WTI (Aug) $70.62 +$2.35, Brent (Aug) $75.67 +$2.47, Diff -5.05 +12c.
USNG (July) $2.53 +19c, UKNG (July) 97.010p +4.75p, TTF (July) €37.075 -€5.72.
Oil price
In what is continuing as the ultimate see-saw between demand and supply, yesterday saw better economic data from China which was enough to, along with a weaker dollar continue the oil price rally. Also the head of the KPC has said that they see Chinese demand growing ‘steadily’ which reinforces 2H theory. Natural gas prices have picked up a little in both the UK and the US, recent weakness must surely prove transient.
Diversified Energy Company
Diversified Energy announced on 21 March 2023 a dividend in respect of the fourth quarter ended 31 December 2022 of 4.375 cents per share (“Q4 2022 Dividend”). The Company will pay the Q4 2022 Dividend on 30 June 2023 to those shareholders on the register on 26 May 2023.
The Company announces that Shareholders who have elected to receive their dividends in GBP sterling will receive an equivalent payment of 3.43 pence per share, based on the 15 June 2023 exchange rate of GBP 0.78299=US $1.00.
DEC are a favourite in the Bucket List and the above proves that it is delivering the goods dividend wise whatever currency you take it in. At a yield of 15% the shares are extraordinarily good value and offer returns in income and I’m confident from here a significant capital rise and it is good to see a number of directors buying stock recently. A no-brainer….
PetroTal Corp
PetroTal has announced that it received notices to exercise 37,949,314 Investor Warrants at a price of 16 pence per Common Share from an investor in relation to the Investor Warrants issued on June 12, 2020. The Company received 6,071,890 GBP for the Warrants exercised.
Following the Warrants exercise, the Company will have no Investor Warrants outstanding. Application will be made for admission of the 37,949,314 Common Shares, which will rank pari passu with existing Common Shares, to trading on AIM, which is expected to occur on or around June 21, 2023.
Following Admission, the Company will have 922,305,711 Common Shares issued and there are no shares held in treasury. This figure may be used by shareholders as the denominator for the calculations to determine if they are required to notify their interest in, or a change of their interest in, the Company under the FCA’s Disclosure Guidance and Transparency Rules.
Nothing much to add to this but worth including as the company raises yet more cash, of £6.1m to add to the coffers.
Gulf Keystone Petroleum
Ahead of today’s 2023 Annual General Meeting (“AGM”), Gulf Keystone, a leading independent operator and producer in the Kurdistan Region of Iraq, provides an operational and corporate update.
Jon Harris, Gulf Keystone’s Chief Executive Officer, said:
“Gulf Keystone entered 2023 following a year of strong operational and financial performance and continued delivery against the Company’s disciplined strategy of investing in profitable production growth, sustainable shareholder returns and maintaining a strong balance sheet. Following the suspension of Kurdistan crude exports on 25 March 2023 and continued delays to oil sales payments, our focus has shifted to aggressively reducing all costs to preserve liquidity, while maintaining safe operational readiness to quickly restart production. We are now exploring potential options to sell our crude to local buyers.
While no timeline has been publicly announced, we continue to believe the suspension of exports will be temporary and that the KRG will resume more normalised payments. We are encouraged by the ongoing engagement between the KRG, Iraq and Turkey and note the approval earlier this week of the Iraqi Federal budget, which is a step in the right direction towards formal recognition of Kurdistan production by Iraq and potentially paves the way for monthly budget transfers from Iraq to the Kurdistan Regional Government (“KRG”). We continue to closely monitor the situation.
Operational
- Production from the Shaikan Field remains shut-in following the suspension of exports and closure of the Iraq-Turkey Pipeline on 25 March 2023
- The suspension has resulted in a gross production deferment to date of around 4.3 million barrels, or approximately 11,800 bopd on a full-year basis (2023 gross average production guidance prior to suspension: 46,000 – 52,000 bopd)
- Almost all operational activity in the Shaikan Field has stopped since the pipeline closure in order to preserve liquidity
- Production facilities currently ready to resume production
- All drilling and well workover activity halted, with the drilling rig released following the completion and hook-up of SH-18
- All expansion activity suspended, including the installation of water handling
- Progressing critical safety upgrades and maintenance activity
- No Lost Time Incidents for over 150 days
- Currently exploring opportunities to sell Shaikan Field crude to local buyers
- Potential opportunities to initially sell a portion of PF-1 production at prices in line with the local market
- Logistics in place to quickly restart trucking operations
Financial
- The Company continues to engage with the KRG regarding outstanding receivables for the months of October 2022 to March 2023 totalling $151 million net on the basis of the KBT pricing mechanism
- Net capital expenditures to the end of May 2023 are estimated at $49 million, including completion of SH-17 and SH-18, well workovers, well pad preparation, long lead items and expansion of production facilities
- Cash balance of $93 million at 15 June 2023
Outlook
- The Company continues to believe that the suspension of exports will be temporary and that the KRG will resume more normalised payments
- While no official timeline to restart pipeline operations has been announced, the Company understands that discussions between the KRG, the Iraqi Ministry of Oil and the Turkish authorities remain ongoing
- The KRG announced that it had reached an agreement with the Iraqi government on measures to allow the resumption of oil exports through Turkey, and also reported that Iraq’s State Oil Marketing Organization (“SOMO”) had officially requested Turkish authorities to allow Kurdistan’s oil exports via the country’s Ceyhan port
- Iraq’s parliament recently approved the 2023-2025 Federal Iraqi budget, a step towards formal recognition of Kurdistan production by Iraq and potentially paving the way for monthly budget transfers from Iraq to Kurdistan
- The Company continues to monitor the situation and is currently ready to resume production
- The Company remains focussed on preserving liquidity while proactively managing existing accounts payable
- Lowering net capital expenditures, operating costs and G&A to a monthly run rate of around $6 million net from July 2023
- 2023 net capex currently estimated at $70-$75 million (previously revised guidance of $80-$85 million)
- Estimated $49m net capex Jan-May 2023; estimated $20-$25m of safety critical and contractual commitments remaining for Jun-Dec 2023
- 20% deferral of Executive Director salaries & Non-Executive Director fees and reduced staffing and contractor levels
- Final 2022 ordinary annual dividend of $25 million cancelled, as announced on 23 May 2023, with the reinstatement of distributions to be considered once regular KRG payments resume
- 2023 net capex currently estimated at $70-$75 million (previously revised guidance of $80-$85 million)
- Continuing to review additional liquidity options, including local crude and inventory sales and further cost reductions
2023 AGM
Gulf Keystone is today hosting its 2023 AGM at 10am CET via webcast. It will not be possible to attend the meeting in person but all registered Gulf Keystone shareholders are invited to view the webcast at the following link: http://meetnow.global/gkpagm2023. Joining instructions are available on Gulf Keystone’s website: https://www.gulfkeystone.com/investors/agm/.
The AGM will be hosted by Jaap Huijskes, Non-Executive Chairman, and Martin Angle, incoming Non-Executive Chairman and current Deputy Chairman and Senior Independent Director. It will include a presentation by Jon Harris, Chief Executive Officer, and Ian Weatherdon, Chief Financial Officer. A copy of the presentation will be available to view on the Investors section of Gulf Keystone’s website (https://www.gulfkeystone.com/investors/presentations). A recording of the presentation will also be available to view on the same page later in the day following the conclusion of the AGM.
Things remain tough in Kurdistan and being completely out of their hands are restricted to cost reduction and ‘preserving liquidity’. So the hunker down mentality and wait for the reopening of the Iraqi-Turkish pipeline has to remain in place.
Tower Resources
Tower has provided an update on activity in respect of license PEL 96 in Namibia, covering offshore blocks 1910A, 1911 and 1912B (the “Namibian Blocks”) and, in particular, the recent basin modelling work undertaken over the license area.
Tower is the operator of license PEL 96 with an 80% working interest.
Highlights
· A basin and thermal maturity study has been undertaken within PEL 96 which has significantly progressed the understanding of the hydrocarbon prospectivity of the license. This basin modelling study has been carefully integrated with seismic sequence stratigraphic interpretation of the large 2D seismic datasets and integrated with the well data within PEL96 and available well data elsewhere in the Walvis Basin region.
· The integrated analysis of the seismic, wells and the basin modelling results shows clear evidence of a working petroleum system present within the Dolphin Graben in PEL 96; in the form of oil recovered from cores in the 1911/15-1 well and direct hydrocarbon indicators (DHIs) observed on seismic.
· The objectives of the basin modelling study were to assess the critical elements of the hydrocarbon charging system, i.e. thermal maturity, distribution of generative source kitchens, volumetric estimation of generative capacity of mature source rocks, timing of generation/expulsion of hydrocarbons and mapping of migration pathways.
· Main conclusions of basin modelling study:
o Generative source kitchens have been calculated and have been mapped within PEL 96. Lower Cretaceous syn-rift sediments within the main depocenters of the Dolphin Graben calculate as mature for main oil and late oil generation.
o Timing of the main and late oil generation phases calculated to be mid-Tertiary (Oligocene) to present-day.
o Migration pathways for oil charge have been mapped and the main foci of migration identified. The volumes of hydrocarbons generated have been calculated for each source kitchen.
o The main fetch areas that are able to focus migration towards each of the main prospects are calculated as having potentially generated oil within the following volumetric ranges; Alpha Prospect fetch area – ca. 45 to 79 billion barrels (“bbls”) oil, Gamma Prospect fetch area – ca. 15 to 23 billion bbls oil.
o The potential for stratigraphic traps is recognised on the 2D seismic data where Cretaceous reservoir targets onlap onto highs along the western and eastern flanks of the Dolphin Graben. These potential stratigraphic traps are located directly on several of the main migration pathways out of the generative kitchens. These potential stratigraphic traps show similarities to the recent major discoveries in South Africa and Namibia.
· The Company is currently undertaking an oil seep analysis to accompany the basin modelling work, and a review of the existing volumetric data on the prospects and leads that have already been identified is underway.
Jeremy Asher, Tower’s Chairman and CEO, commented:
“We are excited by the results of the basin modelling work and its indication of the prospectivity of Tower’s licenses in Namibia. It explains neatly the results of the Norsk Hydro well, the source of the lacustrine oil found within it, and the reasons why that oil found its way into that well and subsequently migrated away from it. The conclusions indicate the potential for either of the giant billion-barrel-plus structures in the West of the license to be charged; furthermore, the migration pathways, coupled with the recent impressive industry successes in drilling stratigraphic plays in the Orange Basin to the South, enhance our interest in the similar stratigraphic leads that we interpret on the flanks of the Alpha Prospect structure in particular. We look forward to updating investors further as our work progresses.”
This is an interesting and exciting, detailed analysis of Tower’s Namibian portfolio, the results appear to justify the long held view by Jeremy Asher and his team that this acreage is highly prospective. Tower are the ultimate survivors in the exploration game and with the most patient shareholders in the game are slowly emerging into the African sunlight.
Background
As part of its work programme, Tower has recently concluded a geochemical and thermal maturity basin modelling study, the results of which have positive implications for the prospectivity of the license and which are now being incorporated into a play fairway analysis covering the full PEL 96 license area.
The 1911/15-1 well drilled by Norsk Hydro in 1994 within the Dolphin Graben encountered several potential source horizons in both the Upper and Lower Cretaceous and has provided the most valuable and well-documented calibration point for the basin modelling. This well has been critical for identifying the most regionally geologically consistent input parameters for the computer models and has provided crucial geochemical data for optimising the basin modelling inputs, and ensuring a very close fit between the output predictions of the computer models and the real-world measurements from the wells and seismic data. The careful optimisation of the basin models to achieve a very close calibration of outputs to the actual observed well data is essential to having useful predictive model outcomes. PEL 96 (and the northern Walvis Basin generally) is an expansive area and therefore it has taken a substantial amount of new work to refine the models.
There is clear evidence of a working petroleum system present in PEL 96. The presence of an oil-mature early Cretaceous (and/or potentially older) source rock is proven by:
a. The presence of a light (thermally mature) oil which was recovered from core samples taken from an Albian-aged carbonate in the exploration well 1911/15-1. The well drilled an intra-basinal high within the central part of the Dolphin Graben. The basin modelling outputs are consistent with the observed well data. This implies that this oil represents hydrocarbons that have migrated from a nearby mature source kitchen within the adjacent half-grabens during Oligo-Miocene times. Additionally, the oil samples recovered from 1911/15-1 have biomarkers indicative of a lacustrine source (of likely syn-rift origin), which implies Barremian and/or older early Cretaceous source rocks. This new technical work conducted by Tower, especially the detailed migration pathway analyses, suggests the presence of only residual hydrocarbons was due to trap breaching, caused by later structural movement and tilting, which spilled any accumulation to the East.
b. The presence of compelling seismic evidence of widespread direct hydrocarbon indicators. These are in the form of large gas chimneys, where gas is observed to be migrating up and along deep-seated faults from half graben depocenters, and also from the presence of seismic anomalies indicating shallow gas accumulations above and in the vicinity of the gas chimneys. These shallow gas anomalies and gas chimneys are particularly prevalent along the western margin of the Dolphin Graben and directly along mapped major migration pathways, and are associated with major extensional faults that extend into the deepest parts of the half graben basins.
The purpose of the basin modelling analysis was to assess three critical elements of the hydrocarbon charging system:
(i) to provide an evaluation of thermal maturity of the main known source rocks and their areal extent (i.e. the areal distribution of the generative kitchens);
(ii) to estimate the generative capacity of the mature source rocks within the generative kitchens within PEL96 and volumes of hydrocarbons generated; and,
(iii) to assess the timing of generation/expulsion of hydrocarbons, phase of hydrocarbons expelled and map main migration pathways for hydrocarbons, and to assess volumetrics of the principal fetch areas for each exploration target.
Initial conclusions:
The main conclusions of the basin modelling study are:
1. The results of the basin modelling analysis, integrated with seismic sequence stratigraphic interpretation of the extensive 2D seismic data sets, indicate that oil-mature Lower Cretaceous source prone intervals belonging to the early Cretaceous syn-rift phase of the basin are widespread within PEL 96 and present over much of the Dolphin Graben throughout PEL 96. Note that additional sub-basins are present in the western part of PEL 96 that may extend the presence of source-prone early Cretaceous, with the potential for additional hydrocarbon generation in this area.
2. Lower Cretaceous source-prone intervals are calculated to sit within the oil window over a large part of the Dolphin Graben within PEL 96, reaching Main and Late Oil Maturity Windows over much of the area.
3. Timing of the source-prone intervals entering the main and late oil generation windows (the critical maturity zones which account for the major component of oil generated that has the capability to migrate) calculates to be mid-Tertiary (Oligocene) to present-day.
4. Migration pathways have been analysed and mapped. The main foci of migration out of the source kitchens have been identified and the volumes of hydrocarbons generated in each fetch area have been quantified. Note that the basin has undergone a significant young structural tilting event (Mio-Pliocene age) which has re-orientated several of the major migration pathways. Therefore, it has been necessary to construct migration maps for both the present-day and also back-strip the basin configuration to map the main migration pathways at a time pre-dating the tilting and coinciding with onset of main oil generation (mid-Oligocene).
5. Source kitchens have been calculated and have been mapped within PEL 96. Several of these have configurations that would focus any hydrocarbon migration towards several of the key prospects and play fairways (note that each of these sub-divisions of the generative kitchen which define migration of oil into any individual prospect or play are termed ‘fetch areas’). Generally, the Dolphin Graben is more mature towards the north and therefore the main volumes of migrations generated and migrated are in the northern parts of the basin, i.e. within PEL 96 and especially within the northern and central parts.
6. The fetch areas that focus migration towards each of the main prospects are calculated as having generated oil within the following volumetric ranges (note that some gas and gas condensates are also calculated to have been generated in some deeper parts of the basin and the volumetrics of these additional generated hydrocarbons are still being assessed):
a. Alpha Prospect fetch area – is calculated to have generated in the range 45 to 79 billion bbls oil,
b. Gamma Prospect fetch area – is calculated to have generated in the range 15 to 23 billion bbls oil,
7. Phoenix High play fairway (with potential for stratigraphic trapping up-dip to the east) – is calculated to have generated in the range 45 to 59 billion bbls oil. Note that the ranges in volumes of hydrocarbons generated per fetch area is in part a reflection of the late tilting of the basin which causes a reorganisation of the migration pathways from Oligocene to present-day and which changes the areal extent of each fetch area over time; this therefore changes the volume of hydrocarbons capable of being focused towards each prospect with time.
8. The potential for stratigraphic traps with major regional onlaps of the main Cretaceous reservoir targets are identified on the seismic data to be located directly on several of the main migration pathways out of the generative kitchens. This is especially interesting for prospectivity since any oil migrating towards the western mega-high prospects, for instance, the Alpha or Gamma Highs, must first pass through these stratigraphic trapping areas with potential for these stratigraphic traps to be substantially oil charged.
Potential stratigraphic traps are recognised in western areas of PEL 96 along the eastern flanks of the Alpha and Gamma highs in both Lower and Upper Cretaceous reservoir-target sequences. These potential stratigraphic traps have an up-dip towards the ocean (west) architecture, similar to recent major discoveries by TotalEnergies in South Africa.
Potential stratigraphic traps are also recognised in central areas of PEL 96 along the western flanks of the Phoenix High, and potentially the Elephant High slightly to the South. These potential stratigraphic traps have an up-dip to the coast (east) architecture similar to some of the major recent discoveries further south in Namibia.
Next steps
The Company is currently undertaking an oil seep analysis to accompany the basin modelling work, and a review of the existing volumetric data on the leads that have already been identified. This will result in a revised evaluation of the prioritisation, and volumetrics associated with those leads, which the Company will share with investors in due course.
In addition to highlighting the potential of the Tower Resources Namibian Blocks, the results of the recent technical work will provide a good foundation in ensuring the remaining initial exploration phase of the PEL 96 work programme, including the acquisition of new 3D seismic data as set out in the Company’s work programme, is sufficiently optimised and targeted to unlock the full prospectivity of the license.
The Company is currently finalising a technical presentation on the basin modelling, which will be posted to the Company’s website in due course. The Company will notify investors when this is available.
Coro energy
Coro yesterday announced that it has signed the acquisition of a rooftop solar portfolio from the shareholders of KIMY Trading and Service JSC, as previously announced on 25 November 2022 and 29 March 2023.
As initially announced on 25 November 2022, the Company entered into a period of exclusivity on a 100% interest in a leased rooftop solar portfolio in Vietnam across four locations close to Saigon with an aggregate generating capacity of 3.25 megawatts (“MW”) currently held by KIMY (the “Portfolio”). The Portfolio has been operational for two years and benefits from an existing power purchase agreement with a remaining eighteen year term, with the power off-taker being state owned Electricity Vietnam (“EVN”). Following comprehensive due diligence and site visits, one of the Portfolio’s rooftop systems has been removed from the acquisition, such that the Portfolio now totals only 2.39MW. The acquisition price has also been adjusted accordingly.
The total acquisition price is therefore US$1.3 million (US$543/MW) split as follows:
· At completion:
o Assumption by Coro of US$600,000 of existing specialist renewables debt with a Vietnamese bank;
o US$111,912 payable in cash, of which US$30,000 is ring fenced to secure certain required firefighting certificates;
o US$285,000 payable in new ordinary shares in the Company to be issued at the mid- market price six months following completion and locked in for 18 months from completion;
· A further US$300,000 in cash in six equal monthly instalments from completion.
The cash consideration is anticipated to be settled from the existing cash balance of the Company’s Vietnam subsidiary and future cash flows from the existing 3 megawatt project accompanied by the acquisition project revenues. To end of April 2023, cash receipts from the 3 megawatt project total US$115,000
KIMY incurred a loss of approximately US$195,000 in the year to 31 December 2022 which includes various cost of sales and administration expenditure which will not be inherited by Coro post-acquisition. Consequently, the acquisition is expected to be both cash positive and profitable from completion.
Completion of the acquisition of the Portfolio is expected to occur in Q4 2023 and further announcements will be made in due course, as appropriate.
This completion means that Coro is continuing to carefully expand the Vietnam solar business through a combination of build and buy whilst they wait for operators in the Duyung farm-out process to complete which is a unique opportunity to resolve the leverage going forward.
And finally…
And so, the Ashes series starts today at Edgbaston after what seems like years of build up. England won the toss and are batting. As I publish England are 40-1.
And football is already back with Euro qualifying tonight, England are in Malta, Wales host Armenia and Northern Ireland are in Denmark.
The US Open started yesterday at the Los Angeles Country Club, record low scores featured with leaders Fowler and Schauffele lead on 8 under with Johnson and Clark 6 under and Rory on 5 under.
The Denver Nuggets are the NBA champions after beating the Miami Heat 4-1. Nikola Jokic was the finals MVP and now he’ll head back to Serbia to be with his horses… It was all too much for Miami after a brutal run through the East but they had a hell of a run as the 8 seed. Plenty to look forward to next year including the introduction of number one draft pick Victor Wembanyama.
And it’s the Canadian GP at the Gilles Villeneuve Circuit in Montreal.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. The writer may or may not hold investments in the companies under discussion
