WTI $80.26 +$1.86, Brent $85.91 +$3.65, Diff -$5.65 -$1.16, USNG $4.47 -8c, UKNG 187.0p u/c, TTF €75.0 +€2.50

Oil price

As the market sorts itself out into the new year, happily registering an annual gain-just- after having seen every station from $75-140 on the way. With the rig count showing u/c overall at 779 and down 1 in oil to 621 the chances of domestic oil filling doing much gushing next year are pretty limited.

San Leon Energy

San Leon, the independent oil and gas production, development and exploration company focused on Nigeria, announces a further update in relation to the Proposed MLPL Reorganisation, details of which were set out in the Company’s AIM Admission Document published on 8 July 2022.

Further to the announcement made on 1 December 2022, the MLPL Reorganisation Agreement‘s deadline for the satisfaction of the condition relating to the New Eroton Debt Facilities being entered into, which had already previously been extended to 31 December 2022, has now been further extended to 31 March 2023 by agreement between the Company and Midwestern.

As previously announced, the Sahara OML 18 Acquisition Agreement will not be entered into until after the New Eroton Debt Facilities have been entered into and the funds to allow the Eroton OML 18 Transactions to proceed are available, and therefore the MLPL Reorganisation Agreement‘s deadline for the Sahara OML 18 Acquisition Agreement to be entered into has also now been further extended to 31 March 2023 by agreement between the Company and Midwestern.

These extensions bring the timelines for the satisfaction of the MLPL Reorganisation Agreement‘s conditions relating to the New Eroton Debt Facilities and the Sahara OML 18 Acquisition Agreement in line with the current longstop timelines for the completion of the MLPL Reorganisation Agreement and the ELI Reorganisation.

Unless otherwise defined herein, the capitalised defined terms used in this announcement have the same meaning as those used in the Admission Document.

As I have commented on a number of times before, the sheer size and complexity of this deal means that delays are inevitable and this is no exception.Today’s action seems more sensible as instead of renewing every month the company has just matched with the official drop dead date as they are so close.

Also I remain convinced that the deal is not far away from completing and providing a red letter day for shareholders, a member of the Bucket List which is being updated this week the overhanging yield makes it a very attractive stock indeed.

Angus Energy

Angus has announced that gas volumes produced and sold equalled 5.6 million Therms in aggregate for the months of October, November and December combined or 1.87 million Therms per month all in excess of both hedged volumes and predictions made in our Competent Person’s Report of January 2020.

Average daily flow rates were highest in November at 6.0 mmscfd and were somewhat lower in December owing to both scheduled and cold weather-related shutdowns giving an average for the quarter of 5.5 mmscfd.  The cold weather related issues have now been overcome.

Peak daily flow rates from the two wells remained at around 6.4 mmscfd throughout the period. Pressure on the existing two wells A4 and B2 has converged at about 33 barg which is close to the stable flowing wellhead pressure before these two wells were shut in in 2017.

Gas condensate (liquid) production averaged 120 bbl/day which is somewhat higher than expected whilst water production, entirely from A4 well, was lower than expected at an average of 20 bbl/day.

Second Compressor and Side Track
The second compressor is already on site together with its control computer and driver engine and is being tied into the main plant.  It is expected that the second compressor will be in dynamic commissioning during the second half of January and therefore able to process a further 6.4 mmscfd of gas volumes raising the plant’s processing capacity to close to 12.8 mmscfd.

The present drilling operations on the final horizontal section of the SF-07 side track are scheduled to resume on 5th January and this well is expected to be in testing mode in the latter half of this month. If successful, the SF-07V well is expected to supply sufficient gas volumes to utilise most, if not all, of the additional process capacity.

This is an update which makes valid points and if I didn’t know any better I would say that it was put out to point out in actual numbers to the detractors just quite how well things have been going on production and what the outlook going forward is. 

With the recent raise, another opportunity for long term supporters of Angus to back the company,  and now an operational boost to increase production with the adding of the second compressor. As they move towards the time that they complete the acquisition of the remaining 49% of Saltfleetby the outlook remains valuable.

Challenger Energy Group

Challenger notes recent media reports and confirms as follows:

• On 27 December 2022 ANCAP, Uruguay’s national energy company, announced that a further two offshore blocks in Uruguay have been awarded following competitive bids received in the Second 2022 ANCAP Open Bidding Round.
• The AREA OFF-4 deep-water offshore block, which is immediately adjacent to Challenger’s AREA OFF-1 shallow water exploration block, has been awarded to a consortium of Shell and APA Corporation (formerly known as Apache). AREA OFF-4 was the subject of competitive bids received from the winning consortium and from YPF (the Argentinian National Oil Company). ANCAP has reported that the consortium has committed to undertake extensive work on the AREA OFF-4 block in the initial 4-year exploration period, including 3D seismic acquisition.
• Additionally, the AREA OFF-5 deep-water offshore block has been awarded to YPF. ANCAP has reported that YPF has committed to undertake an extensive technical work program on the AREA OFF-5 block in the initial 4-year exploration period.
• The award of these two blocks is in addition to the award to Challenger of the AREA OFF-1 block in May 2020, and the awards in May 2022 of the AREA OFF-2 and AREA OFF-7 blocks to Shell, and the AREA OFF-6 block to APA.
• As a result of the recent awards, all but one of the available offshore exploration blocks in Uruguay have now been licenced, and, with the exception of Challenger Energy, all have been licenced to global oil and gas majors.
• The aggregate value of work now committed across blocks AREA OFF-2, AREA OFF-4, AREA OFF-5, AREA OFF-6 and AREA OFF-7 by Shell, APA Corporation and YPF during the next 4 years, in respect of both technical and exploration activities including well drilling, is estimated by ANCAP to be in excess of approximately US$230 million.
• The full text of the announcement by ANCAP is available on ANCAP’s website – www.ancap.com.uy
• ·      It is noted that in addition to work that will now be undertaken by Shell, APA Corporation and YPF on their Uruguayan blocks, various public statements and news releases indicate that relevant additional work and drilling activities are currently underway or being planned by multiple parties for 2023, including additional exploration and appraisal wells being drilled in Namibia, and 3D seismic acquisition in the adjacent Northern Argentina Basin. These activities are expected to further the regional technical understanding and thereby enhance the technical understanding of AREA OFF-1.
• In particular, the Company notes recent reports to the effect that YPF has received environmental approval to acquire 3D seismic on its CAN 102 block in offshore Argentina, commencing in 2023. This block is immediately proximate to AREA OFF-1 in Uruguay.
• Challenger Energy considers that the rapid entry through the course of 2022 into Uruguay of well-regarded international companies, and their commitments to undertake sizeable and meaningful work programs in the near-term (including 3D seismic acquisition and new well drilling), validates both the Company’s decision to enter Uruguay in 2020, and underscores the solid technical foundation and excellent value proposition represented by the AREA OFF-1 block.
• Further, the Company’s technical view is that its AREA OFF-1 licence area, and the broader offshore Uruguay play system, is analogous to offshore Namibia, where there have been recent prolific, conjugate margin discoveries made by TotalEnergies (the Venus well) and Shell (the Graff well), and where reported multi-billion-barrel Cretaceous turbidite reservoirs have been encountered. Specifically, the AREA OFF-1 licence exhibits the same Aptian age play source rock and petroleum systems being present on existing 2D seismic.
• As noted in previous Company releases, the AREA OFF-1 shallow-water block is in Year 1 of an initial four-year exploration period, which commenced on 25 August 2022, and during which time The Company’s low-cost work commitment is to undertake G&G studies, 2D seismic data licencing and 2D reprocessing and interpretation. This work is currently underway, and Challenger Energy expects to substantially complete all required work in the first half of 2023, well ahead of schedule.
• The AREA OFF-1 block contains a management estimated resource potential exceeding 1.5 billion barrels of oil equivalent recoverable (BBOE), based on current mapping from multiple exploration plays and leads in relatively shallow waters, and with significant upside running room. This estimate is corroborated by formal resource estimates provided by ANCAP of 1.35 BBOE as a P50 expected ultimate recoverable resource.
• The Company’s strategy in relation to the AREA OFF-1 block remains unchanged, which is to seek an appropriate farm-in partner in the near-term, that will realise value for the Company, as well as enable an accelerated work program on the block. Further updates will be provided as appropriate.
• An updated presentation in relation to the AREA OFF-1 block will today be placed on the Company’s website – www.cegplc.com.

Eytan Uliel, Chief Executive Officer of Challenger Energy, said:
“In 2020, Challenger Energy successfully bid for the AREA OFF-1 block in Uruguay, and in so doing strategically gained first mover status offshore Uruguay. We were able to secure the block with a modest initial work commitment, which we are already well advanced to completing, considerably ahead of schedule.

Subsequently, in May 2022, three more blocks were awarded in a contested open round, to Shell (two blocks) and Apache (one block). Now, a further two blocks have been awarded in Uruguay in another contested open round, to each of a Shell-APA consortium and YPF, and YPF with partner Equinor is also poised to commence 3D seismic acquisition in a neighbouring block in Argentina. The estimated collective spend by those companies over the coming years on these activities is significant, in excess of $US230 million.

Overall, this means that almost all available offshore acreage in Uruguay has now been taken up, and apart from Challenger Energy, all by majors and NOCs who have committed to very sizeable work programs. This dramatic increase in interest in Uruguay and the neighbouring region is directly related to the very sizeable discoveries made in the conjugate margin Orange Basin in early 2022, and through the course of 2023 we hope to move forward with a farm-in, so as to capitalise on that increased interest and allow for accelerated work on our block. Further updates will be provided in due course.”

Given that I was one of those ‘media reports’ that published early news of these licence acquisitions by the majors and NOC interests last week I have nothing more to add to that. I remain convinced that there should be a big payday if the CEG team can find a farminee and get a really good return for their very smart moves back in pandemic days…

Canadian Overseas Production Limited

Canadian Overseas Petroleum Limited  announce:

• The Company has signed a “Tap” Purchase Agreement for the issue of further 2025 convertible bonds pursuant to the Bond Instrument dated July 26, 2022 with an aggregate principal amount of US$4 million (the “Convertible Tap”). The Convertible is fully anchored by the lead investor for the July 2022 Convertible offering (the “Lead Investor”)
• Alongside Convertible Tap, COPL has received written consent from a majority of 2025 Bondholders to avoid adjustments to the 2025 Bond Instrument conversion price minimizing shareholder dilution. The main Bond terms are identical to the existing 2025 Convertible Bonds (the “Convertibles”). Pricing terms have improved vs. July 2022 issue (higher issue price: 80% vs 78% on July Convertibles), higher strike on new warrants of 18p vs 16.75p on July warrants.
• Following the Company’s hedge restructuring, the offering proceeds will be used for recompletions at Cole Creek Frontier Sands, capex and miscible injections at the Barron Flats Shannon flood and for up front deposits and fees for debt refinancing term sheets for COPL America.
• The Company anticipates signing a Debt refinancing term sheet in January 2023 and closing the debt refinancing in the first quarter of 2023. 
• A ‘tap feature’ to increase the Convertible allows COPL to draw further development funds, should it require, with the aim of increasing production or for future drilling plans, subject to mutual agreement with the Lead Investor, as COPL has done with this Convertible Tap.
• COPL has the support of its existing Lender and has structured amendment to its Senior Credit Facility as it continues its debt refinancing and joint venture discussions for the development of its Wyoming assets.

Convertible Terms
Terms not defined in this Announcement have the meaning given to them in the Convertible Bond Instrument which is available on the Company’s profile at www.sedar.com.  The Company encourages readers to review its Financial Statements and Management Discussion and Analysis for the Third Quarter of 2022 for a full summary of the Convertible terms which are summarised are as follows:

Amendment to Senior Credit Facility
To facilitate the Convertible Tap and COPL’s first quarter objectives including debt refinancing, COPL has agreed to amendments of certain terms of its Senior Credit Facility.  The liquidity covenant has been amended to a 30-day average of $2 million and requisite permissions for the funding of COPL America’s first quarter of 2023 work programme and use of the Convertible Tap proceeds have been received. 

Waiver of 2025 Bond Instrument Adjustments
COPL has received written consent from a majority of 2025 Bondholders to avoid adjustments to the 2025 Bond Instrument conversion price which remains at $0.1583 per share for each $200,000 of 2025 Principal Outstanding.   There are no changes to the 2024 Bond Instrument or Warrants issued in July 2022 as a result of this Convertible Tap Financing.

Arthur Millholland, President and Chief Executive Officer, commented: 
“The Tap provided by our lead institutional investor today illustrates the confidence they have in our business plan going forward. Long term investors in the Company are key to our future, as they provide balance and confidence to our current shareholders, and other stakeholders, by allowing the Company to grow through the execution of its business plan. One only needs to look at Occidental Petroleum who have performed brilliantly with the support of a single long term lead institutional investor.”

I agree, a good piece of news that makes the company look more attractive to investors as shown by the commitment of its lead investor to add more to the pot. Since I started looking at COPL I am more impressed as to how it looks going forward.

Beacon Energy

Beacon has provided the following update on the proposed transaction to acquire the entire issued and to be issued share capital of Rhein Petroleum GmbH as announced by RNS on 16 December 2022:

• The Company has received notification that the shareholders of Tulip Oil Holding B.V. have approved the Proposed Transaction, a condition precedent for the Proposed Transaction to proceed
• The Company has today published on its website a Competent Person’s Report (“CPR”) prepared by SGS Nederland B.V, relating to the Rhein Petroleum assets. The CPR outlines:
• 2P net reserves of 3.85 mmbbl and 2C net contingent resource base of 22.96 mmbbl, located across the four core assets within the Rhein Petroleum portfolio
• NPV10 valuation of €52.8 million related to the 2P reserve base
• Cumulative free cash flow of €95.0 million forecast in relation to the 2P reserve base
• Proposed appointment of Stewart MacDonald as an Executive Director and Chief Financial Officer of the Company, subject to Completion of the Proposed Transaction
• Tulip Oil has nominated Leo Koot as its representative Non-Executive Director, subject to Completion of the Proposed Transaction and completion of due diligence by the Company’s Nominated Adviser, in accordance with the terms of the share purchase agreement announced on 16 December 2022
• In addition, the Company notes that it intends to provide private and other qualifying investors the opportunity to participate in the Company’s proposed forthcoming equity fundraise outlined in the RNS issued on 16 December 2022 through PrimaryBid, full details of which be provided in due course.
• As announced on 22 December 2022, the Company will host a live investor presentation relating to the Proposed Transaction via the Investor Meet Company platform on 5 January 2023 at 10:30am GMT. Investors can sign up to the Investor Meet Company platform for free and ‘add to meet’ BEACON ENERGY PLC via the following link:

https://www.investormeetcompany.com/beacon-energy-plc/register-investor

Beacon Energy Non-Executive Chairman, Mark Rollins, said:
“We look forward to Stewart and Leo’s prospective appointments to the Company’s Board.

“Stewart has been instrumental in the Proposed Transaction over the last 6 months, where his background and experience of M&A and financing has been invaluable, and those skills will further support our ambitions to grow Beacon Energy into a material business.

“Leo’s knowledge of the Rhein Petroleum portfolio and experience in the German [oil & gas] sector will be essential as we integrate the business, pursue the near-term drilling and actively engage in in-country business development. The Company will also benefit for Leo’s extensive sector experience as we continue to grow Beacon Energy for the benefit of all shareholders.

“We are delighted that the transaction continues to progress as planned and look forward to providing further updates in due course.”

Beacon Energy CEO, Larry Bottomley, added:
“Since assuming the role of CEO on an interim basis, the entire Board has worked tirelessly to help me deliver value accretive opportunities from our compelling business development pipeline. It is with satisfaction that we have delivered the SPA and I take on the CEO role with considerable enthusiasm to develop a self-funding, production-led platform for growth.  I look forward to working with the extended team on the acquisition and reverse takeover which, once complete, will underpin the Company with immediate cash flow and provide an active near-term work programme designed to grow production, cash flow and value for our shareholders.”

Having seen the original announcements over Christmas this one fleshes out what ‘New Beacon’ is going to be like. There are some interesting features one will discover in the next few days, no less than listening in to the presentation on Thursday which I shall be listening in to. 

But the composition of the board looks very strong indeed, with messrs Koot and Macdonald ensconced some trimming can be done and with the enormous experience of Steve Whyte involved this make for a highly regarded team.  

I look forward to the presentation and catching up with the key personnel, and more importantly getting to know the Rhein Petroleum assets and the German oil and gas industry which  must have inadvertently passed me by in the last 43 years…

KeyFacts Energy Industry Directory: Malcy's Blog