WTI (Jan) $69.34 -4c, Brent (Feb) $74.05 -25c, Diff -$4.71 -21c
USNG (Jan) $2.59 -12c, UKNG (Jan) 102.5p +5.0p, TTF (Jan) €41.295 +€1.32

Oil price

Despite the decent rise today oil will end the week down again after the market continues to disbelieve that Opec, apart from the Saudis will heed the big cut announced at the last meeting. And comrade Putin’s visit to the UAE and the KSA hasn’t changed much.

The Venezuelan President is doing what South American leaders do best, start commandeering other countries in this case he wants a large chunk of Guyana for himself and that acreage is close to the Exxon oil fields…

Over in Oz land, Woodside and Santos are talking a A$80bn merger apparently.

Longboat Energy

Longboat has announced that Longboat JAPEX Norge has farmed down two exploration licences on the Norwegian Continental Shelf through an agreement with Concedo AS.

Summary

• In PL1182S, the Company has farmed down from 30% to 15% in return for a full carry of the  Lotus exploration well, up to an agreed cap above the dry well budget, which is expected to spud in Q3 2024
• In PL1049 which contains the Jasmine and Sjøkreps prospects, Longboat JAPEX has farmed down from 40% to 25% in return for Concedo carrying 15% of the Company’s 2024 exploration expenditure

Lotus exploration well (Company currently 30%) 
Licence PL1182S lies in the prolific Northern North Sea, 4 km southeast of the Company’s recent significant Kveikje discovery where Longboat JAPEX is a 10% equity partner.

The Lotus prospect (also named the Kjøttkake prospect by the licence operator) is comprised of Palaeocene injectite sandstones, characterised by excellent reservoir properties, and is supported by seismic amplitudes. Longboat JAPEX exploited its significant knowledge of injectite reservoirs, which are also the main reservoir in the Kveikje discovery, to secure the Lotus prospect in last year’s APA 2022 licencing round.

Based on the internal estimates, Lotus contains gross mean prospective resources of 27 mmboe* with further potential upside estimated at 44 mmboe*. The chance of success is 54%* with the key risk being hydrocarbon retention.

If successful, Lotus/Kjøttkake is likely to form part of an area cluster development together with Kveikje and several other recent discoveries in the area, through infrastructure associated with the nearby giant Troll field.

The Lotus prospect will be drilled using the semi-submersible Deepsea Yantai and is expected to be drilled during Q3 2024. The licence partnership includes DNO Norge AS (40%, op) and Aker BP ASA (30%).

PL1049 Jasmine and Sjøkreps (Company currently 40%)
Longboat Energy Norge initially held 25% in PL1049 where the deep Cambozola prospects was drilled in 2022. The target for further exploration in the licence is the shallower levels and the licence has been stratigraphically split.  Two prospects have been mapped, Sjøkreps and Jasmine, both targeting Tertiary plays. The area is covered with new modern high quality seismic data and combined with new processing techniques, there is significant potential to de-risk the exploration prospects.

Sjøkreps is a fault-bounded three-way dip closure at Palaeocene level and has preliminary estimated recoverable volumes ranging between 20 to 300 mmboe** (P90-P10) with the main risk being presence and quality of reservoir.

The Jasmine prospect is an injectite target at Eocene level, which is analogous to the Kveikje discovery, and has recoverable volume range preliminarily estimated between 10 to 30 mmboe*** (P90-P10) with the main risk being reservoir presence and quality.

The work programme consists of seismic studies, potential seismic reprocessing and integration of results from ongoing and near-term wells targeting the same interval in the area, which combined have the potential to significantly improve the Chances of Success ahead of making a drill decision. The potential drilling decision has to be made by February 2025.

Helge Hammer, Chief Executive of Longboat, commented:
“We are pleased to announce the successful farm down of the two Norwegian exploration licences and the full carry of the Lotus exploration well cost, which is in line with our strategy to retain exposure to high quality exploration wells but at minimum use of the Company’s equity capital, and we remain fully focussed on delivering on our plans to grow production and reserves in high quality assets in Norway and in SE Asia.”

This is what Helge Hammer does best and here we can see Longboat exercising the model perfectly with this de-risking of the portfolio and keeping the CFO happy at the same time.

Afentra

Afentra announce the successful completion of the previously announced acquisition of interests in Block 3/05 and Block 23 from Sonangol, together with the publication of an AIM supplementary admission document and the proposed re-admission of the Company’s Ordinary Shares to trading on AIM.

Completion of Sonangol Acquisition

Afentra is pleased to announce completion of the acquisition of a 14% non-operating interest in Block 3/05 and a 40% non-operating interest in Block 23, offshore Angola (the ‘Sonangol Acquisition’) pursuant to a sale and purchase agreement between Sonangol and Afentra’s wholly-owned subsidiary, Afentra (Angola) Ltd, dated 20 April 2022, as amended and restated on 18 July 2023.

• Acquisition increases Afentra’s interest in Block 3/05 to 18% (following its previous acquisition from INA), this will increase to 30% upon completion of the ongoing Azule acquisition.
• Payable cash consideration at completion of $21.1million. Initial cash consideration of $56.5m reduced by impact of cash flow adjustments as of the transaction effective date of 20 April 2022
• Company inherits crude oil stock with an approximate value of $11.9 million at $75/bbl (158,691 bbls)1
• Acquisition of a 40% non-operated interest in Block 23 for $0.5m, providing long-term upside potential
• Operational performance continues to improve with Block 3/05 gross production of around 20,560 bbl/d

End 2023 financial position:

• Net debt is expected to be around $20.7m
• Crude oil stock of around 300,000 bbls (value of $22.5m at $75/bbl)

The Company is also pleased to announce the publication of the Supplementary Admission Document in relation to the Sonangol Acquisition. Shareholders are encouraged to read the Supplementary Admission Document in full. 

The Sonangol Acquisition constitutes a reverse takeover under the AIM Rules. Application has been made for 220,053,520 Ordinary Shares to be re-admitted to trading on AIM at 8.00 a.m. (GMT) this morning.

Azule Acquisition
The Government approval process for Afentra to purchase further non-operated interests in Block 3/05 (12%) and Block 3/05A (16%), offshore Angola from Azule Energy Angola Production B.V. (‘Azule’) is ongoing with the acquisition now expected to complete later in 1Q 2024.

Fiscal Terms and CSI equity redistribution Update
We are pleased to confirm that the execution of the addendum to the PSA has now been signed and the improved fiscal terms are now effective thereby having a positive impact on the cashflow associated with the Block 3/05 asset.

The Government of Angola has completed its process to terminate and redistribute the CSI interests thereby increasing Afentra’s current interest in Block 3/05A from 4% to 5.33%; this interest will further increase to 21.33% upon completion of the Azule acquisition.

Operations Update
Gross production from Block 3/05 has averaged 20,560 bopd in November 2023, with annual gross production for 2023 forecast to be around 19,100 bopd. In addition, production from Block 3/05A continues at around 1,300 bopd from the well Gaz-101. These strong and increasing levels of production demonstrate the benefit of continued restoration works over the course of the year in addition to the well intervention activities underway in Block 3/05.

Moreover, production uptime improved quarter-on-quarter, from 77% in 1Q 2023 to 87% in 3Q 2023. Water injection has averaged approx. 33,000 bbl/d for the year to date, a material increase on 2022. The continued light well intervention (LWI) programme to date has focused mainly on re-perforation and stimulation operations across the Block 3/05 fields, further LWI operations also focused on improvements in gas lift are planned before the end of the year. In Block 3/05A, at the Gazela field, long term testing continues at approx. 1,300 bbl/d, enabling framing of potential low cost development options. Future planned activities on Block 3/05 will consist of an additional phase of light well interventions, the installation of ESP’s on a sample set of production wells and infill wells. A gas management workstream commenced in 1H 2023 to examine a holistic solution for gas which could enable a material reduction of emissions in the medium to long term.

We have uploaded a short presentation to the Afentra website: https://afentraplc.com/wp-content/uploads/2023/12/AET-Sonangol-Completion-081223.pdf

The Supplementary Admission Document is available to download from the Company’s website:

https://afentraplc.com/investors/

Total number of voting rights
At Admission, the total number of Ordinary Shares in issue will be 220,053,520. The Company does not hold any shares in treasury, and therefore at Admission the total number of voting rights in the Company will be 220,053,520. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA’s Disclosure Guidance and Transparency Rules.

Commenting on the update, CEO Paul McDade said:
“Completion of the Sonangol Acquisition is a major milestone for Afentra that reflects the efforts on all sides to get this transformative transaction completed.  The effective date of the agreement ensures Afentra has benefitted from 18 months of net interest cash flow from the quality 3/05 asset which significantly reduces the cash payment at completion.  I would like to thank Sonangol and ANPG for their pragmatism and support through the prolonged process and we look forward to working alongside them and our JV partners as we seek to maximise the value of the portfolio for the benefit of all stakeholders over the long-term.

Completion of the Azule transaction will give Afentra more materiality through greater exposure to the cash flow and upside from these assets, and while the completion timing is expected in 1Q 2024, the Company continues to benefit from the cash flow from the 1 October 2022 effective date.  

The Block 3/05 asset continues to perform strongly following successful implementation of the initial work programme designed to optimise production, with field production at the top end of internal 2023 production estimates.  We look forward to continuing to contribute Afentra’s technical insights and value to the partnership in parallel with showing our strong investment proposition to the market.”

At long last Afentra can announce completion of the Sonangol deal which as CEO Paul McDade says above is indeed a major milestone but perhaps more important is that the effective date and which reduces the cash payment on completion.

It should not be ignored that in what is a very tricky sector Afentra has outperformed recently, the shares have nearly doubled from the 18.8p low and I put this down to the market realising just what a good series of deals that have been done and perhaps more importantly that Mr McDade still has more in him…

Accordingly I’m sure that come the January Bucket List assessment it will still be very much front and centre. 

Maurel & Prom/Wentworth

Etablissements Maurel & Prom S.A. yesterday provided an update on the recommended cash acquisition of Wentworth Resources Plc as announced 5 December 2022.

M&P is pleased to announce it has signed an agreement that strengthens its existing long-term partnership with the Tanzania Petroleum Development Corporation, that is a positive step towards receiving the approvals to complete the Acquisition.

The Agreement is structured as a ‘call option’ for TPDC, which provides a pathway for TPDC to increase its ownership by up to 20% in the production interest (the “Call Option”). As part of this Agreement, M&P has received the required pre-emption waiver from TPDC and Tanzanian government approval for the Acquisition, and only the final consent from Tanzania’s Fair Competition Commission (“FCC”) remains outstanding, which is expected to be granted before the Jersey Court sanction hearing.

As the Acquisition is to be implemented by means of a scheme of arrangement pursuant to Article 125 of the Jersey Companies Law, and given the approvals received, Wentworth has made arrangements for the Jersey Court to consider and if, thought fit, sanction the Scheme at a court sanction hearing to be held on 19 December 2023. Following this date, M&P will take ownership of Wentworth and acquire its 31.94% direct and indirect interest in Mnazi Bay (the “Closing”).

Subsequent to the Closing of the Acquisition, M&P expects TPDC to execute the Call Option whereby TPDC can purchase a 20% production interest in Mnazi Bay. As a result, M&P will hold a 60% ownership and TPDC will hold a 40% ownership in Mnazi Bay. The joint operating agreement will be amended to reflect new partnership conditions, and will allow TPDC to appoint secondees to participate in the operations of the Mnazi Bay field.

The Acquisition shall be funded by the £63 million placed in escrow as part of the Acquisition announced on 5 December 2022. Upon execution of the Call Option, TPDC will contribute its share of the acquisition consideration, and Wentworth’s cash balance and corporate winding down costs will be shared between M&P and TPDC.

Commenting, Olivier de Langavant, Chief Executive Officer of M&P, said:
“We are pleased to agree this partnership with TPDC that will reinforce the basis for the mutual benefit of the next phase of development at Mnazi Bay. M&P and TPDC have had a long and successful history and I look forward to this new phase that will bring about the continued growth and development of Tanzania’s natural gas sector. We would further like to take this opportunity to thank our partners at TPDC and other Tanzanian Government stakeholders for working collaboratively to achieve a successful outcome of the Acquisition.”

Nothing to add to this M&P announcement from yesterday as they just put a bit of meat on the bones of the announcement that Wentworth made the day before. By this M&P has added detail of the TPDC arrangement which seems to have solved the conundrum. 

Background
The Acquisition was approved by Wentworth Shareholders at the Court Meeting and the General Meeting which were held on 23 February 2023, but remains subject to the satisfaction or (where capable of being waived) waiver of the other Conditions to the Acquisition as set out in Part III (Conditions to and certain further terms of the Acquisition and the Scheme) of the Scheme Document (the “Scheme Document”).

These Conditions include, inter alia, (i) consent from the Minister responsible for petroleum affairs in Tanzania under the Petroleum Act 2015 and any other applicable laws (“MoE Consent”); (ii) the waiver of any right of first refusal or pre-emption right to which by the TPDC is entitled in respect of the Mnazi Bay asset (the “TPDC Waiver”); and (iii) approval from the Tanzanian Fair Competition Commission (“FCC”) (together the “Governmental Approval Conditions”), in each case on terms satisfactory to M&P, acting reasonably.qqa

EnQuest

EnQuest PLC (‘EnQuest’ or the ‘Company’) today announces that Salman Malik, Chief Financial Officer (‘CFO’) and Managing Director, Infrastructure and New Energy, will assume the role of Chief Executive Officer (‘CEO’) of Veri Energy (‘Veri’), a wholly owned subsidiary of EnQuest. Veri will be responsible for managing the Company’s existing infrastructure and new energy business with a focused management structure. This is a logical next step in the strategic evolution of EnQuest’s ambitions to build an infrastructure and new energy business in a capital-light manner, while providing Veri the opportunity to leverage support from financial and strategic partnerships. 

Salman will remain an Executive Director of the Board of EnQuest, ensuring ongoing alignment with EnQuest’s corporate strategy and net zero commitment.

The Group is delighted to announce the appointment of Jonathan Copus, who will become EnQuest CFO on 1 February 2024. In the interim, Salman and Jonathan will work together to undertake an effective and orderly transition. Jonathan will be recommended for election to the Board as an Executive Director at the Company’s 2024 Annual General Meeting. Jonathan has a technical background in geology and geoscience alongside ten years’ capital markets experience, four years as CFO of Salamander Energy PLC and for the last seven years has been CEO of Getech Group PLC.

Amjad Bseisu, Chief Executive:
“Salman has been instrumental in progressing our decarbonisation and new energy ambitions and has been integral to the Group’s successful debt refinancing activities. In his new role as CEO of Veri, I look forward to working together with Salman as Chairman in this important new growth area for the Group and I am excited about the future of Veri Energy as a key contributor on our energy transition path.

“Jonathan Copus brings considerable knowledge to EnQuest, with a broad background in the energy and natural resource sectors built through technical, finance, operational and commercial roles in both large and small organisations. I am excited to welcome Jonathan to EnQuest and look forward to working together to execute our strategy.”

Gareth Penny, Chairman:
“Following the announcement of our net zero commitment by 2040, these strategic appointments and the establishment of Veri Energy represent significant milestones in the Company’s continued growth and commitment to a just energy transition. I thank Salman for his efforts in his time as CFO and look forward to continuing to work with him as a valued member of the EnQuest Board of Directors. On behalf of the Board, I am also delighted to welcome Jonathan to EnQuest at this important time in the Company’s journey.”

Salman Malik, CEO of Veri Energy:
“I am proud that during my time as EnQuest’s CFO we delivered strong financial results, significantly delevered the balance sheet and strengthened the capital structure. I am  passionate about energy transition and committed to establishing Veri as a leading infrastructure and new energy company. Veri’s initial focus will remain on leveraging EnQuest’s capabilities to progress world scale decarbonisation and new energy projects, including carbon capture and storage, green hydrogen, and electrification at the Sullom Voe Terminal.  

“I look forward to working with Jonathan as he transitions into his role as EnQuest CFO and in delivering on our strategic ambitions.”

I don’t cover EnQuest for historical reasons and rarely comment on board appointments either but I have always had a lot of time for Jonathan Copus and followed him at Getech, a company that he did great things for. Who knows, I might just start casting an eye over EnQuest again…

KeyFacts Energy Industry Directory: Malcy's Blog