Malcy’s Blog – Oil price, Chariot, Jadestone, i3, Pantheon, Deltic & finally

WTI $39.77  -$1.60, Brent $42.66 -$1.41, Diff -$ 2.89 +19c, NG $2.59 

By Malcolm Graham-Wood

Oil price

Oil has eased in the last couple of days and is easier again this morning although as it is Labor Day in the USA it is a holiday over there. Oil has come under pressure as market participants were concerned that Saudi Aramco has reduced list prices by around $1.40 per barrel to Asian customers and also to the USA.

In an interview with CNBC the Russian oil Minister also gave his forecast for oil prices for next year to be volatile but in the $50-55 range.

Elsewhere the Baker Hughes rig count showed a rise of 2 unit overall to 256 while in oil the number was up just the 1 to 181. Finally whilst wishing a very Happy Labor Day to our American friends it is worth noting that this day signals the end of the driving season although this year has been somewhat distorted.

Chariot Oil & Gas-This gets better and better…

An excellent day for Chariot who have announced a significant resource upgrade on Anchois, Morocco following reprocessing of 3D seismic data across the Lixus licence. This has resulted in ‘significant improvements in both image quality and depth control and has had a positive impact on the understanding of the distribution and extent of the Anchois gas sands’.

Netherland Sewell has updated its independent assessment of a 50km² area covering the Anchois gas discovery on the Lixus licence, which has led to a significant resource upgrade for the proposed Anchois Gas Field Development. This amounts to an upgrade of audited total remaining recoverable resource to in excess of 1 Tcf for Anchois, representing a 148% increase (comprising 361 Bcf 2C contingent resources and 690 2U prospective resources).

In addition, this creates the ability for the low-risk prospective  targets (C, M and O sands) to be drilled at low cost as part of any appraisal or development drilling activity on the Anchois Discovery (A and B sands); the development of which brings the potential for material free cash flow, another significant plus for the project.

It also goes without saying that the Chariot team are continuing  to ‘identify, evaluate and quantify additional material gas prospects in the Lixus licence based on the reprocessed data’ which look very promising.

Adonis Pouroulis, Acting CEO, commented:

 “The recent work on the Lixus Licence confirms the materiality of the Anchois Gas Field Development project.

We continue to hold the view that this asset has the capacity to be a value accretive and long-term project of national significance to Morocco. The Anchois development has the potential to supply material gas volumes into existing markets in the near-term, and the exploration prospectivity of the Lixus licence is of a scale sufficient to provide the Moroccan power sector with a clean, reliable, low cost and sustainable supply of gas for decades to come. We continue to make progress in unlocking the Anchois development and generating near term cash flows and we look forward to keeping our shareholders updated on developments on Lixus and, as previously announced, the other opportunities being reviewed over the coming months.”

Lixus, particularly Anchois, is continuing to move forward with pace and impactful upgrades, I am looking forward to seeing this development being brought forward to the next stage as it will add significant value to Chariot. It is worth noting that the more that the company add to resource numbers the more likely they are to find a big fish to partner with in the Anchois development…

Jadestone Energy

JSE has announced new offtake arrangements for the Stag oil field as its existing FSO is being retired. Jadestone is to replace that with modern tankers which will save c.20% annually and will of course tick all the environmental and safety boxes.

i3 Energy

i3 has completed the acquisition of Gain Energy for CAD$80m and the sale of Saskatchewan assets to Harvard Resources for CAD$45m. i3 has picked up two very cheap portfolios which should deliver a relatively low risk and low cost income stream and throws off cash to match the company’s intention to ‘pay a substantial dividend’.

On the subject of shareholders I am of the understanding that the company deserve plenty of praise for getting the deal oversubscribed and with institutions which gives at least arms length approval. With this deal they appear to have to a certain extent started over again which for someone like me who had some concerns about the past must be a good thing.

I like the idea that there is demonstrable potential as the deal works at these economics with ‘material upside’ should oil prices increase in due course. Accordingly it appears to be able to pay a ‘substantial’ dividend at these oil prices and with decent upside should they have success with the drill bit. If this works it is very much a deal to applaud, the jury is out but success is being gambled on by the market which makes i3 very much one to watch.

Pantheon Resources

PANR has announced that application for the Talitha Production Unit is complete and eligible for approval as was the Alkaid Production Unit last week. The Alaska DNR has opened up a public comment period which concludes on October 12th after which it will make a decision on both applications.

Pantheon confirms that it is ‘actively engaged with multiple parties who are presently undertaking analysis of the farm-out opportunity. Such parties range from National Oil Company in size to smaller, more specialist groups, and accordingly farm-out discussions have ranged over the entire Alaskan portfolio to smaller singular projects’. The company confirms its objective is to drill in Alaska this coming 2020/21 winter season if it concludes a farm-out transaction by the end of autumn.

Jay Cheatham, CEO, stated:
“I’m incredibly pleased that the State of Alaska Department of Natural Resources has deemed our Talitha Unit application completed so soon after our Alkaid application. It’s also subject to the standard public notice period, but I’m confident that both the Talitha and Alkaid units will pass public scrutiny. If we can conclude a farm-out by the end of Autumn, we plan to drill the first Talitha well from an ice pad this winter, which will test three very significant horizons, all of which are independent of one another; (i) the shallower Shelf Margin Deltaic, (ii) the Slope Fan sequence of the Brookian, and (iii) the deeper Kuparuk formation.”

“Today’s news is another major milestone for our company. This is a large unit at 44,373 acres or almost 70 square miles and delivers all the acreage needed to develop our Talitha project. The combination of Alkaid and Talitha Units comprise over 105 square miles and complete our project inventory. With the acreage acquired at the last lease sale we have high graded our acreage portfolio.  Today’s news is a testament to the hard work of our people and of the team at the DNR. We could not be happier with this news!”

Deltic Energy

Deltic slipped under the wire last week when discussing the 32nd round awards but it did get some interesting blocks in both the CNS and SNS. It received 6 licences, 12 blocks with 5 in the SNS and 1 in the CNS. This doubles the portfolio from 7 to 13 and highlights the relationship with Shell who have demonstrated their commitment to the basin particularly with 2 blocks that may contain a potential extension to the Pensacola Reef prospect.

Deltic also have been re-awarded a licence that includes the Cadence prospect with ‘TCF’ potential in which Deltic owned before but were times out of. As a result of this the company has reinforced its position in the SNS basin and is building the portfolio through licencing rounds.

And finally…

With Lewis missing the red light on the pit lane and going to the back of the class and various other misdemeanors such as both Ferrari’s and Max DNF’ing it was left to Pierre Gasly to win at Monza yesterday.

England beat Australia again in the T20 and are now dormy 2-0 up with one to play.

Djoko was disqualified from the US Open after KO’ing a line judge with a tennis ball right in the throat.

(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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