WTI (Oct) $83.54 +$1.60, Brent (Nov) $89.15 +$1.15, Diff -$5.61 -45c, USNG (Oct) $7.91 +7c, UKNG (Oct) 404.0p +6p, TTF €209.0 +€6.99

Oil price

Oil bounced partly as Israel suggested that the Iran deal had stumbled. At this price shorting the oil price is a substantial risk…

Union Jack Oil/Europa Oil & Gas

Union Jack has announced that a loan facility and charge agreements have been executed between Union Jack and Europa Oil & Gas for Union Jack to provide Europa with a loan for £1,000,000.

The key terms of the Loan Facility and Charge Agreements are set out below:

• 18 month term
• Principal of £1,000,000 that is repayable at end of the Term or in part or in full at any earlier time at the discretion of the Borrower
• Interest will accrue daily on the amount of Principal outstanding at an interest rate of 11% per annum and is payable quarterly in arrears
• The Loan Facility is secured against an unencumbered 10% interest in the Borrower’s UK onshore licence interest over PEDL180 and PEDL182 including the Wressle oilfield and associated infrastructure

The Board believes that the Loan Facility provides an attractive commercial return to Union Jack on cash funds deployed with appropriate Security.

Executive Chairman of Union Jack, David Bramhill commented:
“Revenues from Wressle have financially transformed the cash flow and our balance sheet in the past 12 months.  Union Jack is now on a material growth trajectory which augurs well for the future of the Company and its shareholders.

“Our working capital position remains robust and continues to grow with cash balances, receivables and liquid investments standing at approximately £10,500,000 as at 6 September 2022, with steady improvement expected by the end of this year, given current oil prices.

“This strong position, combined with being debt free, allows us to confirm we are covered for G&A, OPEX and CAPEX costs that are contracted or planned for at least the next 12 months, including the cost of any development and drilling activities that are currently under consideration during 2022/2023 at the Wressle, West Newton, Keddington and Biscathorpe projects.

“The mandate of the Board is to ensure that the Company’s capital and investments generate an attractive commercial return for shareholders. That also applies to deploying any surplus cash balances currently on deposit to ensure they work as hard as possible and attract optimum interest rates to generate additional revenues.”

Simon Oddie, CEO of Europa, said:
“We are pleased to have secured this source of debt financing from UJO, which is one of our joint venture partners at Wressle. The loan will provide us with additional liquidity and reflects the prudent cash management philosophy that we adopt at Europa when looking at the various development settings that we could face in the near term. One of these scenarios includes a success case side-track that may be drilled in the upcoming Serenity appraisal well. The side-track could prove up further volumes in addition to those proven by the main wellbore and these additional funds will ensure that we have sufficient working capital to progress all of our assets under the potential growth scenarios that we are modelling.”

There is little doubt who has in the stronger position here as UJO provide the lending to EOG who are mortgaging the Wressle position partly to fund work at Serenity. Indeed the act of putting the ever increasing Wressle revenues to work will add even more to the already strong coffers at UJO as they move towards deciding on a policy of returning money to shareholders, the ultimate irony in this transaction. 

IGas/Reabold Resources

IGas welcomes the Government’s statement on the lifting of the effective moratorium on hydraulic fracturing in England and the review of energy regulation.

We have always believed the science, as well as the need for increased domestic production of gas, supports a lifting of the moratorium.

The data that we have collected in the Gainsborough Trough over the past five years shows that we have a world class shale gas resource which is now, given the energy crisis, a strategic national asset.

The development of IGas’ shale gas assets has the potential to provide secure and affordable energy for the UK in the near term, helping to decouple the UK from volatile and competitive international gas markets.  Aside from the clear benefits in job creation and balance of payments through producing indigenous natural gas, we will support local communities with a comprehensive benefit package.

The accelerated development of this strategic natural resource, which we believe is imperative in helping with the ongoing energy and cost-of-living crisis, can only be achieved through a streamlined regulatory process, something the Government has committed to today.  To this end, we look forward to working constructively with the new administration.

Commenting Stephen Bowler, IGas CEO said:
“What has become even more evident in the past few months, given the heightened challenges of the terrible war in Ukraine, is the need for the UK to secure further indigenous supplies of energy to reduce its reliance on imports and reduce spiralling energy prices.

As well as improving our energy security the development of shale gas in the UK would reduce our carbon footprint, increase tax take, provide tens of thousands of well-paid, highly skilled jobs, a chance to reverse our balance of payment deficit and a means to level up the UK economy.

Recent polling by YouGov has shown that, as the cost-of-living crisis bites, local people support shale development where it can bring real benefit to their community in reducing bills. We will work together with local communities to deliver this much needed resource in the near term and demonstrate that it can be done safely.”

Reabold

Reabold, notes the announcement by the UK Government of the cancellation of the moratorium on hydraulic fracturing onshore in the UK.

Reabold welcomes this change in policy and notes that it could have a materially beneficial effect on the Company’s UK onshore business, including the potential to exploit additional resources within its existing licence interests and other potential opportunities.

Whilst the statements are of a differing length they both make the same point about adding reserves which will bring a real benefit to domestic energy economics and the help it can be to communities involved both in terms of local tax takes and employment in localities. 

Those communities will want, indeed demand, the highest of safety standards and those opposed to fraccing will take some persuading, but if we are going to realistically and safely utilise our own fossil fuels this will be a necessary education.  Just being a provider of  extra services and revenue will not cut the moutarde.

Sound Energy

I mentioned Sound yesterday but had very little time to add to the results, since then I’ve had time to reassess, check against previous company comments and hear from Chairman Graham Lyon. 

I think the most important thing which runs through everything that Sound are doing is based around delivery. Phase 1 MLNG is well underway, Phase 2 is now at the financing stage and ongoing. Compare this with what was outlined 24 months ago and as I said, this shows strategy being delivered. 

The recent raise brought new and bigger players into the company and that process will ensure that all the operational news that will inevitably be on the way will be be stepped up in a flurry of construction and fabrication. 

Sound is in a strong position and as I have said before Graham Lyon and his team are working wonders which I expect to be realised in the share price in coming months. The company is soon to be in a position to deliver, that word again, but it is happening at Sound and expect tangible results in providing assets that people need, what better in a new world?

Coro Energy

Coro has announced that the partners in the Duyung PSC have approved an updated Plan of Development and have approved and secured alignment with SKKMIGAS on the PoD. The PoD now been submitted to the Indonesian Ministry of Energy and Mineral Resources for approval.  Coro holds a 15% interest in the Duyung PSC.

Coro is also pleased to announce that an Operator commissioned Competent Persons Report has been prepared by GaffneyCline Associates for the Mako development.

Highlights:

Revised PoD approved by partners

Based on the CPR:

• Compelling project economics:
• 51% IRR
• NPV10 net to Coro of US$87M (US$577M gross) in the Best Case (2C) scenario
• 42 Bcf net entitlement 2C resources to Coro during the PSC life
• Plateau production of 120 MMscf/d for six years in the Best Case (2C) scenario
• CPR capital expenditure requirement to first gas estimated at US$251M gross (US$38M net to Coro).  Coro expects to secure a Reserve Based Lending facility for a large portion of the capital.
• Operator has indicated that termed Gas Sales Agreements (“GSA”), for gas sold into Singapore, are under discussion with SKK Migas with a view to finalising sales arrangements in the near future.

The Operator of the Duyung PSC is WNEL, a 100%-owned subsidiary of Conrad Asia Energy Ltd, and has continued to technically mature the development of the Mako gas field alongside negotiations of  GSA(s), both in preparation for Final Investment Decision.  This has included finalising the revised PoD, on which the JV partners have now secured alignment with governmental regulator, SKK Migas, and submission for ministerial approval. 

The GCA CPR is closely aligned with the PoD and is premised on a two-phased development with six wells in phase 1 and a further two wells in phase 2 after 5 years of production. The wells will be tied back to a leased production platform at the field, with sales gas transported via the West Natuna Transportation System pipeline to Singapore for sales to the Singapore market. The development plan includes first gas in 2025, with a 120 MMscf/d production plateau and a gross recoverable 2C contingent resource of 413 Bcf gas total and 281 Bcf net entitlement attributable to the Duyung PSC JV partners (42 Bcf net to Coro) during the PSC life.

As reported in the CPR (dated 26 August 2022) and specified in the PoD revision, upside exists to increase the plateau rate to 150 MMscf/d, should reservoir deliverability be sufficient. GCA has confirmed Mako contingent resources that are broadly in agreement with the PoD as set out in the table below.  

Duyung PSC – Contingent Resources, GCA Operator CPR

* The CPR estimates that 88% of the Mako field is within the PSC boundary
** After deduction of the 23% contractor take

The Operator of the Duyung PSC is WNEL, a 100%-owned subsidiary of Conrad Asia Energy Ltd, who hold a 76.5% interest in the Duyung PSC. Coro hold 15%. Empyrean Energy plc hold 8.5%.

The Operator CPR, and the updated PoD, assumes first gas in 2025 and calculates the last economic production years prior to the current Duyung PSC expiry date for Low, Best and High cases of 2033, 2036 and 2036 respectively, which extend to 2039 and 2054 for the Best and High respectively if the Duyung PSC is extended.

The Operator CPR utilises a gas price of US$9.97/Mscf in 2025 which is calculated on a Brent linked price formula with a Brent slope of 12% and a  Brent price deck of US$80/bbl in 2025, escalating 2% pa from 2027 thereafter.  Different gas prices may eventually be agreed with the gas buyers and the regulator when the GSA’s are eventually signed. The Operator CPR estimates that the post tax NPV10 resulting from the Best Case Contingent Resources within the Duyung PSC acreage and within life of Duyung PSC (363 Bcf) is some US$577M (US$87M net to Coro) representing a 51% IRR.

Under the PoD and CPR, first gas from the Mako gas project is planned to be evacuated via the West Natuna Transportation System.   The development will utilise a Conductor Support Frame (CSF) for one dry wellhead and gas import-export support, bridged-linked to a leased bridge linked Mobile Offshore Production Unit. The CPR Phase 1 capital expenditure is estimated to be US$251M and total capital expenditure will be US$303M. These estimates will be updated as a consequence of envisaged Front End Engineering and Design (FEED) studies. Coro expects to secure a Reserve Based Lending facility for a large portion of the capital.

James Parsons, Chairman, commented:
“We are delighted with progress on our flagship asset, the Duyung PSC, where we have now approved an updated PoD and are moving to finalise the long-awaited GSA, both significant milestones on the path to building material value for our investors.  As demonstrated by the US$87M NPV10 (net to Coro) reported in the CPR, recent structural increases in global gas markets very much now favour Coro Energy and the Mako gas field.”

This looks very good indeed for Coro that shareholders have been waiting for, good news from Duyung and the asset has always been right up there in world class terms. 

Getech

Getech, the geoenergy and green hydrogen company, continues to build its hydrogen business following the acquisition of H2Green in 2021, with the appointment of Kathrin Schulz as the Group’s European Hydrogen Business Development Director.

Based in Berlin, Ms Schulz will be working to further support Getech’s ambition to establish over 500MW of new geoenergy and green hydrogen assets by 2030 and progress the Company’s growth in new areas of Europe.

Implementing the Company’s strategy for locating, developing and operating energy resources that accelerate the path to net zero, Getech is developing a network of green hydrogen hubs, co-located with wind and solar, to decarbonise transport and industrial sectors.

An update on Getech’s current hydrogen development activities will be included in the Company’s interim results released later in September.

Getech CEO, Dr Jonathan Copus, commented:
“This is an exciting time for Getech, as we expand our team with the focus to develop a more resilient energy system and accelerate the pathway to net zero. Green hydrogen can provide clean power for transportation and industrial sectors that are hard to electrify, as well as energy storage to overcome intermittency and balance supply with demand. Against a backdrop of heightened energy supply uncertainty and price volatility, hydrogen can also play a pivotal role in improving energy security.

Kathrin’s appointment adds to our increasing presence in continental Europe, which is a natural home for our hydrogen production strategy. Hydrogen is a key part of carbon-reduction plans across Europe – at regional, national and EU level. The EU hydrogen strategy (July 2020) set green hydrogen as a top priority – with an objective to install at least 40GW of renewable hydrogen electrolysers by 2030 with production of up to 10 million tonnes of renewable hydrogen in the EU. This focus was further strengthened in response to Russia’s invasion of Ukraine, with RePowerEU (May 2022) adding a target of 10 million tonnes of renewable hydrogen imports by 2030. In support of these initiatives the European Commission has to date approved EUR 5.4 billion of public support under its ‘Important Projects of Common European Interest’ scheme, and is working to develop hydrogen import corridors, via the Mediterranean and the North Sea, and promoting green hydrogen partnerships.

Within continental Europe, Germany is one of the most attractive areas to invest in hydrogen. As Europe’s largest energy consumer, with a thriving heavy industry and mobility sector, Germany considers hydrogen a significant lever to achieve its climate goals. Its ambitious national hydrogen strategy targets 10GW of hydrogen production capacity by 2030. To deliver this, Germany has launched a number of support programmes, and steps to accelerate planning and permitting for power and hydrogen grids. Germany also plans to import significant volumes of green hydrogen and has awarded a grant of EUR 900 million to H2Global, a public-private platform designed to support investments for the production of renewable hydrogen in countries outside the EU.

We welcome Kathrin to our team, and we look forward to leveraging her wealth of knowledge of European energy markets and specialist hydrogen expertise – skills that are fundamental to our ability to replicate, scale up and diversify our green hydrogen portfolio, both in the UK and internationally.”

Ms Schulz added:
“Green hydrogen has huge potential as the world looks to new clean energy sources to speed up decarbonisation of the industry and mobility sectors. Getech is making great strides in bringing forward innovative hydrogen developments that can be scaled at pace, so it’s an exciting time for me to join the business as energy needs continue to rapidly evolve.”

 No need to add anything here, a good appointment.

KeyFacts Energy Industry Directory: Malcy's Blog