Malcy’s Blog – Oil price, Genel, Kistos, Far, Sound Energy, UOG & finally

WTI $60.18 +48c, Brent $63.67 +39c, Diff -$3.49 -9c, NG $2.62 +6c, UKNG 49.1p +0.3p

By Malcolm Graham-Wood

Oil price

Oil is tentatively moving upwards despite clear evidence that the virus is still very much alive and kicking and in big economies. This was combined by the bad news that the J&J vaccine had been ‘paused’ in many countries. Indeed the Opec monthly yesterday reported yet another pushback in the rise in demand very much into 2H 2021. 2Q numbers for demand were revised down by over 500/- b/d to 95.09m b/d but 2H numbers rise to 98.6m b/d.

The API stats after the close showed a good crude draw of 3.6m but gasoline added 5.6m b’s and distillates drew 3m b’s. Talk will be of just how much and when the fast reviving US economy will lead to increased gasoline demand, at present that gives that market a good 6 weeks until May 31st which is Memorial Day and of course the start of the driving season.

Finally it’s Iran watch time, after some reports of enemy action last weekend on its nuclear installations, yesterday the country started 60% enrichment in what was described as being in response to those attacks. With talks restarting today to let Iran back into the fold it might be interesting to see how much rope they are given, one could say that they will just be allowed back despite a huge nuclear presence, it probably doesnt matter much as they are selling a shedload of oil to China anyway…

Genel Energy

Genel announced yesterday payments received from the KRG for oil sales in February 2021. Tawke was $11.4m, Tawke override $6.9m, Taq Taq $1.9m, Sarta $1.6m and receivable recovery of $5.4m. Under the Tawke override payment mechanism, Genel receives 4.5% of monthly Tawke gross field revenues.

The receivable recovery payment relates to unpaid invoices from 2019 and 2020. For each cent above a monthly dated Brent average of $50/bbl, 0.5 cents per paying interest barrel produced will be paid towards monies owed.

‘As noted today by DNO ASA, operator of the Tawke PSC (Genel 25% working interest), following  resumption of payments the partners have stepped up drilling of new wells at Peshkabir and workovers of existing wells at Tawke in 2021, raising gross operated licence production from an average of 110,300 bopd in 2020 to 110,900 bopd in January, 112,000 bopd in February, 113,100 bopd in March and 115,500 bopd month-to-date in April’.

Kistos 

Kistos has announced a PrimaryBid offer at a price to be determined as well as a placing and subscription for institutional and other investors.

The Company will use the funds raised from the PrimaryBid Offer, the Placing and the Subscription to form part of the consideration to acquire the entire issued and outstanding share capital of Tulip Oil Netherlands B.V. from Tulip Oil Holding B.V, which was announced by the Company on 12 March 2021. TON, via its wholly-owned subsidiary, Tulip Oil Netherlands Offshore B.V., owns an operating interest in the Q10-A offshore gas field and interests in other fields in the Dutch North Sea, including the Q10-B, Q11-B and M10/M11 discoveries, and other exploration and appraisal projects.

Upon completion of the Acquisition, which constitutes a reverse takeover for the purposes of Rule 14 of the AIM Rules for Companies, the Company expects to cease to be an investing company under the AIM Rules for Companies and instead become a trading company.

I look forward to the return of the quote for Kistos and shortly after that the new shares, indeed the main point about this PrimaryBid offer is that Andrew Austin said right from the start that he would involve the retail investor and this is what is being done here. Oh and btw, from what I have seen there is some confusion, I don’t think that AA is interested in any deal with Sterling Energy….Probably just lawyers photo copiers making mischief.

Far Limited

I have to say that I am extremely confused about what is going on down at Far, whose shareholder meeting scheduled for tomorrow was in my view meant to have been a rubber stamping of the Woodside acquisition of its Senegal position.

The reason for my confusion is that not long ago I reported news that Remus Horizons had effectively retreated from the high profile corporate activity it had embarked on when it was associated with Far and PetroTal amongst others. When the company ‘lost’ some 15 or more top quality members of staff, some of whom had only recently joined, it looked as if its ambitions had been somewhat curtailed.

So today I was surprised to see the Far announcement in which Remus ‘hereby confirms its intent to proceed to make an off-market takeover offer (Remus Offer) for all of the ordinary shares in FAR Limited  for A$0.021 cash per FAR share’. This as well as the statement below is again rather confusing as so far there has been no binding offer and leaves Far shareholders in a tricky situation at tomorrows meeting. As I see it, should they vote against Woodside the ‘bid’ would go unconditional subject to Far management. As to its funding the company said in the statement that..

‘Remus has a present funding capacity totalling US$400 million of which it has currently allocated up to
US$250 million towards the acquisition of FAR and the provision of additional funds to FAR post the
completion of the acquisition or through a potential working capital support bridge loan (see details
later in this letter). This being more than sufficient to fund the total consideration payable to
Shareholders under the Remus Offer of approximately A$210 million.
For completeness we confirm Remus’ present funding represents unconditional investment
commitments from accredited investors and that Remus is well advanced with securing additional
funding which it recognises will be required to meet funding calls in relation to the RSSD Project in the
event the Remus Offer is successful’.

I understand that several former senior Remus executives remain more than a little sceptical about the “committed” funds ever actually landing.  A previously announced bid from Remus had to be withdrawn because funds never materialised.  So serious doubts must remain about Remus’ ability to complete the Far transaction.  Combine that with the recent resignations of some 15 senior members of staff who walked having lost all confidence in Remus’ ability to pay salaries and creditors let alone find more than $200m to complete this transaction.  With serious holes in the management team and question marks over the financial firepower, I must say I have some sympathy for the sceptical view.

Shareholders are tomorrow going to have to make a tricky decision, bag the Woodside deal or support the riskier Remus ‘offer’, the ramifications should the deal then not go through prove disappointing at the very least. Perhaps it is a good thing that Far has elected to discuss this as the first item on the agenda so that orderly debate can sort this one out….

Sound Energy

Sound has announced that at the meeting of the holders of the Company’s Luxembourg listed EUR 28.8m 5.0% senior secured notes due 2021  held earlier today  to consider the Company’s proposal for the restructuring of the Notes, the Proposal was duly approved by the requisite authority.

With the Proposal approved by Noteholders, the Company will issue the 141,176,448 New Ordinary Shares in the Company (representing c.10.64% of the Company’s current issued ordinary share capital) to Noteholders on a pro rata basis, as detailed above.

Application has been made for the 141,176,448 New Ordinary Shares to be admitted to trading on AIM (“Admission”) and it is expected that Admission will occur at 8.00 a.m. on 20 April 2021. Following Admission, the Company’s issued ordinary share capital will comprise 1,467,420,837 Ordinary Shares, none of which are held in treasury.

Therefore, following Admission of the New Ordinary Shares, the total number of Ordinary Shares with voting rights in the Company will be 1,467,420,837 which may be used by Shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.

The Company is progressing the Final Investment Decision contract and approval processes for its Micro LNG phase 1 development with all relevant stakeholders. This will lead to a ‘notice to proceed’ and construction to start in due course. The Company confirms that, after restructuring of the Notes, it has sufficient cash resources through to August 2021 to undertake these activities.

Graham Lyon, Sound Energy’s Executive Chairman, commented:  

“I am pleased that Sound Energy has now successfully completed the restructuring of its loan note obligations.  This new arrangement removes one of the constraints in progressing the development of the Tendrara TE-5 horst development.  I would like to thank the Noteholders for working closely with Sound Energy to develop a solution that benefits all stakeholders. The Company is now well into the contracting and approval processes which will consequently deliver the phase 1 Micro LNG ‘notice to proceed’.”

More good news for Sound, following this they can get on with the operational work in Morocco and this opens up the development at TE-5 on the ground. Management both in Morocco and here in the UK should be commended for sticking to its guns and playing hard ball on behalf of the shareholders. This is a key obstacle that Sound will be very happy to have behind them, full marks to all.

United Oil & Gas

UOG has announced a ‘material’ upgrade to its Abu Sennan reserves onshore Egypt. The Independent reserves and resources report, relevant to end 2020, by Gaffney Cline & Associates (“Independent Reserves Report”) indicates material increase in reserves at Abu Sennan.

The report gives a 24% increase in Abu Sennan Gross 2P Reserves to 16.8 MMboe (15% gas) from 13.5 MMboe at the beginning of 2020, representing a near 200% reserves replacement ratio, before the recent drilling success at the ASH-3 and ASD-1X wells.

Gross 1P reserves up by 59% to 6.7 MMboe and gross 3P reserves up by 21% to 34.7 MMboe (from 4.2 MMboe and 28.6 MMboe respectively at the beginning of 2020).

There were significant additional growth opportunities evaluated in the report, noting 21 exploration prospects, many with multiple reservoir targets.

United’s Chief Executive Officer, Brian Larkin commented:

“It is really pleasing to see the Abu Sennan assets continuing to perform so strongly, and so consistently, with a reserves replacement ratio of over 190% for the second year in a row.

 “We remain confident that the Licence has much more to offer, and indeed, these upgraded reserve numbers take no account of the successes already achieved so far during the 2021 drilling campaign. This report significantly increases our understanding of the potential of this asset, pointing to 21 potential exploration targets. With further development drilling due to commence shortly at Al Jahraa, and further development and exploration targets identified across the licence, we are looking forward to further news flow and growth from Abu Sennan, both in the coming months and in the longer-term.”

And finally…

Two big night’s in the Champions League, last night Chelski hung on to win overall against Porto and tonight they will find out who they play in the Semi final. It could be Liverpool or Real Madrid, the Spaniards lead 3-1 from the first leg and now at Anfield it could be quite a belter.

On the other side of the draw the Noisy Neighbours tonight play Borussia Dortmund in Germany, City carry a 2-1 victory from the first leg. Last night PSG lost 0-1 at home to Bayern Munich but that made it 3-3 and the French team went through on away goals to play City or Dortmund in their semi final.

News today that financier Bernie Madoff has died in a New York federal prison aged 82.

(The opinions expressed here are those of the author, a columnist for Share Talk.)

Malcolm Graham-Wood

Source Link https://www.malcysblog.com/2021/04/oil-price-genel-kistos-far-sound-energy-uog-and-finally-2/

Website Link www.malcysblog.com

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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