WTI (Feb) $70.77 -$3.04, Brent (Mar) $76.12 -$2.64, Diff -$5.35 +$40c
USNG (Feb) $2.98 +9c, UKNG (Feb) 77.10p -8.5p, TTF (Feb) €30.685 -€1.66

Oil price

The flip-flopping of the oil price continues, after the fall yesterday, down to the Saudi price cut and the alleged agreement between shipping companies and the Houthi rebels today the price has risen by around $1.70

And further corporate activity is apparently going on in the US corporate patch, one which was mentioned here a while ago has reappeared and it looks like the merger between Southwestern Energy Co and Chesapeake is on the cards to create a $17bn entity.

BP

For those who noticed a header about BP last week which didn’t turn into an article, well spotted, I had a couple more replies to my throwing a bit of bait into the pond and just held it up for a few days. Above is a comment about yet another merger/takeover in the US patch which comes hard on the heels of deals of a number of bigger deals in recent months.

And then there were a number of stories in the social media recently about a big UK deal in the making followed by an article by Mark Kleinman, who apart from very rarely being wrong with his stories suddenly tipped BP as a bid target with Shell as the potential suitor.

After that his column revealed that ‘several leading investors in BP’ want the company to ‘target Charles Woodburn, the BAE Systems Chief Executive as it seeks a successor to Bernard Looney who left in ignominious circumstances last year’ and is yet to be replaced on a permanent basis.

For those who feel that a bid for BP is more than an outside bet I would caution that I have been thinking about this for sometime now as it continues to underperform its peer group. With a market cap of some £79bn BP hits the scales at around half that of Shell, now conveniently quoted in London and performance-wise, BP has lagged behind Total, Shell, Chevron and Exxon.

To be honest without some form of Government ‘protection’ BP would have gone by now. Its performance has been a major disappointment which must lie at the door of the last two CEO’s but the responsibility of the board. The biggest mistake was that Helge Lund should have been made CEO and not the Chair at the last board roundabout.

But the only way to get around the politics would have to be a bid from Shell dressed up as a merger, in which case Shell would take up most of the top positions and Lund could be compromise Chairman, unless of course one considers the aforementioned  Charles Woodburn who might tick a few boxes…

i3 Energy

i3 announces its 4th Quarter 2023 dividend totalling £3.084 million and confirms the following:

• Dividend: 0.2565 pence/share for the quarter
• Ex-Dividend Date: 18 January 2024
• Record Date: 19 January 2024
• Payment date: 9 February 2024

Payment to shareholders holding their shares on the TSX will be made in Canadian dollars using the exchange rate from the Bank of England at close on the Dividend announcement date, 9 January 2024.

Little to add here, at least the dividend hasn’t disappointed and as it’s a key part of the i3 story it will please this time.

SDX Energy

Corporate update

Highlights

• Gas prepayment agreement rolled over with CITIC Dicastal subsidiary, DIKA MOROCCO AFRICA, for a further $2.1 million for Q1 2024 gas deliveries.
• The Company continues to work with CITIC Dicastal on a long-term prepayment for future gas deliveries in Morocco.
• Latest well, KSR-21, is tied-in and ready to supply SDX’s offtakers.
• Egyptian West Gharib asset sale documentation agreed with execution and closing expected later in January, subject only to administrative steps being completed.
•  Implementation of new strategy, including detailed cost review and balance sheet optimisation by swapping $1 million of cash-backed bank guarantee with a parent company guarantee.

Morocco – SDX/CITIC strengthen partnership

The Company is pleased to announce that it has reached agreement for a second 3-month gas prepayment with its largest offtaker in Morocco on the same terms as the previously announced, Q4 2023 prepayment. The prepayment by DMA covers the supply of gas by SDX for the first quarter of 2024 and is approximately $2.1 million.

Additionally, the Company continues to work directly with CITIC Dicastal to provide a long-term offtake agreement, demonstrating the support of CITIC Dicastal, a company with nearly $1 trillion in assets.

Morocco – KSR-21 well update

The KSR-21 well, which was successfully drilled and tested in Q4 2023, has now been tied into existing infrastructure and will begin producing as soon as the expected government approvals are received, which are envisaged shortly. The Company will update shareholders as soon as production from this well has commenced.

Egypt – sale update

SDX is pleased to confirm that it has agreed with the buyer the terms of an execution version of the sale and purchase agreement (“SPA”) for its West Gharib assets.

The closing of the transaction remains subject to the completion of certain approvals, including Egyptian government approvals, which are not expected to be withheld, with the execution of the SPA and the final closing date for the sale of these assets is now expected in the second half of January 2024.

Proceeds from the sale of the West Gharib assets are expected to be approximately $6.9 million and will be paid in US dollars. Of the total West Gharib sale proceeds, approximately $3.8 million will be paid immediately. The remaining $3.1 million, which is subject to certain post close events, is expected to be paid during Q1 of 2024.

In parallel, the Company is finalising the SPA for the divestment of its remaining Egyptian asset, South Disouq, with terms largely agreed. This sale of this SDX-operated asset is also subject to government and joint venture partner approvals.

Corporate update and replacement of bank guarantee

The Company continues to work on delivering on its recently announced new strategy. The proceeds from the sale of the Company’s Egyptian assets and of payments in Morocco will be used to develop its existing assets in Morocco and pay creditors.

Additionally, the Company continues to evaluate areas to improve operational and commercial efficiencies and to reduce costs where possible with the aim of delivering long-term sustainable returns for shareholders. This includes prudent balance sheet optimisation and, to that end, the Company has recently replaced a $1.0 million cash-backed bank guarantee with a parent company guarantee (“PCG”).

It is expected that this change in guarantee structure will enable SDX to access $1.0 million of cash by the end of February 2024.

Both the previous cash-backed bank guarantee and the new PCG cover SDX’s Lalla Mimouna Nord concession obligations to ONHYM.

There is no comment from the CEO so shareholders are expected to judge for themselves what to read into the statement or even the likes of me, however I have not met the SDX management so that makes this much more difficult for all of us. 

I guess that the Egyptian sale is self explanatory, terms agreed for the disposal of West Gharib are $6.9m of which $3.8m will be paid immediately and with $3.1m in the first quarter. South Disouq is also being sold and terms ‘largely agreed’. 

In Morocco the KSR-21 well appears to have been a success and awaiting approval for going on production. The proceeds of the Egyptian sales are going into Morocco along with the pre-payment of the gas offtake and remains of the Egypt proceeds.

KeyFacts Energy Industry Directory: Malcy's Blog