Malcy’s Blog – Oil price, Union Jack Oil, Reabold Resources, Rockhopper Exploration, Capricorn Energy & finally

WTI (Nov) $82.15 +$3.65, Brent (Nov) $89.32 +$3.05, Diff -$7.17 -60c. 

Author @mgrahamwood

USNG (Oct) $6.65 n/c, UKNG (Oct) 304.9p -10.1p, TTF (Nov) €214.485 +€12.48*

*October contract expiry.

Oil price

A big rally yesterday which was probably mainly down to Hurricane Ian which has cut production in the Gulf, but already gone through and is now wreaking havoc in Florida. Whilst production will return it may be that onshore downstream facilities may restrict the product markets.

The EIA inventory stats were also better than expected, crude oil actually drew, albeit a small amount of 215/- barrels but the whisper was for a big build after the API stats last night and gasoline saw bigger demand and drew by 2.422m b’s and distillates by nearly 3m barrels. The refinery run rate fell by 2 clear points to 90.6% and as we approach the autumn I expect more. Don’t forget that the SPR release is about to end…

Union Jack Oil/Reabold Resources

Union Jack Oil and Reabold Resources are pleased to provide summary details from a Competent Person’s Report, dated September 2022, prepared by RPS Energy Canada Ltd  evaluating the resources of PEDL183, as of 30 June 2022.


·    Kirkham Abbey Best Case Gross Unrisked Contingent Technically Recoverable Sales Gas at West Newton is estimated to be 197.6 billion cubic feet

·    Geological Chance of Success of Kirkham Abbey estimated to be 85.5%

·    Gross NPV10 risked value of Kirkham Abbey Contingent Gas Resource is US$396.1 million post tax

·    Substantial additional Prospective Resource figures for Ellerby, Spring Hill and Withernsea

·    Union Jack fully funded for the drilling of the horizontal well and testing in 2023


The CPR was prepared on behalf of the operator Rathlin Energy (UK) Limited.

In the preparation of the Report, RPS has adopted the Petroleum Resources Management System  standard and used definitions contained therein. A glossary of all technical terms used is included in the Report.

RPS has approved this RNS.



Gross Technically Recoverable












Note: Net data for Union Jack can be calculated by applying its 16.665% economic interest to the above gross data.



Source Rock






Geological COS

West Newton










Gross Risked Net Present Value Post Tax (US$ million)

























Gross Petroleum Initially in Place (bcf)








Spring Hill








Note: Net data for Union Jack can be calculated by applying its 16.665% economic interest to the above gross data.


Gross Recoverable Sales Gas (bcf)








Spring Hill








Note: Net data for Union Jack can be calculated by applying its 16.665% economic interest to the above gross data.



Source Rock






Geological COS









Spring Hill
















Executive Chairman of Union Jack, David Bramhill commented: 

“The conclusions of the CPR signal a highly valuable onshore project with resources comparable to those usually reported from offshore developments and at a time when forward gas pricing is higher than oil. Such a significant domestic onshore gas resource as West Newton will be an important transition fuel in helping the UK achieve its 2050 Net Zero targets.

“The Geological Chance of Success of 85.5% in respect of the Kirkham Abbey formation at West Newton is amongst the highest that I have ever observed.

“I look forward to the commencement of the drilling of a large scale horizontal well during 2023, with potentially, a Company-making result to complement our successful onshore Wressle oil production development, which has already financially transformed Union Jack and propelled the Company into a profitable entity.

“Union Jack is fully funded for the drilling of the horizontal well and all testing operations where third-party technical analysis has determined that using long horizontal development wells and oil-based muds should maximise hydrocarbon productivity.

“We look forward to 2023 with a seriously high level of positive anticipation on many fronts.”

Stephen Williams, Co-CEO of Reabold, commented:

“We are very pleased with the results of the CPR, which provides external validation of our view that West Newton is a strategic asset that can play an important role in improving the UK’s security of supply requirements for natural gas.  West Newton’s gas could supply 380,000 UK homes for many years, alleviating our reliance on imported gas. Furthermore, we are very excited by the prospective resource potential from Ellerby, Spring Hill and Withernsea, which combined are potentially larger than West Newton, and we would note that there remains considerable further running room on the licence beyond that covered by the CPR. We look forward to the drilling of the West Newton B-2 horizontal well that will be a key step in developing and exploiting the substantial resource potential in PEDL 183.”

This is an exceptionally good CPR and one which both companies correctly say is company making. With Gross 2C of 197.6 bcf and a gross NPV 10 risked value of $396.1m post tax it will rank with many as a massive UK onshore field and as pointed out, there is potentially much more upside from the prospective resource.

A huge resource which is good for both companies and also good for the UK’s bank balance and obviously energy security. The market has unsurprisingly marked both stocks down which is as about as accurate as normal but does reflect that at present investors are as impatient as ever, for the time being only long-term value hunters need apply, unless of course a big company comes along and spots that ten pound notes are available for one pound here…

Rockhopper Exploration

Rockhopper has announced its unaudited results for the six months ended 30 June 2022.

Year to date highlights

Sea Lion

·    Completion of transaction for Harbour Energy plc to exit and Navitas Petroleum LP “Navitas” to enter the North Falkland Basin with a 65% stake in, and operatorship of, all of Rockhopper’s North Falkland Basin licences

·    Rockhopper retains material 35% working interest in North Falkland Basin licences

·    Extension of all North Falkland Basin licences to 1 November 2024

·    Improved alignment in the Sea Lion Joint Venture, with Rockhopper benefitting from an attractive funding package from Navitas

Ombrina Mare

·    Successful arbitration outcome with unanimous decision in Rockhopper’s favour

·    Compensation of €190 million

·    Interest at EURIBOR + 4% accruing annually from 29 January 2016

·    Temporary four-month pause in interest from date of award

·    Italy has 120 days to apply for an annulment of the award, which can only be annulled in limited circumstances

Corporate and financial

·    Successful capital raise of US$10.4 million by way of placing and open offer

·    Warrants issued to provide additional upside to holders and future potential balance sheet strength

·    Continued focus on costs


·    Lower upfront cost Sea Lion development being worked up and financing sought

·    Arbitration award, after collection, will make a material contribution towards Rockhopper’s share of Sea Lion development costs

·    Sea Lion FID targeted 2023/24

Keith Lough, Chairman of Rockhopper, commented: 

“Following completion of our transaction with Navitas, the capital raise, and the successful arbitration outcome, we stand on the cusp of what we believe will be the most exciting period at Rockhopper for some years, culminating, we hope, in the development of a material scale energy resource in a British Overseas Territory.

We have a committed and capable partner with proven financing capability, which has recruited an exceptional and highly experienced development engineer to run the Sea Lion project. 

Amidst continued global uncertainty and material domestic pressures, we continue to believe a responsibly developed Sea Lion oilfield could provide both a meaningful source of financial benefit to the Falkland Islands, and a strategically and financially important resource to the United Kingdom.

Furthermore, Sea Lion is not a one-off project. We have very material low-risk exploration upside, providing potential additional benefits to all stakeholders.

We thank our stakeholders and the Falkland Islands Government for their continued support as we strive to reach project sanction and unlock material value for all involved.”

This is the time and the place for Rockhopper, the company who found the Sea Lion discovery all those years ago and then has had to deal with partners who had either no money or no faith are now, with Navitas able to go for FID at the project. Having been a fan of it for all of its lifetime I am allowing myself just the tiniest smirk as I can see that the development has ticked pretty much all of the boxes to get the green light.

To add to the excitement from the South Atlantic recently came success in court as the company won its arbitration case and with it compensation of €190 million plus interest. The Italian Government has 120 days to pay or appeal in ‘limited circumstances’ so if that deadline runs out RKH will have something in excess of $200m to add their share of the Sea Lion pot. 

And what a surprise, for some reason or other the market have got the jitters, whilst the shares have admittedly quadrupled from the lows I think that there is an upside fit for a king, those who don’t like making money leave the bus at this stop…

Capricorn Energy- Christmas comes early…

Proposed pre-Completion cash special dividend of $620m to Capricorn shareholders

Expected to deliver total value to Capricorn shareholders of 271 pence per Capricorn share

Withdrawal of intention to recommend the Tullow Combination

Capricorn and NewMed are pleased to announce a proposed combination, to create a MENA gas and energy champion and one of the largest upstream energy independents listed in London. A cash special dividend of $620 million is proposed to be paid to existing Capricorn shareholders  immediately prior to the completion of the Combination.

The Combination will be effected by Capricorn acquiring all of the partnership interests in NewMed in consideration for the issue of new Capricorn shares to NewMed unitholders based on an exchange ratio of 2.337344 New Capricorn Shares for every NewMed participation unit (a “Unit”).

The Combination will result in Capricorn shareholders holding approximately 10.3 per cent of the share capital of the Combined Group and NewMed unitholders, together with NewMed’s current general partner, holding in aggregate approximately 89.7 per cent of the share capital of the Combined Group at completion of the Combination. The Combined Group will trade under the name NewMed Energy and expects to retain its existing Premium Listing on the London Stock Exchange. It intends to implement a listing of its entire issued share capital on the Tel Aviv Stock Exchange  to take effect on or as soon as possible after Completion of the Combination. It is expected that UK FTSE indexation will also be maintained.

Under the terms of the Transaction, Capricorn Shareholders will receive a cash special dividend expected to be $620 million, equivalent to £1.72/share[1],[2] immediately prior to Completion of the Combination.

The Combination exchange ratio values Capricorn, on an ex-dividend basis, at $338 million or £0.99/share[3], a 46 per cent premium to the theoretical ex-dividend price on 28 September 2022 (being the last business day prior to the date of this announcement).

The expected total value of the Transaction to existing Capricorn Shareholders is therefore equivalent to 271 pence per Capricorn Share. This represents a premium of:

·     13 per cent. to the closing price of 240 pence per Capricorn Share on 28 September 2022 (being the last business day prior to the date of this announcement); and

·      36 per cent to the closing price of 199 pence per Capricorn Share on 31 May 2022.

The board of directors of Capricorn believes that the Transaction is in the best interests of Capricorn Shareholders and intends to recommend unanimously that Capricorn Shareholders vote in favour of the resolutions to be proposed by Capricorn at the shareholder meeting to be held to approve the Transaction. Accordingly, the Capricorn Board has unanimously decided to withdraw its intention to recommend the Tullow Combination.

The board of directors of NewMed has confirmed its intention to recommend unanimously that NewMed unitholders vote in favour of the resolutions to approve the Combination. Delek Group, NewMed’s principal unitholder, which holds voting interests in c.54% of NewMed’s Units, has entered into an irrevocable commitment to vote its Units in favour of the Combination.

The Board of the Combined Group will have a clearly defined governance structure in line with the UK Corporate Governance Code. Whilst it is currently proposed Simon Thomson, the CEO of Capricorn, will become the transitional Chair of the Combined Group, to provide continuity through the Combination process, a search for an independent Chair will be undertaken and it is intended all UK corporate governance principles will be complied with in due course.

As well as the Chair, the Board of the Combined Group will comprise Yossi Abu as CEO, James Smith as CFO and 7 Non-executive Directors, with 2 expected to be representatives of the Delek Group and 5 expected to be independent non-executive directors (2 of which will come from the existing Capricorn Board). Accordingly, a majority of the directors of the Board of the Combined Group, excluding the Chair, will be independent.

Combination Highlights:

Ø    Significant return of value in cash to existing Capricorn shareholders

Ø    Creates a MENA gas and energy champion and one of the largest upstream energy independents listed in London

Ø    Diversified portfolio of high-quality producing assets in Israel and Egypt underpinned by 45.34% interest in Leviathan, one of the world’s most attractive gas fields

Ø    Combined 2P + 2C reserves and resources of c.11.8 TCF and 690 MMscfd of net working interest production

Ø    Significant cash flow generation from sustainable producing asset base with tangible development projects set to deliver production to > 1.2bcf/d by 2030 subject to relevant project approvals

Ø    Long-term contracts provide strong cash flow visibility and downside protection, while retaining exposure to commodity price growth

Ø    Material and sustainable dividend policy – initially targeting a minimum annual dividend of 30% of annual free cash flow, pre-growth capex and after financing costs

Ø    Attractive diversified exploration portfolio across Cyprus, Egypt, Israel, UK, Mexico, Mauritania and Suriname

Ø    Commitment to net zero carbon emissions by 2040[4]; Ultra low scope 1 & 2 emissions from Leviathan of ~1.7kgCO2/boe

Ø    Material gas production helping customers reduce carbon emissions, provide reliable and affordable energy, and playing a crucial role in the energy transition.

Nicoletta Giadrossi, Chair of Capricorn said:

“The Board has engaged in a robust and dynamic process to evaluate options for Capricorn and considered a broad range of external factors and market conditions. The Combination with NewMed and a cash special dividend represent the delivery of significant value for Capricorn shareholders. We believe this is a compelling transaction which combines near term value realisation with ongoing participation and value creation in a world class gas company.”

Simon Thomson, Chief Executive of Capricorn said:

This transaction delivers our shareholders substantial capital return, together with an ongoing stake in a differentiated UK listed company, shaped for the future of the energy industry.  

The combined business will offer investors a gas business of scale, with the prospect of near-term growth, a dependable capital returns policy, and a compelling ESG narrative to support the energy-hungry markets of the Middle East, North Africa and Europe.”

Yossi Abu, Chief Executive of NewMed said:

“By combining with Capricorn we are creating a leading MENA gas and energy company, whilst significantly benefiting the shareholders of both companies.  With 2P & 2C reserves and resources of approximately 11.8 TCF, predominantly gas from Leviathan, low-cost and highly cash generative production, the Combination creates a true regional energy champion.

Secure, sustainable, and long-life cash flows will allow the Combination to offer a compelling mix of capital distributions to shareholders and growth potential. With Capricorn, we have a shared vision on a disciplined capital allocation framework and a strategy to potentially significantly increase our production while expanding to the LNG market with the aim of supplying Europe’s growing gas demand. The Combination will play a pivotal role in the energy transition, through organic brownfield cost effective developments while delivering attractive returns to our shareholders.

On behalf of NewMed, I would like to thank all our stakeholders for their support for this highly attractive Combination.  With our new partners at Capricorn, we are extremely excited about the future.”

A new gas and energy champion is born from the coffers of Delek and the good sense of the Capricorn board who have heeded all the advice that was forcefully given to them that bailing out Tullow was not a logical deal for their own shareholders. 

They now get a more sensible valuation, a special cash dividend worth $620m or £1.72 per share and will own some 10.3% of the new combined group, New Med Energy. The deal values Capricorn at a total of 271p per share, a substantial premium to where it had languished as holders expected the Tullow smash and grab to succeed. 

The principal holder of the Group will be Delek who bring to their substantial asset base to the party and a good quality and ambitious management team. NewMed Energy looks like it works from both its historic base and the addition of Capricorn for whose shareholders it is a blessing and they keep a residual interest for some upside. 

And finally…

England are getting good at throwing away T20 matches and yesterday managed to pull defeat from the jaws of victory again. There is way too much of a comfort zone given to them by the historic Morgan era when players were urged if not encouraged to be spirited when batting. In itself that’s not a problem but should be tempered by stupidly giving away wickets when a base is being built, just mentioning it..Oh and by the way Hales is very welcome back but a 75% drop rate in easy catches is not a statistic an international player should get accustomed to.

The opinions expressed here are those of the author

Author @mgrahamwood

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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