WTI $71.65 -$1.48, Brent $73.47 -$1.29, Diff -$1.82 +19c, NG $3.61 -5c, UKNG 82.75p +0.25p

Oil price

The Opec report yesterday made few changes to its forecasts, not surprising really given recent discussions within the group. Further stock drawdowns have led to levels below the 5 year average which should remain and call for Opec+ oil remains strong.

Jadestone

Jadestone has announced the satisfaction of all conditions required to complete its proposed acquisition of the Peninsular Malaysia assets of SapuraOMV Upstream Sdn. Bhd, including receipt of PETRONAS approval.

Jadestone and SapuraOMV will now proceed to complete the transaction, which will entail Jadestone paying the headline consideration of US$9 million, subject to agreed adjustments. At completion, Jadestone will also receive the economic benefits from the Assets accruing from the effective date of 1 January 2021.  Under the terms of the acquisition agreement, completion is scheduled to occur on or about 30 July 2021.

Paul Blakeley, President and CEO commented:
“I am delighted to see that the conditions to complete this transaction are now satisfied, allowing us to conclude our acquisition of the Peninsular Malaysia assets in a very efficient way.  Our ability to complete this transaction within just three months of announcing the deal is a testament to the strong spirit of collaboration with each of the Seller, PETRONAS Carigali and PETRONAS. 

“I would like to acknowledge the clear and practical regulatory processes as well as the efficiency exhibited by PETRONAS during this approval process.  

“Jadestone is well prepared for working within the Malaysian regulatory regime, with a significant in-country presence and our operational leadership team already on the ground.  We now look forward to rebuilding our operating presence in-country, deepening key relationships, and establishing a significant business, drawing on the deep pool of Malaysian national talent.”

This is further good news from Jadestone who had slowed the business down significantly during 2020 but they have shown that it is possible to come back fighting and at $75 oil it won’t have missed too much. They comment that on completion, which is imminent, they will add ‘immediate cash flow of around 6/- b/d of oil equivalent of low operating cost production, on a net working interest of which over 90% is oil’.

They also claim that adding the Assets to the Jadestone portfolio will increase the Group’s 2P reserves by 34%, adding 12.5 million barrels oil equivalent of net working interest 2P reserves as at 31 December 2020, based on Jadestone’s best estimate 2P reserves production profile. I remain convinced that whilst the shares are some 40% up from the low, the size of the prize for the company should justify a share price of at least north of 100p.

Pantheon Resources

Pantheon has completed its analysis of the SMD-B zone, one of the three zones within the SMD, and estimates that this zone has the potential to contain 2.6 billion barrels oil in place and a P50 Contingent Resource (recoverable) of 404 million barrels oil. The Company’s previous management estimate for the SMD was an OIP of 1.8 billion barrels and a P50 Prospective Resource of 483 mmbo across all three of its zones combined, of which approximately 265 mmbo were attributable to the SMD-B zone; being the zone subject to today’s resource upgrade.  

Today’s resource upgrade is significant in that it is both (a) materially larger in size, and (b) management believe meets the higher resource classification of ‘Contingent Resource’, than the previous ‘Prospective Resource’. This also compares favourably to the previous Independent Experts estimate in September 2020 of 302 mmbo  Prospective Recoverable Resource across all three zones of the SMD.

Jay Cheatham, CEO, said:
“As mentioned previously, the Talitha #A well delivered excellent exploration results that have given us an opportunity to prove up a multi billion barrel oil accumulation with the potential to be one of the largest conventional onshore oil discoveries made in North America. Today’s news is another important step, with the SMD resource upgrade following the 1.4 billion barrel resource estimate on the Theta West/Basin Floor Fan earlier this year. It is also worth remembering that the resource potential of the Kuparuk and the Slope Fan System is yet to be reported. The analysis to date is very encouraging, as is the strong oil price outlook which has resulted in greater interest in the sector from corporates, investors and industry players alike.”

As always it should be borne in mind that this is yet again a management number and one in which it is they who are putting their own numbers into a higher resource classification. It may be that until these huge numbers are independently verified the market will be reluctant to convert in-house numbers into a higher share price.

It may be that so far there has been no joy on the farm-out front which again is somewhat mystifying given how many billions of easily producible barrels the company has. They announce again that they are in discussions with potential farminees and hope to do a deal in the 4th quarter of this year, that may be the time when the shares start to motor.

Pantheon has a loyal bunch of shareholders who are totally convinced that this really is the golden ticket and I hope that they are right. Once the potential problems are sorted, ie a CPR, a farm-out and of course raising money needed to develop the asset they will have their day in the sun, maybe a good farm-out will mean that someone else will step in to pay the costs…

KeyFacts Energy Industry Directory: Malcy's Blog