WTI (Mar) $63.55 +26c, Brent (Apr) $68.05 +50c, Diff -$4.50 +24c.
USNG (Mar) $3.42 -9c, UKNG (Mar) 76.25p -4.95p, TTF (Mar) €32.795 -€1.765

Oil price

Oil is down slightly this morning after the US/Iran talks at least didn’t break up in tears on Friday, they are set to continue this week. Post the US trade deal, India are starting to cease crude purchases from Russia which has left up to 12m barrels of crude on the high seas with various traders saying that the discount to rent for ESPO is $9/b and for Urals as much as $12/b. 

Savannah Energy

Savannah announced on Friday afternoon that NIPCO had increased its stake in the company from 27.57% to 27.93% and that CEO Andrew Knott had also upped his holding to 14.02% from 13.86%.

Chariot

Chariot reported on Friday that Etana Energy, the South African electricity trading platform in which Chariot’s subsidiary, Chariot Generation and Trading (Pty) Limited holds an economic interest of 34%, alongside H1 Holdings, Norfund and Standard Bank, has signed a significant Power Purchase Agreement with Sibanye-Stillwater. Sibanye-Stillwater is a multinational mining and metals processing group and one of the largest gold and platinum group metals producers in South Africa.

Under the 10-year agreement, Etana will deliver 220MW of renewable energy per year to Sibanye-Stillwater’s mining operations, commencing in late 2027. This energy will be provided by wheeling electricity from Etana’s solar and wind generation portfolio and transmitting this through South Africa’s national grid. The Agreement has been structured to compliment and integrate directly into Sibanye-Stillwater’s existing and future power requirements helping to significantly reduce both its electricity costs and carbon emissions.

Benoit Garrivier, CEO of Chariot’s Renewable Power division, commented:
“This is another material offtake agreement signed with a major industrial customer which continues to underline the scale of the market that Etana can address. Importantly, this further evidences how Etana is able to augment and work alongside existing energy provisions, enabling large companies to meet their long-term energy needs with sustainable supply. Etana is fast becoming one of the largest providers of renewable energy in South Africa and we would like to congratulate the whole team on their impressive growth and development.”

More good news from Chariot who are rapidly building up the business in South Africa, indeed growth is so fast that they are already the leading electricity trader in the country. I am confident that with this progress the power side of Chariot is moving ahead strongly and the future of the group as a whole is showing considerable optimism. 

Southern Energy

Southern has announce the execution of definitive subscription and purchase and sale agreements with three related arm’s length private investors, pursuant to which the Investors have agreed to subscribe, on a non-brokered private placement basis, for senior secured convertible debentures  and new common shares of the Company and purchase a newly-created gross overriding royalty  for aggregate net proceeds of US$22.0 million after a 8.8235% original issue discount equivalent to US$1.5 million on the Debentures.

All figures referred to in this news release are denominated in U.S. dollars, unless otherwise noted.

Ian Atkinson, President and Chief Executive Officer of Southern, commented:
“This transaction is a strategic reset of Southern’s capital structure. By retiring our existing high-cost senior credit facility and extending maturities, we are significantly reducing our cost of capital, improving financial flexibility and creating a runway to execute our 2026 development plan.

The structure of the transaction sees an existing shareholder step up as a long-term strategic partner through a combination of equity participation, disciplined convertible financing, and non-dilutive capital tied directly to asset-level performance. Importantly, the investment allows us to refinance debt that previously carried a substantially higher interest rate and accelerate development across our core Gulf Coast asset base where we have successfully proven significant natural gas reserves realizing premium pricing.

While the U.S. continues to set record levels of Liquefied Natural Gas exports from the Gulf Coast area with significant additional capacity coming online in 2026, the proliferation of AI data centers is soon expected to have a profound effect on the robust future of natural gas demand. With this financing in place, we are focused on disciplined execution, advancing high-return development activity, with the objective of delivering sustainable, long-term value for shareholders.”

This is great news for Southern and its loyal shareholder base, the refinancing pays off the existing debt, well ahead of its expiry but which would have been cause for worry nearer the time but this gives serious flexibility with regard to planning and cash flows.

The deal is attractive, it brings in a new, high quality investor who is prepared to back the Southern team and gives them optionality to perhaps drill in the liquids prone Williamsburg or of course in the Gwinville. 

I have already recently pointed out that Southern will be a gainer from potential longer term strength in the natural gas market, you only have to see recent strength as a result of the cold weather to get that but mixing in some liquids will add to that mix.

Indeed the proliferation of data centres expected can only frank the longer term pricing, as it is,  summer gas is already showing a decent bit of strength, enabling better cash flow management. Add that to the new cost of borrowing, 7% against 15% before, a substantial and supportive new backer keen to invest more over the term and Southern looks in very good shape. 

I will write more after the closing of this financing, expected later this week, but my initial views are very positive, this is excellent planning for the future, it gives big potential to gear up if opportunities arise and the company are track to return to growth with a long term strategic partner. High quality management, well backed and with an exciting portfolio, the outlook is back on track and investors should have it on the radar screen again…

Transaction Highlights

• Use of Proceeds: Net proceeds from the Transaction will be used to repay and retire the Company’s existing senior credit facility in full and for development capital, including for the completion of two drilled uncompleted wells in Gwinville and further drilling on the Company’s existing asset base, and general working capital and corporate purposes.
• Offering: US$18.5 million gross purchase price through the issuance of: (i) 17,000 US$1,000 face value Debentures issued with a 8.8235% OID at a price of US$911.76 per Debenture for gross proceeds of US$17.0 million (net proceeds of US$15.5 million); and (ii) 30.0 million Shares at a price of CAD$0.07 (US$0.05) per Share for additional gross proceeds of CAD$2.1 million (US$1.5 million).
• GORR: US$5.0 million gross purchase price of a 6% GORR in all revenue from all existing and future developed production of petroleum substances on the Company’s lands as of the closing date calculated based on the Company’s realized price received for each commodity, in perpetuity, payable monthly.
• Interest Payments (Coupon): The Debentures bear interest at 7% per annum on the outstanding principal amount of US$17.0 million, payable quarterly in arrears.
• Maturity: The Debentures will mature on December 31, 2028. The principal amount attributed to the OID, being US$1.5 million, will be repaid in cash.
• Conversion Price: The Debentures (excluding the principal amount attributed to the OID) will be convertible at the Investor’s option into Shares at a price of US$0.073 (CAD$0.10) per Share, being a ratio of 13,700 Shares per US$1,000 principal amount of the convertible portion of the Debentures.
• Ownership Restrictions: The Investor may not convert the Debentures or receive interest in Shares if doing so would cause the Investors’ ownership to exceed 19.99 percent of the outstanding Shares without prior TSX Venture Exchange (“TSXV”) clearance and shareholder approval.
• Change of Control: In the event of a change of control, the Debentures will be redeemed for principal and accrued interest, though the Investor may convert prior to the closing of any such transaction.
• Listing and Admission: The Company has applied to have the Shares (including the Shares issuable upon conversion or interest payment of the Debenture) listed on the TSXV and admitted to trading on the AIM market of the London Stock Exchange. The Debentures will not be listed on any exchange.
• Closing Date: On or about February 12, 2026.

Further information on the Offering and GORR

The Debentures will mature on December 31, 2028, and bear interest at a rate of 7 percent per annum, payable quarterly. The Debentures (excluding the principal amount attributed to the OID, being US$1.5 million) will be convertible into Shares at any time prior to maturity at the Conversion Price. At the Investor’s option, interest may be paid in cash or in Shares, with the number of shares determined based on the market price of the Shares and prevailing exchange rate at the time of payment, subject to approval by the TSXV. In the event that the Investor is not approved as a “Control Person” (as defined in the TSXV Corporate Finance Manual) on or prior to December 31, 2026, then, from and after January 1, 2027, the Debentures will bear interest at a rate of 15 percent per annum.

The Company intends to seek disinterested shareholder approval of the Investors as a Control Person at its next annual general meeting. Assuming full conversion of the Debentures (excluding the portion of principal attributable to the original issue discount which is to be repaid in cash), a maximum of approximately 212.35 million Shares would be issuable, in addition to the 30.0 million Shares issued pursuant to the Offering.

The Debentures will be secured by a first-priority security interest over all present and after-acquired personal property of the Company and its subsidiaries. This includes an Alberta law general security agreement and charges over the shares of the Company’s subsidiaries. The terms of the Debentures will restrict the Company from granting liens over its property without the Investor’s consent, other than customary permitted liens. The GORR will be granted as a non-possessory fee simple determinable interest in land that runs with the Company’s lands as of the closing date.

The Transaction is expected to close on or about February 12, 2026, or such other date as the Company and the Investors may agree, and is subject to customary closing conditions, including the payout and discharge of the Company’s existing senior credit facility and the approval of the TSXV, and will result in aggregate net proceeds to the Company of US$22.0 million.

The Debentures and Shares (including the Shares issuable upon conversion or interest payment of the Debenture) will be subject to a four month and one day hold period under applicable securities laws in Canada and the rules and policies of the TSXV.

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