Malcy’s Blog – Oil price, Scirocco Energy, Savannah Energy, President Energy, Sound Energy & finally

WTI $65.57 -61c, Brent $68.87 -36c, Diff -$3.30 -$1.09, NG $4.26 -31c, UKNG 238.0p -0.02p

By Malcolm Graham-Wood

Oil price

It’s all down to the virtual Opec+ meeting which starts later, we all have views about the result, if it were me I would take the 400/- b/d off the market. Just watch out for the wording, it may be that they add to production limits but behind the scenes actually cut as not all countries can actually make the increase and there will be an ‘acknowledgement’ of the SPR releases in the equation.

Just as a matter of interest I note that Chevron has announced a 20% increase in capex for next year to $15bn along with a rise in its guidance for buy-backs from $2-3bn to $3-5bn and that Shell has just started its $1.5bn buy back funded by its Permian proceeds, both indicate confidence in the market.

Scirocco Energy

Scirocco has announced that further to its announcement on the 22 October 2021, the first phase of the 3D seismic project has commenced on the Ruvuma PSA in Tanzania in which the Company holds a 25% working interest.

 ARA Petroleum Tanzania Limited has confirmed, further to the award of the seismic acquisition contract announced on 24 September 2021, the contractor commenced preparatory works as planned on 15 November and has now established the GPS control points and survey equipment is being calibrated for ground staking. The Joint Venture expects line clearing and mobilisation of the camp to commence next week. The contractor is making good progress with the mobilisation of the necessary equipment with 5 vibroseis trucks now ready to be offloaded at the port of Dar es Salaam and the importation of the receivers is ongoing with the expectation that this will be completed next week.

The Joint Venture expects the contractor to be fully mobilised and to commence the survey on 15 December in line with the expected timetable. The first phase of seismic survey activity will continue until the weather permits and commence again once the rains have abated in late Q1 2022.

 Tom Reynolds, Chief Executive Officer commented:

“It represents a critical milestone for the project as the 3D seismic survey begins within the Ruvuma PSA. The further geotechnical knowledge the Joint Venture will gain from the acquisition of a modern 3D survey over the target area including the Ntorya discovery is a significant step for the Joint Venture and, tied with the upcoming well, will further define this important Tanzanian gas resource.

While Scirocco remains in commercial negotiations with interested parties engaged in the ongoing sales process, the Company will continue to adopt a phased approach to funding its share of all commitments associated with future activity on Ruvuma, including the first phase of the seismic programme which is fully funded from available resources based on the Operator’s cash call forecast. Ruvuma represents a material value catalyst for Scirocco, both in terms of monetisation and operational activity, and will remain a priority until that value has been realised for our shareholders.”

Good news for Scirocco most notably for the quote that SCIR is fully funded for the first phase of the Seismic, and that it is ‘sensibly’ adopting a phased approach to funding requirements for Ruvuma activity while it is still engaged in commercial discussions regarding the potential sale/part-sale of Ruvuma. 

Shareholders should take comfort from the fact that the company will not dilute shareholders unnecessarily by raising all the funds for the 2022 work programme if there is a reasonable chance they will monetise Ruvuma through the ongoing sales review.  And that fact that SCIR reference they are still in engaged in negotiations with interested parties (plural) ought to be well received and support this strategy. 

Scirocco importantly reiterates its commitment to realising value from this quality asset on behalf of its shareholders, either through sale/part sale or through the exciting drill next year.  Either way, 2022 gearing up to be a transformative year for SCIR with plenty for shareholders to look forward to.

Savannah Energy

Savannah Energy PLC, the African-focused British independent energy company sustainably developing high quality, high potential energy projects in Nigeria and Niger, provides the following update.

The Company’s ordinary shares were suspended from trading per the Company’s announcement on 2 June 2021 as a result of the requirement for the Company to announce it was in advanced exclusive discussions with ExxonMobil Corporation with respect to the proposed acquisition of its entire upstream and midstream asset portfolio in Chad and Cameroon (the “Proposed Acquisition”).

The Company continues its final work in relation to the Proposed Acquisition and intends on publishing an AIM Admission Document on or around 17 December 2021, following which point the Company would seek restoration to trading on AIM of its ordinary shares.

More good news from Savannah as it indicates that it is only a couple of weeks before the Aim document and subsequent restoration of trading which many keen followers are very keen to see. 

President Energy

President has provided an update on its oil and gas operations in Argentina and Louisiana. Drilling of the DP-2001 well at the Dos Puntitas field, Puesto Guardian Concession (President 100%) safely and successfully reached the planned target depth of 3,225 metres, on time and budget with encouraging results.

A full suite of electric logs, including pressure testing, has been acquired over three separate runs which, on a preliminary basis, indicate that this new oil well DP-2001 is virtually  analogous  to the  well DP-1001 drilled at the same field in 2010. The electric logs on DP2001 show a total net oil pay of some 10 metres over two intervals. Pressure tests show an average depletion of 10% from original pressure with good mobility shown in each of the spot tests which are all positive signs taking into account Dos Puntitas is a producing field.

It is encouraging that the older well DP-1001, drilled at the time by the then operator Puesto Guardian at a cost of approximately US$6 million is still in continuous production and had an initial production level of 40m3/d of oil. After 11 years the well is still producing 9m3/d.

The new well DP-2001 which has been drilled by President faster and at nearly half the cost, is now being cased and thereafter cemented prior to completion and testing with a workover rig. This rig will be mobilised to start work in the field in January so that, all being well, it can complete and test both this well and the next well in the sequence, DP-2003. It is testing that will provide the acid test as to produceability of any well. 

 After casing of the present well, the rig will move to the location for that second well DP-2003 where spudding is estimated to take place in about 10 days time.

In Louisiana the workover of the Triche well is ongoing, the well has been cleaned up and the lower open perforations, considered to be generating a higher water cut, have been successfully cemented.

The top of the previously perforated interval has now been re-perforated with a previously un-addressed interval higher up the hole saved for later as there is good pressure seen from the perforations already made. The higher interval has been made ready to be completed rigless at a later date.  Promising progress has been made to date and whilst running a day or two behind schedule, the well should be back on production within the first half of December.

Unusually no comment from Peter Levine on this one but there are a few words on the website just saying how good this find was, also if you do view that take a look at his latest corporate video, it may open your eyes as to how big the company is. This is a good operating result to go with all the other good news around President at the moment. 

Sound Energy

Sound Energy, the energy transition company, is please to confirm that further to the announcement on 9th November 2021, Dr Christian Bukovics has now been appointed as Senior Independent Director of the Board. Christian will chair the HSE and Remuneration & Nomination committees.

Graham Lyon, Sound Energy Chairman, commented:

“We are delighted to announce Christian’s formal appointment to our board. He joins at a time when much activity is being crystalised as we progress Sound Energy to a development company.”

It’s a bit like London buses, nothing for ages and then three in a row. Today Sound confirm Dr Christian Bukovics as SID and committee chairs. At least there won’t be a mad rush of announcements running up to Christmas…

And finally…

Last night in the Prem the three pretenders, as is normal, cruised through their away games. Chelksi won 1-2 at the Hornets, the Noisy Neighbours went to Villa and also won 1-2 whilst Liverpool won 1-4 in the derby against the Toffees. Elsewhere the Hammers drew with the Seagulls, the Saints drew 2-2 with the Foxes and Wolves drew 0-0 with Burnley. Tonight the Bees visit White Hart Lane and the Gooners go to the Theatre of Dreams.

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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