on appalling terms for Cairn shareholders used to better treatment.

They have already seen a ceding of most of the C suite executives and the Scottish head office, let alone the hard won cash position for no perceptible reason. The shareholders might realise before it’s too late that giving away the company is not necessarily a done deal. 

And finally…

No blog yesterday but footy at the weekend saw leaders the Gooners go down at the Theatre of Dreams but they remain top over Spurs who beat the Cottagers and the Seagulls who beat the now lowly Foxes. Wins also for the Bees, Chelsea with a fortunate goal against the Hammers, the Magpies, the Cherries and Wolves.

Tonight in the Champions League Chelsea are at Dinamo Zagreb, Celtic host Real Madrid and the Noisy Neighbours are at Sevilla.

The opinions expressed here are those of the author

Author @mgrahamwood

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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