WTI (Dec) $81.64 -$3.95, Brent (Jan) $89.78 -$3.08, Diff -$8.14 +87c, USNG (Dec) $6.36 +16c, UKNG (Dec) 265.0p +15.0p, TTF (Dec) €113.8 +€5.16

Oil price

China dominated the fall yesterday, further Covid problems and they are cutting back shipments of crude from the KSA, watch out for Opec on December 4th…Also the Fed’s Bullard on CNBC said that US rates would go to 7% not stop at 5%.

The UK budget made the expected changes in the Looney Tax, the levy went from 25% to 35% and investment allowance is now down to 29%.

Eco (Atlantic) Oil & Gas

Eco Atlantic has announced that the Gazania-1 well on Block 2B, offshore South Africa, which spudded on October 10, 2022, reached target depth of 2,360m but did not show evidence of commercial hydrocarbons. The well will now be plugged and abandoned as planned.

The well logging is currently on-going and the JV Partners will undertake a detailed analysis of the results, which will inform our future plans. The JV Partners submitted a Production Right Application to the Petroleum Agency of South Africa  on November 15, 2022, for Block 2B, based on the existing oil discovery of AJ-1 and potential future operations.  Therefore, the JV Partners have time to conduct further analysis and integration of the Gazania-1 well data to allow them to determine the next steps on the Block. 

The Company, alongside its respective JV Partners, will now move on to executing our plans for more exploration wells, including a two-well campaign on Block 3B/4B offshore South Africa planned to begin in 2023, and at least one well into Cretaceous targets on the Orinduik Block offshore Guyana.  As announced by the Operator of Block 3B/4B, a collaborative farm-out process, up to 55% gross WI, has been ongoing and we look forward to updating the market on this in due course.

Colin Kinley, Co-Founder and Chief Operating Officer of Eco Atlantic, commented:
“We very much appreciate the stakeholder and shareholder support on this well that was safely drilled with no environmental issues. Early challenges with weather and service logistics on this well cost us a bit of time to get started, however we are happy with the overall technical operation of the well.

Gases normally associated with light oil were encountered throughout the drilling of the Gazania-1 well. This, in our view, confirms the active hydrocarbon system, proven by the A-J1 discovery well in 1988, extends to the part of the basin where the Gazania-1 well is located. Further seismic interpretation will likely lead to the definition of viable areas for trapping downdip of Gazania-1 closer to the 1988 oil discovery A-J1.

“While the well results are obviously disappointing at this location, we remain optimistic for this basin and look forward to continuing our exploration efforts”.

Gil Holzman, Co-Founder and Chief Executive Officer of Eco Atlantic, added:
“While it is naturally disappointing not having made a commercial discovery, the Gazania-1 well was only the first of four wells we have planned for the next 18-24 months across our wider portfolio. We now move on to executing our plans for more exploration wells; a two well campaign on Block 3B/4B offshore South Africa planned to begin in 2023, and at least one well into Cretaceous targets on the Orinduik Block offshore Guyana. A collaborative farm-out process on 3B/4B has been ongoing with the Operator and JV partners and we look forward to updating the market on this in due course.

“I want to thank our internal operations team and NRG Well Management for their excellent performance executing and operating the Gazania-1 well, the Government of South Africa and PASA for their professional support throughout, and all our JV Partners at Africa Energy, Panoro, and Crown Energy. We have established ourselves as a qualified and reliable Offshore Operator. This experience will be extremely useful for our future exploration campaigns, particularly upcoming on Block 3B/4B.”

There is little to add to this statement that the management has not done in the above. The news is clearly a significant disappointment and the shares have given up almost all the 70% gains since the beginning of the year.

Also Eco still has enough in its portfolio to look forward to, a couple of really exciting wells on 3B/4B in 2023 and of course the long awaited well on the Orinduik Block offshore Guyana. 

Reabold Resources

Reabold, announces that, further to its announcement on 31 October 2022, all the proposed resolutions by the Requisitioning Shareholders, who owned approximately 6.93% of the Company’s issued share capital at the time of that announcement, including removing the entire Board of directors and replacing them with four new directors proposed by the Requisitioning Shareholders, were clearly rejected at the requisitioned General Meeting held earlier today.

A statement from Jeremy Edelman, Chairman of Reabold:
“I am delighted by the considerable support of our shareholders for the existing Board and would like to take this opportunity to thank them. Whilst this process has been a costly distraction from the important work of taking forward the assets within the portfolio, the Board has gathered much shareholder feedback over the course of the last few weeks and will use it to enhance the Company’s interaction with its investors in the future.  We look forward to receiving the second tranche of the Shell proceeds which we intend to return a portion of the capital back to shareholders, an event which demonstrates execution of Reabold’s business model. Distribution of capital to shareholders will form a core element of the Company’s financial strategy alongside progressing, de-risking and monetising assets in the portfolio.“

Again, very little to add to what the Chairman has said above and the company is moving on with ‘monetising the portfolio’. But the shares have been a disappointment of late and there is much to do, the return of capital to shareholders will be top of the to do list.

Hurricane Energy

Hurricane notes the Autumn Statement issued by the Chancellor of the Exchequer on 17 November 2022 containing changes to the Energy Profits Levy.  From 1 January 2023, the EPL rate will rise from 25% to 35%. The Investment Allowance will be reduced to 29% for all investment expenditure (other than decarbonisation expenditure) broadly maintaining its existing cash value. The EPL will end on 31 March 2028. 

As previously announced, the EPL charge for the Company for 2022 is currently expected to be less than $5 million taking into account capital allowances available in the period as well as the effect of the Investment Allowance that is included within the EPL legislation. 

The Company is assessing the impact of the proposed changes to the EPL, in conjunction with its tax advisers. Currently it anticipates that, assuming oil prices remain at current levels, the impact of the increased EPL charge for 2023 and for 2024 will be a similar amount, but this is heavily dependent on the Company’s cost base at the time and the achieved level of revenue, driven by the price of oil. 

The Formal Sale Process announced by the Company on 2 November 2022 is progressing, with multiple expressions of interest received from credible counterparties. The Company will provide further updates in due course.

Hardly a battery of information as you can see, but at least the FSP is ‘progressing’ and we should hear something soon. I can’t get any comment from any of the parties so I am not surprisingly unable to add much, on Hurricane that nowadays is situation normal, the brokers have even managed to silence Crystal Amber and that takes a bit of doing. 

United Oil & Gas

Yesterday I had the opportunity to interview Brian Larkin, CEO of United Oil & Gas. UOG is at a very interesting point in its development with the Egyptian portfolio funding its own drilling as well as the G&A for the rest of the firm. 

Upside comes from the potential at the Maria field in the North Sea and of course the monster in Jamaica. I know that there are major plans for growing the company through organic and inorganic means and I am looking forward to seeing what the M&A department can come up with. 

The shares have fallen by some 30% from the year’s high but for the longer term at the 2p level they remain very attractive. 

Core Finance CEO Interview: Brian Larkin

Gulfsands Petroleum

Gulfsands Petroleum has announced the opening of its new Middle Eastern Business Hub in the United Arab Emirates, based in the international financial centre, Abu Dhabi Global Market (“ADGM”).

As part of its expanded profile, Gulfsands is also establishing a MENA-dedicated subsidiary, Gulfsands Middle East Limited (“GMEL”). GMEL’s focus will be on increasing Gulfsands’ presence in the region as part of its goal to become a major MENA-centric energy company.

Gulfsands’ Abu Dhabi office will be led by Mr. Mark Cutis. Mr. Cutis has extensive regional commercial experience having been an active member of the Abu Dhabi business community for 14 years, formerly as Chief Investment Officer for Global Special Situations at the Abu Dhabi Investment Council. He was also Group CFO and Chief Adviser at Abu Dhabi National Oil Company, as well as more recently Chief Executive at ADGM.

One of Gulfsands’ objectives of establishing itself in Abu Dhabi is the aspiration to contribute meaningfully to the regional political discussion surrounding Syria. Gulfsands hopes that its physical presence in the region will help it to structure and target its Syrian initiatives appropriately, taking into account the views of local stakeholders and, in doing so, galvanise regional support for such initiatives.

Gulfsands remains committed to supporting work by the international community to deliver a long-term solution to the situation in Syria, where its world class asset, Block 26, remains in force majeure. Gulfsands is eager to work with all stakeholders, including those regional neighbours closely affected by the ongoing conflict, to try to find a way whereby Syria’s energy resources can be used as a catalyst to bring relief to all Syrian people, after more than 11 years of devastating conflict.
Having recently eliminated all legacy liabilities arising from prior oil and gas ventures, most notably in Colombia, Gulfsands is also looking to capitalise on its local presence in Abu Dhabi to step up business development activities in the MENA region.

Mr. John Bell, Gulfsands Managing Director, and also Director of GMEL, commented
“We are very excited to be finally establishing a presence in the Gulf which has been a long sought-after objective of the Group. We are delighted to welcome Mark on board as we press ahead with business development across the region, as well as our initiatives that will hopefully allow us to restart our operations in Syria, for the benefit of all Syrians.
With respect to Syria, we remain committed to compliance with all relevant sanctions and continue to support and uphold international protocols such as UNSCR 2254. We also believe that a regionally led initiative to harness the power of Syria’s natural resource endowment for the good of all the Syrian people is a viable way forward for Syria. Our newly established presence in Abu Dhabi demonstrates our commitment to ensuring engagement with regional stakeholders to help navigate this complex multi-tiered political and humanitarian landscape.”

Gulfsands has also set up a checker on the front page of its website to try and publicise just how much oil and its potential value has been lost since 2017, here are those stats as of today. 

BARRELS LOST

Barrels of Oil stolen from the Syrian People since January 2017

40,343,031

POTENTIAL VALUE STOLEN

Potential value stolen of Oil Stolen From the Syrian People since January 2017

US$ 2,824,011,821 *

* using an oil price of $70 per barrel

Gulfsands has made substantial steps here by setting up this Middle Eastern Business Hub in the United Arab Emirates, based in the international financial centre, Abu Dhabi Global Market. Crucially it has hired a very senior industry executive and the hub will be led by Mr. Mark Cutis.

Cutis has extensive regional commercial experience having been an active member of the local investment community and having held very senior roles and I suggest that it will be a transformatory move for Gulfsands. 

Things are really on the move at GPX, not just this hub and this hire, they have a new website, new branding and of course are led by the hugely experienced MD John Bell. 

KeyFacts Energy Industry Directory: Malcy's Blog