Sunday Blog, 25 September 2022
I3E EOG DELT LBE PMG SQZ PRD RKH HBR NVPT HE1 CLON PET
Catching up on the last two weeks, Deltic Energy (DELT) announced a £17 million placing, subscription and open offer at 3.5p (more than twice the level at which it first started being covered weekly in the private blog). The proceeds will be used mainly to fund the Selene well (in which Deltic holds a 50% working interest), operated by Shell. It is expected to spud within the next 12 to 18 months. DELT estimates that Selene has a gross P50 prospective resource of 318 billion cubic feet of gas, with a geological change of success of 70% and an unrisked post tax project net present value of $312 million net to Deltic, calculated using a gas price of 80 pence per therm. In the meantime, the Pensacola well (in which DELT holds a 50% working interest) is due to spud next month. Deltic estimates that Pensacola has a gross P50 prospective resource of 309 billion cubic feet of gas, with a geological change of success of 55% and an unrisked post tax project net present value of $166 million net to DELT, again calculated based on a gas price of 80 pence per therm.
i3 Energy (I3E) and Europa Oil & Gas (EOG) announced the spud of the Serenity appraisal well. I3E owns a 75% interest; EOG 25%. The drill programme is expected to last approximately 30 days and the well will be plugged and abandoned after the completion of operations. It’s designed to prove the extension of the reservoir to the west of the discovery well 13/23c-10 and prove up additional hydrocarbon volumes in place, thus enabling optimisation of any necessary further appraisal and a development plan for the field.
Longboat Energy (LBE) issued a number of announcements: the Copernicus exploration well (10% LBE interest) was dry and will now be plugged and abandoned, a rig contract has been signed for the drilling of the Velocette exploration well (20% LBE interest) in the third quarter of 2023, and the Oswig exploration well (20% LBE interest) has delivered positive initial results. Hydrocarbons have been encountered in the Oswig well and a decision has been taken to drill a sidetrack and perform a drill stem test.
The Parkmead Group (PMG) announced an update on Skerryvore. Having received approvals from the regulatory authorities, it has reached agreement to increase its stake in the project from 30% to 50% and continue as operator. Serica Energy (SQZ) also owns a 20% interest. Agreement now has been reached to drill the high-impact Skerryvore prospects and geotechnical work has confirmed considerable multi-interval potential. The planned well will target the main stacked exploration prospects, at Mey and Chalk level, which studies indicate could contain 157 million barrels of oil equivalent in the P50, most likely case.
Predator Oil & Gas (PRD) announced that its Mag Mell project concept for Ireland has been validated by the Department of the Environment, Climate and Communications’ review of the security of Ireland's electricity and natural gas systems, which considers floating storage and regassification units as options for the import of liquefied natural gas to support security of energy supply. Following publication of the review, Predator intends to submit its Mag Mell project to the public consultation process. The main event coming up at PRD is the drilling of the MOU-2 gas well in Morocco, for which it is fully funded. In respect of its previous MOU-1 well, Predator was covered weekly in the private blog from as low as 1.21p. The share price hit 22.5p prior to the well spud last year.
Rockhopper Exploration (RKH) announced a Sea Lion update. The transaction enabling Harbour Energy (HBR) to exit and Navitas Petroleum (NVPT) to enter the area with a 65% stake in, and operatorship of, all of Rockhopper's North Falkland Basin licences, has completed. Sea Lion alone is said to be capable of producing at over 120,000 barrels of oil per day, with significant upside, and the proven oil and gas in the Falklands is stated by Rockhopper to have the potential to form a material part of wider UK energy supply in a relatively short time frame, bringing with it huge potential security of supply and financial benefits for all stakeholders.
Helium One Global (HE1) announced an operational update. A letter of intent has been signed with Baker Hughes to provide integrated services to the Rukwa Phase II drilling campaign. A target spud date of January / February 2023 has been set, subject to successful completion of the rig audit and contract agreement. A low-cost solution has been provided by Baker Hughes mobilising equipment already active in Southern Africa. Continued shortages in the global helium market have seen record prices in contract and spot pricing at $400 per thousand cubic feet and $1,000 per thousand cubic feet respectively. Helium One says it remains committed to delivering a successful Phase II drilling campaign at Tai, where robust closure at multiple stratigraphic levels and multiple subsurface helium shows identified in 2021 drilling gives the company the best opportunity to make an economic discovery that unlocks the potential of the Rukwa helium province.
Clontarf Energy (CLON) and its sister company, Petrel Resources (PET), are more about stock promotion than serious oil and gas endeavours, but that also can offer the opportunity for profit. CLON announced its interim statement last week and discussed the Sasanof-1 well drilled in May / June 2022, which, while it did not flow commercial hydrocarbons, did show that 1,000 metre offshore wells can be funded via stock liquidity. Expect new deals in the coming weeks and months. Regarding Petrel, I highlighted it as a favourite several times in 2019 at around 1p and it went as high as 26.5p thereafter, up over 25 times. I highlighted it again as ready to run earlier this year at 1.65p and it was up at 5.1p just a couple of weeks or so later. There’s more on how to play these in the private blog package.
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