Sunday Blog, 6 November 2022
88E EEENF ANGS PANR PTHRF PRD DELT HUR GENL BOIL PTAL PTALF I3E COPL BEY LOGP EOG PET
88 Energy (88E, EEENF) announced its quarterly activities report. The main focus now is on its Alaska North Slope Icewine prospect, with a total estimated prospective resource of 1.03 billion barrels of oil. The Hickory-1 exploration well to be drilled there is currently being planned and permitted to be drilled during 2023. It is designed as a vertical well to be drilled to approximately 12,500 feet to intersect and test all four key reservoirs. Funding is still to be done. 88 Energy has been covered weekly in the private blog three times in the past three years, recording gains, of up to 1,300%, each time.
Angus Energy (ANGS) announced its side track spud and forward plan. The total programme, including clean up of the well, is expected to last around 35 days. Regarding current process capacity, sales gas now exceeds 6 million cubic feet per day and condensate production has stabilised at or around 120 barrels per day. Production will be ramped up soon with a second compressor expected to be delivered in December, allowing an increase up to 12 million cubic feet per day by January.
Pantheon Resources (PANR, PTHRF) announced an operational update for its Alkaid #2 well. Production testing operations have commenced, with the well in the clean-up phase. Operations to date have recovered approximately 10% of the frac fluid used, with oil cuts averaging from 8% to 12%. The well has seen a strong sand production response, which must be addressed to ensure sand is not restricting the well bore, and the company is awaiting delivery of a coiled tubing unit to clean out the well bore prior to recommencement of flow test operations.
Predator Oil & Gas (PRD) announced an operations update. It has executed a rig contract with Star Valley Drilling for Rig 101, which successfully drilled the MOU-1 discovery well, to drill the upcoming MOU-2 well in the Guercif Licence, onshore northern Morocco. The rig has been mobilised to a holding location for rig preparations while the access tracks and roads to the MOU-2 location are upgraded and well pad construction completed. The drill will be testing estimated net contingent gas resources of between 295 billion cubic feet and 708 billion cubic feet. PRD was covered weekly in the private blog at significantly below the 4p placing level at which drilling of the MOU-1 well was financed. The share price moved up to over 22p prior to the spud.
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Deltic Energy (DELT) announced a Pensacola drilling update. Shell UK, the operator, has indicated that preparations are now underway to move the Maersk Resilient drilling rig to the Pensacola location and mobilisation is planned to occur in early November, with the well expected to commence drilling mid-month. It is targeting gross P50 prospective resources of 309 billion cubic feet of gas, with a 55% geological chance of success. DELT, with a 30% interest in Pensacola, is now standing at 3.48p, more than twice the level at which it first started being covered weekly in the private blog.
Hurricane Energy (HUR) announced that it has received an offer for the entire issued share capital of the company at an indicative price of 7.7p per share in cash. The company says it is in a strong financial and operational position, however, Crystal Amber Fund, which holds 28.9% of the shares, has indicated its desire to monetise the value of its shareholding and the company has decided to launch a formal sale process in order to establish whether there is a bidder prepared to offer a value that the board considers attractive. In the event that the sale process does not result in a transaction, the board intends to commence a capital return programme with up to $70 million (equivalent to 3.1p per share) to be returned to shareholders in the first quarter of next year. Following that, in the absence of more favourable alternatives, further distributions could then be made during 2023 and beyond. It’s an interesting one.
Another is Genel Energy (GENL), which announced a trading and operations update. The company is on track to generate around $250 million of free cash flow this year, building towards a significant cash balance of over $500 million (£442 million) by the end of the year. Market capitalisation by comparison is £379 million. In addition to the production business averaging over 30,000 barrels of oil per day, there is a pre-production business in Somaliland, where following a successful farm-out last December, preparation continues for the drilling of a well on the highly prospective SL10B13 block, where GENL holds a 51% working interest and is operator. The prospect contains stacked reservoir objectives, with multiple individual prospective oil resource estimates each ranging from 100 to 200 million barrels.
Baron Oil (BOIL) announced a Chuditch update regarding preliminary interpretation of the reprocessed 3D seismic data. Best case aggregate gross gas-in-place is now estimated at approximately 5,500 billion cubic feet versus an equivalent estimate of 3,889 billion cubic feet prior to 3D seismic data reprocessing, and the best case recoverable resource estimate is now 3,625 billion cubic feet, using preliminary gas recovery factors of between 50% and 75%, versus an equivalent estimate of 2,924 billion cubic feet prior to the reprocessing. Financing is key of course and the company says it is in talks regarding a farmout with multiple potentially interested parties. The share price hit 0.35p on the news. BOIL has been covered weekly in the private blog from 0.06p up.
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PetroTal (PTAL, PTALF) announced what it described as robust initial production for well 13H. It tested at approximately 8,000 barrels of oil per day over its first week. Barging logistics continue to improve, with the company now expecting to raise production levels by mid-November. Current field production capacity is over 20,000 barrels of oil per day. PetroTal now is drilling well 12H with an approximate cost of $14 million and an estimated completion in mid-December. I highlighted PTAL when it was 7.6p. It’s now nearly seven times that price at 53p.
i3 Energy (I3E) announced a third quarter operational and financial update. Production now exceeds 23,000 barrels of oil equivalent per day, with forecasts in line to reach 24,000 barrels of oil equivalent per day prior to year-end. Full-year 2022 net operating income is now forecast to be approximately $172 million based on current strip pricing. Canadian Overseas Petroleum (COPL) announced an operations and corporate objectives update. The miscible flood at Barron Flats continues to exceed initial expectations and due diligence is being conducted by a large oil company with respect to a possible joint venture on COPL's deep oil discovery.
Barryroe Offshore Energy (BEY) and Lansdowne Oil & Gas (LOGP) updated regarding the Barryroe lease undertaking application. The Department of the Environment Climate and Communications is requiring proof of financial capacity. Better news was received by Europa Oil & Gas (EOG), though, which was notified by the same department that the Minister has given his consent to extend the first phase of its FEL 4/19 licence to 31 January 2024. Europa intends to use the extension to carry out further technical studies and allow more time to secure a partner to advance development of the licence. FEL 4/19 contains the large, low risk, Inishkea gas prospect, which is potentially a strategic asset.
Finally, Petrel Resources (PET) announced a placing to raise £250,000 at 1.2p per share, with warrants attached exercisable at 1.8p. Use of funds is to provide the company with additional working capital, as Petrel's board continues to assess new projects in Iraq, and advance its Ghanaian interests. I highlighted PET several times in 2019 at around 1p and it went as high as 26.5p thereafter. I highlighted it again as ready to run earlier this year at 1.65p and it was up to 5.1p just a couple of weeks or so later.
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