WTI $73.13 -$2.12, Brent $74.76 -$1.73, Diff -$1.63 +39c, NG $3.66 -4c, UKNG 82.5p -1.97p
By Malcolm Graham-Wood
An agreement was made in Opec+ yesterday as the UAE had their baseline shifted up from 3.168m b/d to 3.65m b/d with effect from next April. Whilst this sounds good enough the Emirates still say that ‘deliberations are ongoing’ which sounds like they wouldn’t mind a number with a 4 on the front. Opec+ will now increase by 400/- b/d from August to December.
The EIA inventory stats showed yet another substantial draw yesterday, at least in crude oil, down by 7.9m barrels, whilst gasoline added 1 million b’s which foxed some although some areas slowed slightly last week. Distillates added 3.7m barrels as production of it and gasoline dipped slightly.
Following the announcement yesterday, Petro Matad has announced that it has conditionally raised gross proceeds of US$ 9.7 million through the oversubscribed placing of, and subscriptions by a director and shareholder of the Company for, 200,624,830 new Ordinary Shares at a price of 3.5p per share.
The Company also announced that, following the further announcement made yesterday regarding the launch of a proposed retail offering via PrimaryBid, it has successfully conditionally placed 14,285,714 new Ordinary Shares at the Placing Price, raising gross proceeds of approximately US$0.7 million.
The Company has conditionally raised, in aggregate, approximately US$10.4 million at a price of 3.5 pence per new Ordinary Share with Petrovis participating in the Subscription for a total of 43,321,299 New Ordinary Shares with a total value of approximately US$2.1 million and Mike Buck, CEO of Petro Matad, participating in the Subscription for a total of 2,062,919 New Ordinary Shares with a total value of approximately US$100,000.
Conditionally, in aggregate, a total of 214,910,544 New Ordinary Shares will therefore be issued, representing approximately 24 per cent. of the Enlarged Share Capital.
The company plans to use the proceeds of this raise to, fund the completion of the Heron 1 and install well site production equipment, drill and complete for production (if successful) H2 and H3 wells and hopefully to start production in mid-2022 with processing and export via adjacent Petro China operated facilities.
They will also hopefully, recruit a farm in partner, if acceptable terms can be agreed, in order to accelerate Heron full field development and to join in exploration efforts as well as to fund a portion of the Company’s Production Sharing Contract expenses;
The raise will also fund a portion of G&A and other corporate expenses.
Mike Buck, CEO of Petro Matad, commented:
“The Board is delighted by the support we have received from new and existing shareholders, and is pleased to welcome a number of new blue chip institutions to the register.
This fundraise will allow us to commence production from the Heron Field, with the completion of the Heron 1 well and the drilling of the H2 and H3 wells.”
So, where does all this recent activity leave MATD? The first thing that I have to call out is the discount that the money was raised at, first glance it was 36% based on the previous close but that moves to 54% from the day of the exploitation licence or 60% from the high. Whilst I know that it was clear that MATD needed to raise some money and one can’t assume there was a leak, which incidentally I don’t believe, it should have been done along with the new licence process.
Grumble over, I’m really delighted that Petro Matad have now received the exploitation licence and are well funded to get stuck into the exciting Heron 1 area and prepare for production as well as to drill the H2 and H3 wells. The drilling window means that the company can now prepare for a bumper programme next year with ot without a partner.
On that subject the company are ‘resuming conversations’ with potential partners and there are a number out there I understand. MATD were very happy using PetroChina rigs in previous campaigns and they would surely have an advantage over other potential partners as they also have people, facilities, rigs and of course export lines that they can call on.
At these levels and with a good list of new and existing shareholders I’m sure that from today’s 3.375p level the shares will be good long term value after a bit of indigestion after this issue.
Serinus has announced that the drilling of the Sancrai – 1 well has discovered gas. The drilling of the well has concluded achieving the total planned drilling depth of 1,600 metres. The well was drilled five days ahead of schedule and approximately 19% below budget.
Continuous formation gas shows were recorded over 20 metres of gross pay over four sand intervals from the measured depths of 855 metres to 875 metres. At this drilling interval the measured total gas ranged from 5.5% to 11.1% with an estimated average porosity of between 23% and 27%. Open-hole petrophysical analysis undertaken during the drilling operations has further confirmed this gas-bearing Pliocene sand zone. The Company will now proceed to perforate and test the Pliocene sand zone prior to completing the well for future production.
This newly discovered gas field lies approximately 7.8 km to the south of the Moftinu Gas Development project and provides Serinus with a high value, high return development opportunity similar to the Moftinu Gas Development project. The close proximity of the Sancrai – 1 well to the Moftinu Gas Plant provides the Company with the option to bring this well onto commercial production while drilling additional appraisal development wells into the structure in order to fully delineate the gas field.
The Board of Directors and the Management of the Company are very pleased to have discovered a new gas field in Romania as it provides further affirmation of the Company’s belief that there are multiple shallow gas fields within the Satu Mare Concession Area.
I met with Jeffrey Auld virtually this week and Serinus has significant charms particularly for those who like to buy cheap stocks with no debt, reducing costs, and where some directors are buying stocks with their own money. I am considering covering the stock where a number of reasons, but primarily apparently due to stock overhang, have made the performance dire in the extreme but am undertaking a watching brief.
Trinity Exploration & Production
Trinity has provided an update on its operations for the three-month period ended 30 June 2021.
‘The Trinity operating model of a low cost break-even and a technically-led operating capability has resulted in continued strong production levels and operating cash generation, both of which underpin the Group’s strategic push to meaningfully scale the business’.
Significantly, despite the Covid-related state of emergency in Trinidad, production levels remained resilient during Q2 2021 with production volumes averaging 3,047 bopd (Q1 2021: 3,107), yielding a H1 2021 average of 3,032 bopd. The Group’s unaudited cash balances remained robust at US$19.0 million as at 30 June 2021 (US$20.2 million (audited) as at 31 December 2020) as a result of strong operating cash generation (US$5.1 million).
The Company remains on track to meet its operating break-even target of below US$ 30/bbl for 2021. Average pre-hedge income operating break-even (revenues less royalties, opex and G&A) for H1 2021 was US$27.8/bbl (unaudited) (H1 2020: US$24.7/bbl (unaudited)). The increase in H1 2021 in part reflects additional costs associated with the Covid pandemic.
Bruce Dingwall CBE, Executive Chairman of Trinity, commented:
“The Board is extremely proud of the Trinity team for, once again, safely delivering a strong operational and financial performance despite the ongoing state of emergency in Trinidad. Strong base production and operating cash generation, and the maintenance of a robust balance sheet, are the foundations that continue to enable us to pursue the numerous initiatives underway to meaningfully scale the business. In addition, the capital reduction which we have recently effected will enable the Company to return value to shareholders via dividends and/or share buybacks as and when appropriate.
“As we look to the future with increasing confidence I must again thank our staff and business partners for their unstinting dedication to their responsibilities and to the supply chain and their employees for supporting our operations through the extraordinary period we are all living through.”
The British & Irish Lions lost their first match on tour last night by 17-13 to the South Africa A team which contained 7 of the victorious world cup team.
And today marks one of the highlights of the year, the first day of The Open Golf Tournament. This year it is being held at the Royal St George Golf Club.
(The opinions expressed here are those of the author, a columnist for Share Talk.)
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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