WTI $68.50 -71c, Brent $71.63 -60c, Diff -$3.13 -$1.07, NG $4.38 +7c, UKNG 130.37p +6.37p
By Malcolm Graham-Wood
As with most Opec+ meeting days oil markets are on their toes, indeed already and before the meeting has started crude has gained a dollar and given it all back. Personally, I don’t expect many, if any divergences from the stated policy, of +400/- b/d. Even the rather weak attempt by the White House to get them to raise production was similar to current policy and will be ignored by Opec+.
Ida continues to head up the North Eastern Seaboard leaving behind one hell of a mess. Production is still down some 94% and refining 95% as Exxon closed their Baton Rouge 525/- b/d capacity and Philips their 255/- b’d capacity units. In total some 2.3% of all refining is shut-in, around 13% of US capacity.
Sound has reported a 12-month extension to the initial period of the Anoual Exploration Permits, onshore Morocco. The Anoual Permits cover 8,873 square kilometres in Eastern Morocco and, following completion of the acquisition by the Company of the entire issued share capital of Schlumberger Silk Route Services Limited as announced on 31 August 2021, the Company holds an operated 75% interest in the Anoual Permits, with the remaining 25% interest held by joint venture partner, L’Office National des Hydrocarbures et des Mines.
Due to ongoing disruption caused by the impact of the COVID-19 pandemic, during which the Company has been in regular dialogue with the regulatory authorities, ONHYM has approved a 12-month extension to the initial period as defined in the Petroleum Agreement related to the Anoual Permits due to Force Majeure in order for the Company to complete the committed work programme. Subject to the issuance of the Joint Arreté signed by the Minister in charge of Energy and Minister in charge of Finance, the length of the initial period defined under the Petroleum Agreement, which was previously successfully re-negotiated as announced by the Company on 6 July 2020, will now be 5 years and 4 months, commencing 8 September 2017.
The work programme commitments for the Initial Period remain unchanged. The length of the first complimentary period, which would commence upon the successful completion of the now extended Initial Period, is 1 year and 2 months and the second complimentary period remains unchanged at 2 years and 6 months. The work programmes for each of the complimentary periods remain unchanged.
As a result, the Anoual Permits now have a total duration of 9 years (in place of 8 years) and the unchanged work commitments under the Anoual Permits are as follows: Initial Period of 5 years and 4 months from 8 September 2017: FTG-aerogradiometry and 600 kilometres of 2D seismic and 1 exploration well with Triassic objective (to be scheduled in 2022).
Optional first complimentary period of a further 1 years and 2 months: if the results of the drilling of the exploration well drilled in the Initial Period are likely to constitute a commercially exploitable discovery, the Company will acquire 150 km2 of 3D seismic or its equivalent in 2D seismic data. If the results of the exploration well drilled in the Initial Period are not likely to constitute a commercially exploitable discovery, the Company will undertake further geological and geophysical studies but will not be required to acquire this additional seismic. Optional Second complimentary period of a final 2 years and 6 months: A further single exploration well with Triassic objective. The Company clarifies that the commitment to acquire FTG-aerogradiometry and 600 kilometres of 2D seismic during the Initial Period has already been fulfilled and approved as such by ONHYM.
Mohammed Seghiri, Sound Energy’s Chief Operating Officer, commented:
“COVID 19 travel restrictions have prevented us from mobilising staff and contractors in order to prepare for our next exploration well which will target a TAGI petroleum system prospect in Anoual exploration permits. We thank ONHYM and the Ministry of Energy for their strong and continuing support. Hopefully, all the sanitary measures (vaccination campaigns, border control, etc) already put in both the UK and Morocco will help to avoid new delays. We, as Sound Energy, are eager to make a new discovery and thus unlock the multi Tcf exploration potential of Eastern Morocco basin”.
This further progress by Sound in Morocco shows that the team is working flat to the boards and the Chairman has been with the team in-country in the past few days. The team are clearly working closely with ONHYM to ensure a safe and timely exploitation of these Anoual permits and will ensure that Sound phases their exploration programme in sync with the work required for the micro LNG project.
So far Covid-19 regulations have allowed this work to progress and the team has been working on this through the bank holiday weekend no less to get this successful conclusion. I think that these regular updates from Sound that are showing that there is much within the business in Morocco and is being approached with gusto by the team on the ground, investors should be happy and will be rewarded.
Kistos has provided an update on the initial results of the appraisal of the Vlieland sandstone formation in the Q07 and Q10 blocks, offshore the Netherlands, this was the first stage of the company’s four month drilling campaign. After encountering the target formation on prognosis at a depth of 1,562 metres TVDss, an 825 metre horizontal section was drilled by the Prospector-1.
The Q10-A-04 A well was flow tested for 5 days between 26th and 31st August 2021. During this time, a maximum stable rate of 3,200 barrels of oil per day (bopd) was achieved, which was higher than anticipated. The oil will be sold to a local refinery and is good quality with an API of 33°. The well is now shut-in for a pressure build-up and the information obtained, along with reservoir and surface samples taken during the flow test, will be analysed as Kistos prepares a field development plan for this project.
Kistos has previously estimated 2C resources for this accumulation of between 23.1 – 67.5 mmboe net. This estimate was independently audited by Sproule and will be refined following review of all the data.
‘Kistos recognises it is imperative that all hydrocarbon supplies are sourced from fields with the smallest carbon footprint possible. The Company has demonstrated with the design and performance of the existing Q10-A platform that it is capable of keeping emissions to an industry leading minimum. Having confirmed the viability of this discovery in the Vlieland sandstone, we will examine options for developing it to achieve a “best in class” scope 1 and 2 emissions profile’.
The Q10-A field is currently shut in while annual planned maintenance is undertaken at the TAQA-operated P15-D facility, through which gas export is currently routed. Production is anticipated to re-start before the end of September. Prior to the shut in production was constrained by compressor issues on the P15-D platform.
Now to the interesting bit of today’s news, along with the well result Kistos has announced the potential acquisition of the Ferrum wind farm as it fits with the company’s policy of keeping emissions as low as possible.
Kistos has signed an Agreement with Infinergy and Windcollectief Noord-Holland to enter into exclusive negotiations to acquire Windpark Ferrum. Windpark Ferrum comprises three wind turbines on the TATA-owned site in IJmuiden where Kistos proposes to reroute gas production from Q10-A and build a compression station adjacent to an existing facility.
The wind farm can produce up to 7MW of electricity and would enable Kistos to supply a material proportion of the power required by the new facility from a renewable source. This would have the effect of materially reducing the overall carbon emissions of the new plant. The agreement does not require the parties to enter into a transaction and there can be no assurances that one will occur.
Commenting, Andrew Austin, Kistos’ Interim CEO, said:
“I am delighted to be able to announce the extremely positive results from the appraisal well in the Vlieland sandstone. This is a great credit to the team who have spent several years believing in the reservoir and planning this activity. We will now look at our options for developing the field, which overlies our existing producing gas field, in the most carbon efficient manner including the use of shore power derived from renewable sources. I look forward to updating our stakeholders on the remainder of the drilling campaign over the coming months.
In the meantime, the signing of the exclusivity agreement on the Ferrum wind farm demonstrates our commitment to the provision of low carbon intensity energy supplies. It complements the gas facility we are seeking to develop at IJmuiden, allowing us to keep emissions as low as possible. This is an exciting prospect for Kistos and we look forward to announcing further progress in the near future. “
The Kistos share price has rallied by a short 10% this morning to 260.5p which is 2.6x your money if you invested at the off last November or a mere pound a share if you bought at the time of the Tulip acquisition. Kistos has already ticked a number of boxes by making a smart acquisition of a company changing size, had a very decent success with the drill bit and subject to this deal going through added to its green credentials.
If you add to that what the gas price has done in recent months KIST has a very decent future as a green, efficient gas play but there is one other part of the valuation equation. Today’s result firms up a mid-case 42m bbls and extremely profitable barrels they are, I think that you could put a value of some $15 per barrel in the ground on it which makes the current market cap of just north of £215m somewhat derisory. I can see 300p + a very achievable short term target by taking the mid-case 42m bbls x $15 plus the existing business…
Longboat Energy has announced the completion of the farm-ins with Equinor, Idemitsu and Spirit announced on 1 June 2021. Following updates from the licence operators, the Company now expects to complete the drilling of four exploration wells in its seven well programme before the end of 2021. The wells now scheduled to drill during 2021 are: Egyptian Vulture (Company 15%), Rødhette (Company 20%), Mugnetind (Company 20%) and Ginny/Hermine (Company 9% ). The programme is anticipated to commence during September and a further operational update will follow to coincide with the spudding of the first well.
The Company is also pleased to confirm that Copernicus (Company 10%), the seventh exploration well in its programme, is now a firm commitment following a recent notification to the Norwegian authorities by the joint venture partners, Equinor and PIGNiG. Copernicus is anticipated to drill in 2022 and lies on the Utgard High in the Vøring Basin region of the Norwegian Sea and the prospect is a combination trap with mapped stratigraphic pinch out down-dip and a small structural component at the apex.
The Copernicus prospect is estimated to contain gross mean prospective resources of 254mmboe1 with further potential upside to bring the total to 471mmboe1. The chance of success associated with the Copernicus prospect is 26%1 with the key risks being reservoir presence/quality and trap.
Helge Hammer, Chief Executive of Longboat, commented:
“We are pleased that the Farm-Ins have completed and we are now operational, with Longboat about to embark upon the drilling of four wells over the next few months in an extremely busy and exciting time for the Company.
“We welcome the notification that the drilling of the Copernicus well is now a firm commitment for next year. This well is a play opener offering very considerable prospectivity.”
The Paralympics continue with another big haul for team GB who are now 3rd in the table.
Tonight sees the start of the World Cup qualifiers with Scotland away in Denmark.
The opinions expressed here are those of the author
Malcolm Graham-WoodRead More
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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