Malcy’s Blog – Oil price, Predator, Jadestone, IGas, Zephyr & finally

WTI $75.16 -7c, Brent $77.16 +99c, Diff -$2.00 +99c, NG $3.70 +4c, UKNG 94.58p +5.08p

By Malcolm Graham-Wood

Oil price

No deal, no new oil seems to be the mantra after the Opec+ meeting didn’t reconvene after the UAE challenged its baseline numbers awarded at the April 2020 determination. While there will be a short term hiatus it may well be that Gulf members meet behind the scenes to sort things out. Having had monthly meetings all year there is, at least right now, nothing in the book.

Of course doom mongers abound and those suggesting the break-up of either Opec or the Gulf Alliance are peddling their wares, right now the only thing that is of interest is the sound of silence from the US, $5 gasoline would change that soon enough…

Predator Oil & Gas

Predator Oil & Gas Holdings Plc (PRD), the Jersey-based Oil and Gas Company with operations in the area of the Guercif Petroleum Agreement, comprising the Permits I, II, III and IV, located in the Guercif Basin in northern Morocco, announces completion of the drilling of MOU-1. Predator (75%) operates Guercif in joint venture with the Office National des Hydrocarbures et des Mines (“ONHYM”) acting on behalf of the State (25%).

Initial results show that formation gas shows were recorded  in a shallow sand at 605 metres measured depth comprising 2.35% or 19,392 ppm C1 methane. Total background, exclusively dry gas, increased from 0.6% to 1.7% (5,232 to 13,800 ppm C1) down to 1,159 metres MD. Formation gas shows of 1.8% and 3.8% (13,355 to 36,035 ppm C1) were encountered whilst drilling this section.

Below 1,159 metres in the lower Guebbas and Hoot (using the stratigraphic nomenclature of the Rharb Basin) total background gas was from 0.7% to 1.5% (5,000 to 11,996 ppm C1) but with traces of heavier gases C2, C3 and C4. Formation gas shows of up to 1.67% (13,643 ppm total gases) were also recorded.

Wireline logs were run from 724 to 1487.4 metres MD over the interval with gas shows. Wireline logs will require detailed interpretation to take into account borehole conditions caused by borehole enlargement where washouts have occurred in the open-hole section.

MOU-1 drilling operations were completed and a cemented completion was run whilst the well is being evaluated. I have published the full drilling report as it is quite detailed, the company also details its forward plans which they are confident about. 

The occurrence of good gas shows in  MOU-1 with evidence of thermogenic gas migration supports in this part of the Guercif Basin the pre-drill geological interpretation for a deep gas “kitchen” connected to shallower reservoirs by large faults.

Based on these positive results the Company will be proposing to its partner to drill the previously defined MOU-4 location later this year to the northeast of MOU-1, and to commission an Environmental Impact Assessment (EIA) over the prospective area around the MOU-4 location which will also incorporate information from the existing EIA. 

Paul Griffiths, CEO of Predator Oil & Gas Holdings Plc commented:

“We are pleased to have completed the MOU-1 drilling operations which was our first operated well in the Kingdom of Morocco. We sincerely thank those contracted to the Company who have worked tirelessly to execute our drilling programme. We are also grateful for the support and practical assistance given to us by our partner ONHYM during and leading up to drilling.

Based on the positive indications of the presence of gas in MOU-1 we are  now proposing to drill again later this year.”

This well is still in a very early stage of evaluation so the share price movement is somewhat surprising, also the nature of the structure and contractual details must preclude full release of data. However I think it would be fair to assume from the above that it was a credit to find gas in a basin that had not been drilled for some 30+ years.  Also as is alluded to in the announcement, there is much evaluation yet to be done on the well which is still in a  condition to be tested at any time.

Looking ahead I think that the CPR resources will remain unchanged or go up as there is now proven gas present which explains why the company want to move ahead with planning for the MOU-4 well. There is much going on across the board at Predator and not just in Morocco, I am happy to continue to keep the company in the Bucket List.

Jadestone Energy

Jadestone has reported that the Minister of Mines and Energy, Indonesia has issued a Ministerial decree dated 30 June 2021, allocating gas sales from the Akatara gas field in the Lemang PSC, onshore Indonesia, to a subsidiary of the national electricity utility, PT Perusahaan Listrik Negara.

The Ministerial decree facilitates the development and commercialisation of the Akatara gas field and also the associated production and sales of LPG to the local domestic market in Jambi, together with condensate sales to a local buyer. 

 Jadestone has also announced that a heads of agreement in relation to gas sales from its planned development, has been executed with PT Pelayanan Listrik Nasional Batam, as buyer.  A fully termed gas sales agreement will now be progressed, with negotiations underway.

 The Ministerial decree and HoA specify a gross sales volume of 20 BBtu/d starting in Q1 2024 and a plant gate sales price of US$5.60/mmBtu, at a delivery point approximately 17 kilometres from the field. Indonesia’s upstream regulator, SKK Migas, has approved the HoA which is fully aligned with the Ministerial decree. 

Paul Blakeley, President and CEO commented:

 “I am delighted to have come to this critical milestone and to have obtained the support of both the Minister and SKK Migas in pursuing this important development.  Gas from the Akatara field will ultimately be used for electricity generation by PLN, while LPG sales will provide much needed energy directly to the local market to meet domestic cooking requirements for the local population in the Jambi region.  The associated condensate production will be utilised in the local market as well and will proportionately offset the reliance on imported product.  Substituting coal burning with locally produced gas for power generation as well as LPG for local domestic use are both important contributions by Jadestone to the UN Sustainable Development Goals.

The Ministerial decree facilitates the development of the Akatara gas field and allocates the Lemang gas to meet domestic electricity demand for industrial users in Batam.  Importantly, these arrangements are in line with the price, volume, and tie-in expectations we set out when we acquired our 90% operated interest in this asset just over six months ago, meaning our expectations for value add remain unchanged.  I look forward to pressing toward formal field development sanction, in preparation for gas sales to commence, with key workstreams already underway, optimising the existing front end engineering study and preparing for contract tendering later this year.”

 This is more excellent news from Jadestone who continue to step by step deliver the goods after the shutdown year of 2020. The shares are closing in on the ytd high of 81p but realistically the shares should be back over 100p where they would not be expensive. Amongst the best management in the sector and with a portfolio that has the scope to offer much bigger returns I’m very happy with JSE being in the Bucket List. 

IGas Energy

IGas has confirmed that it has completed its scheduled six-monthly RBL facility redetermination process.  The redetermination exercise confirms US$27.0 million (£19.5 million) of debt capacity and current headroom of US$8.6 million (£6.2 million). As at 30 June 2021, cash balances stood at US$3.6 million, with net debt of US$18.4 million.

Things are going well at IGas at the moment and this is a very conservative facility indeed. Along with the exciting developments in geothermal and hydrogen and the rock solid business is very profitable at this oil price and they have a very active hedging operation. It is worth taking a look at my recent interview with CEO Steve Bowler which is below in case you missed it at the time.

Core Finance CEO Interview: Steve Bowler, CEO of IGas Energy

Zephyr Energy

With apologies, Zephyr put this out yesterday when you may have noticed that the blog was intense. As a slightly less time critical announcement I’m hoping that Colin and team will bear with me…

The company  provided an update on its flagship project in the Paradox Basin, Utah, U.S.A.  On 28 June 2021, Zephyr announced the signing of a drilling contract with Cyclone Drilling Inc. in order to secure Cyclone Rig #34 for the purpose of drilling the State 16-2LN-CC appraisal well.  Last winter, the same rig successfully and safely drilled Zephyr’s State 16-2 vertical well to a total depth of 9,745 feet in less than 19 days, a record performance versus historical drilling in the northern part of the Paradox Basin.  Rig #34 is fully capable of drilling to the planned depths and pressures that are expected at the State 16-2LN-CC well.

Zephyr has announced that Cyclone plans to commence mobilisation of Rig #34 to the State 16-2LN-CC well site.  Once on site in the coming days, the equipment will be rigged up over a period of a week in preparation for drilling, and Zephyr remains on track to spud the well before the end of July.  Drilling is expected to take approximately 20 days following spud.  Further updates will be provided in due course.

Colin Harrington, Zephyr’s Chief Executive, said

“I am delighted that the pieces are coming together for our forthcoming drilling programme, enabling us to commence drilling in line with our forecast timetable.  With permitting and site preparation completed and rig mobilisation now commencing, we are in full countdown mode ahead of this highly anticipated drilling effort.

“Our key objectives are to drill a safe, responsible and successful well, and I’d like to thank our technical team and contractors for their meticulous preparation in helping us deliver on these objectives.”

Zephyr continues to deliver and I am very much looking forward to seeing how the State 16-2LN-CC well goes with its spud date on timetable at the end of this month. Colin and his team have put together a cracking portfolio and I am led to believe that there is more to come…

And finally…

The England ODI squad which was due to be playing three games against Pakistan starting on Thursday has been hit by 7 Covid cases including 3 players. Accordingly a whole new squad under Captain Ben Stokes who was on the way back from injury has been selected, however there is no Alex Hales who must think he won’t ever get another game for England.

In the Euro 2020 tonight sees the first semi-final between Italy and Spain which will be a tasty affair.

I can’t help noticing that Jessica Springsteen has been selected by the USA for their Olympic horse-riding team,  clearly she was ‘born to ride

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

Malcolm Graham-Wood

Source Link https://www.malcysblog.com/2021/07/oil-price-predator-jadestone-igas-zephyr-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 blog


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