WTI (May) $83.14 +41c, Brent (June) $87.29 +18c, Diff -$4.15 -23c
USNG (May) $1.75 -1c, UKNG (May) 74.01p -4.98p, TTF (May) €30.085 -€2.715

Oil price

Oil was up on Friday by $3/barrel which would have led to a rise on the week. As it was, the worries surrounding Iran and Israel diminished and oil fell.

Union Jack Oil

Union Jack has announced the appointment of Craig Howie as an independent Non-Executive Director with effect from 22 April 2024.  The Company also announces that Raymond Godson, Non-Executive Director, will retire from the Board following the Annual General Meeting to be held on 27 June 2024.

To facilitate his appointment to Union Jack’s Board, Craig will shortly be stepping down from his current role as lead E&P analyst at Shore Capital, where he has had responsibility for oil and gas equity research for 14 years. Craig has been actively involved with Union Jack since its IPO in 2013 and has wide-ranging financial markets experience. He previously spent five years at Blue Oar Securities, where he became a director of equity research and spent two years on secondment at subsidiary Rowan Dartington’s headquarters in Bristol. He holds several securities industry qualifications and is a member of the Society of Petroleum Engineers.

Upon Ray’s retirement, Craig will assume Ray’s duties as Chairman of the Company’s Audit Committee and as a member of the Company’s Remuneration Committee.

David Bramhill, Executive Chairman of Union Jack, commented: 
“I would like to thank Ray for his commitment to Union Jack since the Company’s IPO in 2013.  His knowledge of the oil and gas sector and financial background have been of very great benefit to the Company.  On behalf of the Board I would like to wish Ray all the best for his retirement.

“We are delighted to welcome Craig to the Board to replace Ray. Craig is a highly experienced upstream oil and gas equity research analyst and has worked as an investment professional specialising in the natural resources sector for over 20 years.  I am confident that his strong financial and E&P sector experience and enthusiasm will prove invaluable as we continue to drive Union Jack forward.”

Craig Howie, Non-Executive Director, commented: 
“Having been involved with Union Jack since its IPO, I am well versed with the business and delighted to be joining as an independent Non-Executive Director. I am confident that these are exciting times for Union Jack, particularly given the Company’s rapid expansion into the USA. I am looking forward to working closely with David and the wider Board as Union Jack’s UK and USA strategies continue to be implemented. After so many years, it is with mixed emotions that I leave Shore Capital and I am pleased that the firm remains a trusted Joint Broker to the Company.”

I dont normally comment on NED appointments but in this case I can add something. I have known both the company and Craig Howie for more years than I would admit and this is a marriage made in heaven, UJO’s gain is most certainly Shore Capital’s loss.

Craig will add more than the usual NED would do and he is never short of a few bob’s worth and the rest of the board will know they have been in a meeting, good stuff all round.

Galp Energia/Sintana/Eco (Atlantic) 

Galp (80%, operator), together with its partners NAMCOR and Custos (10% each), has successfully completed the first phase of the Mopane exploration campaign with the conclusion of the Mopane-1X Well Testing operations.

The Mopane-1X well discovered, in January, significant oil columns containing light oil in high-quality reservoir sands at two different levels: AVO-1 and AVO-2. The rig then moved to the Mopane-2X well location, where in March significant light oil columns were discovered in high-quality reservoir sands across exploration and appraisal targets: AVO-3, AVO-1 and a deeper target. In particular, the Mopane-2X well found AVO-1 to be in the same pressure regime as in the Mopane-1X discovery well, around 8 km to the east, confirming its lateral extension.

The reservoirs log measures confirm good porosities, high pressures and high permeabilities in large hydrocarbon columns. Fluid samples present very low oil viscosity and contain minimum CO2 and no H2S concentrations. The flows achieved during the well test have reached the maximum allowed limits of 14 kboepd, potentially positioning Mopane as an important commercial discovery. In the Mopane complex alone, and before drilling additional exploration and appraisal wells, hydrocarbon in-place estimates are 10 billion barrels of oil equivalent, or higher.

All acquired data from the current Mopane drilling campaign will be analysed and integrated into an updated reservoir model. The model will serve as the basis to refine Galp´s near-term drilling plan to further explore, appraise and develop the wider Mopane complex.

Galp will continue to analyse the acquired data during the coming weeks to assess the commerciality of the discoveries.

I have been following this Mopane drilling campaign for some months, not specifically for involvement by UK stocks, there have been none directly, but as there are knock-on effects for investors who read the blog.

With Galp having played a hugely successful part in these discoveries which are truly game-changing for them (the stock is up another 20% this morning) with their 80% in the block and with NAMCOR (State Co) and Custos with 10% each and through its 49% indirect in the latter Sintana, quoted on the TSX has a significant interest in what looks like a huge find.

There is also another, and potentially significant gainer from these discoveries as Mopane is believed to be on-trend with the 3B/4B licence in the Orange Basin in South Africa where Eco Atlantic have a substantial holding and has recently announced a farm-down to TotalEnergies and QatarEnergy which I am expecting to complete soon. After that I expect drilling to commence on the block, Eco are really in the pound seats here and although the shares have yet to go up by the amount that they should do yet, it must only be a matter of time before the shares rise hugely. 

If you add to that the Shell Enigma-1 well is rumoured to be yet another barn-burner the region is buzzing with talk of oil finds from Namibia and South Africa. Indeed today is the opening day of the Namibia International Energy Conference where many industry executives are headed and you can see where the new levels of interest and participation are peaking. 

Europa Oil & Gas

Europa has announced that it has published on the Company’s website a third-party report that details the results of an updated study which calculated the expected emissions associated with the development of a future 1 TCF indigenous gas discovery on Europa’s Irish offshore licence FEL 4/19.

The Report was independently researched and compiled by sustain:able (https://www.esgable.com/), an ISO certified emissions advisory company that specialises in forecasting greenhouse gas emissions associated with the upstream oil and gas industry, and is an update to the prior sustain:able report published by the Company on 7 March 2023. The Report was commissioned following the recently redefined 1.5 TCF Inishkea West prospect by Europa, which was a result of a remapping exercise of the prospects on the Licence following the reprocessing of the existing seismic data, and the 2022 emissions data recently published by the UK government.

The key findings of the study listed in the Report are as follows:

• the average operational life-of-field emissions intensity for the Corrib gas field is 5.3 kgCO2e/boe[1];
• the average operational life-of-field emissions intensity for indigenous gas on the Licence is forecast to be 2.8 kgCO2e/boe;
• the weighted average carbon intensity of imported gas into Ireland from the UK during 2022 is estimated to be 36 kgCO2/boe[2] (estimated to be over 12 times more CO2 than indigenous gas from the Licence);
• LNG[3] accounted for 26.7% of UK imported gas during 2022 with a weighted average carbon intensity of 78 kgCO2/boe (over 27 times more CO2 than Irish indigenous gas from the Licence), and,
• the projected production from Inishkea West has the potential to almost eliminate the need for gas imports from the UK in 2030 through to the end of 2032 (based on SEAI[4] demand predictions) and therefore to dramatically reduce associated emissions.

The very low emissions associated with the development of a gas discovery at Inishkea West detailed in the report are primarily due to the following factors:

• the close proximity of Inishkea West to the existing Corrib field (Corrib is adjacent to the Licence and Inishkea West is only c.18km from the Corrib infrastructure);
• gas would be produced through the existing subsea pipeline and facilities located at the Bellanaboy Gas Terminal;
• the quality of the gas and the low levels of impurities associated with the gas;
• the quality of the reservoir anticipated and the forecast initial production rates from Inishkea West wells;
• the anticipated size of the gas resource; and
• the forecast production profiles associated with a gas discovery on the Licence.

Will Holland, Chief Executive Officer of Europa, said:
“This updated emissions report reinforces the importance of the gas resource at Inishkea West, which has the potential to not only eradicate the need for higher emissions intensity gas imports from the UK for up to 3 years, but also a discovery would help Ireland meet its carbon emission reduction targets. A discovery at Inishkea West could provide security of gas supply for Ireland during the transition to renewable energy, which is in line with the EU’s stated goals for diversity of gas supply.

FEL 4/19 contains the large 1.5 TCF low risk Inishkea West gas prospect where, given the proximity to existing infrastructure, a discovery could be brought online quickly providing domestic gas with, as this report demonstrates, significantly lower emissions intensity than imported gas from the UK, Norway or further afield.

We are now in the process of progressing FEL 4/19 to drilling, which requires us to attract additional partners to this highly prospective licence.”

With Europa publishing the emission report it should be an open and shut case for ticking the box and moving on at Inishkea West which could, as EOG say, provide the necessary gas supply as well as within international targets. But given the nature of the intransigence up until now I wouldn’t be counting the days I’m afraid…

KeyFacts Energy Industry Directory: Malcy's Blog