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Oil & Gas highlights: Tullow Oil, Europa, 88 Energy, Madalena, Solo Oil, Union Jack Oil, SDX Energy

Tullow Oil on Wednesday has vowed to further squeeze down its $1.1bn capital budget, Irish oil stocks surged and 88 Energy had more shale success in Alaska.
Tullow says capex could be slimmed down to $300mln.

Tullow Oil (LON:TLW) on Wednesday has vowed to further squeeze down its $1.1bn capital budget for 2016, and said it could shave spending down to just $300mln per year from 2017 onwards if oil prices stay low.

Capital spending totalled $1.7bn in 2015, and the company said it is working to reduce 2016’s current budget down to $900mln from $1.1bn. Like much of the oil sector, Tullow has been working to reset its operations to survive as crude prices have slumped down to around $30 per barrel.

The Africa focussed oil producer this morning announced revenues were some 27% lower in 2015, and losses for the year amounted to $1bn.

Europa Oil & Gas (LON:EOG) has confirmed it has been awarded a new licence option (LO) for acreage in the southern Porcupine Basin, offshore Ireland.

AIM quoted Europa was notably the only small cap explorer among the initial licence awards – with other new acreage holders named as Eni, BP, ExxonMobil, Nexen, Scotia, Statoil and Woodside Petroleum.

“We are delighted with the award of this licensing option, particularly given the strength of the competing companies,” said Hugh Mackay, Europa chief executive. “This is an endorsement of the strong technical work that supported our bids.”

88 Energy (LON:88E) shares rose nearly 200% on Wednesday after it revealed better than expected results from tests on samples taken from the recently drilled Icewine-1 well, in Alaska.

The company said that permeability tests on samples recovered from the HRZ shales in the Icewine-1 well exceeded expectations and porosity readings were at the upper end of expectations. In the words of 88 Energy, these findings cross off two of three potential ‘Achilles heels’ of its new HRZ shale play.

Madalena Energy (CVE:MVN, OTCMKTS:MDLNF) is to sell its Canadian oil and gas assets in a share-based deal worth C$5.5mln. The asset sale is part of a broader set of deals which will see a new Canada focussed oil junior in Toronto.

Point Loma, currently a private company, has agreed to acquire Madalena’s Canadian unit, which produces some 135 barrels oil equivalent per day from the Paddle River area of Alberta, at the same time as it is acquired by Toronto Ventures Exchange listed First Mountain Exploration (CVE:FMX).

For South America focussed Madalena the deals represents a useful divestment of non-core assets.

Solo Oil (LON:SOLO) has decided to further increase its stake in the soon-to-produce Kiliwani North project, onshore Tanzania.

It will purchase an additional 3.825% stake in the venture from Aminex, increasing its interest to 10% from 6.125%. In return, Solo is paying $2.16mln. The AIM quoted oil junior had the option, under an existing agreement, to acquire up to 6% of the project.

US onshore oil and gas group Magnolia Petroleum (LON:MAGP) brought on  eight new wells to its portfolio in its latest quarter, taking the total in production where it has a stake to 210.

A further nine at various stages of development, said Magnolia, which also has agreed to participate in a 10 well drilling programme alongside operator Continental Resources targeting gas in the South-Central Oklahoma Oil Province (SCOOP).

Onshore UK oil and gas explorer Egdon Resources (LON:EDR) recorded elevated gas readings, indicative of the presence of hydrocarbons, at its Keddington-5 well in  the East Midlands.

Hydrocarbons were recorded at from a gross interval of 141 metres, containing 62 metres of net sand, Egdon said. The well has now been suspended to enable production flow testing of the reservoir with a traditional beam pump. Union Jack Oil (LON:UJO) has a 10% stake in Keddington.

SDX Energy (CVE:SDX) has revealed excellent well results from the North West Gemsa field, onshore Egypt.

The Al Amir SE 23 well encountered a significant oil bearing reservoirs, in the Kareem Rahmi and Shagar formations. Some 23 feet of oil pay was measured in the Shagar, while 28 feet of pay was measured in the Rahmi.

Production was brought online from the Shagar and during testing flow rates were measured at 3,860 barrels of oil per day with 2.55mln cubic feet of gas per day.


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