Todays’ Oil and Gas update – Jadestone Energy and Orcadian Energy

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Jadestone Energy (LON:JSE): Update on Maari acquisition, New Zealand

Orcadian Energy – New entrant to AIM

 

Energy Prices         

Brent Oil US$72.5/bbl vs US$70.1/bbl yesterday

WTI Oil US$70.2/bbl vs US$68.8/bbl yesterday

Natural Gas US$3.13/mmbtu vs US$3.11/mmbtu yesterday

 

Oil Price News 

SP Angel’s Oil Market outlook following March 2021 OPEC+ meeting: https://youtu.be/DFcon98RdqE

Please see SP Angel’s Oil Market outlook for 2021: https://youtu.be/T222JHGzokI

Oil prices continue to rally as the API reported a draw in crude oil inventories of 2.1MMbbls yesterday for the week ending 4 June

Last week, the API reported a draw in oil inventories of 5.4MMbbls after analysts had predicted a draw half that size of 2.1MMbbls

Crude oil inventories have fallen by more than 14MMbbls since the start of this year, according to API data, but are still up 43MMbbls barrels since January 2020

While crude oil inventories fell yet again this week, US oil production fell to an average of 10.8MMbopd for the week ending 28 May, according to the latest data from the Energy Information Administration

This is down 200,000bopd from the week before

The API reported a build in gasoline inventories of 2.405MMbbls for the week ending 4 June, on top of the previous week’s 2.51MMbbl build

Distillate stocks saw an increase in inventories this week of 3.752MMbbls for the week, on top of last week’s 1.585MMbbl increase

Cushing inventories fell this week by 420,000bbls

Gas Price News 

After maintaining the US$3/mmbtu mark last week in the face of moderate temperatures, weather models that showed much hotter conditions in key US regions this week helped lift the July Nymex futures contract even higher, to around US$3.1/mmbtu

However, weather data in recent runs has backed off some of the hot weather, both in terms of intensity and location.

Yesterday, the forecast shifted a little further cooler for the next couple of weeks but maintained the “impressive heat” for this week, according to Bespoke Weather Services

Currently, there are no tropical cyclones expected to form in the Atlantic for the next 48-hours, according to NOAA

Natural gas production was also flat week on week

 

Company News

Jadestone Energy (LON:JSE): Update on Maari acquisition, New Zealand

Share Price: 69p, Market Cap: £319m

Jadestone has provided a much-anticipated update on the planned completion of the acquisition of the 69% operated interest in the Maari asset, shallow water offshore New Zealand.

The Company has continued working with the seller, OMV New Zealand to satisfy the remaining outstanding conditions to complete the acquisition, in particular the approval of New Zealand Petroleum & Minerals. 

While this work is continuing, the Company expects that completion will occur in the second half of 2021. 

In parallel with the NZP&M discussions, the Company is in discussions with OMV New Zealand and expects to extend the long stop date under the Maari sale and purchase agreement, which is currently set at 30 June 2021. 

The Company will provide an update, once a date has been confirmed.

The Company intends to issue updated production guidance in due course, accounting for a revised expectation on timing to close the Maari asset acquisition and the positive impact of the acquisition of the SapuraOMV Peninsular Malaysia assets announced on 30 April 2021.     

Our take: A timely update from Jadestone, reassuring the market with regards to this drawn out but accretive acquisition. Importantly in our view, the Company’s production profile remains in line with guidance and given deferred investment from last year is now in progress, notwithstanding commodity price improvements and inorganic growth slated for H2 2021, we see rapid expansion this year for the Company. The Company’s balance sheet strength underpinned by its prudent approach to capital discipline has ensured it successfully navigated a difficult period for the sector. Preserving its healthy dividend this year also ensures a sticky shareholder base and differentiates Jadestone from many of its peers in our view.

Orcadian Energy  New entrant to AIM

A significant new entrant to the AIM E&P space sees Orcadian Energy’s intention to float.

Orcadian is also seeking to raise gross proceeds of c.£5m to progress its UKNS assets.

The Company’s key asset is the 100% interest in the Pilot oilfield, with audited proven and probable reserves of 78.8MMbbls (audited by Sproule BV).

The Company plans to develop, in phases, the Pilot Oilfield (comprising Pilot Main and Pilot South) and its other key discoveries Elke, Narwhal and Blakeney, using a polymer flood approach.

There is also potential for other prospects within the Group’s licence areas to be developed using the same method (such as Bowhead and the Elke satellites) if future drilling successfully confirms their suitability.

Polymer flooding is an established development technique for viscous oil assets which has been proven offshore on the Captain field in the Central North Sea by Chevron and Ithaca.

The Company expects to pursue in parallel, potential development farm-out and contractor alliances as options for financing the development of its assets.

The Company has a low emission development plan, which it believes is in line with the OGA’s Net Zero goals, and which is projected by Crondall to deliver an emissions performance which lies in the lowest 5% of the world’s oilfields.

Previous initial funding was received by Orcadian from Shell Trading International Limited in 2019.

The Company’s strategy is to identify discovered resources, preferably well appraised and most likely on the UKCS; to secure access to those resources; and to create a profitable field development plan which attracts finance either from oil industry partners or financial investors.

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