Share Talk Weekly Energy Sector News Round-Up, 13th March 2022

Petrol prices globally have risen above £1.60 a litre on average for the first time, as Putin’s invasion of Ukraine continues to affect the energy prices worldwide.

The prices of UK shale gas stocks IGas Energy Plc and Egdon Resources PLC rose on Thursday, as the government rethinks their position on fracking. This could allow for domestic gas resources to be unlocked to reduce dependence on Russian imports.

Cuadrilla is a privately held company that has taken the UK’s shale gas industry to its feet. The sector had been largely in limbo since projects failed regulatory approval or planning approval. The majority of the projects were located in the North West of England. They allowed the British Geological Society and the company to envision decades of supply, but not enough to allow the gas to be commercially tested.

Cuadrilla was the leader in advanced projects, while London Stock Exchange-listed IGas (and Egdon) amassed material potential acreage throughout Cheshire, Lancashire, and Lincolnshire.  IGAS shares rose 55.46% and EDR by 48.18% in the past week.

IOG plc (AIM: IOG.L), the Net Zero UK gas and infrastructure operator focused on high return projects, updated on gas sales arrangements and progress towards a resumption of Southwark drilling.

The Company has in parallel been making good progress with the required regulatory and commercial processes to implement the rock dumping solution to the seabed scour issue at the Southwark field location. Resumption of Southwark drilling therefore remains targeted for later this month, potentially moving to mid-April due to the interplay of logistical factors and tidal conditions. On that basis, Southwark First Gas currently remains targeted for Q3 2022.

PetroNeft Resources PLC was up by a quarter this week. It was another stock that had Russian interests on the return trail.

Plexus Holdings PLC(AIM: POS) released a statement earlier this week regarding the rising tensions in Europe following the tragic invasion of Ukraine by Russian forces indicating it is monitoring the situation closely. The wellhead equipment supplier has a licence agreement with its Russian licence partner, Gusar but due to the ongoing situation in Ukraine, it has decided to suspend activities with Gusar until further notice. The suspension of these activities is not expected to have a material impact on Plexus’ financial trading performance in the year ending 30 June 2022, which the Board anticipates will remain in line with market expectations.

Malcy’s Blog – Oil price, Genel Energy, Touchstone Energy, Getech, Empyrean Energy & finally

The directors present their report together with the condensed interim financial report of the Group (Oilex) comprising of Oilex Ltd (ASX:AIM: OEX) and its subsidiaries for the half-year ended 31 December 2021 and the auditor’s review report thereon.

Prospex Energy Plc (AIM: PXEN) provided an update on the production strategy from its El Romeral power project in Spain, in which it holds a 49.9% working interest through Tarba Energía. In light of the recent energy shortfalls across Europe, the joint owners of Tarba (Prospex and Warrego Energy Limited) have temporarily agreed to operate the power plant 24 hours a day, six days a week until 15 March 2022. Due to current electricity prices, revenues from the plant have reached an all-time high and switching to almost continuous operations will further increase revenue.

Empyrean Energy plc (AIM: EME), the oil and gas development company with interests in China, Indonesia and the United States, provided an update on preparations to drill the Jade prospect at its 100% owned Block 29/11 permit, offshore China.

Empyrean anticipates that NH9 will become available by the end of March if the current well does not encounter testable hydrocarbons or approximately 2 weeks later if a testing program is required. Following a safety inspection, there would be approximately 2 days of mobilisation to the Jade well location from the current CNOOC well location

Empyrean is the operator of Block 29/11 in China and has 100% working interest during the exploration phase. In the event of a commercial discovery, its partner, China National Offshore Oil Company (“CNOOC”), may assume a 51% participating interest in the development and production phase.

UK Oil & Gas PLC (AIM: UKOG) announced that with respect to the Company’s appeal against Surrey County Council’s refusal of planning consent for its Loxley conventional gas and hydrogen feedstock project. The Planning Inspectorate has now confirmed that the inspector has submitted his report to the Secretary of State (“SoS”) to assist in his determination. The Planning Inspectorate has also advised that they expect the SoS to issue his decision on or before 7 June 2022.

The above follows the Company’s announcement in January of this year that the Secretary of State for Levelling Up, Housing and Communities had recovered the appeal from the Planning Inspectorate.

Oracle Power plc (AIM: ORCP) appointed H&P Advisory, part of the Hannam & Partners group, as financial adviser and consultant to l focus exclusively on its proposed green hydrogen project in Pakistan. H&P   will prepare a valuation model to help realise the full potential of the project as it enters into the next phase of planning and development.

Angus Energy PLC (AIM: ANGS) Update on Installation Schedule at Saltfleetby & Issue of Equity. Progress continues at the Company’s 51% owned Saltfleetby Gas Field on fabrication, testing, assembly and certification on each of the skids together with, where fully advised, estimated delivery dates to site.

88 Energy Limited (ASX:AIM: 88E) reported that the Arctic Fox rig commenced drilling the Merlin-2 appraisal well, located in Project Peregrine in the NPR-A region of the North Slope of Alaska, at 7:00 pm on 7th March 2022 (Alaska time).

The well is to be initially drilled to approximately 2,000 feet, with the surface casing then installed and the Blow Out Preventer ( BOP ) system tested. This is anticipated to take approximately one week in total. Drilling is then set to deepen the well through the N18, N19 and N20 target horizons in the Nanushuk Formation to the planned TD. This deeper drilling is anticipated to take up to approximately four weeks.

Sound Energy, (AIM: SOU) announces an extension to the date by which the conditions to its binding gas sale and purchase agreement (the “GSA”) in respect of the Phase 2 development of the Tendrara Production Concession.

Morocco’s state owned power Company ONEE (Office National de l’Electricite et de l’Eau potable) for the sale of natural gas from the Tendrara Concession in Eastern Morocco over a 10 year period are required to be satisfied by a further three months (the “GSA Extension”). The terms of the GSA were announced by the Company on 30 November 2021.

i3 Energy plc (AIM:I3E) (TSX:ITE), an independent oil and gas company with assets and operations in the UK and Canada, is pleased to announce the following update.

MetalNRG plc, (LON: MNRG), announced that it has agreed an exclusive remit for AdviCorp PLC to source a £20 million to £40 million debt facility to be invested on a project by project basis in identified, qualified and “shovel ready” waste to energy projects in Europe.

Following MetalNRG and EQTEC plc (AIM: EQT) entering into a Business Development Partnership (as previously announced on 22 March 2021) extensive work has been completed by the partnership to secure exclusivity and develop a pre-qualified secured pipeline of waste-to-energy and waste-to-fuels projects. These projects are expected to deliver revenues within 6 to 18 months of funding. The first project is already under construction in Italy.

Shell declares it will no longer buy Russian oil and natural gas

Shell CEO Ben van Beurden stated, “We are acutely aware of the fact that our decision to buy a cargo Russian crude oil for refinement into petrol and diesel — despite having the security of supply at the forefront our thinking — wasn’t the right one. We are sorry.”

SDX Energy Plc (AIM: SDX) announced the spudding of the SD-5X exploration well, targeting the Warda prospect in the South Disouq development lease.

SD-5X spudded on 4 March 2022 and is expected to reach TD in approximately three weeks. The primary target, which has already been encountered in the Ibn Yunus and Sobhi field reservoirs, is the basal Kafr El Sheikh sand at around 6,800ft TVDSS. The well is targeting an estimated gross unrisked P50 EUR of 11bcf and has a 40% chance of success. In a success case, SD-5X will be tied-in to the CPF via the existing SD-4X flow-line and should be on production by the end of June 2022.

SD-5X is the first of three wells to be drilled in the South Disouq area during 2022. The second well in the campaign will be the SD-12_East well on the Sobhi Field (planned spud of mid-April). SD-12_East will target an estimated gross unrisked P50 EUR of 7bcf, and will be followed by the MA-1X well (Mohsen) targeting an estimated gross unrisked P50 EUR of 21bcf. The Mohsen well is planned to spud mid-to-late May.

Russia threatens to cut off Nordstream 1 (Yamal Europe westbound) pipeline flow

Alexander Novak, Russia’s Deputy Prime Minister, stated Monday that Russia could reduce natural gas supplies to Germany through the Nord Stream 1 pipeline. Novak stated that Russia has made unfounded allegations about Russia in relation to the European energy crisis and the imposition of a ban on Nord Stream 2. He also said that an embargo would be imposed on gas flowing through the Nord Stream 1 pipeline.

Russia has maintained for years that it does not use natural gas as a weapon.

Empyrean Energy plc (AIM: EME), provided the following update on preparations to drill the Jade prospect at its 100% owned Block 29/11 permit, offshore China. China Oilfield Services Limited (“COSL”) has successfully completed the well site survey required over the Jade Prospect drilling location.

Early discussions with both COSL and CNOOC regarding a drilling slot using the NH9 rig, which is currently drilling a well for CNOOC in the region, have been positive and an update on scheduling is expected shortly.

Zephyr Energy plc (AIM: ZPHR) (OTCQB: ZPHRF) provides an update on its flagship project in the Paradox Basin, Utah, U.S.

Colin Harrington, Chief Executive of Zephyr, said: “Many factors have contributed to the CPR taking slightly longer than originally anticipated, but we do expect to receive the report from Sproule within the next few weeks. More importantly, we are excited about the detail and analysis provided to Sproule and have appreciated their thoughtful collaboration with our technical team to date. We look forward to updating the market on Sproule’s completed evaluation, and on multiple additional fronts, over the coming few weeks.”

Analysts predict that oil prices will rise further this week as a result of delays in the Iranian nuclear talks’ conclusion and the possible return of Iranian crude oil to global markets. These markets are already suffering from Russian supply disruptions.

Russia is asking for U.S. written guarantees that sanctions against Moscow for its invasion of Ukraine will not affect Russian cooperation with Iran. Sources say that China has made new demands.

The Brent benchmark rose 21% last week to close at $118.11 per barrel, while the U.S. crude closed at $115.68. These levels were not reached in 2013 or 2008. This was due to Russia’s continued difficulties selling oil amid new sanctions.

Update: Shell will donate profits from Russian oil trade to Ukraine aid fund

Shell buys Russian oil at a record discount of $28.50 a barrel, Brent Crude – a nine-year high of $118 a barrel. British company profited from the opposition of other traders to Putin’s fossil fuels.

Shell broke ranks with Western traders who shun Russian oil and bought a tanker-load from the country at an unprecedented discount.

The company paid $28.50 per barrel less than the Dated Brent benchmark price for physical oil in trade, which saved millions of pounds during a time when global prices are rising.

By @ABMckinley

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