Oil price, Longboat, Serica, Orcadian, Lamprell, Chariot. And finally…

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WTI $82.81 +15c, Brent $84.32 -26c, Diff -$1.51 -41c, NG $5.78 -42c, UKNG 194.64 -1.36p (Dec)


Oil price


Not much more to add for this week and as the end of the months beckons Brent is underperforming ahead of expiry. WTI is tighter, as I have been going on about for ages whilst punters are worried about recent inventory builds the draws at Cushing are becoming more noticeable.


Putin has now said that Russia will produce and sell more gas and oil which may be a point of contention at next Thursday’s Opec+ meeting, Algeria has already weighed in suggesting no change which is most likely at this point.


Longboat Energy


Longboat has announce a ‘minor ‘oil discovery with the Mugnetind exploration well in licence PL906 (Company 20%) in the Southern North Sea. The exploration well 7/11-14 S encountered hydrocarbons in the Upper Jurassic Ula Formation. The Ula formation was reached at a vertical depth of 3,985 metres below sea level and consisted of a 28 metre gross section with 14 metres of net sandstone of moderate to good quality. The reservoir section in Mugnetind is thinner than predicted as we encountered a thick coal layer immediately under the reservoir. Mugnetind was drilled on a seismic anomaly, which predrill had been identified as either hydrocarbon filled reservoir or coal.


Based on the operator’s preliminary estimates the Mugnetind discovery contain recoverable resources between 5 and 11 MMboe, which is not considered to be commercial in isolation. The well, operated by AkerBP, was drilled ahead of time and below budget and will now be plugged and abandoned as planned.


Helge Hammer, Chief Executive of Longboat, commented:


“While we are disappointed that Mugnetind has come in below pre-drill expectations, we will continue to review opportunities in the area and the potential for finding a commercial development solution. Nevertheless, having discovered hydrocarbons in all of our first three wells is a fantastic achievement by our technical team.”


“Following our material discovery at Egyptian Vulture earlier this week, the Company is looking forward to the continuing fully funded well programme with Ginny/Hermine expected later in 2021 and the Kveikje and Cambozola wells spudding in the spring of 2022.”


The first stage of the Longboat drilling programme has been very successful even if you judge it by Egyptian Vulture alone, indeed whilst Mugnetind is not commercial on its own but may work if adjacent finds are made, preferably not of coal.


The shares have fallen today, the stock at 76p looks very attractive based on existing discoveries let alone anything that might come from the drilling programme in the new year.


Serica Energy


Serica has updated on its Columbus field located in the Central North Sea, to minimise environmental impact and associated processing equipment, Columbus hydrocarbons will flow into the Arran subsea system before processing on the Shell operated Shearwater platform.


Shell have informed the company that the Shearwater platform is currently operating at restricted capacity which will result in a delay to the start-up of Columbus production although it is still expected that first production will be achieved in Q4 this year. As a result, Serica’s full year net production is expected to be slightly lower than the current guidance of 23,000 to 25,000 boe/d.


Mitch Flegg, Chief Executive of Serica Energy, commented:


“There will be no significant long-term impact resulting from this short delay to the Columbus start-up and I am pleased that the well is ready to produce as soon as the export system allows.


The result of this delay is that it is now likely that our full year production will be slightly lower than our previous production guidance. Net Serica production has been strong during September and October, averaging over 26,000boe/d from our BKR and Erskine fields during a period of strong commodity prices.


The use of existing infrastructure to progress the development of Columbus reinforces the benefit of Serica’s approach to providing much needed low carbon gas for the UK.


I would once again like to acknowledge the skill, hard-work and dedication of our operational team who are working closely with the Shearwater Operator to ensure that production begins at the earliest opportunity. I would also like to recognise the support of our joint venture partners Waldorf Production UK Ltd. and Tailwind Energy Ltd.”


This is a dog that barked in the night story, nobody got hurt and no value has been lost as a result of sharing facilities with other industry operators. The Serica share price has fallen from its recent peak as the gas price has rowed back from its peak, at todays price of around 200p for the December contract SQZ is doing very nicely thank you, always welcome in my Bucket List.


Orcadian Energy


Orcadian announced yesterday that it has received three expressions of interest for the provision of an FPSO for the Pilot development. As advised in the Admission Document, the Company engaged Crondall Energy to approach the appropriate FPSO providers on our behalf and has been delighted with the quality of the responses. Three of the four companies, currently operating FPSOs on the UKCS, submitted detailed proposals to Orcadian.


The Company will now enter into discussions to clarify the proposals which the Directors expect to take several months. The Company anticipates announcing its preferred partner for the development of Pilot in due course.


Steve Brown, Orcadian’s CEO, said:


“We were very pleased to have received three such high-quality expressions of interest for the provision of an FPSO for the Pilot development. We will be evaluating these proposals and discussing them with the contractors, to optimise both the vessel selection and the technical and commercial framework for engaging an FPSO contractor as a partner in the development of Pilot.”


I have met the Orcadian team and they impressed me very much and this news shows that the Pilot development, which is well appraised and ready for development, moves a stage further. The next step is to secure development partners in order to deliver a fully financed FDP to the OGA, I can see plenty of upside at Orcadian.


Lamprell


Lamprell has announced that the placing has raised GBP21.9m after it issued 68m new shares at 32p, an 8.6% discount. The Capital Raising is required in order to address the Group’s near-term working capital needs, strengthen the Group’s balance sheet and to take advantage of the 3 significant accessible opportunities which the Board believes are available to the Group in its addressable markets.


At 40p Lamprell doesnt take into account its order book and future opportunities, with the equity and debt situation almost sorted Lamprell can forge ahead with what it does best and as it builds out the programme under way.


Chariot


I was at the Chariot event last night as they put forward the programme to shareholders and other interested parties. There is nothing to add to my comments from yesterday and the new presentation showed just what a formidable company it is becoming and I continue to believe in a potentially massive upside at the company.


And finally…


Some rugby this weekend as Scotland host Tonga and Wales entertain the All Blacks tomorrow. On Sunday Its Harlequins v Sarries.


In the T20 World Cup, today saw the Windies scrape past the Bangas and this afternoon it’s Pakistan against Afghanistan.


Racing is at Ascot and Wetherby and some flat stuff.


In the footy it must be Ole’s last stand at White Hart Lane, how he still has a job is anyone’s guess….Elsewhere tomorrow the Foxes host the Gooners, the Bees travel to Burnley, Liverpool host the Seagulls, the Eagles go to the Emptihad, the Magpies host Chelski and the Saints are at the Hornets.


Sunday sees the Canaries entertaining Leeds and the claret and blue derby as the Hammers go to the Villa.


The weekend also sees games 3,4 and five in the World Series in Atlanta and it’s 1-1 going into the three games.

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