OGV Energy Week 23 oil, gas and energy review

United Oil & Gas PLC was a strong performer this week after the group revealed on Wednesday the latest successful well result at the Abu Sennan concession in Egypt.

The company said the El Salmiyah-5 well had encountered some 120 metres of net hydrocarbon pay across four intervals which, as United highlighted, makes the main target materially larger than was previously believed

Testing of the Kharita Reservoir achieved a rate of 8,700 barrels oil equivalent per day, comprising 4,100 barrels of oil equivalent per day (boepd) plus 18mln cubic feet of gas per day, the group added.

In the wake of the news, United O&G had its share price target bumped up by Cenkos Securities to 7.3p, which said it was impressed by the result from the El Salmiya-5 well.

The City broker noted that the well encountered net pay in all the target intervals, while there were indications of a potential thicker and larger undrained area up-dip of the existing El Salmiya wells.

As a comparison, the El Salmiya-2 well, drilled in 2013, encountered 56 metres of net pay within the Kharita and was tested at a rate of 3,530 boepd and 4.7MMscf/d of gas, said Cenkos.

The broker also noted that the 8,700 boepd achieved on test is just from the primary Kharita target and does not include production from the Abu Roash C or E Members.

Another good gainer this week was Canadian Overseas Petroleum Limited which on Thursday announced a settlement in principle regarding its dispute with Essar over the OML 226 prospect off Nigeria.

The agreement will see COPL’s 50% owned affiliate ShoreCan transfer 70% of its stake in Essar Nigeria to Essar Mauritius in return for an end to the legal action brought by the Indian conglomerate.

Essar Nigeria’s sole asset is a 100% interest and operatorship of OPL 226, which lies 50 kilometres offshore in the central area of the Niger Delta.

Through the agreement, Essar Mauritius will grant Shorecan a 10% carried interest (capped at US$5mln net) on all costs relating to the drilling of a first appraisal well at OPL 226.

Essar Nigeria will also now seek an extension of the production sharing contract for OPL 226 beyond the current term that ends on September 30.

Among the bigger companies, Premier Oil PLC shares jumped higher on Friday after it agreed revised payment terms for its North Sea acquisitions from BP PLC.

Having pledged to pay US$625mln in January, before the crash in oil prices, Premier has now agreed in principle to pay cash of just US$210mln on completion, funded with equity.

Then roughly US$300mln of cash flows will be retained by BP from the 23,000 daily barrels of oil equivalent the assets produce on average, with a final US$115mln only payable if oil and gas prices recover further in the future.

Otherwise, it was a fairly quiet week for the junior oilers.

On Monday, Bahamas Petroleum Company PLC posted full-year results that highlighted the explorer’s relatively strong financial performance, as it awaits a hotly anticipated drill programme that was delayed amid the coronavirus (COVID-19) pandemic.

Financial results for the twelve months ended December 31, 2019, confirmed BPC finished 2019 with US$11.2mln of cash.

On the financing front, on Thursday Curzon Energy PLC revealed that it had raised £166,066 by placing shares at a penny a pop.

The placing shares came with warrants attached that can be exercised at 1.5p a share. In all, 16.6mln shares were issued along with 17.6mln warrants.

The funds raised will be used to advance and complete negotiations with the Sun Seven Stars Investment Group (SSSIG) on a transaction involving the London Critical Metals Market (LCMM).

On Friday, Block Energy PLC, the exploration and production company focused on Georgia, revealed that its current Technical Director, Roger McMechan has stepped back from his executive position to pursue his other interests with effect from June 3, 2020.

However, it added, McMechan will continue on the board as a non-executive director, enabling the company to utilise his petroleum engineering expertise and detailed knowledge of its assets as Block Energy prepares to restart oil production and initiate gas production at its West Rustavi field.

The company said that, in his place, it has appointed Ritchie Wayland, a former Group Exploration Manager of JKX Oil & Gas PLC, as its new Technical Manager.

And on the same day, Cadogan Petroleum PLC announced that its CEO, Fady Khallouf, on June 3, 2020, purchased 2,250,000 ordinary shares of £0.03 each in the company on the London Stock Exchange at a price of £0.0245 each.

Following this purchase, the group noted, Khallouf holds in total 7,750,000 shares representing 3.17 % of the company.

Read the latest issue of the OGV Energy magazine HERE.