WTI (Aug) $83.16 -72c, Brent (Sep) $86.54 -89c, Diff-$3.38-17c
USNG (Aug) $2.32 -10c, UKNG (Aug) 77.5p +1.2p, TTF (Aug) €33.395 -€0.3

Oil price

Last week oil was up a little, $1.62 and $1.54 for WTI and Brent respectively, in a week with a US holiday and being a new month, quarter and half kept books flat. The rig count showed a rise of 4 units overall but was unchanged in oil. 

Deltic Energy

Deltic has announced that it has accepted one of the two licences that were provisionally awarded by the North Sea Transition Authority in Tranche 3 of the UK’s 33rd Offshore Licensing Round.

Licence P2672 (Deltic 100% WI) is located immediately to the west of the West Sole gas field and covers blocks 47/5e, 47/10c and 48/6c and contains the Pharos and Teviot discoveries.  Deltic’s preliminary evaluation, completed as part of the application process, has resulted in an updated understanding of the structural setting, which suggests that the Pharos discovery and the Blackadder prospect are in fact a single Leman Sandstone structure.  

Deltic’s preliminary volumetrics for the two discoveries on the licence are summarised below:

*Both wells encountered gas-bearing Leman Sandstone, however neither well was flow tested so there is residual risk related to reservoir effectiveness.

The 47/05d-6 well, drilled by a consortium led by Dana Petroleum in 2013, targeted what was originally interpreted to be a standalone prospect formerly called Pharos, however updated structural mapping indicates the well intersected the materially larger Blackadder structure in a downdip location.

The initial 3 year Phase A work programme commitments for the licence are focused on the reprocessing of legacy 3D seismic data to improve reservoir imaging and refine the structural model in order to further de-risk the Blackadder structure at nominal cost.

Graham Swindells, CEO of Deltic, commented:
“The Blackadder project has many analogous attributes to the Selene prospect, where the reworking of legacy datasets has unearthed a potential missed pay opportunity of material scale. Blackadder’s location, in close proximity to existing infrastructure that requires new third party gas to defer decommissioning, should enhance its value in a mature basin where new licences are likely to become increasingly scarce. Over the coming year we will progress our work on the legacy data in preparation for farm-out, in anticipation of drilling an appraisal well on Blackadder in due course.”

The extra work done on this licence looks like it has turned up a serious potential benefit to Blackadder making it  much larger than previously thought. The fact that updated structural mapping indicates it is no longer considered a separate structure, but actually part of a bigger find when combined with the previous Pharos prospect, makes this a far more significant opportunity.

In addition to this the prospect is made more economic due to the fact that it has multiple offtake solutions that due to its proximity to existing infrastructure that ‘requires new third party gas to defer decommissioning’ and thus increases its scarcity value.

Deltic has won this licence in a competitive bid situation which makes me feel that they are not the only company to have spotted this potentially lucrative anomaly and that with 100% of the licence they could end up partnering with someone and have a low-cost, swift to develop opportunity which is not unlike Selene to look at. The shares are well placed, with drilling at Selene imminent and that being another exciting prospect the shares are well placed with a great deal of upside to my 100p target price.

Angus Energy

Angus has announced Second Quarter 2024 Production and Operations Update

·    Production for the Quarter was 6.48 mm therms of natural gas and 10,478 bbls of condensate
·    Estimated revenues of £4.90m for the Quarter

Gas volumes produced and sold from the Saltfleetby Field equalled 6.48 mm therms in aggregate for the months of April, May and June 2024 combined. Second quarter production equates to an average of 2.16 mm therms per month. Operational efficiency was 91% for the second quarter. Gas condensate (liquid) production averaged 115 bbl/day.

The Quarter had no major planned maintenance activities of production critical equipment with only minor servicing of the two compressor engines carried out during the Quarter. A well performance management strategy to address the impact of liquids on production rates is being developed.

At the Brockham Oil Field, production resumed on the 4th of June. At the end of the Quarter, two road tanker shipments had successfully completed with cumulative oil production measured at 560 barrels.

Angus has delivered another good quarter with good efficiency rates and few, if any setbacks. The intelligence on strategy for liquids continues as does the delivery from Brockham and Angus is looking in very good shape.  

Trinity Exploration & Production

On 1 May 2024, the boards of directors of Trinity and Touchstone announced that they had reached agreement on the terms of a recommended acquisition of the entire issued, and to be issued, share capital of Trinity by Touchstone to be effected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006.

Capitalised terms used but not defined in this announcement have the meanings given to them in the shareholder circular relating to the Scheme published by Trinity on 24 May 2024, unless the context requires otherwise.

Trinity and Touchstone are pleased to provide an update with respect to the Scheme timetable.

The Acquisition remains subject to the satisfaction or waiver (where capable of being waived) of the remaining Conditions to the Acquisition as set out in Part Three of the Scheme Document, including the Court’s sanction of the Scheme at the Court Hearing and the delivery of a copy of the Court Order to the Registrar of Companies.

The expected timetable of principal events for the implementation of the Scheme is set out below. If any change to the key dates and/or times set out in the timetable are made, Trinity will give notice of this change by issuing an announcement through a Regulatory Information Service and such announcement will be made available on Trinity’s website at https://trinityexploration.com/investors/touchstone-offer/

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes:

(1) References to times are to London, United Kingdom time unless otherwise stated.
(2) The time for the Court Hearing, the number of the Court and the name of the judge will be available at least 1 business day before the Court Hearing.
(3) A copy of the Court Order sanctioning the Scheme is expected to be delivered to the Registrar of Companies one Business Day after the date of the Court Hearing, such that the Effective Date is then expected to be 1 August 2024. The events which are stated as occurring on subsequent dates are conditional on the Effective Date and operate by reference to this time.
(4) This is the latest date by which the Scheme may become Effective. However, the Long Stop Date may be extended to such later date as may be agreed by Trinity and Touchstone (with the Panel’s consent and as the Court may approve (if such consent and/or approval is required)) or if the Panel requires an extension to the Long Stop Date pending final determination of an issue under section 3(g) of Appendix 7 to the Code.

Nothing to add here but I publish so that I can remind people that Touchstone should get their hands on Trinity on 1st August, after that the businesses can be merged.

Echo Energy

Echo has announced preliminary results of metallurgical testing of gold samples from mining shafts at the Tesoro Gold Concession, southern Peru, which is held by the Company’s 50%-owned Peruvian joint venture, Boku Resources SAC.

Highlights:

• Two composite samples taken from two main shafts corresponding to the “Bonanza” and “La Dorada” vein systems at a depth of approximately 10m returned high gold grade values of 21.36 g/t and 13.13 g/t
• Samples were analysed to determine gold dissolution susceptibility through standard bottle roll cyanidation tests
• Following a retention time of 48 hours, a maximum dissolution of over 90% was evidenced, with recovery rates of 90.53% and 92.93% for the respective samples

Following Echo’s announcement on 1 July 2024 regarding its participation, through Boku, in gold and silver mining and the cleaning of known tailings deposits containing gold and silver in Peru, Boku has undertaken metallurgical tests of samples obtained from Tesoro. The samples were processed at the Minares South laboratories in Chala, Arequipa, southern Peru.

The preliminary results come from two composite samples taken from two main shafts corresponding to the “Bonanza” and “La Dorada” vein systems at a depth of approximately 10m. to determine the gold dissolution susceptibility through standard bottle roll cyanidation tests. The achieved results show that after a retention time of 48 hours, a maximum dissolution of over 90% was evidenced, with recovery rates of 90.53% (sample 000234) and 92.93% (sample 000240).

Tesoro is situated in the Nazca-Ocona gold corridor in the province of Caraveli, department of Arequipa, southern Peru.

Table 1: Summary of metallurgical results

Stephen Birrell, Chief Executive Officer of Echo, commented:
“These are excellent metallurgical results which confirm our understanding of the richness of the veins at Tesoro and keep us on track for production later this year.”

Erick Pegot-Ogier, General Manager of Boku, added:
“We have initiated work in opening the mine shaft at Tesoro and decided to take fresh samples for analysis to confirm our understanding of the grade and expected recoveries during processing. The results confirmed our recovery rates to be above 90% and upheld all previous sampling that indicated gold grades from 8 g/t up to bonanza grades of 30 g/t. We are progressing to build our workforce in anticipation of deepening existing shafts and commencing mining operations.”

This will be my last note on Echo, surely now a metals and mining company after these results which have come out with somewhat indecent haste after the news last week that they were going in with Boku. But, Stephen Birrell has come up with something here and I wish him well. 

Serica Energy

Serica Energy plc (AIM: SQZ), confirms that Christopher Cox, Chief Executive Officer, purchased 306,597 ordinary shares at an average price of  £1.390797819 per share in the Company.

Following this transaction, which is detailed in the PDMR Notification Dealing Form below, Mr Cox is interested in 432,027 ordinary shares in the capital of the Company, representing 0.11065% which is calculated on the total number of ordinary shares carrying voting rights of 390,457,635.

Worth noting this, as I always say, directors investing cash in their businesses are a rare event and this is definitely voting with the wallet. 

KeyFacts Energy Industry Directory: Malcy's Blog