WTI $73.47 +49c, Brent $74.62 +34c, Diff -$1.15 -63c, NG $3.65 +2c, UKNG 88.0p +4.59p

Oil price

Opec+ is underway and I cant add much more to my previous comments. I’m sure they have significant leeway to add much more than the 500/- b/d but are unlikely to, why should they, they have the market by the short and curlies..This is partly due to what I banged on about last year, the companies cut costs so much, and I mean about 5 years worth in 6 months that the market is already unforgiving and short, typically short-sighted by some of the majors.

What that means is that there is way less non-Opec supply around and hence the strength of the Opec+ position, and the Russians know that too…The EIA stats have been confirming what the Saudis have been telling us for some time that continued draw of stocks around the world are another thing that will alter the equilibrium. Crude drew another 6.7m barrels and with refinery runs up again at 92.9% as they build gasoline stocks ahead of the Independence Day holiday weekend gasoline added a modest 1.5m b’s just in case.

Scirocco Energy

Scirocco has this morning provided an update on the operational activities in the Ruvuma PSA. ARA has now completed the tendering work for the acquisition of 454 km² 3D seismic and contract award will follow the approval by the Tanzanian authorities for the issue of the seismic acquisition contract.

The Operator expects that acquisition will commence later in the third quarter of 2021. The Chikumbi-1 exploration and appraisal well is now expected to spud early in the third quarter of 2022. Assuming a successful outcome from the drilling of the Chikumbi-1 well, first gas from the project is anticipated to be delivered by the end of 2024. The work programme scheduling is in line with the Company’s expected funding commitments towards it.

APT has also re-interpreted the existing 2D seismic dataset and considers the Ntorya gas reservoir to be the product of a stacked, high-energy, channelised sand system. The Operator’s revised mapping and internal management estimates suggest a mean risked gas in place (“GIIP”) for the Ntorya accumulation of 3,024 Bcf in multiple lobes and a mean risked recoverable gas resource of 1,990 Bcf which will be appraised by the planned seismic and drilling programme.

Tom Reynolds, CEO, commented:
“We are pleased to provide the operational update on the Ntorya gas discovery and forward work programme. APT has made significant progress since assuming the role of Operator and we are now looking forward to a busy period of operational activity as the Joint Venture executes the 3D seismic and well planning programme. Additionally, the work undertaken by the APT technical team to re-map the discovery and identify prospective additional resources demonstrates the potential size and scale of the Ntorya discovery.”

Scirocco are well placed as they note the assumption of APT as Operator and with a busy schedule but more importantly have already seen a big upgrade in their management estimates of resource estimates that can only add value to all involved.

Chariot Limited

Chariot has announced the appointment of David Brecknock to the role of Drilling Manager, with responsibility for the Company’s planned Anchois gas appraisal well within the Lixus licence, offshore Morocco. The objectives of the drilling campaign are to further evaluate the resource volumes of the Anchois gas field to unlock the initial development, to provide a future producer well location and potentially drill the additional prospective sands with the aim of establishing a larger resource base for longer term growth.

Adonis Pouroulis, Acting CEO of Chariot, commented:
“I am delighted to welcome David back to the Company. He played a pivotal role in Chariot’s previous drilling campaign in Namibia which was operated safely, on time and under budget, and we expect him to play a similarly important part in our exciting Anchois gas appraisal well. We look forward to keeping the market up to speed over the coming months as we get closer to drilling.”

I wouldn’t normally comment on such an appointment but this is important on a couple of fronts, firstly that the hiring of a drilling Manager brings forward activity at Anchois but also that DB is a former Chariot man and should fit in swiftly and without need to get the corporate picture. Expect the new speedy rate of activity at the company to be maintained.

President Energy

President Energy has announced significant new developments with regards to Atome, the Company’s newly-established hydrogen and ammonia production subsidiary. Atome has entered into a co-operation agreement with the innovation arm (“Techco”) of a government-owned green electricity generator (“Genco”), located in a democratic and economically open country in the Americas.

The agreement relates to the proposed production, sale and distribution by Atome of green hydrogen, ammonia and the associated oxygen by-product initially for the local market and thereafter for export. The co-operation agreement provides for assistance by Techco in the procurement of a suitable power purchase agreement from the national electricity supplier who takes their power from Genco and the provision of suitable land for the Project by Genco/Techco in close proximity to the power source.

If implemented, it is intended that the Project (which will be the first of its kind in the country) will commence with a pilot production programme and followed by industrial production to be spooled up by the mid/late 2020’s to have an output capacity of some 30,000 MT of Hydrogen per year which can if required generate some 180,000 MT of green ammonia per year utilising 200MW of electricity.

The country in question has significant current and future green power capacity to fulfil the anticipated demand as and when the project progresses. Atome will be the owner, funder and operator of the Project with Techco and its other innovation projects benefiting from the profits of the venture in due course in consideration of its co-operation.

This represents an important initial step by Atome in pursuit of its stated business objective to become a large scale hydrogen and ammonia producer during this decade. Atome has appointed Strand Hanson Limited  to act as financial advisor in relation to the proposed listing of Atome’s shares on the standard list of the London Stock Exchange, which is currently expected to take place later this year.

The Company intends to invite shareholders of President on a record date to be defined to participate in the Listing alongside new investors and the Listing is expected to facilitate a distribution in specie of shares in Atome to President shareholders.

A separate listing of Atome will broaden the scope of opportunities available to its hydrogen and ammonia business to a completely separate audience decoupled from the valuation metrics of the Company’s current Argentina-centric core hydrocarbon business.

President continues to finance Atome’s working capital from its own resources. The listing will allow Atome to raise finance to fund the Project and any future initiatives in its own right thereby negating any potential dilution for President shareholders. NB there is much more detail in the RNS about the rationale, the market etc. 

Peter Levine, Chairman, commented,
“The announcement today marks an important development for President and its group. Our Company must evolve, recognise investor sentiment and the need to protect the environment. The commencing of concrete steps together with the intention to spin off Atome into a separate stock market entity with its own distinct valuation and investor audience is a radical, bold and forward-thinking move.

“At President we recognise that the spin-off provides Atome the most fertile ground to grow exponentially as a distinct entity. We are optimistic as to the prospects for Atome and see an increasingly intensive work stream encompassing not just the initial country in which we have commenced work but others where management can leverage their extensive networks and experience.

“The spin-off leaves a still successful President core business which has created and will retain a major shareholding interest in Atome with itself significant potential to grow its profits and cash flow whilst retaining the ability to consider the manner and course of its future as a publicly listed company. President investors can be assured that the Company will continue to be laser focused and committed to its ongoing hydrocarbon projects.

“Thus since the start of the year, President has announced the successful drilling of three gas wells in Rio Negro, Argentina on time and budget, the soon to be successfully completed new oil treatment plant also in that province likewise currently on time and budget, the soon to start three well drilling programme and seismic data acquisition in Salta Province, Argentina and the long anticipated successful farm-out of the high impact exploration interests in Paraguay with drilling to commence next year.

“Finally, it is important to recognise and respect loyal shareholders of President and as such we intend as part of the listing process to invite shareholders on the record at a date to be defined to participate in the listing of Atome and through, as may be appropriate, distributions in specie by President in shares of Atome”

As ever Peter Levine has come up with a vehicle that is thinking laterally within the ‘energy’ business and giving his shareholders an opportunity to participate in any progress he makes. Also at a time where ESG and carbon neutral strategies are becoming ever more main street he is going the extra mile, something that those in the sector have started to develop will be pleased about. Yet again I have to say that President shares are undervalued and not yet reflecting this potential.

Block Energy

So, what on earth is going at Block? I must admit that having thought that the actions of rebel shareholders had quietened down recently, looking at the AGM results in today’s RNS it seems that it is certainly not the case. With the vote to re-elect Philip Dimmock only just passing (with a staggering 44% of votes against); what makes the company think that it has reason to stagger on without a credible mandate?

Given the ease at which other directors were re-elected it is clear to me that the rebel shareholders only hold one man accountable for the derisory performance of company in the last 24 months.

As I understand it, there are now reluctant but motivated moves afoot by one of the largest institutional shareholders to call for a General Meeting to enact change. I would expect that to add to the embarrassment currently being heaped on the Chairman and would speculate that they will secure the modest additional 6% votes to firmly press the ejector seat button.

Block is on pretty weak ground right now, with share performance having seriously underperformed since the peak driven by little operational success. The new well has been spudded in Georgia but given that shareholders are expecting significant upside more is needed. Ignoring the wishes of the shareholders via AGM votes seems like a risky way of doing things, some would say that the situation as it looks right now is untenable…

KeyFacts Energy Industry Directory: Malcy's Blog