Sunday Blog, 26 June 2022
IOG PTAL CHAR RKH ECO HUR LBE WEN SCIR AEX
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Catching up on the last two weeks, IOG (IOG) announced a corporate update. Saturn Banks gas production continues to be restored and the company expects to produce 45-60 million cubic feet per day over the second half of this year. The extension of the Saturn Banks pipeline system to Southwark has been successfully laid and drilling of the Southwark East well is at an advanced stage. Southwark is expected onstream in the fourth quarter. The Goddard and Kelham appraisal wells follow. A Nailsworth final investment decision and seismic re-evaluation results for the Panther/Grafton area are both targeted by year end. IOG was covered in the private blog from as low as 9p and is now standing at 28.75p, having been as high as 46p in March.
PetroTal (PTAL) announced a sales update. Approximately 720,000 barrels of its Bretana oil has now been successfully tendered at the Bayovar port by Petroperu for the July lifting. The resumption of partial pipeline operations now provides assurance that the company can execute its shareholder strategy on time as previously indicated. In February, PetroTal announced a $120 million fully funded capital program that could potentially generate up to $230 million of free cash flow this year, allowing the company the optionality to redeem the remaining $80 million in bonds early and implement its strategy of returning capital to shareholders. I highlighted PTAL when it was 7.6p. It’s now over six times that price at 46p, having been as high as 63.5p earlier this month.
Chariot (CHAR) announced 2021 final results. The year end cash position was $19.4 million, with no debt and minimal remaining work commitments, since when a further $29.5 million has been raised. At Anchois, an accelerated field development plan is underway as Chariot looks to progress the front end engineering design, ahead of the final investment decision. Management states it is focussed on progressing towards material cashflows as quickly as possible. Moving forward, the project has significant additional upside with the potential for multi trillion cubic feet volumes in deeper plays. The company has further attraction with its transitional power projects: renewable energy for mining and green hydrogen. CHAR was covered in the private blog from as low as 5p and is now standing at 17.7p, having been as high as 26.9p in April.
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Rockhopper Exploration (RKH) announced the results of a placing and subscription. The company raised gross proceeds of $7 million (£5.75 million) at 7 pence per unit, each unit comprising one new share and, for every two new shares subscribed for, one warrant. The warrants are exercisable at 9p. A further $5 million (£4.1 million) is to be raised via an open offer to existing shareholders. Use of funds is to pay corporate costs, licence fees, costs associated with the completion of the Navitas transaction and various other costs not covered under the Navitas loan agreement, including all costs relating to the South Falkland licences. The prize is project sanction at Sea Lion. At current oil prices, Rockhopper believes the potential value creation to shareholders by sanctioning Sea Lion (a 500 million barrel oil field) is highly material.
Eco (Atlantic) Oil & Gas (ECO) announced an operational update relating to its Gazania-1 well on Block 2B, offshore South Africa, in which it holds a 50% working interest. The company plans to spud Gazania-1 in September and the well will take approximately 25 days to drill. The block contains the previous AJ-1 discovery with 56 million barrels mean contingent resources of light oil. Partners in the well are Africa Energy, Panoro Energy and Crown Energy. The rig is on schedule to mobilise out of Norway in the third week of July and spud early in September. Potential is stated by the company to be the establishing of a new, over 300 million barrels, light oil resource.
Hurricane Energy (HUR) announced an operational and financial update. As of 14 June, Lancaster was producing around 8,700 barrels of oil per day from the P6 well alone with an associated water cut of approximately 45%. The 29th cargo of Lancaster oil, totalling approximately 547,000 barrels, was lifted on 24 May, priced by reference to the average of the first five days of May's dated Brent quotes, being $110 per barrel, resulting in net revenue of $59.5 million. The next cargo is anticipated to be lifted in late July. As of 31 May, the Company had net free cash of $139 million, with $78.5 million of convertible bonds outstanding and due to be repaid in July. Following the repayment, assuming oil prices remain at over $90 per barrel, at the end of July Hurricane is forecasting to be holding net free cash in excess of $75 million. If oil prices for the July cargo are above $120 per barrel, the net free cash forecast increases to above $90 million. Coming up next are acquisitions.
Longboat Energy (LBE) announced an operational update. Two high-impact exploration wells are scheduled for the third quarter, targeting net, unrisked mean resources of 44 million barrels of oil equivalent. Oswig (in which the company holds a 20% interest) is expected to commence drilling in July and Copernicus (in which the company holds a 10% interest) is expected to commence drilling by the end of September. A further firm, high-impact exploration well, Velocette (20% interest) is expected to be drilled in the second quarter of next year. All three wells are fully funded. Of the six wells drilled to date, Longboat is actively reviewing monetisation and commercialisation options of its three discoveries. It is also now screening opportunities to participate in the recently announced Norwegian APA licensing round, so plenty of news to come.
Wentworth Resources (WEN) announced agreement with Scirocco Energy (SCIR) to acquire Scirocco’s 25% non-operated working interest in the Ruvuma PSA and its 1.9 trillion cubic feet Ntorya gas discovery in Tanzania. The other partners are ARA Petroleum Tanzania, with a 50% working interest and Aminex (AEX), with a 25% carried interest. Ruvuma is adjacent to Wentworth's Mnazi Bay gas producing asset. Consideration is comprised of an initial cash payment of $3 million, with further deferred and contingent cash payments of up to $13 million dependent on certain development and production milestones. The consideration will be funded through WEN's cash resources. It’s a potentially transformational transaction for Wentworth, which already has gas production averaging 92 million cubic feet per day.