WTI (Nov) $79.49 -$1.74, Brent (Dec*) $85.14 -$2.04, Diff -$5.65 -$1.61, USNG (Nov*) $6.77 -10c, UKNG (Nov) 335.31 -54.69p, TTF (Nov) €176.0 -€25.85.
*Brent November contract expiry, USNG October contract expiry.

Oil price

I have been talking to industry experts here in Cape Town from arrival on Saturday to this evening, there is much to come and I have some 30 meetings but already the hot stories are Shell and Total, Graff and Venus, South Africa and Namibia and how much Chevron are putting down.

But there is so much more and companies from all over the world are talking about Morocco and opportunities in Sub Saharan Africa, Afentra is on everybody’s lips, a smart deal in Angola they are saying, I agree…see Tower below.

As for the oil price I will do my monthly summation when I return but it’s history and right now we have an imminent Opec+ meeting where I still believe we will see production cutbacks. 90 Bucks is the lowest they will accept and they will not  take a gradual trade down to $75, traders take on MbS at their own risk and I wouldn’t short oil here.

Indeed with no increase in production from the USA and the SPR sales will soon end, the incompetent EU are allegedly going to do something, maybe Belgium might send some chocolates but early December they are moving apparently. The joker is Chinese demand, against a world situation with no spare oil when (and not if) that demand picks up, so will the oil price.

Oil companies never learn, nothing like a deadline to produce results on that day and end up in company with others and get lost in the crowd. My advice is that if you want to shine and have your place in the sun don’t wait until everybody else is reporting, unless of course you want to be lost in the crowd…

Genel Energy

Genel has announced the appointment of Paul Weir as Chief Executive Officer, and as a member of the Board of Directors, with immediate effect.

Paul, who was previously Chief Operating Officer before being made Interim Chief Executive Officer in June this year, joined Genel in January 2020. Paul had worked for more than 30 years in upstream E&P with experience in the North Sea, South East Asia and Africa. Before joining Genel, Paul was Group Head of Operations and Safety at Tullow Oil. Prior to that he had spent 13 years at Talisman Energy, ultimately as VP Production and Exploration. He has also worked in a variety of roles at Total, Occidental, Elf and Nippon Oil.

David McManus, Chair, said:
“I am delighted to confirm the appointment of Paul as Chief Executive Officer. He has the experience and vision to deliver Genel’s strategy, as we focus on positive performance from our current portfolio and utilising our material financial strength to grow the Company for the benefit of all stakeholders. Paul has already brought energy and clarity to the business, giving us confidence that value delivery will follow.”

Paul Weir, CEO, said:
“I am excited to be leading Genel as we move on to the next chapter of our growth story. We have built a fantastic team that I am confident will turn our significant growth potential into value for shareholders. My highly experienced team is focused on both operational delivery – our production remains robust, and our material dividend is well supported – as well as exploring opportunities for putting our balance sheet to work to enhance our position by adding assets. As we look to do so, we will not lose our firm focus on the central pillars of our business model – mitigating risk and ensuring the ongoing financial strength to support our dividend in the long-term.”

This was always going to be a more than usually difficult appointment purely because of the circumstances it arose in. When deciding who would be the best candidate it seems that the management team that is now in place is best suited and most qualified to drive Genel forwards, growing the business on the basis of familiarity, current growth and financial strength. 

On this analysis, which I consider to be absolutely the right one, Genel can forge ahead with the current portfolio and use the significant financial strength that it has built up and ensure that shareholders remain amongst the best rewarded in the sector. 

Coro Energy

Coro has announced the successful completion of commissioning of the Vietnam rooftop solar pilot project. As a result, the 3-megawatt pilot project, consisting of over 4,500 solar panels and other ancillary components which has been installed across four factory roofs in Vietnam and covers a total area of 16,120 square metres (the “Project”), is now delivering electrical power which is being consumed on site by Phong Phu Corporation, one of Vietnam’s premier textile manufacturers under a 25-year power purchase agreement and is expected, at current pricing levels, to produce net cash flows to the Group of approximately $0.3m per annum.

With the Project now in commercial production, due diligence and technical assessments are underway with regards to potential clients and locations for additional roof top solar projects and further announcements will be made, as appropriate, in due course.

Michael Carrington, Managing Director: Renewables, commented:
“We are delighted to now be producing power and to have commenced our first revenue stream in Vietnam. The whole team, including Coro’s partner and suppliers, has performed exceptionally well delivering this maiden project, and I am very proud of what has been achieved safely, on schedule and to budget. We have set a high bar for future projects, but we now know our capabilities and look forward to rapidly building our solar portfolio.”

To me Coro looks like it is in a very interesting space at the moment, this announcement shows that the exciting market that is Vietnam is showing some decent legs and with solar being the most exciting of all renewables I think that Coro are on to something here.

Hurricane Energy

Hurricane Energy plc, the UK based oil and gas company, provides its 2022 interim report and unaudited half-year results for the six-month period ended 30 June 2022 on the last day of the window….

Financial results

• Revenues of $159.5 million from three liftings of Lancaster crude (H1 2021: $124.5 million from four liftings)
• Cash production costs† of $35.4/bbl (H1 2021: $24.8/bbl) in line with expectations
• Generated $110.1 million of operating cash flow (H1 2021: $75.9 million), equivalent to $67.5/bbl (H1 2021: $37.9/bbl)
• Profit after tax for the period of $67.0 million (H1 2021: $42.8 million)
• Net cash† at 30 June 2022 of $48.4 million (31 December 2021 net debt: $27 million) – repaid $78.5 million Convertible Bonds plus $1.5 million of accrued interest after the period end to become debt free
• Net free cash† of $126.9 million at 30 June 2022 (31 December 2021: $51.5 million) ($76.6 million as at 31 August 2022 following repayment of the Convertible Bonds and the July lifting)
• Restricted cash of $60.8 million at 30 June 2022 relating to decommissioning obligations and FPSO charter (31 December 2021: $45.7 million) – Restricted cash is in addition to Net free cash

† Non-IFRS measures

Operations

• Excellent operational performance at the Aoka Mizu FPSO with an average Lancaster field production uptime of 98% in H1 2022 (H1 2021: 96%)
• Lancaster EPS production averaged 9,000 bopd for H1 2022 (H1 2021: 11,100 bopd) in line with expectations
• Annual planned maintenance shutdown successfully carried out in September, with next lifting scheduled for early October 2022

Corporate

• Philip Wolfe appointed Chair in March 2022, replacing John Wright who remains as a Non-Executive Director
• Juan Morera appointed to the Board as a Non-Executive Director in March 2022, representing Crystal Amber, Hurricane’s largest shareholder
• Linda Beal appointed to the Board as an Independent Non-Executive Director in May 2022, taking on the role of Audit and Risk Committee Chair
• Robin Allan appointed to the Board as an Independent Non-Executive Director in July 2022, taking on the role of ESG Committee Chair

Outlook

• Hurricane passed a key milestone with its repayment of the outstanding Convertible Bonds post-period end in July 2022, and is focused on building a positive long-term future for the benefit of all stakeholders
• Management will identify and pursue opportunities for the most effective capital allocation of its funds

Antony Maris, Chief Executive Officer of Hurricane, commented:
“Repaying our Convertible Bonds and becoming debt-free has enabled us to consider multiple trajectories for Hurricane’s future.  At the same time as ensuring continuing production from Lancaster, we have been working diligently on many workstreams, all with the aim of creating additional value for our shareholders.

In terms of Lancaster, continuing our close collaboration with our FPSO operator, we have been able to deliver superb uptime performance, leading to the production of more oil in the period. Our team can be justifiably proud of the fact that we bettered our targets set for the shutdown and unplanned downtime without at any time compromising the safety of our operations.

Looking to Lancaster’s future, we have expended considerable effort and some funds into maintaining the ability to deliver a new well in the Lancaster Field, termed P8, in order to meet our “maximum economic recovery” obligations to the UK Government. Given our emissions challenges, we have worked closely with the UK’s offshore regulator, the North Sea Transition Authority (“NSTA”), to plot a way forward for Lancaster. It is disappointing that despite the enormous efforts of our team, and extensive interactions over many months, the NSTA is unable to provide comfort to the Company with regard to the likelihood of it being granted the necessary consents related to flaring for Hurricane to make further commitments to investment in Lancaster.

In parallel, however, we have been pursuing alternative capital allocation opportunities outside of our existing asset base – a task which is challenging owing to the current market volatility – and one that we can now focus on completely.

With our strong balance sheet, no debt, and our decommissioning liabilities being fully funded, I believe Hurricane, with our committed and capable team, is well placed to be able to create additional value for our shareholders.”

It is hard to see quite where Hurricane goes from here, this report tells us nothing nor did the con call on Friday, given what an east job the treasury had it is hard to understand that the figures came in on deadline day and  friday, perhaps travelling under the radar is catching. 

Hurricane’s previous run-in with the regulator was put down to the last management team, it seems that the current team make them look like diplomats and it is quite astonishing that in a hostile environment with the NSTA can continue when Government departments are trying to get companies like Hurricane to up their production. 

Hurricane are debt free having paid off the convertible and with the cash being thrown off something rotten and should be £100m by Christmas and another £250m next year there must be a queue of suitors after all people wanted Capricorn’s cash, maybe Tullow should buy it…

Hurricane are looking like a wallet left on a table at an international pick pockets convention and the shareholders are being treated like second class citizens…

Who on earth could live in a house like this…?

Reabold Resources

Reabold Resources on Friday announced its unaudited interim results for the six months ended 30 June 2022. And on the last day possible…..

Highlights

• Offer from an oil and gas major for Corallian and its Victory licence, in which Reabold holds a 49.99% interest:

o  Conditional sale agreed post period end in September 2022[1]; total gross cash consideration for Corallian of £32 million in staged payments; Reabold’s share of net proceeds c.£12.7 million

o  Reabold a key facilitator in progressing the Victory gas asset to the point of development and monetisation; valuation achieves significant uplift on Reabold’s investment

• Acquisition of remaining Corallian assets for £250,000 with economic effective date of 4 May 2022 – completion announced in September 2022[2]; six North Sea licences acquired with attractive development and monetisation prospects
• Encouraging developments at West Newton in first half and post period end

o  Planning granted for drilling and production at Rathlin’s West Newton A site, as well as a time extension to allow for further exploratory drilling at the West Newton B site, paving the way for the next phase of activity at West Newton towards development

o  Rigorous internal and external technical testing throughout 2021 and the first half of 2022 underpins strong economic and strategic value of West Newton; CoreLab analysis demonstrates actual reservoir fluid flow through several reservoir samples

o  First horizontal appraisal well planned for 2023 as part of phased investment programme to considerably de-risk the project

o  Post period end CPR published in September 2022 confirms gross 2C unrisked technically recoverable resources of 197.6 bcf of sales gas, with an estimated 86% geological chance of success

• Converted drilling and production success in subsidiary Reabold California LLC into a 42% stake in Daybreak Oil & Gas Inc (“Daybreak”), an OTC traded, Californian oil and gas operator; the transaction in May 2022 creates liquidity for Reabold and forms a new, cash flow producing business with good growth prospects
• Net cash of £3.6m at 30 June 2022; financial flexibility and funding of development opportunities will be further improved with Corallian sale proceeds
• On 28 September 2022, Reabold announced it has agreed to conditionally acquire the entire issued share capital of Simwell Resources Limited, which includes interests in four Southern North Sea licences1
• Appointment of CFO Chris Connolly in May 2022; former Finance Director Anthony Samaha appointed Non-Executive Director

[1] See Note 14 for further information

2 An additional £93,000 was paid on 14 September 2022 to reflect interim period cashflows between the economic effective date of 4 May 2022 and completion

Financial Results

• As at 30 June 2022, the company had no borrowings and cash and cash equivalents of £3.6 million
• Capital expenditure in the first half of the year was £451,000 (H1 2021: £599,000)
• Net cash used in operating activities was £844,000 in H1 2022 (H1 2021: £550,000). The increase was driven largely as a result of higher operating costs in the US and adverse working capital movements
• Upon completion of the equity exchange with Daybreak, Reabold derecognised its interest in Reabold California LLC in exchange for recognising an investment in Daybreak as a financial asset measured at fair value. Within the first half results, the loss on disposal and subsequent gain in fair value led to a net charge of £1.2 million[3]

Sachin Oza and Stephen Williams, Co-CEOs of Reabold, commented:
“We made good progress in the first half of 2022 and have confidence in the value creation opportunities that lie ahead for Reabold and its shareholders. The impending monetisation of the Victory asset is a major milestone for us. The sale has demonstrated the cycle of our investment strategy, attracting an oil & gas major to acquire the asset we identified at the early stage of development as low-risk, under-valued and strategically important. The transaction also provides us with greater financial capacity to fund development and subsequent value realisation in our other investments, primarily the excellent prospect of West Newton in the near-term.

Reabold has continued to invest in the development of new UK hydrocarbon resources, acquiring six new North Sea licences from Corallian, and agreeing to acquire interests in another four North Sea Licences via the transaction to buy Simwell Resources post period end. We recognise the important role we can take in contributing to the security and affordability of the UK’s energy supplies.

Reabold can look forward to an exciting future. We will continue with our disciplined strategy to allocate capital to undervalued oil & gas assets where their development benefits from being close to existing infrastructure.”

After a number of deals recently from Reabold the shares have halved in the month. I have already commented on quite what the company has done to achieve this but am still wracking my brains, the Corallian sales process was good and left them with residual acreage with good upside as did the USA package. The Simwell deal was common sense as was the US deal and drilling should start in 2023 at West Newton which offers substantial upside for shareholders. 

Wise investors look to put money down when the going looks hardest and as they say the darkest hour is the one before dawn. Reabold and other domestic producers have assembled a high quality group of portfolios that will provide much needed power that will be the transition to whatever is called for, just because the market says no that doesn’t make it right. 

Tower Resources

Tower Resources on Friday announced its Interim Results for the six months ended 30 June 2022. And on the last day possible. 

HIGHLIGHTS 

• January 2022 – Placing of 576,923,077 new ordinary shares at 0.26p to raise £1.5 million (gross), with the Company’s Chairman and CEO, Jeremy Asher, subscribing for 9,615,384 new Ordinary Shares in the Placing for £25,000;
• February 2022 – Announcements by the National Petroleum Corporation of Namibia, Shell Namibia Upstream B.V. and QatarEnergy, regarding the drilling success of the Graff-1 well on PEL 39 with discoveries in both its primary and secondary targets, proving a working petroleum system for light oil in the Orange Basin, offshore Namibia, and analysis by the Company of the implications for its own Namibian blocks;
• May 2022 – The Cameroon Minister of Mines, Industry and Technological Development (MINMIDT) granted a further extension of the First Exploration Period of the Thali PSC to 11 May 2023.
• June 2022 – Tower Resources Cameroon SA executed a term sheet with BGFI Bank Group, the largest bank group in Central Africa, for a medium term loan of CAF 4.42 billion (equivalent to approximately US$7.1 million) as partial financing of the NJOM-3 well on the Thali block in Cameroon. The loan would cover around 40% of the US$18 million well cost, with a further amount in excess of 25% already having been paid for by TRCSA, and the balance of 35% of the cost of the well also to be funded by TRCSA.

POST REPORTING PERIOD EVENTS

• August 2022 – Placing of 857,142,286 new ordinary shares at 0.175p to raise £1.5 million (gross) with the Company’s Chairman and CEO, Jeremy Asher, subscribing for 142,857,143 new Ordinary Shares in the Placing for £250,000;
• August 2022 – Issue of 11,200,000 Ordinary shares in the Company to Bedrock Drilling Ltd in lieu of fees to the value of £25,200.

After a considerable amount of time and with Chairman Jeremy Asher bearing the brunt of the funding I can now see the light at the end of the tunnel. I would have liked a few comments from him but he is reluctant to blow his own trumpet.

The Thali block in Cameroon is joined by the excitement in Namibia thanks to the perceived success of the Graff-1 well which could prove up something for Tower under the nearability rule. I’m spending time with Jeremy Asher this week and I look forward to reporting back positive news. 

Thats all, its late and I have a braai to go to, and finally will resume tomorrow I hope.

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