Oil price, Angus, Jadestone, UOG. And finally…

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WTI $73.95 +33c, Brent $75.41 +31c, Diff -$1.46 -97c, NG $3.91 -14c, UKNG 106.37p +0.45p


Oil price


Another up week, little changes as we move into the new month where we are pretty much constantly seeing stock draws and the increased call on Opec+ despite the 400/- b/d rise agreed at the recent meeting. WTI rose $1.88 and Brent $1.31 despite seeing the expiry of the September contract at the weekend.


Natural gas is still seeing the best moves, indeed whilst in the US it stuck around four bucks, in the UK it rose some 19.4% on the week and is now comfortably above the highly profitable 100p level. In the US the Baker Hughes rig count showed a fall of 2 units overall to 488 and 2 in oil to 385, hardly the stuff of increasing domestic production.


Angus Energy


A thorough operational update on its portfolio from Angus this morning starting with the Saltfleetby Gas Field where it has a 51% interest and is on track for re-commissioning in December 2021. The process facility detailed design has resumed and is at an advanced stage. Long lead equipment has been ordered and bespoke processing units have been tendered. Several items of processing equipment are in fabrication. Design work leading to confirmation of all bulk materials is underway.


Two gas compressor packages are being fabricated by specialist engineers in Kent. Caterpillar gas engines and Ariel reciprocating compressor sections have been ordered and delivery confirmed. Bulk materials for the skid-mounted unit and process manifolds fabrication have been ordered. The first complete gas compressor package will be delivered to site in November.


Production process equipment for dehydration, dew point control, condensate stabilisation and fuel gas treatment have been designed by Hull based engineering group. Local UK fabricators have tendered for the build and their bids are under evaluation.


Process equipment including separators, storage tanks and enclosed ground flare system has been sourced as surplus equipment from a recently decommissioned site in the vicinity. The equipment will be recertified and slightly modified for use in the process facility. Re-purposing this equipment provides opportunity for schedule and budget savings.


Gas commercial sales meter and analyser skid is under fabrication in the UK and the Factory Acceptance Test of the complete package, including the remote communications link, is scheduled for September. Factory Assessment Test (“FAT”) will be attended by representatives from the National Grid (LSE:NG.) as well as Angus engineering team. Equipment will be delivered to site after FAT.


Power generation with Caterpillar gas engine using fuel gas from the production process has been ordered. Electrical switchgear is included in the order. Delivery to site is in October.


Detailed design of the process facility continues with Aberdeen based engineering house. The facility design has been iterated to include final equipment selections and is being matured into the complete design package. Bulk materials are being specified for subsequent order. Civils and foundations designs are being progressed. Electrical and instrumentation design will resume from August.


Construction activities will commence in August with limited groundwork and foundations preparation on this pre-developed site. In situ fabrication of flowlines will commence in September as well as installation of the ground flare. Other production equipment will be connected as individual skid packages arrive from the fabricators.


Permitting and planning is well advanced. As regards the pipeline, our statutory Safety Case and Major Accident Prevention Document are in advanced stages of review by HSE. The process plant will be dealt with by continuous assessment by local HSE Field Officers. We are in continuous engagement with Environment Agency regarding the process plant. All local authority planning permissions for both process plant and pipeline are in place. OGA approval of Field Development Plan is also complete.


At the Saltfleetby Gas Field with regard to the side track and other assets, rig tender and selection is already complete with tenders for associated equipment expected in the forthcoming week. Target mobilisation of rig is slated for first week in October. Should suppliers indicate potential delays, whether Covid-19 related or otherwise, the Board will consider a deferral of the side track until end of March 2022 if those delays would in any way cause consequent delay to commissioning of the process plant. This would be to ensure that Angus and partners benefit from the very tight pricing environment indicated by UK National Balancing Point forward gas prices for January, February and March 2022. The Board will advise in due course should this become the case.


As regards planning and permitting, local authority approval was obtained last week. An initial presentation has been made to HSE. BSOR application to HSE will be made in mid August. It is understood that the operation can be conducted under Angus’ existing Environment Agency permit for this site.


Angus Energy contracted realtimeseismic.com to carry out the reprocessing of our Saltfleetby 3D seismic dataset which was originally acquired in 1997 over a total area of 79.92km2. This considerable reprocessing project was motivated by the perspective of using up-to-date techniques to improve the geological interpretability of the dataset. The final deliverable was a depth model validated by the fields well data. A focused proportion of this reprocessed seismic is currently undergoing interpretation by the technical team in order to provide an accurate representation of the sub-surface to aid in the successful design and drilling of the SF7V side-track, the results of which will be announced when available.


Over subsequent months a more complete re-interpretation will take place over the whole field and in particular over the southern satellite reservoir with the aim of shaping a field development programme to convert some of the 12 BCF of 1C (the low estimate of) contingent resources into 1P (P90 or proven) reserves to supplement the existing 18 BCF of 1P reserves from the main Westphalian reservoir.


On the Lidsey Field where Angus has an 80% interest, seismic acquisition by Rees Onshore Seismic and Stryde is complete and reprocessing again by realtimeseismic.com is expected to be complete this week. The survey will tie-in the existing seismic lines to define the subsurface structure.


The company are allowing until the middle of September for re-interpretation and discussion with partners in this Licence before presenting to shareholders. Should the new seismic, as adjusted for our revised depth conversion, continue to be as promising as presently expected, ‘we would move to a planning application for a side track on this low impact site together with an amendment to our Field Development Plan and subsequently regulatory submissions to HSE. We have confirmed with Environment Agency that the side-track can be drilled under our existing standard rules permit’.


‘Given likely planning permission timetables a side track is unlikely to be carried out until we are into 2022. Given our Licence holding is 80% we have some flexibility in terms of farming out some or all of the capital cost to third parties’.


Environment Agency determination of our application to reinject water for reservoir management at Brockham is expected to be made during September. If the determination is in favour of the application, a further period of consultation would follow, allowing for a variation of permit to be issued in late October or early November. Additionally, Angus has begun to approach stakeholders, local and national, for consultation regarding an intervention in BRX4-Z. This intervention would involve the abandonment of the Kimmeridge layer and re-perforation the Portland layer in order to benefit from pressure support from water injection. The re-perforation itself would be a relatively low level intervention and would not require drilling, although this and the abandonment would require the presence of a rig for a brief period of time. Any operation would be subject to approval of water injection by Environment Agency as well as traditional local authority and other regulatory approvals.


With regard to the Balcombe Oil Field the Company has had further discussions with West Sussex County Council and has indicated its intention to appeal the WSCC Planning Committee’s decision to reject our application for a short well test against the Officers’ recommendation to approve. Angus will be making its appeal to the Planning Inspectorate and is presently preparing its statement of case.


George Lucan, CEO, writes: “Angus remains focused on early near term cash flow from the re-start and expansion of the Saltfleetby Gas Field, taking advantage of the rally in gas prices and the tight gas supply in the market. A separate update will be provided on Angus’s Energy Transition projects in the coming days.”


There is a lot here but I think that those looking at Angus as an investment would welcome most of the detail from the company today. It shows that Angus are without doubt delivering on the strategy that they outlined a while ago and that includes the successful funding process. The market may want to see the whites of Saltfleetby’s eyes but to me the risk has diminished substantially and the company should be given a much higher market cap than the current GBP8.5m.


Jadestone Energy


Jadestone has announced that they have completed the acquisition of the Peninsular Malaysia assets of SapuraOMV Upstream Sdn Bhd. Inclusive of agreed adjustments, the Company’s net consideration comprised a net cash receipt of approximately US$9.2 million.


The Assets add immediate cash flow from around 6,000 barrels of oil equivalent per day of low operating cost production, on a net working interest basis, of which over 90% is oil. Adding the Assets to the Jadestone portfolio will increase the Group’s 2P reserves by 34%, adding 12.5 million barrels oil equivalent of net working interest 2P reserves, based on Jadestone’s best estimate 2P reserves production profile.


United Oil & Gas


United has provided an update on the testing of the Al Jahraa-8 (“AJ-8”) development well in the Abu Sennan concession, onshore Egypt. United holds a 22% working interest in the Licence, which is operated by Kuwait Energy Egypt.


Preliminary short-term test results from the Lower Bahariya reservoir indicate a maximum flow rate of 2,093 bopd and 3.63 mmscf/d (c. 2,819 boepd gross; 620 boepd net) on a 64/64? choke and a rate of 1,189 bopd and 1.22 mmscf/d (c. 1,433 boepd gross; 315 boepd net) on a more constrained 26/64? choke.


These test results exceed United’s internal pre – drill expectations and the well will be brought onto production from the Lower Bahriya reservoir in the coming days. The EDC-50 rig will now move 7km to the north of the Al Jahraa Field, where drilling of the ASX-1X exploration well is due to commence in the coming days.


United’s Chief Executive Officer, Brian Larkin commented:


“We are delighted to announce further positive news from the AJ-8 development well; continuing our run of success on the Abu Sennan licence. With over 40m of net pay previously reported, the AJ-8 well was expected to flow at good rates, but it is great to have our expectations exceeded with these encouraging initial test rates recorded from the Lower Bahariya.


“We will now work with our partners to bring the well on stream in the coming days, at a rate which will maximise the long-term production and contribute to our low cost production base. We will move ahead to spud the ASX-1X exploration well, the next step in our plans to further realise the value of this exceptional licence.”


And finally…


In Tokyo Team GB is still doing well with a gold and two silvers so far today in eventing and weight lifting. The cycling is under way and it will be interesting to see how they fare under new management.


The SPL started at the weekend and resumed as before with Rangers wining 3-0 against Livingston whilst Celtic lost 2-1 at Hearts and this after they had been knocked out of the Champions League by FC Midtjylland of Denmark.


The British and Irish Lions lost the second test against the Springboks 27-9 on Saturday after a truly awful performance, now all down to the decider in Cape Town on Saturday.


Finally yesterday in the Hungarian GP it was an incredible event in which a number of cars were taken out at turn 1 by either Bottas or Stroll which left a red flag restart after which Lewis from pole was the only restarter on the grid after everyone else changed tyres. He then had to fight his way through the field and ended up third behind winner Ocon and Vettel in second place. With Max back in 10th that meant a few points picked up which may be added to as after the race Vettel was d/q’d for not having a litre of fuel left to be tested.


The Hundred continued.

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