WTI (June) $94.40 -$1.45, Brent (June) $105.33 +26c, Diff-$10.93 +$1.71
USNG (May) $2.52 -9c, UKNG (May) 111.75p -1.33p, TTF (May) €45.155 -€0.275

Oil price

Oil is around two dollars up today which is slightly at odds with the overnight rumour that suggested that Iran was prepared to accept an interim deal that would reopen the Strait of Hormuz. This was after the Iranian Foreign Minister had allegedly travelled to both Oman and Russia to canvas, one I can believe but……

It’s a busy week for interest rates as many world banks are meeting, the Fed start their two day meeting tomorrow with Jerome Powell in the Chair for probably the last time after the case against him was dropped and Kevin Warsh’s appointment can be ratified now Thom Tillis has withdrawn his blackball.

The Baker Hughes rig count showed a fall of three oil units to 407, hardly the stuff of drill baby drill especially with WTI at $95…

Europa Oil & Gas

Europa has noted the decision of the North Yorkshire Council planning committee at its meeting on 24th April that it is minded not to approve the Company’s plan for a well in Burniston on its Cloughton prospect, despite the positive recommendation from the Council’s planning department that the operation should proceed. A final recommendation is pending a decision by the Secretary of State over the need for an environmental screening assessment to be carried out relating to the proposal, despite the Company having already opted to voluntarily complete and submit an environmental screening assessment as part of the planning application.

The Company is disappointed with the committee’s decision, which directly contradicts the NYC planning officers’ endorsement of its plans for the well after an exhaustive review process, and Europa intends to appeal the decision once the final recommendation has been delivered. 

The Company is confident that on appeal the planning permission will be approved. Following implementation of the Wressle development, which was approved on appeal, the initial local opposition and concern has disappeared and the local community is now highly supportive. This clearly demonstrates how a well-run operation can be conducted without negatively impacting local amenity and how the community can realise a material benefit. 

William Holland, Chief Executive Officer of Europa, said:
“Our planning application for the well at Burniston was underpinned by 13 expert reports and exhaustive preparatory work. It was also recommended by the council’s own planning department. We shall appeal the decision and remain of the view that the well can be safely and efficiently delivered and is in the best interests both of the local community and the country.”

So, despite contradicting the planning officers endorsement of the application and with widespread local approval, the North Yorkshire Council has said that ‘it is minded not to approve EOG’s application for a well at Cloughton.

Indeed  whilst the company say that ‘the initial local opposition and concern has disappeared and the local community is now highly supportive. This clearly demonstrates how a well-run operation can be conducted without negatively impacting local amenity and how the community can realise a material benefit’ no one is listening…

This is now subject to a final recommendation by the Secretary of State with regard for the need for an environmental screening assessment ‘despite the company having already volunteered such an assessment as part of the planning application’. Indeed, the company has already submitted the ES so it is unclear how he will respond to this. 

Europa has said that it will appeal the decision and ‘remain of the view that the well can be safely and efficiently delivered and is in the best interests both of the local community and the country’.

I might be wrong but relying on this Secretary of State for such an endorsement seems fraught with danger given his net zero fanaticism. Assuming the committee does reject the application, the company will now prepare the appeal documentation which will, I understand take around 4-8 weeks to compile. 

Yet another perfectly reasonable and well documented application has therefore now stumbled on the personal aspirations of a group of councillors who, with any luck might be given the boot either on May 7th or at the next opportunity.

Not content with going against the PO’s recommendation, and the wishes of the local community, they prefer to feather their own nests whilst taking the pieces of silver on offer for turning up at meetings and clearly not doing what is best for the area they represent.

Whatever the Secretary of State decides it seems that the tide is turning in respect of domestic hydrocarbon extraction and this specific instance, where the company ‘remain of the view that the well can be safely and efficiently delivered and is in the best interests both of the local community and the country’, is a perfect example.

Red Capital

Red Capital Plc, the Main Market listed acquisition company, is pleased to announce that it has secured binding funding commitments of £1.6 million, in conjunction with a proposed change of acquisition and investment strategy of the Company.

Since listing in 2021, the Directors have continued to explore a number of opportunities where they believe there to be opportunities for the creation of shareholder value across certain sectors of focus including business services and technology.  During this time, the Directors have also remained open to attractive investment opportunities outside of the Company’s original investment thesis. 

As part of this process, they have identified a compelling opportunity to partner with a leading management team and strategic investors focused on the energy sector, that will enable the Company to transition its strategic focus towards opportunities within Venezuela.

Highlights

• Proposed placing and unsecured convertible loan note issuance (“CLN”) commitments raising £1.6 million in aggregate
• Proposed appointment of Scott Gilbert as Non-Executive Chairman and Greig Gilbert as Chief Executive Officer, British-Venezuelan executives, investors and entrepreneurs with over 35 years’ combined experience building and leading energy and industrial businesses across Latin America and Africa
• Strategic transition of the Company towards Venezuela, the world’s largest hydrocarbon basin, now reopening to international capital for the first time in a generation
• Creates a compelling opportunity to build a portfolio of Venezuelan energy assets of scale to establish the Company as a leading UK listed vehicle in the Venezuelan energy sector
• Proposed change of name to Apertura Energy Plc, and change of TIDM to “VZLA”
• Net proceeds raised from the proposed placing and CLN issuance used to underpin revised strategic focus of identifying and evaluating Venezuelan energy assets

David Williams, Chairman of Red Capital commented:
“I am delighted to have reached agreement with Scott, Greig and the wider Apertura team in partnering on this opportunity.  The opening up of the Venezuelan energy market is tremendously exciting and in Apertura we believe we have a highly credible team, with critical in-country experience of operating and growing assets within this sector.”

Greig Gilbert, Proposed Chief Executive Officer commented:
“We see an exceptional opportunity to build a leading energy platform in Venezuela. As the market reopens, it brings renewed demand for capital, technology, equipment and operational expertise.

I am excited to lead Apertura’s strategy through a disciplined buy-and-build approach, integrating upstream assets with services and infrastructure to create significant value and reduce execution risk.

With experience in investing in and leading businesses across the energy sector in Latin America, combined with a deep personal connection to Venezuela and a family heritage in the country’s oil and gas sector spanning three generations, I am confident in our ability to deliver on this opportunity.“

This may be early days as I have only just picked up on this one but it may well be one for the radar screen. With the opening up of the Venezuelan energy market it is clear that it is for certain back on the map and this looks like a powerful team to be first movers in this way.

The start of this process shows that many bases are being covered, although the long term objective is to get barrels flowing and raising capital is an important  first stage, that can only be part of the way to the ultimate goal. 

An operation of this scale demands many different inputs, it requires equipment, infrastructure and expertise from both the technical and local regional operators who will all add valuable data. This also means that Apertura will bring to the table a group of solid investors and of course the wider reach that the Gilberts have. 

Knowing Scott Gilbert as I do, and investors will know him through Corcel which has been had a copybook investment start with its Angolan initiatives, this has the very good chance of being one to follow. With the two Gilberts having excellent access to equipment and services through their private ventures, the capital they can pull in from supporters and of course the operational expertise in the group. and so I think that this is an exciting, potentially great platform. 

Proposed Fundraise

The Company has received binding commitments from certain strategic investors to invest £1.6 million in support of the Company’s new strategy.  It is proposed that the £1.6 million is raised in two tranches as follows:

1. £0.75 million through a placing of 7.5 million ordinary shares of £0.01 par value each in the capital of the Company (“Shares”) at a placing price of 10 pence per Share; £0.15 million will be raised immediately through existing authorities with £0.6 million subject to a to-be-convened general meeting of the Company
2. £0.85 million through an unsecured CLN, which shall convert at a price of 10 pence per Share

The CLN will be at zero coupon, and following the requisite shareholder approval at a general meeting of the Company as well as the approval by the Financial Conduct Authority (“FCA”) and the Jersey Financial Services Commission (“JFSC”) of a prospectus to be published in due course, will convert into an additional 8.5 million Shares.

In addition to the Proposed Fundraise, the Company will issue 1:1 warrants (the “Warrants”).  The Warrants will be exercisable in whole in conjunction with completion of the Company’s first investment or acquisition (the “Inaugural Transaction”).  If not exercised at this point, further exercise windows will occur at the six, twelve and eighteen-month anniversaries of completion of the Company’s Inaugural Transaction.  Any residual Warrants not exercised during these windows remain available to exercise up to expiry of the Warrants, being April 2031. The Warrants will be exercisable at a price of 10 pence per Share.

Further, it is proposed that the incoming management team of Scott Gilbert and Greig Gilbert (“Incoming Management”) will subscribe for 3 million Shares in aggregate at nominal value (“Management Equity”), which shall also have 1:1 Warrants.

On the basis the Proposed Fundraise of £1.6 million completes following the passing of the requisite resolutions at a general meeting of the Company, as well as FCA and JFSC approval of a prospectus, a total of 19 million Shares will be issued alongside 19 million Warrants.

Apertura Energy and the Venezuelan energy sector

Venezuela holds the world’s largest proven hydrocarbon reserves and a significant base of related energy infrastructure. Incoming Management believe that decades of under-investment, the departure of international operators, sanctions and operational decline have left a broad range of energy assets – upstream licenses, drilling and production infrastructure, midstream capability and related services – operating materially below their potential, with critical equipment, services capacity and technical capabilities having also been significantly reduced over time.

As the regulatory landscape evolves and international capital begins to re-engage with the country, the Directors and Incoming Management believe a generational opportunity exists to acquire high-quality Venezuelan energy assets at attractive valuations relative to their long-term intrinsic value, and to rehabilitate them using modern operating practices and targeted capital expenditure. In addition to capital deployment, this will require the restoration of in-country capabilities, including equipment, services and operational infrastructure. The gap between current activity levels and historic capacity represents, in Incoming Management’s view, one of the most compelling risk-adjusted opportunities in the global energy sector today.

The Company intends to pursue its new strategy through a disciplined buy-and-build strategy, built on four pillars:

• Quality energy assets – targeting a broad range of Venezuelan energy opportunities, including upstream interests, drilling and production infrastructure, drilling and well intervention capabilities, midstream capability and other related services, with existing capability and near-term value-unlock potential
• Operational restoration – applying established industry practices and in-county operational expertise to rehabilitate under-invested assets and unlock embedded value
• Local partnership – working alongside Venezuelan counterparties and the relevant authorities to ensure assets are developed within the regulatory framework
• Disciplined capital allocation – pursuing acquisitions where risk-adjusted returns materially exceed the Company’s cost of capital, and returning capital to shareholders where appropriate

In conjunction with the Company’s change in strategy, it is proposed that the Company will undergo a name change to Apertura Energy Plc with the Company’s TIDM changing to “VZLA”.  Both changes are anticipated to take effect following passing of the requisite resolutions by shareholders at a general meeting of the Company.

Directorate change

As part of the Company’s change in strategy and transition to the Venezuelan energy sector, it is proposed that Scott Gilbert is appointed to the Board as Non-Executive Chairman, and Greig Gilbert as Chief Executive Officer. 

Simon Webster will step down from the Board as Non-Executive Director with David Williams moving from Non-Executive Chairman to Non-Executive Director to continue to work with Scott and Greig in the delivery of the Company’s new strategy.  It is anticipated that the directorate changes will take effect following approval of the Proposed Fundraise at the Company’s general meeting.

In addition, the Company is in advanced discussions regarding the appointment of further Non-Executive Directors with deep Venezuelan energy and regulatory expertise. Further announcements regarding these proposed appointments will be made in due course.

Information pertaining to Scott Gilbert

Scott Gilbert is a British-Venezuelan investor, executive and entrepreneur. He is Chief Executive Officer of Corcel Plc (AIM: CRCL), an Africa and Latin America-focused oil & gas exploration and production company, and a co-founder of Group de Clermont Ltd, a family-owned investment holding company with interests in the energy sector across Africa and Latin America. Scott is also a co-founder and Non-Executive Director of AOT International Ltd and a Non-Executive Director of Conterp Group Plc. He brings almost 20 years of international oil and gas experience covering technical, commercial, M&A, leadership and executive roles.

Information pertaining to Greig Gilbert

Greig Gilbert is a British-Venezuelan investor, executive and entrepreneur. He is a co-founder of Group de Clermont, and currently serves as Chief Executive Officer of Conterp Group Plc, a leading onshore drilling and well intervention company with over 700 employees in Brazil and operations expanding across Latin America. Greig is also a co-founder and Non-Executive Director of AOT International Ltd, an oilfield technology company providing products and services to major exploration and production companies globally. He brings over 15 years of international business experience spanning manufacturing, commercial, M&A, corporate finance and executive leadership.

Intention to Convene a General Meeting

Completion of the Proposed Fundraise and change of the Company’s name remain conditional on approval by shareholders of the Company of the requisite resolutions at a general meeting.  In addition, at the general meeting, shareholders will be asked to consider and approve certain amendments to the Company’s memorandum and articles of association (“M&A”) to increase the authorised share capital of the Company and incorporate provisions required by UKLR 13.2.1R(1) that the Company complete an initial transaction on or before 30 July 2027, otherwise it will cease operations.

Accordingly, the Company will be posting a notice convening a general meeting shortly, to be held at the Company’s premises at 28 Esplanade, St. Helier, Channel Islands, Jersey JE2 3QA (the “General Meeting”).

A copy of the notice of General Meeting and proposed new M&A will be available on the Company’s website at: https://www.redcapitalplc.com/investors/ once the notice has been posted.

The Company will make further announcements in due course.

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