Weekly Oil and Gas Highlights, 19th May 2019

Funding news, project updates and financial results all featured in a busier week for the sector.

Block Energy PLC (LON:BLOE) on Thursday confirmed the close of the bookbuild for its new £12mln placing and has priced the funding at 11p per share.  It is selling 109mln new Block Energy shares at 11p each, a 15% discount to the market price prior to the funding.

The placing will be executed in three tranches and is conditional upon a shareholder vote at a general meeting.

The cash injection will pay for the drilling of up to four new horizontal sidetrack wells to scale up production, the expansion of production facilities to provide capacity for 4,000 to 5,000 barrels of oil per day, and the acquisition of 3D seismic data.

Additionally, three other wells – not aimed directly at field development – are in the plans. Two will test appraisal targets, and another will be aimed at a 608bn cubic foot gas resource. All the proposed operations are expected within 12 months of the funding.

Hurricane Energy PLC (LON:HUR) confirmed a key milestone towards the delivery of the Lancaster field early production system (EPS), with the Aoka Mizu vessel taking on hydrocarbons. The company, in a statement, told investors that the hydrocarbons were introduced into the Aoka Mizu FPSO (floating production storage and offloading) system on 11 May.

In doing so it marks the end of the commissioning phase and triggers the beginning of the Lancaster EPS start-up.

Next, Hurricane will open up each of the two EPS production wells. Each will be individually tested and then shut-in, allowing data to be gathered, and the process will conclude once the company has initiated continuous flow from both wells for 72 consecutive hours.

After this point Hurricane will declare ‘first oil’ has been achieved at the Lancaster EPS area. The EPS will yield some 17,000 barrels of oil per, though it is still only a relatively small pilot area in what is otherwise a very large multibillion barrel oil project.

Alba Mineral Resources plc (LON:ALBA) investors were pleased to see the latest positive results from the company’s 11.765% owned Horse Hill oil project.

In a statement, the project’s largest listed stakeholder UK Oil & Gas PLC (LON:UKOG) – which has a 50.635% majority interest in Horse Hill – provided details from the production testing programme at Horse Hill and told investors that a week-long pressure build up (PBU) test was successful.

UKOG revealed that the PBU results were significantly better than expected, showing little or no apparent pressure depletion compared to prior PBU testing back in April.

Production volumes from the Portland reservoir now exceeds 20,500 barrels of oil, and, the most recent production rate measured 220 barrels of oil per day – with the rate purposely constrained to protect future field performance. Previously in testing the Portland saw a peak production rate of 362 bopd.

Overall, the full extended well test has produced more than 45,500 barrels of oil. The programme aims to produce a total of 50,000 barrels. Once 25,000 barrels have been produced from the Portland reservoir, testing will revert back to the Kimmeridge zone.

Diversified Gas & Oil PLC (LON:DGOC) reported first quarter production at 69,000 barrels of oil equivalent per day (boepd), in-line with rates at the end of last year.

The company, in a statement, added that production in April exceeded 70,000 boepd and upon factoring in the addition of the acquired HG Energy assets the rate jumps to over 90,000 boepd. It added that the integration of the HG Energy assets continues in-line with expectations.

For the first quarter, the company said it had adjusted earnings (EBITDA) of US$62mln and margins, at 55%, were consistent with the performance at the end of 2018.

Touchstone Exploration Inc (LON:TXP) told investors that production in the first quarter averaged 2,121 barrels per day. That represents a 37% improvement on the comparative period of 2018, and, a 15% rise on the preceding quarter.

The Trinidad focused company, in its quarterly results, reported US$11.01mln of realised petroleum sales marking a 34% increase from 2018’s first quarter. It generated US$29.35 per barrel, an 11% increase in the operating netback.

It brought in US$2.43mln of funds from operations, while in its financial results it recognized a net loss of US$185,000 reflecting increases in supplemental petroleum tax expenses. In April, production averaged 1,789 bopd with the decline due partially to natural decline and downtime for two higher productive wells.

The company is also presently preparing for an exploration programme, at the Ortoire project. It is expected that a well will be spudded in June, subject to rig availability, and, another well is planned to follow using the same rig.

Columbus Energy Resources PLC (LON:CERP) told investors it has received a private petroleum licence for the Bonasse licence area in the South West Peninsula of Trinidad. Executive chairman Leo Koot, in a statement, highlighted that “even a modest discovery” on the peninsular would have the potential to transform the company.

“The grant of the private petroleum licence (PPL) for the Bonasse licence area in the south west peninsula of Trinidad, which includes the Bonasse field, is formal recognition by the Ministry of Energy and Energy Industries that Columbus has the right to exploit any oil and gas in the Bonasse Licence Aream,” Koot said.

“Whilst, in some ways, this is merely an extension of the current de facto situation, I believe it is an important step in that it formally recognises our rights and grants us the regulatory certainty to continue with our operations and planned drilling campaign. Without it, we would not have been able to drill the upcoming well.”

Mosman Oil And Gas Ltd (LON:MSMN) raised £750,000 of new capital and has agreed to drill two wells at the Champion project, in Texas. The new wells follow the capture of 3D seismic data and the company expects they will provide an increase in production and revenues.

Last week, Mosman struck a farm-out deal to bring new partner Xstate Resources into the Champion project. Now the new partners have agreed to advance Champion with the drilling of two prospects, Falcon and Galaxie.

Mosman’s financial contribution to each well is expected to be around £235,000. This commitment is supported by the new share placing which sees 250mln new shares sold to investors at 0.3p – around a 31% discount to Monday’s closing price. Elsewhere, at the Stanley project, the company has recently upgraded facilities and infrastructure to handle higher volumes of oil production.

The Stanley-1 well continues to flow oil and its output is being constrained to enhance long term performance of the well. In recent days, between 28 April to 12 May 2019, the well produced 135 barrels of oil per day.

Since the recompletion of the well it has produced a total of 2,436 barrels of oil, which was sold at a price of around US$67 per barrel. Recently drilled Stanley-2, meanwhile, continues to produce mainly gas and is constrained by infrastructure capacity. The well may be recompleted in the future to open it up for oil production.

Union Jack Oil PLC (LON:UJO) chairman David Bramhill today told investors that the “future remains bright” as the company continues to advance its onshore UK growth strategy. Financial results for the twelve months ended 31 December 2018 come as the company awaits news from the potentially high impact West Newton appraisal well.

In October, the company acquired a 16.665% interest in West Newton via a farm-in deal and last month drilling operations began. The West Newton A-2 appraisal well is a follow up to a previously drilled discovery well, which yielded a 189bn cubic feet gas equivalent resource in the Kirkham Abbey Shoal formation.

With the new well, Union Jack and its partners are targeting Kirkham Abbey and the Cadeby Reef exploration target, which has been estimated to have the potential for 79.1mln barrels of oil equivalent.

Notably, in the reporting period, the company increased production volumes by 250% and it increased its interests in key assets.

In terms of financials, the company highlighted that it is fully funded for all current drilling and testing requirements. It had a current cash balance in excess of £2.5mln at the end of May and is debt free. UJO generated some £165,270 of revenue, and reported a pre-tax loss of £1.09mln for 2018.

SDX Energy Inc‘s (LON:SDX) latest quarterly results confirmed strong year-on-year production growth and an improved financial performance, though some operations disappointed due to technical problems.

Production in the first three months of the year amounted to 3,715 barrels of oil equivalent per day (boepd), up 22% compared to the same period in 2018, thanks to additional wells in Egypt and higher gas sales in Morocco.

Quarter-on-quarter comparatives, however, showed a 5% decline in output as a result of a higher water cut in wells at the North West Gemsa field.

The company noted that production has remained stable at the Meseda operation and in Morocco since the end of the quarter though NW Gemsa continued to see a decline. Well work-over activities are ongoing at both Meseda and North West Gemsa.

Attentions are on the South Disouq start-up which is due to deliver material production growth later this year. Today, SDX noted that construction work continues and ‘first gas’ production is expected in the fourth quarter.

Group said chief executive Paul Welch is stepping down from his role at the end of May and as part of an ongoing succession plan he will be replaced by Mark Reid, currently SDX’s chief financial officer, on an interim basis.

 

Author Jamie Ashcroft

 

Article originally published by proactive investors. Share Talk is not responsible for its content or accuracy and may not share the author’s views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

 

 

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