Oil price, Predator, Zephyr, Gulf Keystone, Jadestone. And finally…
WTI $70.29 +33c, Brent $72.52 +30c, Diff -$2.23 -3c, NG $3.15 +2c, UKNG 68.89p -o.o3p
With oil marginally up this morning if that stays crude will be up albeit modestly, on the week. And that’s not bad after the monthly reporting which has shown a slightly diverse analysis of what’s going on. To sum up, the EIA looked at the numbers but not might actually happen, Opec who know what might actually happen are more bullish and the IEA are as usual a waste of the hundreds of millions of dollars they charge their members every year.
Opec has reported that world demand will be c.99m b/d in the 2H and going into 2022 at 100m b/d. Supply should increase to cope with this extra demand which even the IEA are calling at +1.4m b/d so we can expect the call on Opec crude to be around 29m b/d in 2H 2021.
Predator Oil & Gas (LON:PRD)
Predator has announced that the MOU-1 site construction and civil works have been completed, a further update on the mobilisation of the Star Valley Rig 101 to Guercif is expected next week. The Company is eagerly anticipating the start of potentially transformational drilling operations adjoining the ConocoPhillips licence on the western border of Guercif that includes an area of over 100 km² with a number of gas prospects to be further evaluated for potential drilling following the completion of MOU-1. It is worth noting that Predator’s high equity interest, very close proximity to gas infrastructure and Morocco’s low taxation regime creates extremely favourable conditions for early gas monetisation to address Morocco’s immediate requirement for additional gas resources. The risk versus reward metrics are compelling considering the low well costs and potentially low capital development costs.
I think it is worth taking another look at the Moroccan request for EOI’s re the LNG.
Predator Gas Ventures Morocco Branch (PGVMB) has submitted a response to AMI No.1/DC/2021 dated 26 April 2021 issued by the Department of Energy and Mines Fuel Department in Morocco: “Call for expressions of interest in the Construction and operation of a FSRU” for Morocco to import LNG.
The initial scope of the FSRU project is for an annual requirement of 1.1 BCM by 2025 rising to 1.7 BCM in 2030 and 3 BCM in 2040. By comparison Predator LNG Ireland Ltd has a scoping annual requirement of 2.6 BCM for its FSRU design concept for the Republic of Ireland (“ROI”).
PGVMB is utilising its experience and know-how that it has acquired through the development of its FSRU concept for security and diversity of energy supply for the ROI together with management’s involvement with infrastructure stakeholders and regulatory authorities developed over many years in the gas sector in the ROI.
The FSRU project is envisaged to be a much longer-term project that does not compete with the Company’s short- and medium-term plans to explore for, appraise and develop gas in its Guercif licence onshore northern Morocco. It is potentially a complementary addition to the Company’s business development strategy for Morocco to increase both materiality and the potential for future gas exports to Europe once the domestic Moroccan gas market reaches capacity. Guercif is ideally located adjacent to the Maghreb gas pipeline to support multiple development scenarios both for the domestic and international gas markets.
Discussions and negotiations continue regarding the potential for three additional Collaboration Agreements with European companies specifically in relation to the FSRU concept both in the ROI and Morocco that potentially may lead to further announcements in the coming weeks should these discussions and negotiations successfully conclude on terms acceptable to the Company.
Predator are building a potentially strong and diverse position in Morocco and are looking to evaluate additional projects and opportunities. They have shown that they are capable of demonstrating an ability to drill during COVID restrictions whilst maintaining the pace of development of a diverse portfolio of projects simultaneously in three different jurisdictions designed to enhance the increasingly important ESG credentials.
Zephyr Energy (LON:ZPHR)
Zephyr has announced that it is filing an application with the OTC Markets Group for the Company’s Ordinary shares to be publicly cross traded on the OTCQB Market based in the United States. ‘The Company believes that having its Ordinary Shares traded on the OTCQB will provide enhanced investor benefits, including easier trading access for investors located in the U.S., and greater liquidity due to a broader geographic pool of potential investors. A market maker will be appointed in the U.S. to support the trading on the OTCQB’.
Colin Harrington, Chief Executive of Zephyr, said:
“We believe dual trading on the OTC and AIM Markets represents another important step for the Zephyr corporate platform. Dual trading, combined with our recent pledge to achieve carbon neutrality across our operational footprint, will serve to diversify the share register and increase exposure to a broader range of investors, whether U.S.-based or ESG-focused. This action comes on the back of an already increased level of interest from U.S. investors as a result of the recent expansion of our operational footprint in the U.S.
“Over the last 18 months, we’ve worked hard to complete Zephyr’s corporate transformation, and following our admission to trade on the OTCQB, I believe our Company platform will now be optimally structured to benefit from the considerable operational activity planned for the coming months.”
Whilst for most London quoted stocks an OTC is of limited interest, for Zephyr however with its US leadership and assets is not most London stocks. The boxes that the company ticks are importantly US sensitive i.e. US assets drilled with a US Government grant, the board and of course its newly strengthened ESG credentials which will attract the cream of US investors, it should be a good move and I confidently predict significant further share price growth.
Gulf Keystone Petroleum (LON:GKP)
An operational and corporate update from GKP this morning with a successful restart of drilling activities, with commencement of SH-13 completion ahead of the previously announced schedule of Q3 2021. After SH-13, SH-I will be drilled and electric submersible pumps will be installed in two existing wells. Gross production is now expected to increase towards 55,000 bopd in Q4 2021, versus previous guidance of Q1 2022 which compares with gross average production from the field in 2021 to date of c.43,600 bopd, in line with 2021 guidance.
$100.8 million ($78.9 million net to GKP) received from the Kurdistan Regional Government in 2021 to date for payments of crude oil sales and recovery of outstanding arrears.
As previously announced, GKP is proposing a $25 million annual dividend and $25 million special dividend, both for approval at next week’s Annual General Meeting as they continue to balance investment in growth and returns to shareholders.
GKP has made a proud boast of retaining a robust balance sheet, and with a cash balance of $195 million as at 10 June 2021 it is indeed strong and payments have been coming in from the KRG so far this year. With ambitious plans for significant further production expected by the market it will be needed along with the dividend and further spend.
Jon Harris, Gulf Keystone’s Chief Executive Officer, said:
“We continue to safely navigate a challenging operating environment due to COVID-19, with gross average year-to-date production of c.43,600 bopd, up almost 20% from 2020 annual average gross production. Today, we are pleased to announce that we have restarted work to complete SH-13, marking the resumption of drilling activities ahead of schedule. As a result, we now expect to increase gross production towards 55,000 bopd in Q4 2021 and to be at the upper end of 2021 guidance (40,000-44,000 bopd) as we continue to develop and realise the value of the Shaikan Field’s substantial reserves and resources for the benefit of all stakeholders
Jadestone Energy (AIM:JSE)
Jadestone has confirmed the dividend payment of US$1.08 per share, 77p at a cost of $5m.
Paul Blakeley, President and CEO commented:
“I am delighted to provide our shareholders with direct returns and to complete the guidance commitment we made in 2020. With this dividend payment, the Group will have paid shareholders a total of US$7.5 million in respect of our 2020 performance.
“Payment of this second and remaining portion of our 2020 dividend programme underscores the resilient performance of the underlying business in 2020. Despite the oil price collapse, we were able to generate positive organic free cashflow, after paying down debt outstanding by around US$43 million and more than doubling our net cash position to US$82 million, as well as announcing and closing the acquisition of Lemang during the year.
Importantly, and in contrast to the Group’s maiden dividend payment, this dividend will be paid to shareholders without Canadian withholding tax, thereby underscoring one of the benefits of our recent internal reorganisation and redomicile to the UK.”
It’s the start of the Euro 2020 Tournament, only a year late and being played in 16 cities around Europe with the final at Wembley. Hopefully crowds will build up through the tournament but the naysayers are urging Boris to maintain the lockdown even though it is not necessary.
This weekend home countries are represented by Wales who play Switzerland tomorrow and England host Croatia on Sunday.
Racing this weekend at Sandown and York ahead of Royal Ascot next week.
And the second test continues, England scored 303 and as I write New Zealand are 94-1.