Oil price, Zephyr, Challenger, Predator, Genel, UOG, Hurricane. And finally…

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WTI $71.65 -26c, Brent $74.48 -2c, Diff -$2.83 +24c, NG $3.97 -13c, UKNG 97.5p +3.5p


Oil price


As expected the oil price is solid, the IMF left growth numbers effectively unchanged with a little tinkering in individual cases. The US is seeing an uptick in Delta cases which is slightly unnerving but so far the action by the UK Government is appearing to lead to a fall in cases.


The API stats showed a bigger than guessed draw of 4.7m barrels and with gasoline falling a whopping 6.2m b’s and distillates making a clean sheet with a draw of 1.9m b’s. Lets see what the EIA later shows.


Zephyr Energy


Zephyr has provided an update on the State 16-2LN-CC drilling operations as well as to announce an increase in its operated land position through the acquisition of an additional 12,260 acres in the Paradox Basin, Utah, U.S.


The Company has reported that drilling operations have proceeded in line with Company expectations. At present, the well has been drilled to a total depth of 10,100 feet and has successfully landed in the Cane Creek reservoir at an approximate 85 degree angle. The objective of the next phase of drilling is to safely and successfully drill approximately 5,000 feet of horizontal lateral to intersect with the open natural fracture systems which are believed to exist across this portion of the Cane Creek reservoir.


Zephyr has also announced an agreement to increase its land position in the Paradox Basin through the targeted acquisition of an additional 12,260 leased acres deemed by the Company to be prospective for mid- to long-term development. Consideration for the new acreage will be satisfied from the Company’s existing cash resources. Following the closing of the acquisition of the new acreage, the Company will operate a total of 37,613 gross acres in the Paradox Basin, the majority of which the Company holds as operator with a 75% working interest.


The new acreage is located on Utah School and Institutional Trust Lands Administration (“SITLA”) lands – the acreage position was nominated for auction by Zephyr and was secured during the most recent SITLA auction. A portion of the new acreage is proximal to the Company’s existing Paradox acreage position, with additional new acreage located in both the historically productive Cane Creek Field and Salt Wash Field which lie to the south of Zephyr’s existing land position.


Colin Harrington, Zephyr’s Chief Executive, said:


“We are pleased that the State 16-2LN-CC drilling operation is progressing well and according to plan. Drilling continues 24 hours a day, seven days a week, and we look forward to this next phase of horizontal drilling with the utmost anticipation.


In addition, I am thrilled to be able to bolster the scale of our Paradox project at this point in time. Our team is developing a unique understanding and data set across the Paradox Basin – and we’re excited about this timely opportunity to expand our operated asset base.


The opportunity to nominate and acquire, at auction, leasehold positions of our choosing was a key consideration and we’re grateful for the opportunity to once again transact with the professionals at SITLA. In addition, we are always mindful of our core mission to be responsible stewards of the environment in which we operate, and we have taken great care to only acquire leases which we believe can be developed with a minimum of surface and environmental disruption.


It’s an exciting time for the Company, filled with short-term operational activity and long-term strategic potential. Today’s news is progress on both fronts, all in the pursuit of delivering significant value creation for our Shareholders for many years to come.”


This is further good news from Zephyr who are continuing to deliver potential value for shareholders, this time fine tuning its position in the Paradox which they know better as every day passes and all the time the drilling continues, into the Cane Creek…


Challenger Energy Group


Challenger has provided the following update in relation to production testing of the Saffron-2 appraisal well. As previously advised, the Saffron-2 appraisal well was successfully drilled to a depth of 4,567ft encountering similar Upper, Middle and Lower Cruse reservoirs to those encountered by the Saffron-1 exploration well.


Since the last announcement of 14 July 2021, the drilling rig has been fully demobilised, to be replaced at site by a Challenger Energy workover rig along with production tanks and major production equipment. Following inspection and subsequent formal approval of both the well completion and production facilities by the Ministry of Energy and Energy Industries, approximately 130ft of potential reservoir sands in the Lower Cruse sections of the well was perforated, to enable production testing from these zones to commence.


Currently drilling materials and fluids are being recovered from the well, which is expected to continue for several days. Once the well has been fully “cleaned-up”, pressures, oil and fluid types, and production rates from the Lower Cruse zones of the well can be ascertained – an important part of the process as this reservoir has not previously been tested/ produced. Thereafter, the other 200ft of net pay identified in the Upper and Middle Cruse zones will be perforated and tested, to give a full assessment of the well’s production potential.


Eytan Uliel, Chief Executive Officer, commented:


“The objective of the Safffron-2 well is to understand the production potential from the various reservoir units identified by both the Saffron-1 and Saffron-2 wells, starting with the Lower Cruse intervals. I am pleased to advise the first stage of production testing at the Saffron-2 well has commenced, with well bore clean-up operations underway. We will provide a further update once we have an indication of production potential.”


Predator Oil & Gas


Predator has provided an update this morning on Morocco, Trinidad and Ireland plus a board change. In Morocco the Company’s primary operational focus will be to implement its work programme to build on the success of the MOU-1 drilling programme. Planning for MOU-4 is underway with long lead materials being identified to ensure material delivery in ample time prior to the spud date of MOU-4.


Further developing the potential for a Floating Storage and Regassification Unit (“FRSU”) for LNG imports will also be discussed with suitable local off-takers of gas and other more carbon-intensive fuels that are active in the downstream energy sector in Morocco. The Company is working with the Schulte Group (https://www.schultegroup.com) to develop the project concepts. Together this will expand the Company’s options to enter at the earliest opportunity the Moroccan gas market, which currently provides a very attractive commercial proposition.


In Trinidad and Ireland the Company’s recently appointed Chief Operating Officer, Lonny Baumgardner, has been tasked with overseeing the next stage of C02 EOR operations in Trinidad as the impact of current COVID restrictions is gradually relaxed and the ability to carry out well workovers safely and efficiently improves. In the meantime C02 is continuing to be injected into the AT-4 block in the Inniss-Trinity field.


Opportunities have been identified to potentially realise the investment made to date in C02 EOR in Trinidad through consolidation with in-country producers expressing an interest in C02 EOR services provided by Predator Oil & Gas Trinidad Ltd.


Finally, an opportunity to capitalise on the progress made on the Mag Mell Kinsale FSRU project in Ireland through consolidation with a potential acquirer or acquirers of a producing gas asset in Ireland is also being pursued.


After some three years with the Company, Ronald Pilbeam is stepping down from the Board with immediate effect to pursue other interests


Paul Griffiths, Chief Executive of Predator, commented:


“The recent appointment of our COO Lonny Baumgardner has provided us with the ability to refresh our operational and executive management team. Lonny has significant expertise in identifying and realising commercial potential by improving the efficiency of operations and focussing resources on production and producing opportunities. This will become increasingly significant as the Company transitions to AIM”


Genel Energy


Genel has announced that payments have been received from the Kurdistan Regional Government relating to oil sales during May 2021. Genel’s share of those payments is as follows: Tawke $13.6m, Tawke override $8.3m, Taq Taq $2.0m, Sarta $3.0m and with a receivable recovery of $3.5m totals $30.4m.


Following the receipt of the receivable recovery payment, Genel is now owed $141 million from the KRG for oil sales from November 2019 to February 2020 and the suspended override from March to December 2020


United Oil & Gas


UOG announce the proposed sale of UKCNS assets to Quattro Energy for up to GBP3.2m. Quattro Energy is a new UK company incorporated in April 2021 by an experienced North Sea focused management team. The acquisition of United’s CNS interests is a first step towards Quattro’s objective to build a portfolio of oil & gas appraisal, development, and producing assets.


The transaction will result in an initial payment of GBP2 million (c. US $2.8 million) at completion. Subject to a Field Development Plan being approved for block 15/18, an additional uplift amount of GBP1.2 million (c. $1.7 million) will be paid to United.


Brian Larkin CEO, United Oil and Gas PLC:


“With this transaction we continue to demonstrate our ability to actively manage our portfolio of assets to unlock significant return in value for our shareholders in a short period of time. In line with our stated strategy, the proceeds of this transaction will further strengthen our balance sheet to support the growth of the company”.


Hurricane Energy


Hurricane has provided an update on Lancaster field operation. It reports that production operations at the Lancaster field have resumed following the Aoka Mizu FPSO’s scheduled annual maintenance shutdown, which took place earlier this month. Production from the 205/21a-6 well is currently stabilising, and a further update will be given in the Company’s next monthly production release, which is scheduled for mid-August 2021.


Whilst the company continue to update on operational matters the market’s attention will be on Crystal Amber with their 25% but gossips in the bourse are convinced that another predator is lurking in the wings and comes with a strong Big Apple accent…


And finally…


Team GB continue to do well in Tokyo and today Tom Dean and Duncan Scott pick up gold, a silver in the rowing and a bronze in the dressage.


Glorious Goodwood continues, with heavy showers the going is soft heavy in places which kept a number of favourites out of the running.

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