Malcy’s Blog – Oil price, Far, Savannah, Union Jack Oil & finally

WTI $40.37 -36c, Brent $42.63 -45c, Diff -$2.26 -11c, NG $1.64 -3c

By Malcolm Graham-Wood

Oil price

Oil drifted yesterday and is equally down this morning. No real news but weakness was down to an increase in COVID-19 numbers reported in the last 48 hours. After hours the API reported a build in crude oil stocks of 1.7m barrels which was higher than the whisper of 300/- barrels. But, and more importantly products drew, gasoline by a solid 3.9m b’s and distillates by 2.6m, also much higher figures than guessed by the teenage scribblers on the Strasse…

Far Limited

Far has announced that Far Senegal has not paid its most recent cash call and therefore has received from the operator a notice that FS is in default. However the operator has been undertaking a programme to reduce capex and Far is waiting ‘clarity’ on these matters and meantime continue to investigate selling all or part of its interest in the RSSD PSC and JOA. Far continue to make deep cuts across the board whilst this is taking place.

Savannah Energy

Savannah has announced that an extension has been granted by Aim regulation to report its results in July 2020 rather than the 24th June as previously planned, this is due to the COVID-19 lockdown in their country of operations but that the audit process is currently being finalised.

But in an update to 31st May average daily production was up 15% in the Jan 1-31 May period to 20.8 kboed including a 19% increase in Uquo gas production to 18.3 kboed. Group revenues were $17.8m (including approximately 6 weeks production of Nigerian operations) and the cash position was $25.7m and group debt position was $520m both at 31 May 2020.

It is important at such a time to take on board the comments of SAVE CEO Andrew Knott,

“I am very pleased with the performance of our business to date so far this year.  By taking decisive action we have managed to successfully navigate the oil price downturn and the COVID-19 pandemic.  We have also been able to significantly increase our daily gas production in Nigeria reinforcing Savannah’s status as Nigeria’s most reliable sources of gas-to-power, at a time when the in-country gas-to-power shortage has increased by 42%. I am very proud of our Company’s efforts during this difficult time and I look forward to sharing further updates with our stakeholders in due course.

Whilst it is frustrating that we have had to delay the publication of our 2019 Annual Results, I can confirm that there are no issues with the audit. The impact of the Covid-19 lockdown in our countries of operation has meant that we will now look to publish them later in July 2020.”

Solo Oil 

Solo has announced in a corporate update this morning that due to the COVID-19 virus it has applied for a delay in releasing its 2019 financial statements which has been granted. At the AGM, which will also be delayed the change of name to Scirocco Energy will be requested.

With regard to funding and liquidity the company is in a position of relative strength compared to certain peers in these unprecedented times with low fixed overheads and projects primarily focused on the development of large scale onshore gas developments in Tanzania ‘with no direct exposure to the oil price and strong localised pricing for gas in the region’.

Finally, in their own words, better than mine, ‘The Company has sufficient cash to support its operations in its current state to the end of Q1 2021 and remains funded for its share of the firm budget for its Tanzanian operations, capital programme and strategy.  The Company can report unaudited 2019 year-end cash of £1,063,872, nil debt and an outstanding receivable position of £1,259,768. Further, after prudent management of payables over the last six months, the Company currently has no outstanding major creditors outside of the normal course of running the business’.

Union Jack 

UJO has announced the acquisition of a further 3% of PEDL 253 which contains the Biscathorpe project as well as the signing of a legally binding and confidential settlement with Humber Oil & Gas. The 3%, acquired from Montrose Industries takes UJO’s stake to 30% in this potentially material and commercially viable hydrocarbon resource remains to be tested and takes their stake to 30% and costs only £115,000 in cash from resources.

David Bramhill, Executive Chairman of Union Jack Oil said in the statement “The collective extensive technical information analysed over the past several months, combined with the APT conclusions on the likely presence of good quality oil have materially upgraded the resource potential and economic value of the project, upholding our opinion that PEDL253 remains one of the UK’s largest onshore un-appraised conventional hydrocarbon licences.

I feel that UJO has a number of exciting opportunities in its portfolio and this adds to that, the shares deserve to be on a much higher market cap, currently only £23m.

And finally…

Last night Spurs kept their Champions League pressure on by beating the Hammers 2-0. Tonight the Blades go to the Theatre of Dreams, Villa go to the Magpies, the Canaries host the Toffees, Wolves entertain the Cherries and the Eagles go to fortress Anfield.

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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