WTI (Nov) $78.50 +$1.79, Brent (Nov) $86.27 +$2.21, Diff -$7.77 +42c.
USNG (Oct) $6.65 -25c, UKNG (Oct) 315.0p +64p, TTF (Oct) €202.005 +€21.48 .
Oil rallied yesterday, Hurricane Ian, now a Cat 4 storm was headed to the Gulf of Mexico and as much as 500/- b/d of oil was shut in in case of damage, since then it has veered towards Florida and oil has fallen back. Also Russia has suggested that the next Opec+ meeting takes as much as 1m b/d of crude off the production quotas. That looks a touch high to me but I’m sure that half of that would start the process, after all it won’t take much to tighten this market.
The market is trying to work out what has happened to the Nordstream pipeline which suffered a breakage yesterday, something to do with dynamite I hear…Inventory stats later, the API reported a build of 4.2m barrels of crude, higher than the whisper for the EIA and a draw in gasoline but a small build in distillates.
Every so often the way that companies are obliged to report results mean that congestion arises as they jostle to report by the deadline. Yesterday was one such day, terrible Tuesday saw around 10 companies reporting results which of course means associated meetings and conference calls. As A result I for example had 6 back to back calls and meetings and no chance to get a blog out. Accordingly I have reported on those in brief and hope that one day companies along with their IR advisors might try and report on quieter days when they can have their own day in the sun…
Firstly today’s news…
Diversified Energy Company
Diversified has today announced the closing of its acquisition of certain upstream assets and related facilities in Oklahoma and Texas, within the Company’s Central Region, from ConocoPhillips Company.
• Purchase price of $240 million before customary purchase price adjustments
• Acquisition net purchase price of $210 million (the “Acquisition Cost”) after customary purchase price adjustments
◦ PV17 of net PDP reserves of ~31 MMBoe (186 Bcfe) and a 29% discount to PDP PV10 of $297 million(a)
• Cash margins(b) of ~70% on estimated Adjusted EBITDA of $82 million(c)
• Acquisition cost multiple(c) of ~2.5x on PDP-only assets
• Non-dilutive financing results in uplift of ~20% to 2021 Adjusted EBITDA per share(d)
• Acquisition increases production by ~9 Mboepd (~52 MMcfepd), (+6% vs 1Q22 exit rate)
◦ Consolidated corporate declines unchanged at ~8.5%(e)
Diversified funded the Acquisition with cash on hand and existing availability on the Company’s Revolving Credit Facility resulting in post-transaction liquidity of approximately $200 million(f), which the Company expects to increase with a higher borrowing base on its Credit Facility as it adds these assets as additional collateral. Post-transaction leverage, as measured by pro forma Net Debt to Adjusted EBITDA, is ~2.2x(g).
Commenting on the Acquisition, CEO Rusty Hutson, Jr. said:
“Having closed another non-dilutive acquisition of high-quality assets that add scale to Central Region, we are excited to begin the process of efficient integration and deployment of Smarter Asset Management along with our ESG initiatives across this additional asset base. The successful close of this attractively priced acquisition increases asset density and enhances the opportunity for synergies within the Central Region, while providing robust cash flows that further support our dividend distributions and future accretive reinvestment.”
This good news today adds to the DEC valuation as well as delivering all the usual synergies and accretive earnings made with each acquisition. It also adds to the announcement made yesterday that the DEC board had approved terms of a buy-back programme to take place ‘over several months’ in order to create value for shareholders and will be restricted to 10% of shares outstanding.
There are few companies in the oil sector that offer the incredible value proposition that Diversified does and I’m sure that there will be more deals that will add to that value. The shares are around 15% off the recent peak which offers incredible value as I have always said on a total return basis given the attractive running yield and asset improvement.
Reabold has announced the execution of a Sale and Purchase Agreement for the conditional acquisition of Simwell Resources Limited.
· Reabold is to acquire Simwell at a low acquisition cost with a total initial consideration, plus the repayment of all outstanding creditors/liabilities, of £1 million
· The transaction substantially increases Reabold’s footprint in the emerging Zechstein trend, complementing its onshore position in PEDL183, including the West Newton project
· The licences have a number of prospects covered with high quality 3D seismic data
· Licence P2332 has prospects to be derisked by success at the Pensacola well
· An initial consideration of £361,840.93 to the Sellers to be satisfied by the issue of 134,105,159 new ordinary shares in the capital of the Company at a price of 0.27 pence per share, being the closing price on the last practicable trading day prior to signing of the SPA.
· The sum of £305,157.71 payable to certain Simwell creditors which shall be satisfied by the issue of 113,021,374 new Ordinary Shares at the Issue Price.
· The sum of £333,001.36 payable to certain Simwell creditors to be satisfied in cash from the Company’s existing cash resources.
· A contingent deferred consideration of £150,000 (“Deferred Consideration Amount”) payable to the Sellers to be satisfied by the issue of new Ordinary Shares (“Deferred Consideration Shares”):
o The contingent deferred consideration will be payable to the Sellers if, inter alia, the operator of licence P2332 undertakes to the NSTA that the licensees will commit to drill a well pursuant to a defined work programme and within the applicable timescales.
o The number of Deferred Consideration Shares to be issued to the Sellers will be calculated by dividing the Deferred Consideration Amount by the prevailing share price based on the ten-day volume weighted average price of an Ordinary Share, as reported by Bloomberg, immediately preceding the date on which all of the applicable conditions are satisfied.
Simwell currently holds interests in four UK licences in the Southern North Sea (“SNS”) outlined in the table below:
Other JV Partners (Working Interest)
Shell U.K. Ltd. (70%)
Shell U.K. Ltd.
Horizon Energy Partners Ltd. (77.5%) and Ardent Oil Ltd. (12.5%)
Horizon Energy Partners Ltd.
Horizon Energy Partners Ltd. (77.5%) and Ardent Oil Ltd. (12.5%)
Horizon Energy Partners Ltd.
Horizon Energy Partners Ltd. (77.5%) and Ardent Oil Ltd. (12.5%)
Horizon Energy Partners Ltd.
The transaction is conditional on, inter alia, customary conditions for a transaction of this nature, including approval by the North Sea Transition Authority. If the conditions are not satisfied or waived (as applicable) within 12 months of the date of the SPA, the SPA shall terminate.
The SPA contains customary warranties and a tax indemnity from the Sellers. The SPA further provides that the Sellers will be subject to a lock-in undertaking (save for customary exceptions) in respect of (i) the Initial Consideration Shares for a period of 6 months following completion of the SPA and (ii) the Deferred Consideration Shares for a period of 6 months following the date of issue of the Deferred Consideration Shares.
Simwell has a 30% equity interest in licence P2332 following a farmout to Shell U.K. Ltd, which is now the operator with a 70% equity interest. Shell acquired a 640 km2 3D seismic survey in the area covering licence P2332 in August 2019, funding Simwell’s 30% share. The survey also covered parts of the adjacent licence P2252, which contains the Pensacola prospect that has been stated by Deltic Energy Plc to have a P50 gross prospective resources of 309 bcf and is planned to be drilled in Q4 of 2022. Simwell believe that success at Pensacola would derisk a number of similar prospects in P2332. Shell will continue to fund 100% of the licence costs until a drilling election is made.
For licences P2329, P2427 and P2486 a 3D seismic survey was acquired over the licences in the summer of 2019 where several prospects have been identified. The new 3D PSTM provides a high-definition view of the Zechstein Hauptdolomite play. A further number of prospects, with 4-way closure, have been identified and are believed to lie on trend to the Ossian-Darach oil discovery, c. 40km to the west.
Stephen Williams, Co-CEO of Reabold, commented:
“We are delighted to be able to acquire this set of highly prospective assets at a compelling valuation. This extends our significant position in the emerging Zechstein play into the offshore, and at an exciting time for the play ahead of the drilling of Pensacola.”
I’m not sure what Reabold can do to announce a deal and see a positive reply from the share price. This is a cheap deal whereby RBD expand further offshore with a number of exciting plays to assess, however the upcoming drilling of Pensacola will probably be highly determinant on the acreage that has been bought. If I was a holder of Deltic I would worry that there is now another play on the Shell well or maybe it’s the other way around…?
Getech has announce its unaudited interim results and report for the six months to 30 June 2022.
· Demand for Getech products and services continues to accelerate and diversify – revenue up 11% year-on-year to £2.7 million (H1 2021: £2.4 million).
· Record orderbook value of £4.8 million, a 118% increase year-on-year (30 June 2021: £2.2 million) and 45% increase since the end of 2021 (31 December 2021: £3.3 million).
· Strong visibility in revenue generation, with £1.5 million of the orderbook expected to convert in H2 2022, and a further £1.6 million due in FY 2023.
· Gross profit margin of 63% (H1 2021: 59%) driven by increased product revenue.
· Robust cash position of £4.3 million at 30 June 2022 (31 December 2021: £5.9 million), plus £2.4 million of receivables invoiced post Period-end for payment in H2.
Corporate and operational highlights
· Continued implementation of ‘locate, develop, operate’ business model, using foundation products and services to grow revenue and unlock transformational asset investment opportunities.
· Investment to grow products and services rewarded with multi-million-pound contracts and diversification across transitional petroleum, critical minerals, geothermal, carbon storage.
· Green hydrogen developments advancing at pace – with expansion in tangibility, scale and scope:
· Completion of engineering and commercial feasibility studies for both Shoreham and Inverness, resulting in extension of the Shoreham Green Energy Port exclusivity for five years (through to first production and beyond), groundworks at Inverness SGN gasholder site, and progress towards concluding terms on a multi-hub Joint Venture Agreement with The Highland Council.
· Phase 1 hydrogen production design capacity of Shoreham and Inverness increased to 2.5 tonnes/day (6 MW) in response to strong indicators of initial hydrogen demand – with c.5 tonnes/day of potential identified and targeted for production start-ups in 2025.
· Owned and operated wind and solar generation assets added to the development plan of the Shoreham and Inverness green energy hubs, expanding the revenue generation potential and reducing the cost of hydrogen production.
· The hydrogen project pipeline now totals c.240 MW of production capacity.
Current trading and outlook
· The macro-economic environment continues to drive robust demand for Getech’s products and services, demonstrated by further revenue and orderbook momentum into H2 2022, with additional Globe contracts closed.
· Asset development pipeline is expanding into the geothermal and critical minerals sectors.
Dr Jonathan Copus, Getech CEO commented:
“With global energy investment forecast to rise to $2.4 trillion in 2022, driven mainly by the accelerating need for clean and secure energy, Getech continues to see escalating and widening demand for our industry-leading geoscience data and proprietary geospatial software. This is evidenced by sustained increases in revenue and rapid orderbook growth – both of which have continued to grow post Period end. Inclusive of investment to extend the reach of our foundation products and services, they generated an H1 2022 cash profit. This underscores the strength of our foundation business, which also benefits from US dollar strength.
Against a backdrop of increasing global investment in green hydrogen and recognition of its critical role in energy security, we are making strong progress with our development projects at Shoreham and Inverness. When in operation, Inverness will be the first regional green hydrogen network in the UK and Shoreham a vital local green economic hub in the South of England. Both projects have the potential to demonstrate the suitability of green hydrogen as a decarbonisation solution and provide a framework for future scalability and repeatability across the UK and internationally.
With a clear business model of locating, developing and operating geoenergy and green hydrogen projects, a unique foundation offering and a strong team, Getech is well positioned to drive growth through the acceleration in energy investment.”
There is much going on at Getech as many recent announcements show, the shares however, having halved in a year are struggling to gain investor traction and they will need to demonstrate that all the recent moves in geoenergy and green hydrogen projects are able to deliver solid, meaningful returns, not yet obvious. The jury is out but it has potential to those with a certain vision.
And from yesterday…
Afentra announced its half year results for the six months ended 30 June 2022.
· Cash resources as at 30 June 2022 of $27.1 million (30 June 2021 of $40.8 million)
· Additional restricted funds of $8.0 million1
· Adjusted EBITDAX loss of $1.2 million (1H 2021: loss $1.5 million)
· Loss after tax of $2.9 million (1H 2021: loss $2.4 million)
· The Group remains debt free and fully carried for Odewayne operations
The Company announced two strategically consistent and complementary transactions in Angola, signing sale and purchase agreements (‘SPAs’) with completion expected in Q4 2022 (together the ‘Acquisitions’):
· Sonangol Acquisition: acquisition of interests in Block 3/05 (20%) and Block 23 (40%) offshore Angola for a firm consideration of $80.5 million and contingent payments of up to $50 million;
· INA Acquisition: acquisition of interests in Block 3/05 (4%) and Block 3/05A (5.33%)2 offshore Angola for a firm consideration of $12 million and contingent payments of up to $21 million;3
· Financing Agreements: Sonangol and INA Acquisitions will be financed through cash on the balance sheet and agreed RBL and revolving working capital facilities with Trafigura:
o 5-year RBL facility with up to $75 million available to finance the Acquisitions (8% margin over 3-month secured overnight financing rate (the ‘SOFR’)) (the ‘Acquisition Facility’);
o Revolving working capital facility for up to $30 million to finance asset funding requirements between crude offtakes (4.75% over 1-month SOFR) (the ‘Working Capital Facility’).
· Offtake Agreement: The Company has also entered into an offtake agreement with Trafigura for Afentra’s crude oil entitlement lifted from the Acquisitions.4
Operations pursuant to the ongoing Acquisitions
· Block 3/05: Congo basin, Angola (24% interest)5 – net 2P reserves of 27.7 mmbo, net 1H 2022 production of c. 4,700 bbl/day, net 2C resources of 10 mmbo with significant potential for future upgrades
· Block 3/05A: Congo basin, Angola (5.33% interest)2,5 – three appraised discoveries in adjacent licence to Block 3/05, providing tie-back opportunities using existing infrastructure; net 2C resource of 1.8 mmbo
· Block 23: Kwanza basin, Angola (40% interest)5 – highly prospective deepwater exploration and appraisal opportunity that is largely under-explored containing a small pre-salt oil discovery
· Odewayne exploration block: offshore Somaliland (34% interest fully carried by operator, Genel Energy) – the team continues its technical assessment and outlook on block prospectivity in discussion with the operator
Paul McDade, Chief Executive Officer, Afentra plc commented:
“The first half of 2022 marked a transformational period for the Company, including the foundational asset transaction with Sonangol enabling entry into Block 3/05 in Angola. Following Period end, Afentra announced an incremental transaction with INA gaining additional exposure to the high quality 3/05 block and the adjacent 3/05A block. Combined, these complementary acquisitions provide a strong growth platform, underpinned by robust cash flow and significant potential to deliver upside value. The financing and offtake agreements announced with Trafigura demonstrate our ability to efficiently fund our focussed buy and build strategy. In August, we were pleased to recommence trading in Afentra’s shares on AIM and, subsequently, shareholder approval of the Sonangol transaction. We take confidence that the completion of a smooth election process and the re-instatement of the government will allow the Company to re-engage with the Government to achieve completion of the transactions in Q4 2022. Meanwhile, the Company continues to remain highly active and disciplined in its assessment of the opportunity landscape in line with its stated growth strategy.”
The Afentra story is all about the deal with Sonangol whereby Paul McDade and his former Tullow colleagues have picked up a seriously valuable portfolio of acreage in Angola. I have made my position clear since the shares returned to AIM and feel that this deal has incredible upside yet to be fully realised by the market.
However it is worth noting that directors have been buying shares with cash since then which shows just how much they believe in this story. A good initial production story with substantial upside is by no means in the price and the shares are remarkably cheap at this level.
Serica yesterday announced its financial results for the six months ended 30 June 2022.
First Half 2022 Performance
- Average production of 26,600 boe per day net to Serica compared to 18,855 boe per day for 1H 2021, increasing Serica’s contribution to security of UK gas supply.
- Gas price volatility continues with market prices ranging from below 100 pence to over 300 pence per therm and averaging 175 pence per therm for the period (1H 2021: 50 pence per therm).
- Capital investment programme maintained with initial Bruce well intervention campaign commencing in May and preparations for North Eigg exploration well which spudded in July.
- Cash balances at 30 June 2022 increased to£258.3 million (31 Dec 2021: £103.0 million) with a further £160.4 million lodged as hedge security (31 Dec 2021: £115.4 million) giving a combined total of £418.7 million (31 Dec 2021: 218.4 million).
- Operating cash flow of£312.0 million (1H 2021: £72.8 million), after adjustment for hedge security, reflecting:
o increased production levels
o higher realised commodity prices
o partially offset by 1H hedge settlements.
- Expiry of the BKR cash flow sharing and Rhum performance-related payments at end 2021 with final cash settlements of £93.9 million made in 1H 2022.
- Average realised gas price of136 pence per therm (1H 2021: 50 pence per therm) after system entry fees and including fixed price volumes, with average overall realised sales price of US$101.00 per boe (1H 2020: US$43.30 per boe).
- Average operating cost ofUS$16.07 per boe for 1H 2022 (1H 2021: US$16.05 per boe).
- Operating profit of£196.3 million (1H 2021: £5.5 million) after £56.4 million of unrealised hedging provisions (1H 2021: £30.3 million) and profit after tax of £116.7 million (1H 2021: £1.3 million).
- Serica’s first ever LWIV campaign concluded without any safety incidents or environmental issues:
o initial well (Bruce M1) re-entered for first time since 1998 and production increased from around 400 boe/d before intervention to over 1,800 boe/d in July 2022
o second well (Bruce M4) increased from around 450 boe/d to over 2,400 boe/d.
- Plans to perform similar interventions on other Bruce and Keith wells, both subsea and from the platform, are now being accelerated.
- Capital investment of£20.9 million (2021 full year: £52.2 million) all funded from internal cash resources.
Environmental, Social and Governance
- Carbon intensity on Bruce production facilities reduced by 15% compared to 1H 2021.
- Early and continued supporter of the Energy Services Agreement, helping to protect supply chain resilience.
- We continue to implement projects to deliver North Sea Transition Deal emissions reduction targets.
- Serica’s North Sea investment programme continues with results from its North Eigg exploration well due in December and further BKR well campaigns planned for 2023.
- Full year 2022 production guidance narrowed to 26,000-28,000 boepd.
- Gas price outlook likely to stay volatile but unhedged proportion of sales to increase as remaining hedges expire.
- Combined cash of£482.4 million at 23 September 2022
o cash and deposits of £282.6 million after Q3 settlement of £66.0 million tax instalment and £24.5 million dividend payment
o plus £199.8 million lodged as hedge security having exceeded £300 million in recent months
o though potentially volatile in the short term, hedge security to reduce over the rest of 2022 as remaining gas price hedges expire.
- The Board is announcing its first interim dividend at a rate of8 pence per share payable on 25 November 2022 to shareholders registered on 28 October 2022 with an ex-dividend date of 27 October 2022.
- The potential for further distributions to shareholders, including share buybacks, will be kept under review as the Company continues to pursue M&A opportunities.
Mitch Flegg, Serica’s CEO stated:
“Serica’s production levels in the first half of 2022 have benefited significantly from our ongoing capital investment campaign which commenced in 2020. We are now seeing the full contribution from the 2021 Columbus and R3 projects and additionally we have recently completed a successful Light Well Intervention Vessel (LWIV) campaign on Bruce. As a result of these investment projects, Serica’s net production in the first half of 2022 was 41% higher than the first half of 2021.
Furthermore, the BKR cash flow sharing arrangements have now come to an end after four years during which the Company shared the net cash flow with the vendors of the relevant assets. We now retain 100% of the net cash flow from BKR.
Market gas prices, though highly volatile, have continued to strengthen during 2022 and as a result of increased production at higher commodity prices, Serica’s operating cash flow for the six-month period was £312.0 million and profits increased at all levels.
Over 85% of Serica’s production is gas, providing much needed domestic energy during a time of heightened concern around the UK’s security of supply. This gas will continue to be an important energy source during the Net Zero transition.
This operational and financial performance has enabled the Company to steadily increase its return to shareholders. Following the recent payment of a 9 pence per share final dividend for full year 2021, we are today announcing our first interim dividend of 8 pence per share which will be paid in November 2022.”
There is nothing to report here that we didn’t know already, Serica is in great nick with better production in a particularly strong market where whatever the prices are this winter will be above previous expectations. What I did hear in the management call yesterday was that they are winding up the hedging programme and with it the cash mountain currently not available to them.
This pile of cash could then be used to provide growth for Serica and probably should do, the Kistos bid seems to have been missed in this statement but surely will have provided a tweak that has provided the extra dividend announced yesterday. Roll on North Eigg…
President yesterday announced its unaudited half year results for the six months ended 30 June 2022.
Selected Results Summary
All numbers in US$ ‘000 unless stated
Profit / (loss) after tax but before non-cash items
Free cash flow generation from core operations
Average daily production, boe (oil & gas)
Average realised price per boe (US$)
Group net debt
Administrative expenses US$ per boe
Well operating costs US$ per boe
Corporate and Financial Summary
· Profit after tax before non-cash items* of US$5.6 million (H1 2021 loss of US$2.1 million)
· Group turnover of US$17.7 million (H1 2021 US$17.1 million)
· Free cash flow from core operations of US$6.8 million up 10% over the same period in 2021 (H1 2021 US$6.2 million)
· Adjusted EBITDA of US$5.7 million up 25% over the same period in 2021
· Third party financial borrowings in Argentina non-recourse to Group of US$22.9 million (H1 2021 US$5.9 million) with such increased borrowings arising from material new capex spending, including drilling and investments made in Argentina. All debt in Argentina being serviced in accordance with terms. Group debt of US$11.3 million (H1 2021 US$11.4 million) to the UK parent is covenant lite, long-term debt from IYA, an affiliate of the largest shareholder and Chairman under an open line of credit
· Mark to market value of holding in Atome Energy PLC as at 20 September 2022 of £9.8m (2021: nil) all of which is not shown in the accounts due to the vagaries of accounting reporting standards
· Due to currency exchange restrictions in Argentina, the amount paid back to the UK by its Argentina subsidiary was, and still is, limited to servicing interest for part of the intercompany loan with no capital repayments currently permitted by law. By way of illustration, currently this monthly interest payment back to Group amounts to some US$ 115k
· Average Group net daily production in the period of 1,969 boepd, down 26% on the previous year, impacted by production outages in Argentina, delay in new wells coming on-stream and Louisiana being offline for more than half of the period
· Group production split 69% oil and 31% gas (H1 2021: 64% oil and 36% gas)
· Group well operating costs per boe in the core Argentine business increased by 27% over same period last year due to lower production
· In Louisiana, disappointing issues with workovers and procuring of equipment resulted in no material contribution to results in the period with wells shut-in for more than half the period and sub-optimal flow levels for a longer period. Accordingly, during that period of inactivity, no monies were repaid to the Group and in fact, over US$ 1 million was paid by the Group out of central resources in connection with workover activities
· In Paraguay, work continued in relation to preparation for drilling of the exploration well with our partner CPC, the State Energy Company of Taiwan
· Green House Capital has been created with the purpose of becoming the alternative energy division of President. That division has taken first steps with potential Lithium investment
· Average price per barrel received during the Period was US$ 64.75 in Argentina and US$104.44 in Louisiana
Current trading and developments
· Further to the recent fire in our Puesto Flores Facility in Rio Negro Argentina as announced on 11 August, the disruption has impacted on production from the Puesto Flores oil field in August and September with full and normal production there expected in the first part of October. The Company has insurance coverage and there were no injuries to personnel
· All other of the Company’s fields in Rio Negro, including gas production, and Puesto Guardian have continued to produce normally without disruption, with Salta, Argentina, production for August showing an increase of over 70% compared to the level of production as at 1 January 2022
· Sales price for oil in Argentina improving with current price receivable in Rio Negro approximately US$65 per barrel and in Salta US$68. The recent reduction in international oil prices has to date not affected these levels
· At the current time, the Company has no visibility as to when principal loan repayments can start to be made to the Group from Argentina with timing completely out of the hands of President
· In Louisiana full production is now expected to resume in October after final installation of the necessary gas lift equipment with the wells having being offline for approximately 90% of the time since the start of H2 2022 due to complications in finalising agreements for the gas buyback and sourcing available barges. Once online, profits can start to be repatriated to the Group
· In September new management in Louisiana have been installed at operational level which has started to have a noticeable effect in moving things forward. Until such a time as full production is re-started it is imprudent to project steady state levels of flow as this will be the first time that gas lift will be utilised in the Triche well albeit, in theory, this is designed to stabilise and enhance production levels and mitigate the annoying stop start of recent periods.
· In Paraguay, preparations for the new exploration well have continued satisfactorily with all contractual payments by the partner being paid on time and good relations enjoyed. The position with the Rig contract remains to be fully resolved due to internal complications with the current owner although this is expected to be resolved by the end of November. At that stage, a spud date will be determined
· Green House Capital having taken first steps in relation to Lithium in Argentina and is now seeking to expand its interests in alternative energies and related technologies outside of that country . This is an ongoing process.
· The name of the Company is proposed to be changed to Molecular Energies PLC together with consolidation of shares and increase in authorities. General Meeting of shareholders due to be held on 29 September 2022.
Commenting on today’s announcement, Peter Levine, Chairman said:
“President has delivered a period of solid profits but we recognise the difficulties of the Group’s current reliance on cashflow from its Argentine centric main business when it is not possible to repatriate such profits to Group level. The formation of Green House Capital, which intends to replicate the success of the Atome transaction for the benefit of President shareholders, is the first step in a diversification programme that is subject to active internal debate.
“The disruption in hydrocarbon production in Argentina and Louisiana has not in any event been helpful to our existing business the effect of which is being felt in the second part of this year. I have ordered action and change at country, field and local management level to get us back on a consistent growth path which is a necessity in any event. Notwithstanding my continuing financial support for what will soon be Molecular Energies through my private investment group, reducing the Group debt level including at parent level is a priority over the next months. This will place the Group in a stronger position whilst supporting its evolution into more fertile fields of business where the prospects are re-invigorating and exciting after the frustrating and unrewarding battles of the last years.
“The change of name, image and related matters including the creation of Green House Capital are evidence of our determination to carry out the evolution as soon as possible. The appreciation of approximately 30% in the Atome Energy share price since the start of the year achieved with the right management team we put in place is beneficial to our investment assets and is a precedent pointing to our capability to enhance shareholder value by our evolved strategy.
“The Group has a solid base, is profitable on a post-tax basis excluding non-cash items and is operationally cash-flow positive. As the board continues to implement its new strategy we look forward to our future as Molecular Energies PLC capitalising and repeating the success of Atome with a significant originated value generation for shareholders”.
I think that what Chairman Peter Levine has said in his hard hitting statement can say more than I ever can, backsides are being tanned and President is changing big time.
United Oil & Gas
United Oil & Gas has announced its unaudited financial and operating results for the half year ended 30 June 2022.
1H 2022 Operational summary
· 1H 2022 Group working interest production averaged 1,552 boepd
· In Egypt
– Active drilling programme continues with three out of five wells in the 2022 programme now drilled
– Successful ASD-2 development well brought onstream in March, just six days after well completion.
– ASV-1X exploration well did not yield commercial volumes, but encountered evidence for the migration of hydrocarbons de-risking this element of the petroleum system in this area of the licence
– AJ-14 development well encountered seven metres of net pay. The operations programme continues with well stimulation expected to deliver production rates in line with pre-drill estimates of c. 300 bopd gross (post period)
– The ASH-4 development well has commenced drilling, targeting over 2 mmbbls gross in the prolific Alam El Bueib reservoir (post period)
– Significant increase in the interpreted in-place volumes on the ASH field following improvement to the subsurface imaging from seismic reprocessing
– Zero – Lost Time Incident Frequency rate and Fatal Accident Frequency rate. No environmental spills, Restricted Work Incidents or Medical Treatment Incidents
· In Jamaica, a two-year licence extension was granted and the Initial Exploration Period will now run to 31 January 2024
· In the UK, low cost technical studies have been completed ahead of commissioning of an independent contingent resources report on the Maria discovery
1H 2022 Financial summary
· Group revenue for the first half of 2022 was $9.8m(1) (1H 2021:$10.2m)
· Realised oil price of $105.5/bbl (1H 2021:$63.1/bbl)
· Gross Profit (excluding Egypt tax gross up) $5.6m (1H 2021: $5.7m)
· Cash Operating Expenses of $8.40/boe (1H 2021: $4.61/boe)
· Profit After Tax of $2.4m (1H 2021: $2.0m)
· Cash collections in the six-month period of $8.7m (1H 2021: $8.2m)
· Repayments on BP Pre-payment facility of $1.6m (H1 2021: $2.4m)
· Group cash balances at period end were $3.8m (1H 2021: $2.0m)
· Group Cash balance as at 23/9/2022 of $4.7m
(1) 22% working interest net of Government Take
1H 2022 Corporate summary
· Appointment of Peter Dunne as Chief Financial Officer, with effect from 5 May 2022
· United terminated the sale and purchase agreement with Quattro Energy Limited to sell its UK Central North Sea Licences; P2480 (Zeta) and P2519 (Maria)
· Agreement signed with Anasuria Hibiscus UK Ltd for $2.5m in relation to the Crown milestone payment, with $1.5m received in 1H 2022 and the remainder due prior to year-end
· Completion and receipt of proceeds in relation to the sale of UOG Italia Srl to Prospex Energy for €2.2m plus €0.1m working capital adjustment
· Tom Hickey, non-executive director stepped down from the Board on 23 September 2022
· The full year 2022 average group working interest production guidance range has narrowed to 1,450 – 1,500 boepd (vs 1,500-1,650 boepd previously guided). This is primarily due to rescheduling of the 2022 drilling programme in order to incorporate the results of seismic reprocessing prior to drilling the high impact ASH-4 development well which has now commenced drilling
· In Egypt, drilling results from ASD-2 and the seismic reprocessing over the ASH field are expected to have a positive impact on year-end reserves
· The drilling programme in Abu Sennan is continuing, and we look forward to completing the ASH-4 development well, targeting 2.2 mmbbls gross recoverable resources from the prolific AEB reservoir and the ASF-1X exploration well with a pre-drill target of c. 8 mmbbls gross recoverable resources
· In the UK, we are expecting to complete an independent contingent resources report during Q4 2022 on the Maria discovery ahead of assessing commercialisation options
· In Jamaica, a number of companies are currently conducting detailed technical evaluations
· United continues to evaluate M&A opportunities with a strengthened balance sheet to support the growth strategy
Brian Larkin, CEO commented:
“The Company’s balance sheet is the strongest it has ever been and in the first half of the year we have continued an active work programme across our portfolio of assets.
“We look forward to drilling both the ASH-4 development well and ASF-1X exploration well on the Abu Sennan licence by the end of the year. Successful outcomes on these wells have the potential to significantly increase production levels, add reserves, and boost the longer-term value of the Abu Sennan licence.
“United’s portfolio consists of complementary assets that have the potential to provide short, medium and long term upside to all our stakeholders and provides a platform for growth. Abu Sennan in Egypt continues to deliver production and strong cashflows, Maria in the UK contains a discovery with a potential development adjacent to some of the largest oil fields in the Central North Sea, and Jamaica, where the Walton Morant licence offers access to high impact exploration potential with a quality drill-ready prospect.”
Nothing to add to the UOG statement with everything since the results period already in the news.
i3 Energy yesterday announced the following production update.
i3 recently reached a production rate of 22,000 barrels of oil equivalent per day, comprised of field estimate sales equalling 69 million standard cubic feet of gas per day, 6,470 barrels per day of natural gas liquids and 4,030 barrels per day of oil & condensate, inclusive of royalty production.
The Company has drilled 20 gross wells as part of its expanded 2022 drilling programme. Of these wells 13 are on production, 5 are being cleaned up following tie in and 2 await completion. The latter 7 wells are expected to be fully cleaned up and on production in late October.
With continued performance of the Company’s low-decline base production and success achieved through its initial capital budget, i3 is positioned to execute on the balance of its 2022 drilling programme and remains on track to reach 24,000 boepd by year end.
And today i3 announced the resignation of Graham Heath as Chief Financial Officer and Executive Director and the intention of appointing Ryan Heath to the Board of Directors following completion of relevant AIM Rules requirements. Graham is leaving full time employment immediately to focus on personal health issues such that he can pursue other interests.
The production announced yesterday was very good and on track to hit targets, which is a very good performance. But I have to comment on the news about Graham Heath to whom I wish a successful challenge against his health issues.
In my view i3 is only still here because of Graham, when I first met him in the earlier days of the company when he was my contact and the only reason I kept in touch with the company. An outstanding CFO and an incredibly nice bloke, nothing was too much trouble if I needed something, I wish him all the very best and good fortune in the future.
The absorbing T20 series between England and Pakistan continues this afternoon in Lahore and after the thriller last time anything could happen, it starts at 1530 hrs.
The opinions expressed here are those of the author
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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