Christmas 2022 / New Year 2023 Blog
LBE MEN ATOM EOG I3E ITE UPL BOIL RBD HE1 ANGS PTAL PTALF PRD PANR PTHRF 88E EEENF and more
2022 ends with a robust energy pricing environment and a positive outlook for companies with viable projects. I’ll focus first on some interesting smaller ones which have issued news over the last month or so and offer the potential for significant price action in 2023.
Longboat Energy (LBE) announced a year end update on 13 December. The company (market cap. ~£10 million) estimates its unaudited, year-end 2022 cash position will be ~£9 million. Current drawings under its exploration finance facility are ~£44 million and will be repaid fully from its Norwegian tax rebate due in November 2023. Longboat now has agreed further terms with its lending banks to increase its facility to ~£65 million and extend the availability period to the end of 2024 to finance its drilling programme in 2023 and beyond. Kveikje (in which LBE holds a 20% interest) is one of the largest commercial oil discoveries in Norway during 2022 with good reservoir quality, close proximity to infrastructure and multiple development options. There are the Egyptian Vulture and Oswig discoveries too. Longboat is currently reviewing options which include early monetisation and will be providing a further update on its forward activity programme in the New Year.
Molecular Energies (MEN) issued a market update on 21 December. The company (market cap. ~£15 million) owns 25.2% of Atome Energy (ATOM) (market cap. ~£38 million), plus a start up alternative energies division, extensive oil & gas exploration acreage in Paraguay and significant oil & gas production operations in Argentina and the USA. A further update on its hydrocarbons businesses, which continue to be operationally profitable, as well as an update on the alternative energies division (currently in the lithium exploration business in Argentina), is scheduled to be provided on 9 January. A Paraguay drilling update issued on 7 December estimates the start of drilling of its upcoming exploration well in the latter part of the first quarter of next year, with mobilisation commencing in the first part of that quarter.
Europa Oil & Gas (EOG) (market cap. ~£10 million) released its AGM statement on 7 December. Most interesting is its Inishkea prospect, offshore Ireland, which alone has the potential to supply the majority of the gas required for the five new gas fired power stations in Ireland. The company’s application to extend the first phase of the licence to 31 January 2024 has been granted, which enables continuation of technical studies and provides more time to find a project partner. Since Ireland will continue to require gas into the foreseeable future, having recently agreed plans to build new gas-powered electricity plants, the company says it makes sense to keep this potentially valuable source of indigenous gas available, although Green politicians are likely to see it differently. In addition to Inishkea, Europa also owns a percentage of Wressle production (total average net rate for the year ending 31 July 2022 was 245 barrels of oil per day) and a 25% interest in the Serenity oil discovery operated by i3 Energy (I3E). Although the appraisal well in October 2022 was disappointing and did not encounter oil-bearing sands, the partners are assessing the various development options to bring the field into production. Latest from I3E on 22 December was that the focus is on advancing a field development plan for the Serenity field as a one well development, tied in to existing third party infrastructure.
Upland Resources (UPL) (market cap. ~£5 million) announced a Sarawak update on 20 December. The company says its Block SK334 in Malaysia offers transformational potential and has identified three main structural trends in the seismic interpretation work, confirmed through the correlation with surface geology and regional analogues; the block borders discovered oil fields across the border with Brunei and shares similar geological settings. There is also potential said to be emerging from its UK North Sea P2478 Dunrobin prospect, in respect of which it is working with the joint venture partners (Baron Oil (BOIL) and Reabold Resources (RBD)) to realise value as technical studies complete. A further major asset is the Saouaf permit in Tunisia, which the company has applied to renew until December 2023. Farm out partners for all are being sought.
Other interesting recent news included the announcement from Helium One Global (HE1) of a ~£9.9 million placing and subscription at 5p per share to fund its planned drilling campaign at the Tai prospect in the Rukwa Basin, which is targeted to commence in the first quarter of next year. Helium is a vital resource, un-substitutable in a range of high-value, high-tech, applications, and remains in critical short supply.
Angus Energy (ANGS) also announced a placing and subscription, in its case raising £7.1 million at 1.65p per share. The funds will cover acceleration of field development and production, development of storage, plus cost overruns and hedge payments. A sidetrack currently is being drilled, with expected completion in January and a second compressor has arrived onsite, which is expected to be operational during the course of next month.
PetroTal (PTAL) announced corporate updates. AIDECOBAP has removed the river blockade. With the reopening, the Brazilian export route is now available and production is expected to again reach approximately 18,000 barrels of oil per day for the remainder of December. An agreement also has been reached outlining repayment terms of the $64 million owed to PetroTal by Petroperu from the July export of approximately 720,000 barrels of oil. PTAL has received $10.9 million as part of a schedule of payments and expects to be fully repaid by August next year.
Predator Oil & Gas (PRD) announced an operations update. Initial mobilisation of the rig equipment to the MOU-2 drilling location has commenced and long lead items have been successfully imported and delivered to warehouse facilities in Guercif. Remaining materials and inventory are in transit and will arrive on location in the coming days. A firm spud date should be announced in the near future. The well will be drilled to 1,500 metres true vertical depth and is expected to take between 12 to 15 days to complete.
Pantheon Resources (PANR) announced a reservoir modelling report from Schlumberger, supporting the company’s huge estimated oil in place numbers. Critical in all this, of course, is that commercial flow rates can be established. Pantheon is currently conducting a delayed production testing operation at the Alkaid #2 well and cautions that an assessment of commerciality cannot be made until flow testing operations have concluded. No estimated date for this has yet been advised.
88 Energy (88E) announced the execution of a rig contract for the drilling of the Hickory-1 exploration well. Permitting and planning remain on track for a scheduled spud in late-February / early-March. Hickory-1 is said to be designed to appraise six key reservoir targets and 647 million barrels of oil. The company states that further details of the drilling program and schedule will be announced in the lead up to the spud. In the meantime, expect a placing soon to finance the drill.
Notwithstanding the more volatile conditions, there’s still plenty of money to be made in the markets with the right stocks and the right timing. Look for fully funded companies with a potentially transformational event coming up. The secret is to ride the promote, rather than be the victim of it. I wish you every success in 2023.