Touchstone Exploration 

Touchstone has announced that it has released a new updated presentation ahead of the analysts’ visit to Trinidad which started yesterday. Over the next week the company will show the analysts field operations, company local headquarters and get a chance to meet all executive board and local management as well as Ministry officials and politicians.

Deltic Energy

Deltic has provided the following strategic, operational and organisational update:

Strategic Evolution

For the last decade, Deltic has invested in its UK portfolio and achieved material exploration success despite the well-publicised political and fiscal headwinds that have hampered the UK’s oil and gas industry in recent years. It is clear that, while this situation persists, the UK is not the ideal place in which to invest in new oil and gas exploration or appraisal opportunities. Therefore, the Board has carefully considered the best way to leverage the Company’s international experience and expertise to create value for shareholders going forward.

Over the next 12 months, Deltic’s strategic focus will be on:

• Extraction of value from its existing core UK assets, principally the Selene prospect, while eliminating or deferring expenditure on non-core UK assets
• Leveraging the Company’s core subsurface skill sets, which have been deployed successfully across a range of international territories historically, to identify and access opportunities in overseas arenas with an initial focus on projects with early cash flows and faster cycle times from entry to value crystallisation
• High-impact exploration will always be an integral part of Deltic’s DNA, and the Company will continue to selectively pursue these types of opportunities which could provide significant upside for shareholders in the medium to longer term

Non-Executive Board Change

Peter Cowley has agreed to step down from the Board of Deltic with immediate effect and leaves with the Board’s best wishes. There are no plans to recruit a replacement for Peter in the shorter term and the Company will continue with Mark Lappin and Peter Nicol as its independent non-executive directors while it works through this strategic transition.

Drilling Operations – Selene Exploration Well

Well operations continue on the high-impact Selene exploration well. The Shell operated well reached its total target depth of 3540 metres on 17 October 2024 and encountered a 160 metre thick section of Leman Sandstone with gas present throughout.

While initial observations are clearly encouraging, Deltic will need to wait on further results from the logging and fluid sampling operations before providing a comprehensive update in due course.

Deltic has a 25% working interest in the Selene licence which is located in the heart of the long-established Leman Sandstone gas play in the Southern North Sea. In a success case, the intention would be to proceed directly to field development planning as further appraisal drilling is not considered to be necessary to support a future development investment decision.

Blackadder Licence P2672 – Farm-out Interest

Given the positive read across from Selene to the Blackadder prospect, Deltic has been in receipt of farm-in interest in the licence from a number of companies. The Company will look to capitalise on this third-party interest to materially reduce or eliminate its cost exposure to the forward work programme on this licence. To allow time for these discussions to mature, Deltic intends to defer the commencement of planned work programmes until at least mid-2025, minimising any near-term expenditure.

Syros Licence P2542 – Central North Sea

Despite the excellent technical work completed by the Deltic team, which significantly de-risked the Syros prospect, the ongoing political and fiscal uncertainty has prevented a number of parties that participated in the farm-out process from moving forward with a transaction. Deltic has requested a 12-month extension from the NSTA to Phase A to allow a period of stability post the October budget in which Deltic could re-engage with those interested parties. However, the NSTA has indicated it is not minded to support the request and therefore it is likely this licence will now expire on 30 November 2024.

Dewar Licence P2646 – Central North Sea

Given the continuing deterioration of the fiscal and operating environment in the UK since this licence was awarded in February 2024, Deltic has entered into negotiations with the NSTA in relation to the Phase A work programme requirements on Licence P2646. Deltic does not intend to incur any of the planned costs associated with the Phase A work programme in 2025.

Change of Broker Arrangements 

In recognition of the situation in which the Company currently finds itself, Deltic has reviewed the full range of advisory services it utilises, including its broker arrangements. Going forwards, Canaccord will assume the role of sole broker for the company. Allenby Capital will continue in its role of Nominated Advisor.

Andrew Nunn, CEO, commented:
“First of all, I would like to thank Peter Cowley for his Board contributions and support over the years. We wish him all the best in his future endeavours.

Our immediate focus is the ongoing Selene exploration well, where initial drilling indications are encouraging. I look forward to updating the market on the progress of this highly material well.

The Board has considered the best way to deploy the Company’s experience and expertise to create value for its shareholders. As always, the balance of geological, operational and political risk must be considered and we are actively assessing a number of attractive opportunities in geographies where more supportive policies towards oil and gas development exist.

The key changes we have announced today, in addition to a raft of other less significant changes, will have an immediate and material impact on the Company’s operational expenditure and are expected to result in savings of 40% compared to costs previously budgeted by management for 2025. These savings are key to extending the time period in which to identify and incubate those new opportunities that we believe will help towards stabilising the business and providing a platform for future growth supporting our objective of creating positive returns for shareholders.”

We had been expecting this announcement since Andrew Nunn took over as CEO recently and the contents are no surprise. Firstly I read the news from the Selene well as being guardedly positive, early results look highly encouraging but this is no time to count chickens, let’s wait until testing and analysis is complete, perhaps in the next week or two but good news would change the short term fate of the company.

Elsewhere, Andrew Nunn has announced a mix of straightforward cost cutting such as can be seen in the asset portfolio as well as losing an NED and a broker. At Blackadder, where there has been interest due to the read across from Selene, action has been deferred to allow potential farminees to take decisions once the Selene result is known and the upcoming budget is out of the way.

All in all  exactly as expected, the fiscal actions of successive Governments have made the UKCS firstly almost unprofitable but also ahead of the budget uninvestable, something that should send shivers up the spine of what has been a world beating industry.

Seascape Energy

Seascape has announced that it has been awarded a 28% participating interest in a Small Field Asset Production Sharing Contract over the DEWA Complex Cluster off the coast of Sarawak, Malaysia. The Award was made under the Malaysia Bid Round Plus (“MBR+“) by Petroliam Nasional Berhad   (PETRONAS)  through Malaysia Petroleum Management.

The DEWA partners are EnQuest Petroleum Production Malaysia Ltd (42%, operator)  and Petroleum Sarawak Exploration & Production Sdn. Bhd. (30%) (“PSEP”).

DEWA is comprised of 12 gas discoveries in shallow water (40-50 metres) near to infrastructure off the coast of Sarawak and includes; D30, D30W, Danau, Daya, Daya North, D41, D41W, Dafnah West, Dana, Darma, West Acis and Spaoh. Gas was originally found in the area in 1982 but overlooked by previous partnerships which were focused on oil production.

The DEWA partnership is anticipated to initially focus on the D30, Danau, D41, D41W, Dana and Dafnah West discoveries which are estimated by the Company to contain circa 500 bcf GIIP (gross, ~83 mmboe). These fields are broadly characterised as having clastic reservoirs with large gas columns and good hydrocarbon mobilities. There is a significant dataset including 35 well penetrations, well logs, multiple DSTs and MDTs as well as extensive 3D seismic coverage across the entire PSC area.

Given the shallow water depths and nearby infrastructure, the partnership is targeting a low-cost development plan utilising normally unmanned platform(s) with minimal processing which could support a potential production plateau of up to 100 mmscfd.

The initial low-cost work commitment (approximately $0.6 million net to Seascape) is to conduct a detailed resource assessment and deliver a Field Development and Abandonment Plan within two years. The development of these fields will be under the innovative, new Small Field Asset terms which are specifically designed to simplify and incentivise rapid development of smaller hydrocarbon accumulations in Malaysia.

Investor Meet Company

Nick Ingrassia (CEO), James Menzies (Executive Chairman) and Pierre Eliet (EVP Corporate and Country Chair Malaysia) will host a live presentation for investors via Investor Meet Company on 22 October 2024 at 10:00 AM BST.

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 21 Oct 2024, 09:00 AM BST, or at any time during the live presentation.

Investors can sign up for free via: https://www.investormeetcompany.com/seascape-energy-asia-plc/register-investor

Investors who follow Seascape Energy on the Investor Meet Company platform will automatically be invited.

James Menzies, Executive Chairman of Seascape, commented:
“This award supports our recent decision to strategically pivot the business to focus on Southeast Asia. It builds on our existing position in Malaysia and in one step provides Seascape with an immediate portfolio of gas discoveries with over 500 bcf of in-place resources from four main fields with considerable upside.

DEWA represents an opportunity for the Company together with its partners, EnQuest and Petros, to pursue a low-cost, near-term development located close to existing infrastructure. While the financial commitment and costs over this initial planning phase are expected to be minimal, the prize is very material for Seascape. The award perfectly illustrates how an Independent E&P company can compete and create value in this environment.

On behalf of our entire team, I would like express our gratitude to PETRONAS for the award and we look forward to continued collaboration with all of our partners as we seek to grow the Seascape business for the benefit of both our shareholders and our Malaysian stakeholders.”

There is little doubt that Chairman James Menzies has really pulled off a very smart deal indeed here and whilst for one or two of us it took a little longer to deliver that is nothing in the big picture of creating value in a very small entity. 

It also proves that with limited up front funds but with considerable local experience and knowledge of the landscape significant packages of acreage can be put together. With massive local discoveries and substantial nearly infrastructure including a pipeline network Seascape looks to have pulled the rabbit out of the hat.

The JV have very little prep work to do, Mr Menzies tells me that there is masses of data, multiple 3D seismic and 35 wells worth of logs and DST’s etc to analyse as the Malaysian state has decided to let new companies access these smaller fields and to develop them and the terms reflect that.

This is a real company maker for Seascape and it may not be the last, given what has been going on elsewhere in the energy world it looks like the makings of a great portfolio, with limited costs and a lot of vision, there appears to be a lot of upside at the company.

Sound Energy

Sound Energy, the transition energy company, announces that further to the announcement of 14 June 2024 regarding the entry into a conditional binding Sale and Purchase Agreement, ‘SPA’  for the partial divestment by Sound Energy (AIM: SOU), of its Moroccan assets by way of the disposal by the Company of the entire issued share capital of the Company’s wholly owned subsidiary Sound Energy Morocco East Limited (“SEME”) to Managem SA (the “Transaction”), the Company is pleased to confirm the receipt of formal approval from the Moroccan Minister of Energy Transition and Sustainable Development to SEME continuing as the Operator of record of the Tendrara Exploitation Concession, and the Anoual and Grand Tendrara Exploration Permits, following completion of the Transaction.

As announced by the Company on 27 September 2024, the Transaction remains conditional upon the satisfaction or waiver by the parties of the remaining conditions precedent to the SPA and further announcements will be made as appropriate in due course. 

Really good news from Sound today and this is the really important one, formal approval by the Ministry and all that this entails. I understand that with a few ‘manageable’ processes to come progress to completion is being made ‘on all fronts’.

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog