WTI (Sep) $80.58 +49c, Brent (Sep) $84.99 +75c, Diff -$4.41 +41c
USNG (Sep) $2.63 +4c, UKNG (Sep)* 66.58p -2.17p, TTF (Sep) €27.2 -€0.78
*UKNG August contract expiry

Oil price

Oil had another good week, both WTI and Brent rose by over $3.50 and the same goes on today, WTI is up over a dollar and even Brent ahead of expiry is up some 53 cents. Obviously what the Russians and the Saudis are doing is important but the Opec meeting is on Friday and I would stay bullish and expect the Russians to keep their 500/- b/d off the market and as for the Saudis a rollover of their million cut is inevitable.

China are doing what they can despite some poor factory activity data are betting on that recovering and the pumping of the property sector. I saw an ANZ bank piece that was bulling up the India recovery even more to the extent of overtaking China later in the year.

The rig count saw overall units down by 5 to 664and oil fell by 1 to 529.

Touchstone Exploration

Touchstone has provided an update on the construction of the Cascadura facility and Royston-1X production testing. Touchstone has an 80 percent operating working interest in the Cascadura field and the Royston-1X well, which is located on the Ortoire block onshore in the Republic of Trinidad and Tobago. Heritage Petroleum Company Limited holds the remaining 20 percent working interest.

Cascadura
The Cascadura-1ST1 and Cascadura Deep-1 downhole safety plugs were removed on July 8 and July 9, 2023, respectively. Both wells are currently shut in, with wellhead pressures at approximately 4,100 pounds per square inch. It is anticipated that the Cascadura natural gas and liquids facility will operate between approximately 600 to 750 pounds per square inch.

On July 20, 2023 we completed the initial operational preparedness inspection of the facility with the Ministry of Energy and Energy Industries which involved a comprehensive evaluation of the facility’s infrastructure, safety protocols, and operational procedures. Following the inspection, minor modifications to optimize the facility’s performance and operational protocols were completed and the facility was mechanically complete on July 30, 2023. Pressure testing of the facility with inert nitrogen gas commenced on July 28, 2023, and is now 70% complete.

As we continue to pressure test the facility, we will finalize the electrical and instrumentation connections required to link the Cascadura facility to the National Gas Company of Trinidad and Tobago pipeline tie-in point. We are scheduling the final MEEI inspection this week prior to the introduction of initial natural gas into the system.

Royston
Production testing at Royston-1X is ongoing and the Company will update the market when testing has concluded.                                                                                                                                            

Paul Baay, President and Chief Executive Officer, commented:
“Touchstone is working diligently to complete the commissioning of the facility and we are eager to commence first production. We continually strive to meet or exceed all industry regulations and guidelines and our adherence to the highest health and safety standards will continue to guide us through the completion of the facility.”

Touchstone is now within pitching distance of full-on production so the company are taking no risks by missing any final tests at the facility as they approach the final MEEI inspection and ahead of gassing up the system. 

Over at Royston, as noted above, the testing continues in this important well targeting the intermediate sheet of the Herrera formation, the primary target of the well. 

I remain a huge fan of TXP and when the gas finally flows there will be an incredible increase in value which is by no means in the share price at the moment.

IOG

IOG has provided a further progress update on discussions with bondholders and on production operations.

The existing waiver confirmed on 22 June 2023 postponed the interest payment due on 20 June 2023 under the €100 million senior secured bond to 31 July 2023, together with certain other amendments. Since then, the Company has held extensive discussions with bondholders and their advisors and is now at an advanced stage of agreeing a further waiver in order to provide an additional period of stability to address balance sheet challenges. The Company expects that this waiver will be signed as soon as practicable.

In the event that the Company does not obtain a further waiver from bondholders, an event of default under the Bond Terms may result, which could potentially lead to the Company being put into administration. The Directors do not believe that this is a likely outcome and anticipate that the waiver will provide the Company with a further period of stability. In addition, no plan has yet been agreed around a longer-term solution, on which a number of potential options will continue to be discussed with bondholders.

Operations

• Blythe H2 gas rate has seen natural decline to approximately 26 mmscf/d currently, with over 95% operating efficiency in July and no associated water production
• No change to Blythe remaining reserves estimates (FY2022: gross 1P / 2P / 3P 24.6 / 42.3 / 46.8 billion cubic feet equivalent)
• The Perenco Bacton terminal annual maintenance shutdown is scheduled for early August and expected to last approximately one week, which will curtail average production in that month
• Gas prices have remained relatively weak over the summer, with realised prices averaging in the 70-75p/therm range in July; market volatility remains high.

Rupert Newall, CEO, commented:
“We are now at an advanced stage of agreeing a further waiver, which we expect will be signed as soon as practicable. We continue to have constructive discussions with bondholders and remain focused on delivering an outcome in the best interests of all stakeholders in IOG. We will keep the market advised on further progress at the appropriate times.”

 The path of agreeing the further waiver is always hard going and time consuming. It is clear from this that the bondholders are very close to signing the waiver to allow IOG to continue with its operations which is in everybody’s interest. 

Beacon Energy

Beacon has announced an update on the Schwarzbach-2 (“SCHB-2”) drilling operations.

Following the successful recovery of the directional drilling assembly stuck in the 12¼” hole section of the SCHB-2 well, the deeper part of the 12¼” hole has proved to be unsuitable for onwards drilling so 95/8” casing has been run in the upper part of the open hole. The operations team are now undertaking a deviated mechanical sidetrack to achieve the primary objectives of testing the reservoir targets and completing this well as a producer as part of the development of the Stockstadt Mitte segment of the Erfelden field.

This technical sidetrack is designated Schwarzbach-2 (2.) (“SCHB-2 (2.)”).

The Company expects to reach TD during the course of this week and will provide a further update on progress of the SCHB-2(2.) well as appropriate.

Beacon Energy Chief Executive Officer, Larry Bottomley commented:
“We believe the fishing operation degraded the quality of the deeper part of the 12¼” hole and felt it prudent to undertake a mechanical sidetrack to ensure that we can fully evaluate the primary objectives and complete this well as a producer. This causes an additional small delay in completing the SCHB-2(2.) development well as we maintain our focus on delivering a material increase to the Company’s production.

The operations team are fully focused on drilling the sidetrack to TD and we will update the market as appropriate.”

There is little to add to this situation which we have all lived through from the start, including for a number of us a visit to the site at the beginning of drilling. Drilling a sidetrack which is now underway means the problem is not in the reservoir and that the well can complete effectively normally. It should also make no difference to the target nor the costs where some minor problems are factored into the pre-drill costs but the delay is indeed a pain…

Jadestone Energy

Jadestone has provided the following update on operations at the Montara Venture FPSO offshore Australia.

On 29 July 2023, a gas alarm was triggered within ballast water tank 4S, indicating possible communication with one of the adjacent tanks within the FPSO.

Production from the Montara fields has been temporarily shut in and key stakeholders, including the National Offshore Petroleum Safety and Environmental Management Authority, were notified of the incident.

Tank 4S will be emptied and cleaned over the next week to permit an inspection to identify the source of the communication between tanks and allow for appropriate repairs. Following the inspection, a further update will be provided outlining next steps, any potential costs and any impact to production guidance.

At 30 June 2023, the Company had c.US$118 million of consolidated cash balances (restricted and unrestricted cash) and c.US$111 million of debt drawn under the Company’s reserves-based lending facility, resulting in a net cash position of US$7.1 million.  In addition, the Company’s US$35 million Standby Working Capital facility remains undrawn.

Paul Blakeley, President and CEO commented:
“While disappointing and frustrating to have to shut in Montara again, we will find and repair any additional defect while continuing with the overall planned programme of inspection of the storage tanks on the FPSO. The safety of our personnel, as well as the long-term integrity of the asset, are paramount. We will provide a further update once the inspection of tank 4S is complete.”

Just when you thought it was safe to open a JSE announcement a potentially nasty leak pops up to bite you. My spell in the dentists chair this morning was a doddle compared to reading another Monty horror story and I genuinely feel for Paul Blakeley and team, well almost.

The bottom line is that apart from a tiny volume of gas and a spoonful of hydrocarbons, described as the very lightest sheen, there is little or no sign of anything more, at the moment. The problem is that the company can do very little until they get decent visuals on the problem area and that is going to be a few days. 

The old problem of bed space on the boat rears its ugly head again which might constrain the repairs but work on the tank continues and to be fair the CEO says that the regulator is very relaxed and the management are driven in their desire to ensure that the problem is solved swiftly.

Meanwhile elsewhere in the business life goes on, other assets are performing well and there is more M&A activity I’m sure and as can be seen in the statement the company is financially well set up and to be honest, if we must, a modest Montara shut down has always been in the plans, just in case. 

I’m going to give them another chance and after todays news the market has made the stock even more attractive…

KeyFacts Energy Industry Directory: Malcy's Blog