Malcy’s Blog – Oil price, Touchstone Exp, Prospex Energy, Block Energy, Trinity Exp & Finally

WTI $69.09 -16c, Brent $71.31 -13c, Diff -$2.22 +3c, NG $3.93 -13c, UKNG 113.29 -2.4p

By Malcolm Graham-Wood

Oil price

Unless we have a crash this afternoon oil will likely end slightly up on the week something you might not have expected on Wednesday morning. China has partly closed the Ningpo port for Covid reasons, it is the third biggest port in the world and used for much of the country’s hydrocarbon trade.

Both the remaining agency reports are out since the last blog and come as no surprise to anyone. The IEA have taken the bearish view and have cut global demand numbers in the 2nd half of this year by around 500/- b/d to 98.1m b/d. Opec meanwhile havent changed their numbers and still expect demand growth.

Touchstone Exploration

2Q results and an operational update from TXP this morning, the company achieved quarterly crude oil sales of 1,402 barrels per day, an 8 percent increase relative to the preceding quarter and consistent relative to the 1,396 bbls/d produced in the same period of 2020.

Despite COVID-19 challenges in Trinidad, TXP executed an incident free $6,664,000 exploration programme, primarily focused on Cascadura Deep-1 and Chinook-1 well production testing, Royston-1 lease and drilling expenditures, and the Royston area seismic programme.

Realised crude oil prices averaged $59.06 per barrel, representing a 13 percent increase from the first quarter of 2021 and a 101 percent increase from the second quarter of 2020. This generated an operating netback of $26.30 per barrel from an average Brent price of $68.98 per barrel.

Liquidity remained strong with second quarter cash of $11,214,000, a working capital balance of $4,671,000 and $7,500,000 drawn on our term credit facility, resulting in a net debt position of $2,829,000.

Importantly TXP entered into revised ten-year lease operating agreements for the Coora-1, Coora-2, WD-4 and WD-8 blocks through December 31, 2030 giving longevity and in my view significantly increasing value. 

TXP has spudded their final Ortoire minimum exploration commitment well, Royston-1, on August 12, 2021. The primary target is the Herrera Gr7a and the Gr7bc sands at a depth of approximately 9,600 feet, and the well is planned to terminate in the Gr7bc formation at an estimated total measured depth of 10,700 feet. 

This well has been a big project with extensive road construction, 6 bridges built and of course seismic carried out in the jungle which has  at least confirmed the structure that Shell chased back in 1965.

Paul Baay, President and Chief Executive Officer, commented:

“Our second quarter results continue to demonstrate the progress we are making in all areas of our operations in Trinidad and are a testament to the great work done by our dedicated staff amidst a challenging COVID environment. The positive cashflow derived from our base assets and our strong liquidity position have allowed us to advance our exploration operations while we work towards initial natural gas production at our Coho and Cascadura discoveries. The team has been active in increasing our base oil production through a series of low-cost workovers and well optimization while preparing for the four development well drilling program planned for the fourth quarter of 2021.

On the Ortoire block, we are progressing on all fronts including road construction, bridge repairs, well testing, seismic shooting, facilities design, pipeline installation and drilling our highly anticipated Royston prospect. We remain confident that our available credit facility capacity combined with anticipated funds flow from operations will be sufficient to complete our budgeted four well development program as well as drilling Royston-1, one of a number of milestones that we forecast to achieve in the second half of 2021 as we conclude the first phase of our Ortoire exploration program.”

Touchstone has suffered unduly in ratings terms after an incredible start to its drilling campaign in the Ortoire Block in Trinidad. It was as if the market thought that they could go through an extensive drilling campaign without a dry hole although the total project has been an unqualified success. Whatever Royston brings you could double the share price back to the previous high and it would still be a cheap share.

Prospex Energy

The Board of Prospex (the “Board”) announces that it has received a letter from a group of shareholders in the Company, requisitioning a general meeting (“GM”) of the Company’s shareholders (the “Requisition”). The Requisition proposes that shareholders be asked to consider resolutions related to changes to the Board, including the removal of existing and proposed Directors and the appointment of new Directors, and share authorities.

Having taken legal advice, the Board has ascertained that the documentation as received is not a valid request under section 303 of the Companies Act 2006 because such a request must be made by a member of the Company recorded on the Company’s register of members and accordingly the Board is not obliged to call the GM.

The Board has engaged with the group of shareholders as to the actions they need to take to validly call a GM and has invited the group of shareholders to procure that a valid request under section 303 is submitted. Further announcements will be made if and when appropriate.

I reprint this verbatim because it there will be differing thoughts about it. It is clear that the shareholders who requisitioned the meeting are bona fide, their names are on the Prospex website along with their shareholdings and it looks to all intents that PXEN are merely stalling and trying to buy time. I spoke to CEO Mark Routh who explained that whilst it was technical, the names were ‘on the register’ under nominee names and therefore would have been illegal.

Make up your own minds but it is clear that we now have another situation whereby dissident shareholders are attempting to remove all or part of their boards, with their backs to the wall the current directors will do anything to keep their jobs, funny that, this will run and run…

Block Energy

Block has announced the appointment of Jeremy Asher as a Non-Executive Director with immediate effect. Jeremy is currently Chairman and CEO of Tower Resources plc, an AIM-traded oil and gas E&P company with a sub-Saharan-African focus, and owner of Agile Energy Limited, a company that invests in energy projects worldwide, with a focus on upstream oil and gas.

Trinity Exploration & Production

Trinity has confirmed the following Board changes following the tragic passing of Bruce Dingwall CBE, Executive Chairman, on 03 August 2021, Nicholas Clayton, who was named Interim Non-Executive Chairman, will assume the role of Non-Executive Chairman of the Company on a permanent basis with effect from today.

Jeremy Bridglalsingh, currently Managing Director, will assume the position of Chief Executive Officer, effective today. Jeremy, who has been at the forefront of managing Trinity since 2016, will continue to lead the six strong Executive Management Team; which was recently strengthened and expanded to include Mr. Denva Seepersad as Finance Director and Dr. Ryan Ramsook as Executive Manager Sub Surface.

And finally…

The 2nd test continues at Lords and India are in a strong position which could have been so much better one thinks.  As I write they were all out for 364.

I never believe that the football season should start whilst the cricket season is still in full flood but tonight the Gooners go to Premier League debutantes The Bees. Tomorrow sees the Red Devils host Leeds, Burnley entertain the Seagulls, the Eagles go to Stamford Bridge, the Saints are at the Toffees, the Foxes host the Wolves, Villa go to the Hornets and the Canaries entertain Liverpool. Sunday sees the Hammers at the Magpies and the big game is Spurs v the Noisy Neighbours.

Racing tomorrow at Newbury, Donny and Headquarters, mostly uninspiring stuff by the looks of it.

The opinions expressed here are those of the author

Malcolm Graham-Wood

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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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