Malcy’s Blog – Oil price, Helium, Petro Matad, Jadestone & finally

WTI $45.64 +36c, Brent $48.71 +46c, Diff -$3.07 +10c, NG $2.51 -27c

By Malcolm Graham-Wood

Oil price 

The Opec+ meeting has concluded pretty much in line within a wide range of expectations and throws a small fish to those within the group who were agitating for higher production. The increase of 500/- b/d means that cuts are only 7.7m b/d up from 7.2m b/d, apparently in line with recent better demand data for early 2021 and the group has agreed to meet monthly from now on to ‘address the market and demand factors’.

Both WTI and Brent are up almost a dollar this morning which puts the latter only 40 cents away from the magic $50 mark and presumably justifies the Opec+ stance.

Helium 1

HE1 has been admitted to the Aim Market of the London Stock Exchange this morning following its merger with Attis Oil & Gas, at the price of 284p it has a market cap of £14.1m.

David Minchin, Chief Executive Officer, commented:

“Our Admission to AIM is a hugely significant moment for Helium One.  Following our oversubscribed capital raise we are fully funded to carry out an aggressive exploration programme commencing in Q1/Q2 2021. This drilling programme will enable us to prove what we believe is an asset with globally strategic implications in a supply constrained helium market.

“Helium One is the only company listed on AIM that provides investors exposure to helium – a scarce and irreplaceable commodity which is essential for many modern technologies.  We look forward to updating our new and existing shareholders as we progress this programme.”

Petro Matad

MATD updates on the Exploitation Licence application, due to recent full lockdown in Mongolia involving restrictions on meetings this has meant that discussions with involved parties have been postponed until restrictions are eased or virtual meetings can take place.

Jadestone Energy

A trading and operations update from Jadestone this morning, group production from January 1- November 30, 2020 averaged 11,356 bbls/d and the Group remains on track to deliver full year production guidance of 11,000–12,500 bbls/d. Gross cash and bank balances of $100.2 million as of November 30, 2020, versus $99.4 million at December 31, 2019 giving net cash of $82.6 million, versus $39.3 million at December 31, 2019.

Maari acquisition progressing, but as warned, no longer expected to close before year end as a result of delays caused by COVID-19 and New Zealand’s recent general election.  ‘The Company anticipates the acquisition to close in H1 2021 with the effective date remaining January 1, 2019’. In Indonesia, the Lemang acquisition is on track to close in Q1 2021 or earlier.

The Valaris 107 drilling rig has been contracted for 2021 infill drilling and well workovers in Australia and discussions with relevant authorities relating to the Vietnam Nam Du/U Minh gas fields development project are ongoing, with preparations to issue the FPSO contract tender being made.

Paul Blakeley, President and CEO commented:

“Our primary focus during this extraordinary year has been to strengthen our balance sheet and protect the Company from spending inefficiently into the low oil price environment we’ve seen during the course of the last two quarters.  We have started to reinstate investment which will restore production at both Stag and Montara over the course of the next 12 months.  This is aimed at taking advantage of what we anticipate will be stronger pricing going forwards, even as Brent edges up above $49/bbl today, the highest level since March.  We have already completed the first three workovers at Stag, which were deferred during the second/third quarter and are looking to complete three more between now and the end of the year.  At Montara, having encountered problems at the two Skua subsea wells, we are planning well workovers which will either be done via a subsea remote operated vehicle, or with the Valaris 107 drilling rig, which has been secured on contract commencing late Q2 2021 and which, with the right economic environment, will also drill the Montara H6 infill well.

 Despite this, we still expect to deliver full year average production, in line with our revised guidance for the year.  Similarly, with good progress on our Company-wide cost savings initiatives, we also anticipate meeting the operating cost target within our guidance range.  Notably, we did not revise our unit cost guidance upward this year, despite lower production, reflecting the significant achievements made to reduce operating costs through Project Clover, and we continue to work to lock in much of these savings as permanent structural changes in our cost base.  The remaining elements of our guidance were also delivered, having completed our maiden interim dividend distribution, and also reducing our capital spending to within a range of US$30 to US$35 million.

 Progress continues with the Vietnam development, and Petrovietnam has now proposed gas sales profiles which meet customer needs.  These are being assessed to confirm our intended production profiles for the Nam Du and U Minh fields.  This is a key step to finalising a gas sales contract, and attaining government sanction for the field development.

 In the meantime, our financial position is robust as our business remained cash generative throughout the 2020 depressed oil price environment, and has contributed to a growing net cash position as we articulated back in March.  We expect to be entirely debt-free by the end of Q1 2021.

 Finally, we are also investigating a number of new M&A opportunities which are either on the market, or anticipated to be brought to the market within the next 12 months.  These include a spectrum covering both high value but smaller tuck-in acquisitions and larger, more material opportunities, and which could be transformational for the Company.  As ever, pursuing inorganic growth is subject to our strict acquisition criteria.”

Jadestone continues to exhibit many very pleasing qualities that will serve it well as the energy sector heads into 2021. Having shown solid discipline on costs and even being prepared to make difficult decisions within the portfolio, JSE is in a very good position to grow profitably from this solid base. Management is impressive and amongst the best in the business and at today’s price of 55p I would suggest the company remains very well placed in its peer group.

And finally…

The final of the pretty useless rugby Autumn Nations Cup happens on Sunday at Twickenham, made even more junior by the French Federation’s decision to not allow key players to play this time, pathetic. Scotland go to Dublin for the 3rd place play-off on Saturday.

It is the Sakhir GP in Bahrain on Sunday, after the drama of last week when Grosjean walked away from a fireball let’s hope for something better. With Lewis having tested positive for the Cove, George Russell gets the Mercedes seat which will be most interesting, Brit Jack Aitken gets the spare seat created at Williams.

Some excellent jump racing at the weekend with the Tingle Creek at Sandown and good cards at Chepstow and Aintree.

In the Prem Saturday sees Burnley host the Toffees, the Cottagers go to the Noisy Neighbours, the Hammers host the Red Devils and memories are evoked with Chelski taking on Leeds. Sunday sees the highlight of the weekend as the North London Derby has rarely been played with Spurs first in the League and the Gooners 14th…Elsewhere the Eagles go to the Baggies, the Blades host the Foxes and Liverpool entertain Wolves.

And in a big cheque writing day as the LA Lakers re-sign Anthony Davis for $190m over five years and Le Bron James for $85m over two….

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

Malcolm Graham-Wood

Source Link https://www.malcysblog.com/2020/12/oil-price-helium-petro-matad-jadestone-and-finally/

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


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