Malcy’s Blog – Oil price, San Leon Energy, Genel Energy, Europa Oil & Gas, Scirocco Energy & finally

WTI (Nov) $90.79 -92c, Brent (Dec)* $92.20 -$3.18, Diff -$1.41 -$2.26.

Author @mgrahamwood

USNG (Nov) $2.93 -2c, UKNG (Nov) 109.66 +8.51p, TTF (Nov) €41.25 -€0.94.

*Brent November contract expiry.

Oil price

With a combination of the quarter end and the expiry of the Brent November contract markets were inevitably inevitably thin on Friday, as we start the final quarter today oil is about a dollar better. There is plenty of news around, probably most importantly today is the word from the Turkish Oil Minister, speaking at ADIPEC this morning has said that they will re-open the pipeline from Iraq ‘this week’. 

It is also Opec week with the committees meeting on Wednesday, there have been rumours around that the KSA might release a bit more crude but I think that is a bit too soon, if oil goes above $100 it may happen but not yet. 

China as well as other parts of the Far East and India are taking all or part of this week off, it’s Golden Week and although that might mean they are all on holiday it doesn’t mean they aren’t moving. Reuters have said that there were more than 20 million rail trips on Saturday, a record for a single day. We have already had advance news that flights are jam-packed and spot jet fuel is very tight. 

Finally at ADIPEC former BP Chairman Lord John Brown has said that the pace of transition is going to be significantly slower and take longer to achieve than most have expected. This is very similar to what you have been reading from me over a long time but it bangs home the message that like it or like it not, fossil fuels are here to stay…

San Leon Energy

San Leon has provided the following updates in relation to a further extension to the longstop dates for the proposed transactions with Midwestern Oil & Gas Company Limited  and the Company’s further conditional investments in Energy Link Infrastructure, an extension of the loan repayment date of the Company’s secured US$5.0 million loan from funds managed by Toscafund Asset Management LLP and the publication of the Company’s interims results for the six months ended 30 June 2023.

Update on Proposed Transactions

All longstop dates in relation to the Proposed Transactions have, in agreement with Midwestern and the other relevant parties, now been extended to 31 December 2023. The longstop dates are in relation to the New Eroton Debt Facilities, the Sahara OML 18 Acquisition Agreement, the MLPL Reorganisation Agreement and the ELI Reorganisation Agreement. Details of the Proposed Transactions and the Agreements were announced by the Company on 8 July 2022 and set out in an admission document published by the Company on the same day

The Company continues discussions with Midwestern on whether a potential revision to the Proposed Transactions can be agreed to allow completion to occur whilst the New Eroton Debt Facilities and the Sahara OML 18 Acquisition continue to be delayed for reasons outside of the Company’s control. There can be no guarantee that any such revised terms will be agreed.

Update in relation to loan from the Company’s largest shareholder

On 8 August 2023, the Company announced, amongst other matters, that it had entered into the Loan with the Company’s largest shareholders, certain funds managed by Toscafund. The Loan carries a coupon of 10 per cent. per annum.  The Loan was originally repayable by no later than 7 September 2023 and on 8 September 2023 was subsequently extended to 30 September 2023 (as announced on 8 September 2023). As part of the Loan, San Leon entered into security arrangements with funds managed by Toscafund that comprise both a debenture issued by the Company as well as assignments and pledges over all of its group companies’ loan and equity interests in ELI.  The Security Arrangements will be released upon full repayment of the Loan. 

To allow San Leon to conclude discussions which are at an advanced stage with a third party in relation to securing an alternative loan facility (as mentioned in previous announcements), which once concluded is anticipated to be used towards, amongst other purposes: the repayment of the Loan; the making of the further investments in ELI; and the satisfaction of the Company’s outstanding obligations to its creditors, Toscafund and San Leon have agreed to a further extension of the Loan repayment date to 6 October 2023. All other terms of the Loan remain unchanged. The board of San Leon continues to remain optimistic that a conclusion on an alternative loan facility will be reached in the near term and will provide an update to shareholders and creditors at that time.

Related party transaction

The extension of the repayment date of the Loan issued by funds managed by Toscafund (which own over 75 per cent. of San Leon’s issued shares) is classed as a transaction with a related party under the AIM Rules for Companies.  The Board (with the exception of Kolapo Ademola and Joel Price who are also both directors of ELIthe ultimate beneficiary of the Loan), having consulted with the Company’s nominated adviser, Allenby Capital Limited, considers that the terms of the transaction are fair and reasonable insofar as the Company’s shareholders are concerned. 

San Leon’s accounts for the six months ended 30 June 2023 

On 3 July 2023, San Leon announced that it had not published its audited accounts for the year ended 31 December 2022  by 30 June 2023, as stipulated by Rule 19 of the AIM Rules for Companies, and accordingly the Ordinary Shares were suspended from trading on AIM pending publication of its 2022 Accounts.

The publication of San Leon’s unaudited interim results for the six months ended 30 June 2023  is contingent on the finalisation and publication of the 2022 Accounts. While San Leon remains committed to publishing its 2022 Accounts, publication has not occurred before 30 September 2023. Accordingly, San Leon has not been able to publish its 2023 Interim Accounts by 30 September 2023, as stipulated by Rule 18 of the AIM Rules for Companies. Consequently, San Leon’s ordinary Shares will remain suspended from trading on AIM pending publication of both its 2022 Accounts and 2023 Interim Accounts.

As I have written a number of times in the past this series of connected deals are taking a great deal of time to finalise and accordingly we have another extension of the longstop dates and the loans issued by Toscafund in order to get the deal over the line. 

Genel Energy

Genel is hereby announcing a reverse tender offer (the ‘Buy-Back Offer’) to holders of Genel Energy 4 Finance plc’s USD 300 million senior unsecured callable bonds with ISIN NO0010894330. All bondholders, subject to legal constraints, are invited to offer Bonds to the Company, being the sole shareholder of Genel Energy Finance 4 plc and guarantor of the Bonds. The Company intends to select a maximum price and buy Bonds offered at and below this Maximum Accepted Price at the price offered by each bondholder.

The Company is targeting around USD 20 million in nominal value of Bonds for cash management purposes, depending on the price tendered. The Company retains the full discretion to adjust the buy-back volume.

The Buy-Back Offer will commence on Monday 2 October 2023 at 0900 CET and will expire on Wednesday 11 October 2023 at 1500 CET. Prior to 0900 CET on Thursday 12 October 2023, the Company will determine the Maximum Accepted Price and consequently the total amount of Bonds to be purchased. The Company may, in its sole discretion, waive, amend, extend, accelerate, terminate or withdraw the Buy-Back Offer at any time. Information regarding any such amendments will be published under the Issuer’s ticker on, the information service of the Oslo Stock Exchange, and, the information service of the bond trustee for the Bonds, Nordic Trustee ASA. Cash settlement for the Bonds, including accrued interest, is expected to occur on Friday 13 October 2023.

The Company will only accept offers from a bondholder or beneficial owner of the Bonds (or any person acting as agent, custodian, fiduciary or in another intermediary capacity for a bondholder or beneficial owner) who is not a U.S. person (as such term is defined pursuant to Regulation S under the US Securities Act of 1933, as amended (the ‘Securities Act’)) and who is outside the United States.

The Company has retained Pareto Securities as broker to manage the Buy-Back Offer. Eligible bondholders may provide offers for sale of all or a portion of their Bonds through submission of the bondholders offer form (the ‘Bondholders Offer Form’) no later than 15:00 CET, 11 October 2023. The terms of the Buy-Back Offer and the Bondholders Offer Form will be published on or can be obtained by contacting Pareto Securities on +47 2287 8771.

This is a smart move by Genel, you could say a piece of savvy financial housekeeping that tidies up the company’s debt at a time when there is a hiatus in cash flow and outgoings have been, albeit hopefully temporarily, ceased. 

It makes sense to nip into the bond market and buy back debt at what are unusually low prices, a sort of financial opportunism never to be repeated…Either way, anything that can be done at these levels would be a very smart move – especially if reports on the pipeline reopening are to be believed.

Europa Oil & Gas

Europa Oil & Gas (Holdings) plc, the AIM traded UK and Ireland focused oil and gas exploration, development, and production company, is pleased to announce that following the interpretation of recent seismic reprocessing, the Company’s Pmean prospective resource estimate for Inishkea West has increased by 92% to 1.55 TCF. The seismic data has been reprocessed using full waveform inversion and reverse time migration (RTM) to 20Hz, which are cutting edge techniques. This has resulted in a marked improvement in the imaging of both the Inishkea West and Inishkea prospects, with the Inishkea West structure now being mapped as a large 4-way closure, with a prospective resource Pmean of 1,554 BCF and a range as detailed in the following table:

Inishkea West










Prospective Resource





The reprocessed seismic has materially improved the subsurface imaging and provided more confidence in the quality of the seal and trap at Inishkea West, which in turn has increased the chance of success of the prospect. In addition, Inishkea West is prognosed as a shallower structure by some 900 meters which means that the reservoir quality will be better than at Inishkea.

For the Inishkea prospect, which relied on a degree of side seal for historic prognosed volumes, the reprocessing has confirmed the likelihood of side seal breach and therefore resulted in the downgrading of this prospect. In turn, the Inishkea structure has reduced in size and is now estimated to have a prospective resource of Pmean 146 BCF.

Inishkea West is within easy tie-back range of the Corrib gas field situated some 18 kilometres to the southeast. This proximity to the Corrib infrastructure, the mapped 4-way closure, the large prospective resource and the reduced seal risk means that the Inishkea West prospect has become the primary target on the FEL 4/19 licence.

Given the significant improvement seen in the 20Hz RTM data, it is expected that the subsurface imaging can be further improved by reprocessing the data at 30Hz. Therefore, the Company has decided to apply for an extension to the first phase of its FEL 4/19 licence to allow time for the 30Hz reprocessing to be completed and to subsequently find a suitable partner to drill an exploration well.

The farm-out process that is being managed by Llamas and Bannister Energy Advisors, as announced on 11 January 2023, has been paused until the 30Hz reprocessing has been completed.

Will Holland, Chief Executive Officer of Europa, said:

“This is a very exciting development for the FEL 4/19 licence as the seismic reprocessing has significantly enhanced the sub-surface imaging which has improved our understanding of the size of the prospects and the seal risk. These results have more than justified the additional time and expenditure on what is a key asset for not only Europa, but also Ireland in terms of potential indigenous energy security and as part of the country’s energy transition. The seal uncertainty, which the reprocessing has addressed, was a matter that some of the potential farm-inees had highlighted during the farm-out process and potential partners wanted to see the results of the reprocessing before making an offer. However, we now believe that the sub-surface imaging can be further improved by reprocessing at 30Hz and we will therefore be applying for a phase one licence extension to allow us to complete this work before continuing the farm-out process.”

The hard work at Europa continues, this time on FEL 4/19 where recent seismic reprocessing has significantly changed the game at Inishkea West. Indeed, the reprocessing, in this case using full waveform inversion and reverse time migration to 20Hz which are cutting edge techniques and has been very successful meaning that they are likely to be further improved by reprocessing the data at 30Hz. As CEO Will Holland states, potential farmin-ees wanted to see the results and now both sides will wait for the final data improvement.

The marked improvement in the imaging, whilst downgrading the Inishkea prospect which itself is a three-way closure requiring a fault to seal, has actually upgraded Inishkea West which mapped as a larger, four-way closure with a Pmean of 1,554 Bcf. This means that with better data and a live potential farm-out, Europa has unsurprisingly applied for a licence extension in order to move to the next stage of the process.

Overall whilst this announcement is slightly mixed the shareholders are definitely net gainers from the use of this state of the art technology and its cutting edge conclusions. Whilst the fault at Inishkea itself may not have sealed it has led to feeding Inishkea West and the resource number there has gone from 800 Bcf to some 1.5 Tcf. 

In addition it should be noted that the Inishkea West structure is over 900m shallower than Inishkea, this means that wells will be cheaper (both exploration and development) and the recoverable volumes per well will likely be higher, so less wells needed to drain the structure, as a result the economics will be more compelling. Given that Inishkea is a 4-way closure the risk is lower so this is a prospect with a higher COS, is cheaper to explore (ie much better EMV) and is higher value per Boe than the old Inishkea prospect. 

Management at Europa has been working flat out to find potential in all parts of the portfolio, here in Ireland where there has been some cynicism about the need for future requirements for fossil fuels there is now a more pragmatic, realistic understanding of the energy model and EOG are preparing to be part of it as and when it becomes reality.

Scirocco Energy

Scirocco has announced an update on the Ruvuma transaction. 

Scirocco is pleased to announce that the divestment of its 25% interest in the Ruvuma asset has been approved by the Tanzanian Minister of Energy. With this approval now received, all conditions precedent to the transaction are satisfied and Scirocco and its counterparty, ARA Petroleum Tanzania, can now proceed to complete the transaction in the coming weeks.

Commenting on the update, CEO Tom Reynolds said:

“Ministerial approval brings us one step closer to the impending completion of this transformative transaction, and we are grateful to the Tanzanian authorities for their support. This is a watershed moment for the Company that completes Scirocco’s evolution from an investor in diverse hydrocarbon assets into an investor into cash-generative assets within the European sustainable energy and circular economy markets. We see a broad range of opportunities in these markets providing scope for low-risk, sustainable returns.  We look forward to announcing completion of this long-awaited divestment in the coming weeks.”

Slowly but surely the process in Tanzania moves to some sort of denouement, I’m sure shareholders will be excited to see the deal close and then let Scirocco get back to the business of increasing its investments in the sustainable and circular economy markets. Let battle commence and hope that 2024 will see Scirocco deliver on its plan. 

And finally…

The RWC continued over the weekend but few close games. The All Blacks thrashed Italy, Scotland thumped Romania, the Pumas saw off Chile, the Springboks beat Tonga easily and the Wallabies dealt with Portugal. With Fiji just edging past Georgia that group looks interesting and next weekend is crucial, for those of us in Cape Town it could be a bit of time in Mitchells….

Footy wise Villa put 6 on the Seagulls, who saw that coming, there were wins for the Gooners, the Hatters, the Eagles, the Bar Coders, the Hammers and Wolves beat the Noisy Neighbours. Spurs beat 9 man Liverpool including a VAR ruling that has left much to be desired…

And of course, Europe won the Ryder Cup, eventually by 5 points, for those watching in the afternoon it didn’t look that cut and dried at all….

Author @mgrahamwood

Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. The writer may or may not hold investments in the companies under discussion

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