WTI $72.07 +16c, Brent $74.10 +31c, Diff -$2.03 +17c, NG $4.06 +6c, UKNG 89.11p +0.42p

Oil price

As predicted here the short term punters and traders in the oil market took money off the WTI and Brent tables around the time of the hoo-ha that was the Opec+ meeting and ensuing baseline discussions which lasted a couple of weeks. Monday’s 5 buck fall was enough to tempt enough of the spivs to do a bit of short closing, the result of which was to leave the oil price up on the week.

I wouldn’t expect that the assorted traders will have managed to get much money back in the market, certainly not the amount that they took out in early/mid July which pretty much means that any signs of weakness will see further buying from them.

The other thing that shouldn’t have gone unnoticed is that natural gas remains a very strong market in both the US and in Europe, last week it was up 11% in the US market. Again as mentioned last week those companies with a significant proportion of gas in their mix are doing very well.

Longboat Energy

An operational update from LBE today where they state that the Egyptian Vulture prospect in which they have a 15% interest is on track to spud in late August 2021 by Equinor the operator. The well is targeting gross mean prospective resources of 103mmboe with further potential upside to bring the total to 208mmboe. The Geological Chance of Success associated with this prospect is 25% with the key risk being related to reservoir quality/thickness.

The well is expected to take up to 4 weeks to drill with a pre-carry net cost to Longboat of c.$5 million. Upon success, there is the potential to provide low-CO2 blending gas to the nearby Equinor operated infrastructure (Åsgard) allowing for the possibility of rapid monetisation.

Egyptian Vulture is an Upper Cretaceous turbidite play bounded within a regional graben located in the prolific Halten-Dønna Terrace. The prospect has been significantly de-risked by a strong AVO anomaly analogous to the large Hades discovery made by Faroe Petroleum in 2018 along with several other nearby Cretaceous discoveries also made by the Longboat management team (Solberg, Rodriguez, T-Rex).

Egyptian Vulture marks the first of an anticipated seven well exploration programme which will be drilled by Longboat over the next 18 months on the Norwegian Continental Shelf targeting net mean prospective resource potential of 104MMboe with additional 220 MMboe of upside and follow-on prospectivity. The drilling programme has the potential to create a Net Asset Value of over $1 billion based on precedent transactions on the NCS for development assets.

The next well in the programme is scheduled to commence in mid-September and will target the Rodhette prospect (Company 20%) using the deep water Scarabeo 8 semi-submersible drilling rig. This is a proven Jurassic Play in the Hammerfest Basin with a potential 30km tie-back distance to the Goliat Field for early potential monetisation.

Helge Hammer, Chief Executive of Longboat, commented:
“We are excited at the prospect of drilling our first exploration well and can now look forward to a busy period of almost continuous drilling and frequent value catalysts during the next 18 months with a combined upside value potential in excess of $1 billion.

“Exploration activity in Norway is picking up and during the first six months of 2021, a total of 17 exploration wells have been completed, resulting in eight discoveries. On Egyptian Vulture we are partnering with one of the most successful explorers on the NCS and a successful well could add more than 15 million boe of net contingent resources with significant monetisation opportunities.

“Our plan remains to build Longboat in to a full-cycle, North Sea E&P company. We believe the momentum built by the initial acquisitions will enable us to take advantage of the increasing number of opportunities we are seeing in the market.”

After a slow start Longboat is now up and running and by the looks of it there is more to come. More partnering is on the cards and they indicate that it is rapidly building process as the industry watches on. Expect more acquisitions and farm-ins as now that they are under way there appears to be no stopping them recreating Faroe and maybe more.

United Oil & Gas

An H1 trading statement and operational update from UOG today ahead of figures in September. Revenue for the first half of 2021 is expected to be c. $10.3m-10.5m based on a realised oil price of c. $63.10/bbl.

Group Cash Balance of c. $2.0 million at 30 June 2021, total Cash Collections of c. $8.2 million and cash Capital Expenditure of c. $3.0million. c. $2.2 million invested in the Abu Sennan drilling campaign and workover activities and c. $0.2 million invested in Jamaican, Italian and UK assets.

In terms of guidance, group working interest production in Egypt for the full year is forecasted to average between 2,500 and 2,700 boepd, reflecting the continued good performance from Abu Sennan and the drilling successes that were achieved in H1 2021 whilst group Cash Capital Expenditure for the full year is forecasted to be $7.2 million, fully funded from existing operations.

Expect c. $6.5 million to be invested in Egypt with four wells, five workovers, and facilities upgrades and c. $0.7 million to be invested in the Jamaican, Italian and UK assets.

United Chief Executive Officer, Brian Larkin commented:
“Through execution of our planned work programme, the first half of 2021 has produced exceptional operational and financial success. In addition, we have created significant new opportunities as well as reinforced the balance sheet strength of the Company.

“In particular, our Egyptian assets continue to perform beyond expectations, with production averaging 2,730 boepd; consistent with full year guidance range of between 2,500 to 2,700 boepd. Further, through our H1 drilling programme, we have not only been able to increase production, but also identify new growth opportunities within the licence. Based on this success, we are delighted to be drilling a further exploration well on the licence shortly and are actively working with Joint Venture Partners to agree the optimum long-term strategy for the development of the licence’s potential.

“The outlook for the business remains encouraging and we remain well positioned for further success”.

Prospex Energy

What’s going on at Prospex one asks? It appears that Ed Dawson has been removed as CEO and replaced by Mark Routh, formerly of IOG.

Bill Smith, Chairman of Prospex commented:
“We are extremely pleased to welcome Mark as CEO.  He will bring a wealth of operational and technical expertise to our Board.  Moreover, he is well versed in all aspects of directorship of listed energy companies, being currently a non-executive director of Warrego Energy Limited in Australia (ASX:WGO) and having been both CEO and Chairman of Independent Oil & Gas plc and the MD and founder of CH4 Energy Limited.

We look forward to working closely with Mark as the Company grows its portfolio of European gas and power projects.  In addition to increasing cash flow in Spain and bringing the Selva property on stream, the Company has a number of attractive opportunities and, with the addition of Mark, is well positioned to build new assets in the onshore European gas and power areas while continuing to enhance its ESG programmes. 

I thank Edward for his contribution to the growth and development of Prospex, particularly the very exciting Selva, El Romeral and Tesorillo projects. With permitting nearing completion at Selva to allow production and the growth opportunities at El Romeral, Edward has helped lay strong foundations for the future of the Company.”

This is going to be interesting, in a conversation with Ed a little while ago I thought that things were going quite well as he felt positive about income in Italy and of course upside from Spain. It may be that shareholders feel that those geographies and the power station in Spain were not what they wanted and that limited revenue did not give them enough scope.

The shares had had a good run before recent results after which some disappointment regarding income from Italy appeared and the fact that the shares are 17% up on the news probably reflects optimism regarding a change of direction for the company.

KeyFacts Energy Industry Directory: Malcy's Blog