Malcy’s Blog – Oil price, Orcadian Energy, Longboat Energy, Getech, United Oil & Gas & finally

WTI $79.35 +$1.05, Brent $82.39 +44c, Diff -$3.04 -61c, NG $5.57 -9c, UKNG 213.02p -54.06p

By Malcolm Graham-Wood

Oil price

Oil remains strong and I for one think it will stay this way for the foreseeable future. Last week WTI was up $3.47 and Brent $3.11 and this morning the former is up $2.20 at $81.55 and the latter showing a rise of $1.78 at $84.17. Its Columbus Day today but oil and equities remain open in the US.

It will stay like this for a while and maybe there can be some more lobbying at the next OPEC+ meeting in three weeks time but at the moment, and at least until the balance moves back to supply later next year, I suspect the bulls will have the upper hand. Whatever your thoughts on climate change, fossil fuels are here to stay and Its been a long time since I felt that OPEC+ were in such a strong position.

Orcadian Energy

Orcadian has announced the farm-out of of their Curra prospect to Carrick Resources with the aim of executing final agreements before of December. If an SPA is executed Carrick will then purchase new seismic data relating to the Carra prospect, work up the Carra prospect to drill-ready status, and manage a further farm-out process on the prospect. In return, Orcadian will, subject to OGA approval, assign a 50% interest in the sub-area of licence P2320, which contains the bulk of the Carra prospect, to Carrick.

The Carra prospect lies to the East of the Crinan and Dandy discoveries and to the South of Fyne. The Carra prospect is contained in Tay and Cromarty sandstones which lie on trend with Guillemot West, and is a stratigraphic trap associated with a clear amplitude anomaly defined by 3D seismic. The Carra prospect has been previously estimated to contain P50 recoverable prospective resources of 30 MMbbls of medium gravity oil (Carrick has provided these initial estimates of recoverable volumes).

Steve Brown, Orcadian’s CEO, said:

“We are delighted to be co-operating with Carrick to make the most of the exploration potential of our acreage. Progressing Pilot and the prospects close to Pilot is our main focus and partnering with Carrick to develop a drill-ready prospect on Carra means we will leave no stone unturned in our strategy to maximise value from our assets.”

Having made a couple of comments about Orcadian I recently met with the management and was most impressed with them. They are experienced and have a substantial portfolio of around 79 MMbbl proven and probable including the Pilot field , appraised and with big audited numbers and a good supportive act. This is good news for Orcadian who are looking cheap, and one of the most geared plays to an oil price recovery.

Longboat Energy

LBE announce that the Rødhette exploration well is a discovery but ‘at the lower end of pre-drill expectations’. The exploration well 7122/6-3 S encountered a 29-metre hydrocarbon column in the primary target in the Middle Jurassic Stø Formation. The top of the reservoir was reached close to prognosis containing high net-to-gross, moderate to good quality sandstone. Data acquisition indicates a gas column of approximately 18 metres in the well over an oil rim.

Longboat is also pleased to announce the spud of the Mugnetind exploration well (Company 20%) with the Maersk Integrator jack-up rig. The Mugnetind prospect, operated by AkerBP, is estimated to contain gross mean prospective resources of 24 mmboe with further potential upside estimated at 47 mmboe (gross). The chance of success associated with the Mugnetind prospect is 51% with the key risks being reservoir presence/quality. The well is expected to take approximately five-to-seven weeks to drill with an estimated net cost to Longboat of c.$7 million (c.$1.5 million post tax).

Helge Hammer, Chief Executive of Longboat, commented:

We are pleased to have made a hydrocarbon discovery with our first exploration well following our transformative acquisitions made this summer. We look forward to working together with the operator to use the data collected to assess the development potential for Rødhette alongside existing discoveries and further exploration potential in the area. 

“We are in a very busy period of drilling with Egyptian Vulture and Mugnetind exploration wells now both underway with the potential to create significant shareholder value.”

 Knocking some 10% off the shares as a result of this seems a bit harsh and with so much upcoming work I am convinced that this fall is an opportunity to buy the dip before good news comes along. This management is amongst the best in the sector with a tried and tested model in a previous life and I would certainly back them at this level. 

Getech

Getech are a team with a mission and on Friday announced an ‘exciting executive appointment’ – Max Brouwers joining Getech as Chief Business Development Officer.  Max joins us from Shell, where having worked in numerous senior roles, his most recent position was Leader of Energy Transition for Shell Global Exploration.

In this role he defined and led growth opportunities in hydrocarbons, carbon capture utilisation and storage, geothermal, and strategic minerals. Max Chairs the prestigious American Association of Petroleum Geologists Energy Transition Forum and is a global influencer in the application of geoscience to the Energy Transition.

In tandem with Max’s appointment, Getech is to form a European subsidiary which positions Getech in key international growth markets, where decarbonisation is being driven by the European Green Deal. Max will head this new European subsidiary, which will initially focus on geothermal and green-hydrogen projects across the continent.

As I noted Getech are on the move and the shares should take advantage from this proactive move and head back towards the peak some twice the current price.

Dr Jonathan Copus, Getech CEO said:

“This is an exceptionally exciting period for Getech as we apply our specialist geoscience and
geospatial skills and technologies to the Energy Transition. I am delighted that through the
quality of our offering and the transformational potential of our work, this has enabled us to
attract a business development leader of Max’s breadth, experience, and calibre.

Max’s work as Leader of Energy Transition for Global Exploration at Shell aligns him perfectly
to our focus on business development in hydrogen, carbon capture, geothermal and strategic
minerals. His leadership of our new European Subsidiary will also propel Getech into multiple
new geographies, where he will initially focus on expansion opportunities in green-hydrogen
production and geothermal technologies, which Getech has a unique capability in supporting.

In addition, as we continue to adapt our business model to take direct ownership positions in
companies such as H2 Green, we look to the future with confidence; seeing multiple avenues
for Getech to increase sales, generate value and facilitate growth.
We look forward to updating shareholders on further progress.”

United Oil & Gas 

United Oil & Gas has announced a quarterly production update for the third quarter (Q3) of 2021. Q3 2021 production averaged 2,022 boepd (1,616 bopd oil and 405 boepd gas) net to United.

Production from 1 Jan – 30 Sept 2021 (end of Q3) averaged 2,491 boepd (2,023 bopd and 468 boepd gas) net to United and 2021 full year production is on target to be in line with guidance, 2,100-2,300 boepd, net to United.

All of United’s production for the period was from United’s 22% non-operating interest in the Abu Sennan Licence, Egypt, which is operated by Kuwait Energy Egypt (“KEE”).

This data will vary quarter on quarter as development, appraisal and exploration operations continue.

CEEC

Last week I was a guest at the CEEC Scout Group Meeting where a large number of industry leaders from Europe and indeed worldwide gathered in person for the first time since the pandemic started. There was much to talk about and apart from the detailed formal programme of presentations there were many chances to meet leaders informally.

As my first visit I have to say that the standard of guests, speakers and subjects was quite outstanding and the three days together flew past. Needless to say that I hope to be attending meetings in the future although I don’t go to many of the conferences around in the sector and thank you to the organisers for including me.

And finally…

With the international break ongoing, Scotland’s win over Israel with the Faroe Islands next up must give them a big chance of qualifying for the World Cup and England have Hungary tomorrow.

The Turkish GP was actually interesting with the would he or not on old tyres the big question. Mercedes opted for safety and Lewis is 6 points behind Max with 6 races to go.

And the Tyson Fury v Wilder 111 fight turned into a real epic and with both boxers having visited the canvas, Fury ended victorious. What happens next is up in the air, AJ v Usyk will feature but Dillian Whyte may come into the picture.

The opinions expressed here are those of the author

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 blog


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