WTI $66.02 +$1.58, Brent $69.63 +$1.73, Diff -$3.91 +46c, NG $2.67 -2c, UKNG 46p +0.88p
By Malcolm Graham-Wood
After yesterday’s rise and no change as I write this morning oil is roughly flat on the week. The final report came in and Opec was more positive than the other two with increases in global demand growth forecasts of +5.88m b/d and consumption for the year expected to be 98.17m b/d up around 100/- b/d and 1m b/d respectively and skewed towards the second half.
Predator Oil & Gas
Predator has announced that it has conditionally placed 17 million new ordinary shares at a placing price of 10.5 pence each to raise £1,785,000 (before expenses). The Placing was significantly oversubscribed and utilises much of the Company’s existing headroom shares under the Financial Conduct Authority restrictions for companies on the Official List.
Despite the shares having had a very good run in recent months and the fact that the discount was modest, and the offer so popular that the shares remain ear the high this morning. This can be put down to the fact that during the past 12 months of COVID-19, the Company has been able to focus on successfully developing its projects to a stage where substantive operational progress has been made and results achieved. Additional business development opportunities have been created as the direct result of the progress made during this period.
In Morocco, timing of the MOU-1 well remains on track for Q2 2021, with drilling preparations well under way. MOU-1 will test the western part of the 31.7km² MOU–4 Prospect, with Best Estimate and High Estimate gross gas recoverable resources of 393 and 944 BCF respectively. Additional Best Estimate and High Estimate gross recoverable gas resources of 426 and 879 BCF respectively can be targeted in a second prospect north of the MOU-1 well location (SLR Consulting (Ireland) Ltd. independent Competent Person Report 2020). Accordingly part of the funds will be used on the upcoming campaign in Morocco.
In Trinidad investigation of all potential CO2 EOR producers in the AT-4 Block has been completed and approval to re-start continuous CO2 injection over a continuous period of 9 months at AT-5X will be received shortly, together with approvals to reactivate several wells for return to production.
There are no changes to the previous guidance for the production plateau forecast – in the range 243 – 547 bopd. During the period from 10 February 2021 to 11 March 2021 WTI oil price has risen from US$58.25/brl to US$64.7/brl.
Strengthening oil prices; the recognised and accepted technical success of the CO2 EOR Pilot Project at Inniss-Trinity; and positive dialogue between the Company and the Ministry of Energy and Energy Industries in relation to developing the CO2 EOR potential for the benefit of Trinidad has allowed the Company to progress discussions with several in-country operators regarding expanding our CO2 EOR business. In addition, some of the funds raised will be used to develop a new CO2 EOR Project in a different onshore oil field in Trinidad and evaluate the expansion of the current Inniss-Trinity CO2 EOR project to include other areas of the field.
In Ireland, substantive progress has been made during the last 12 months of COVID-19 restrictions in developing the Company’s Floating Storage and Regasification Unit (“FSRU”) and LNG project in Ireland. Maintaining high visibility and emphasising its potential contribution to security of Ireland’s energy supply has been a key public relations objective of the Company during this period.
Recently, as previously announced by the Company, “it was reported on the 6 February 2021 that technical problems had forced the shutdown of a key electricity generator (capacity 445 megawatts) until the end of June 2021. On average, gas-fired power plants meet almost 60% of Irish power demand. The shutdown coupled with cold weather on 6 January 2021 and low wind speeds, which cut off most renewable generators, resulted in “amber warnings” where there is enough power to meet demand but where reserve back-up power is critically low“.
Security of Ireland’s energy supply is beginning to be addressed with even greater urgency as a result of recent public statements made in this context. The Company believes that it is an opportune time to use some of the funds raised to develop and present to the Irish regulatory authorities an integrated project plan designed to help meet security of energy supply concerns; options for CO2 sequestration; and options for back-up power for data centres using greener energy. This will specifically address utilising the Ram Head gas discovery in the Celtic Sea, still the subject of the Company’s application for a successor authorisation, for gas storage and security of supply.
This involves using the FSRU LNG concept to utilise the Kinsale pipeline for security and diversity of gas supply, from a source not generated by fracking, and for the working gas volumes required by the potential Ram Head gas storage facility whilst providing a potential CO2 storage site at Ram Head, which based on the Company’s practical experience of geological sequestration of CO2 in Trinidad, may have better qualities for safe retention of CO2;
Paul Griffiths, CEO of Predator Oil & Gas Holdings Plc commented:
“It has been an exceptionally busy 12 months for the Company during COVID-19 restrictions. We have been able to further develop and keep on track all of our three core projects. Realistically, 12 months ago, we would never have anticipated that all our projects would have reached such an advanced stage at the same time.
Strengthening oil prices and operational success provides the impetus for increasing investment in new CO2 EOR projects in Trinidad.
Flexibility to add additional drilling locations in Morocco warrants additional investment, as we seek to be the first company in Morocco to drill this year for low risk versus very high reward material, potentially transformational for the Company and our shareholders, gas resources with an early monetisation pathway based on low and manageable capital expenditures.
The security of energy supply issue in Ireland, which will have a negative impact on the price consumers may ultimately have to pay for electricity, is the perfect scenario for an investment in the Ram Head security of energy supply study. 2020 has been busy but 2021 is set to be an eventful year for the Company with multiple value-creating operations and opportunities for our shareholders for a relatively small deployment of additional working capital to provide scope for prudent business, value-enhancing expansion.”
Predator is proving to be a must-have stock with its combination of low carbon drilling in Trinidad, safe energy supply in Ireland and of course an old fashioned substantial exploration play in Morocco where demand for gas is huge. It come as no surprise that this placing was snapped up in minutes with very little movement of the price. PRD remains a favourite Bucket List stock with high quality management poised to make 2021 a red letter year.
Kistos has announced that it has entered into a binding share purchase agreement, subject to customary conditions precedent, to acquire the entire issued and outstanding share capital of Tulip Oil Netherlands B.V. (“TON”) from Tulip Oil Holding B.V. The details of the deal are listed below, verbatim from the document which I feel is best under the circumstances.
- Kistos proposes the acquisition of TON, which, via its wholly-owned subsidiary, Tulip Oil Netherlands Offshore B.V. (“TONO”), 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.
- The total upfront consideration for the Acquisition, subject to completion adjustments, is EUR 220 million. This consideration will be satisfied through a combination of cash, the assumption by Kistos of an existing bond instrument issued by TONO, the issue of a new debt instrument and the issue to the Seller of equity in Kistos. Kistos will also issue warrants over EUR 5 million of ordinary shares at a premium of 30% to the price of any equity placing to TOH. In addition, contingent consideration of up to EUR 163 million is payable on certain development milestones.
- It is anticipated that the Company will carry out an equity placing to existing and new investors in connection with the Acquisition (the “Placing”). The Company is exploring how the Placing can be accessed by retail shareholders. Both the Seller and various Directors of the Company will participate in the Placing.
- The Company is working with debt advisors in Norway to explore the options for the new debt instrument which will be issued as part of the consideration.
- The completion of the Acquisition is subject to, inter alia:
- certain regulatory consents and confirmations;
- finalisation of the Placing and the debt financing associated with the Acquisition;
- the publication of an AIM admission document;
- shareholder approval of the Acquisition; and
- Admission of the enlarged share capital of Kistos to trading on AIM.
- Upon completion of the Acquisition, the Company expects to cease to be an investing company under the AIM Rules for Companies and instead become a trading company. The Group will continue to review acquisition opportunities as they arise.
Andrew Austin, Chairman of Kistos, commented:
“We are very excited to be beginning the next phase of Kistos’ journey with the acquisition of these profitable and cash generative assets, which have probably the lowest carbon footprint of any production assets in the North Sea. To be producing gas, a vital transition fuel, from normally unmanned platforms powered by solar and wind is exactly what we set out to do. In addition, we see potential for significantly increased production from discovered hydrocarbons within the licences being acquired by Kistos.
“The team at Tulip have done a fantastic job to date in getting this low carbon production operation up and running and we are looking forward to working with them and our partners at EBN in replicating this success and being a model for future low impact developments.”
So, Andrew Austin has delivered a deal as promised and one of size and also within the indicated timescale. Indeed while on promises he has delivered a deal that is in energy transition and in gas and taking a look at the ‘greenness’ of the deal I can’t see anything on the radar screen with such carbon credentials – bar none.
The size may be slightly larger than I expected but then never say that with AA of course and with the shares now suspended as it is an RTO and needs a bond issue which is likely already underwritten and an equity raise to sort out in the next few weeks. Kistos has started with a clean sheet and already added the greenest deal around which makes a lot of sense on an economic basis and points us in the future direction of travel.
In terms of this as a starter deal it looks very exciting indeed, it includes a great deal of already discovered hydrocarbons so the pressure is off to a certain extent to do another deal in a hurry although that has never stopped AA before…
Far has announced that both the Remus and Lukoil non-binding proposals ‘remain incomplete’ and the company intends to reconvene the meeting to approve the the sale of its interest in the RSSD Project to Woodside Energy (Senegal) BV having regard to its receipt of these proposals.
‘FAR has no intention of further postponing the shareholders meeting, noting that FAR intends to proceed with
the Woodside Sale if shareholders provide their approval’.
It looks to me that unless Remus or Lukoil or both get their acts together, which is no way a given under current circumstances…that Woodside prevails unopposed.
Today Getech has announced a successful £6.0m Placing, priced at 22 pence per share, and a proposed Open Offer to raise a further £0.25m.
‘In 2020 Getech has been careful to balance the management of risk with the targeting of opportunity. We have done this through customer engagement, cost management and a broad front of business development. The success of these activities has protected our business and kept us in step with our customers – who are also looking to diversify and decarbonise their operations’.
From now on Getech’s focus is to deliver diversified growth by pivoting our business toward a low carbon future. Accordingly proceeds from the fundraise will be used to strengthen Getech and expand the penetration of products, services and technologies into new and existing markets.
These include, in Hydrogen – Getech has today committed to acquiring H2 Green. New funds will be used to accelerate H2 Green’s work and diversify Getech’s hydrogen activities. In mining they will invest to align their own ‘Globe’ product to the mining sector and further promote Getech’s data.
In what is becoming a crowded sector Getech will build a customer solution for geothermal analysis and site selection and finally they intend to maintain investment in their petroleum offering, ‘keeping in step with customer needs and progressing a healthy pipeline of tax efficient R&D innovation’.
Jonathan Copus, CEO of Getech Group Plc, commented:
“We are delighted by the support we have received from new and existing shareholders. The combination of a Placing and Subscription with institutional and other investors alongside an Open Offer both broadens our shareholder base while allowing all shareholders the opportunity to participate. We look forward to utilising the net proceeds to execute multiple growth opportunities, which we have identified through a methodical and balanced programme of business development.
These growth opportunities, with particular focus on the hydrogen, mining and geothermal sectors, reflect the changing shape of the global primary energy mix. This Energy Transition is occurring at an accelerated pace, which places Getech’s customers in a new commercial landscape – one that is underlain by a web of complex location-based decision making. Getech’s products and services can add significant value to this landscape and we are excited by the commercial opportunity that lies ahead of us.”
The week before Cheltenham so a quiet day at Sandown tomorrow along with Hereford and Ayr.
Last night in the Boropa there were wins for the Gooners and Spurs and draws for the Red Devils and Rangers.
In the Prem, tonight the Magpies surely have to beat the Villa as the heat is on in the drop zone. Tomorrow a famous fixture as Leeds host Chelski, the Eagles entertain the Baggies, Burnley go to the Toffees and the Cottagers face the Noisy Neighbours. On Sunday the Saints and the Seagulls meet in the South coast Riviera derby, manager less Blades go to the Foxes, another derby sees Spurs visit the Gooners and the Hammers go to the Theatre of Dreams.
The 6 Nations is back and tomorrow Italy play Wales and England host France, on Sunday it is Scotland v Ireland.
(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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