Share Talk Weekly Energy Sector News – 10th July 2021

Andrew Lowe, CEO of Enteq Upstream PLC (LON:NTQ), noted in his full-year results report that the company remains well positioned to support current and future operations.

The company’s results confirmed its resilience in a period described as “very difficult”, with a more positive outlook citing recent price stabilization, growth in the number of rigs in the United States, international opportunities and the development of new technologies. In particular, the company is focusing on its SABER product, continuing to develop intellectual property and technology licensed from Shell.

“Enteq will continue to invest in the potentially revolutionary SABER technology, as well as other technology engineering projects,” Lowe said in a results release.

San Leon Energy PLC (LON:SLE) has agreed with Midwestern Leon Petroleum Limited to cancel the payment under the loan agreement. Some $32 million was due on July 5 as one of three payments totaling $98 million due at the end of 2021.

As part of ongoing negotiations to combine and consolidate interests in OML 18’s upstream assets in Nigeria, the parties have agreed to a temporary waiver until the end of August (with interest payable if agreement is not reached).

In June it was announced that negotiations had begun with Midwestern Oil and Gas for a deal that would be a reverse takeover: SLE would receive the 60% stake in Midwestern that it does not already own, and the payments it has not yet made would be included in the overall structure of the deal.

i3 Energy Plc (LON:I3E, TSX:ITE) has signed a C$65 million agreement to expand its presence in central Alberta by acquiring assets from Cenovus Energy Inc. that produce approximately 8,400 barrels of oil equivalent per day.

In addition to strong free cash flow, the transaction is expected to generate significant operating synergies, predictable low decline production and a large reserve base with a multi-year development pipeline.

To support the deal, the company is raising £40 million through an initial public offering and a retail offering on the PrimaryBid platform. Following an accelerated market prospecting process, the company has confirmed that it will issue 363.7 million new shares at 11 pence per share, a discount of just 3% to the 15-day average closing price.

Zephyr Energy PLC (LON:ZPHR) has begun mobilizing a drilling rig for the State 16-2LN-CC appraisal well in Utah’s Paradox Basin. The company signed a drilling contract with Cyclone Drilling Inc. in June to secure the Cyclone #34 rig for the program and confirmed today that mobilization is underway.

Rig and drilling crews will arrive on site in the next few days. The Cyclone #34 rig will be installed this week and the well should be drilled by the end of July.

Challenger Energy Group PLC (LON:CEG) said the Saffron-2 exploration well in Trinidad has reached its target depth and has been cased and cemented ahead of production testing, which is expected to begin around July 23.

Data from the latest well intercepts indicate that the sand intercepts are similar to the hydrocarbon-bearing zones encountered in the Saffron-1 well, according to the release. Over the next week, a full suite of logging studies will be conducted in each of the Middle and Lower Cruse reservoirs of interest.

Coro Energy PLC (LON:CORO) said its investment company Ion Ventures, in which it has a 20.3% stake, is accelerating its energy storage projects with a landmark deal in the UK.

Ion is teaming up with infrastructure fund GLIL to create Flexion Energy Holdings, which will focus on grid-scale electricity storage. GLIL, which manages assets worth £2.5 billion, has committed £150 million to the partnership.

Meanwhile, Ion is selling its portfolio of energy storage projects in the UK to Flexion, as well as its future energy storage business in the UK. The goal is to bring 300 megawatts (MW) online in two years and one gigawatt in five.

Diversified Energy Company PLC (LON:DEC) has strengthened its presence in a new growth area with an agreement to acquire assets in Louisiana and Texas. With co-investor Oaktree Capital Management, the company is acquiring a package of 390 wells currently producing 14,000 barrels of oil equivalent per day (boepd), 96% of which is natural gas.

Diversified’s transaction with Tanos Energy Holdings III LLC was agreed at a price of $154 million gross, $118 million net, to be covered by existing cash and credit facilities. In the transaction, the London-listed company will receive a 51.25% interest in the acquired assets.

Another stock that has lost value since the IPO is UK Oil & Gas PLC (LON:UKOG), which raised around £5 million from the share offering at 0.18 pence, down around 22% since the day before the IPO announcement.

The proceeds will fund the remaining portion of the drilling, completion and testing costs for the Turkey Basur-3 appraisal well and the planned 2D seismic acquisition.

Shareholders will have the opportunity to buy the shares at the same price (0.18 pence) in the open offer. However, given that the shares are currently trading at around 0.175 pence, down 27% this week, this offers only marginal upside.

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