WTI (Aug) $108.43 +$2.67, Brent (Sept) $111.63 +$2.60, Diff -$3.20., USNG (Aug) $5.66 +23c, UKNG (Aug) 245.0p -4.75p, TTF (Aug) €148.0 +€1.0

Oil price

It’s Independence Day today so if you are in the yard with your hot dogs, relish and beer have a great day. Oil will be quiet after a mixed week last week when Opec and its quotas were still the talking points about capacity issues. With Libya and Ecuador under pressure and Iran yet to be agreed we may be in the doldrums for a few days.

IOG

IOG  has released an updated Investor Presentation incorporating production data up to 30 June 2022. The presentation can be accessed here: https://bit.ly/3NzKiY2

Andrew Hockey will present on IOG at the Proactive One2One Investor Forum this Wednesday 6 July in London. Registration is available here: www.proactiveinvestors.co.uk/register/event_details/400

Andrew Hockey, CEO of IOG, commented:
“We are very pleased to exit the half year with Saturn Banks producing 60 mmscf/d gross, double the level of one month ago and at the top end of our projected 2H22 range. Our resilience measures on Blythe and Elgood are starting to bear fruit, with 93% uptime in June. After completing Southwark East in the coming days, we will resume drilling the Southwark West well, with both wells targeted for first gas in Q4. This will be followed directly by two exciting appraisal wells at Goddard and Kelham targeting further growth opportunities.

With average realised gas prices to date of 147p/therm and the forward curve for this winter currently exceeding 350p/therm (c.$250/boe), our first half progress sets us up well for a cash generative second half, even as we invest at Southwark. Our latest corporate presentation provides a detailed update on all our current portfolio activities.”

Blythe and Elgood Fields Gas Production
Gas production reached 60 mmscf/d gross by the end of 1H22, up from 30 mmscf/d gross at the start of June. Over the course of June, production averaged 45 mmscf/d gross, with overall uptime of 93% and a volume weighted average realised price (VWAP) of 130p/therm.

From First Gas to the end of the half-year, gross production averaged 34 mmscf/d, with overall uptime of 59% and VWAP of 147p/therm. As previously stated, based on reservoir analysis to date and factoring in planned and unplanned downtime, gross average 2H22 Saturn Banks gas production is projected to be in the 45-60 mmscf/d range, with condensate rates of 250-350 bbl/d.

Southwark Field Development

The drilling phase of the Southwark East production well is nearly complete and the Noble Hans Deul rig is expected to resume drilling the Southwark West production well this week (the top hole section was originally drilled earlier in the programme). After this, both wells will then be hydraulically stimulated before being brought onstream. The subsea and hook-up and commissioning programmes are progressing in parallel, with first gas targeted in Q4 2022.

IOG are very good at information presentation, to their credit when news is good or not so good. That makes this announcement particularly pleasing as the company are reporting very good news across the board. 

The company say that they exited the half year with Saturn Banks producing 60 mmscf/d gross, double the level of one month ago and at the top end of the projected 2H22 range which is inevitably good for revenues. With average realised gas prices to date of 147p/therm and the forward curve for this winter currently exceeding 350p/therm (c.$250/boe), the company report that they expect to be cash generative in 2H this year. 

But that’s not all, determined to continue with the growth in the SNS IOG are still drilling, currently completing Southwark East before resuming at Southwark West both of which are targeted for first gas in Q4 2022. After that there will be two ‘exciting’ appraisal wells at Goddard and Kelham targeting ‘further growth opportunities’. 

My UKNG price quotes reported every day in the blog show a forward curve which makes very pleasing reading for IOG and its shareholders. For November of this year it is showing a price of 403.430p which, should it be anything like accurate would make the company not only delivering on its promise but also be producing enough cash to drill a number of wells next year, pay off a good deal of debt after which who knows, maybe a shareholder return. IOG shares look in a very good place to me. 

Jadestone Energy

Jadestone has provided the following update on operations at the Montara field offshore Australia.

Jadestone is pleased to report that, following a temporary repair of the leak point in the 2C tank and its complete isolation from the production system, together with a review by NOPSEMA of the Company’s inspection and repair records relating to the Montara Venture FPSO crude oil tanks, production was safely reinstated on 3 July 2022.

The oil that was contained within the 2C crude oil storage tank has now been pumped to other tanks on the vessel so that there is no threat to the environment.  A permanent repair of the 2C tank is being advanced, with work expected to start within the next several days.  At the same time, Jadestone will begin to execute full inspection and remediation on the 2C oil tank, which was originally planned for July 2022, as part of the Company’s rolling tank inspection and repair programme.  

Paul Blakeley, President and CEO commented:
“The restart of production at Montara is significantly ahead of our initial four-week assumption, and underscores both the integrity of the FPSO following our remediation campaign in recent years as well as our response to NOPSEMA’s direction to ensure the risk to the environment is as low as reasonably possible.  Our teams, both onshore and offshore, have worked tirelessly to secure the vessel’s integrity and to design and implement detailed solutions which satisfy the regulator, and I thank them for their efforts.  I am also grateful to NOPSEMA for its constructive and balanced approach as we have worked to restore safe operations at Montara.

We will ensure that the lessons learned from this event are incorporated into the future operating strategy for the Montara Venture FPSO, which aims to deliver a prolonged safe operating life for the vessel in years to come.”

Whilst this was a small leak which should have been avoided I know that senior management were furious that Jadestone could have been involved in any leak at all. I had the opportunity to spend plenty of time with CEO Paul Blakeley last week on a one to one basis and I can assure investors that he is as determined to avoid any such leak in the future as he is to ensure that JSE continues to grow at a great pace. 

One interesting thing is about what Jadestone are planning for the future, the existing unhedged production has meant that cash is abundant and that gives the company the opportunity to continue to execute a substantial capex programme, increase significantly its shareholder returns and take advantage of M&A are all real options. 

I asked Paul if there were many realistic, affordable M&A targets with oil at over $100 around.  Interestingly he said that quality assets with big companies restructuring portfolios are actually more available at sensible rates of return and that his team were extremely busy. As we left I suggested that by the end of the year he might hope for an acquisition of some size, his answer was that he wanted four, I don’t think he was joking either…

Jadestone is in good hands, the shares are very cheap, wise investors will be adding to the shares at the moment. 

KeyFacts Energy Industry Directory: Malcy's Blog