WTI (Mar) $73.95 -$2.41, Brent (Apr) $80.60 -$2.45, Diff -$6.65 -24c
USNG (Mar) $2.17 +10c, UKNG (Mar) 124.0p +1.0p, TTF (Mar) €49.535 -€0.15

Oil price

Oil fell as the Fed minutes were published which showed more hawks than expected which in itself means rate rises ‘as appropriate’. So maybe 25 point rises plus maybe the odd 50 pointer…

The API stats showed a build of 9.9m barrels of crude plus a small gasoline rise and a build of distillates of 1.374m

IGas Energy

IGas has issued the following trading and operations update in advance of the Company’s full-year 2022 results, which are scheduled for release on 30 March 2023. The information contained in this statement has not been audited and may be subject to change.

Operational Highlights

• Net production, averaged 1,898 boepd for the year, heavily impacted in the first half by equipment failure caused by supply chain issues
• A production drive was initiated in October leading to a strong recovery in H2 resulting in peak production (averaged across 5 days) of 2,432 boepd and December production averaged 2,221 boepd (net to IGas)
• We anticipate net production of c.2,000 boepd and operating costs of c.$41/boe (assuming an exchange rate of £1:$1.25) in 2023
• Underlying operating costs for the year were c.$41/boe (at an average 2022 exchange rate of £1:$1.24)
• Planning conditions now fully discharged for the drilling of a well in the Corringham field with EA permits anticipated imminently. The development of the Corringham project has enabled the conversion of 350 mbbls 2C resources to 2P reserves as reflected in 2022 CPR with anticipated incremental production of c. 100bbls/d
• Planning application for Glentworth was submitted and validated by Lincolnshire County Council Phase I – potential for additional 200 bbls/d
• Green Heat Network Fund Investment Committee meeting delayed – funding decision now expected in the next few weeks

Reserves Update

Key highlights from the Competent Persons Report (CPR) carried out by DeGolyer & MacNaughton (D&M).

IGas Group Net Reserves & Contingent Resources as at 31 Dec 2022 (MMboe).

Financial Highlights

• Cash balances as at 31 December 2022 were £3.1 million with net debt of £6.1 million
• Net cash capex of £7.9 million in 2022 
• Successful RBL redetermination confirming $17.0 million (£14.0 million) of debt capacity
• 50,000 bbls currently hedged for H1 23 at an average swap price of $94.8/bbl
• Minimal Energy Profit Levy impact for 2022 due to available capital allowances
• Ring fence tax losses at 31 December 2022 were c.£260 million

Chris Hopkinson, Interim Executive Chairman, commented:

“2022 has been a year of change and refocus for the Company as we optimise our existing onshore assets to better position ourselves for a lower carbon future.

Commodity prices remained strong during the period with a resulting positive impact on income and cash generation from our underlying oil and gas assets, enabling us to halve our net debt to £6.1 million (2021: £12.2 million).

We made up for significant falls in production in H1 due to equipment failures to finish the year in line with expectations, at 1,898 boepd.  The Q4 production drive ensured that wells, plant and equipment had the maximum uptime.  As we move into 2023, our focus will be on maintaining and increasing production on our more profitable fields, whilst attempting to drive down costs across the portfolio.

We have made significant progress during the year in bringing our vision for decarbonisation of large-scale heat using geothermal energy, in the UK, closer to fruition.  We have been working closely with Government, academia and commercial partners to accelerate support for and understanding of this proven technology.”

IGas have done well to recover from the production debacle, by the end of the year it was up to 1,898 boe/d and now have guidance for this year of 2,000 boe/d, this seems to be down to a good old fashioned ‘laser drive’ on efficiencies.

With an encouraging CPR -detailed above- being somewhat better than I expected and a halving of debt it seems like some progress is being made. Geothermal is a bit mixed but they are the front of that particular queue which is good. 

Unfortunately the company are being very unlucky in their search for a new, full-time CEO which is odd as there seem to be plenty around, I wonder, how could that be? Unfortunately at 20p against a recent high of 112p the shares are waiting for the new broom as well.

Jadestone Energy

Jadestone has announced that it has completed the previously announced acquisition of a 9.52% non-operated interest in the producing Sinphuhorm gas field and a 27.2% interest in the Dong Mun gas discovery onshore northeast Thailand.  

Due to an effective date of 1 January 2022, the headline cash consideration of US$32.5 million became US$27.8 million on completion, due to customary closing adjustments and as disclosed in the acquisition announcement on 19 January 2023.

The Sinphuhorm acquisition adds 4.6 mmboe of 2P reserves at the effective date of 1 January 2022 and approximately 1,600 boe/d of production net to Jadestone based on current rates, continuing the growth and diversification of the Company’s production base.  Jadestone estimates a return on the acquisition significantly in excess of the Company’s hurdle rates.

The transaction is a first step towards creating a significant natural gas component within Jadestone’s portfolio over the medium-term and establishes a low-cost platform for growth in Thailand.  Further details on the Sinphuhorm acquisition can be found in the announcement of 19 January 2023 and on the Company’s website at https://www.jadestone-energy.com/investor-relations/presentations-communication/.

Paul Blakeley, President and CEO commented:
“We are pleased to complete the Sinphuhorm transaction just one month after its announcement, thanks to strong alignment and effort between buyer and seller. When combined with the completion of the CWLH acquisition and remaining Lemang PSC interest in November 2022, we have now closed three very accretive transactions within the last four months, diversifying our production base and with upside potential in all cases. This is clear evidence of increasing M&A activity in the region, which in turn underpins our confidence in the delivery of our growth strategy in the near to medium term.”

Good to see this excellent deal being completed but now the market wants the next one, we know it’s out there…

 KeyFacts Energy Industry Directory: Malcy's Blog