Market Update: 11 April 2023
Mosman Oil and Gas Ltd (AIM:MSMN)* - Cinnabar gas tie-in
Beacon Energy PLC (AIM:BCE) - Reverse takeover closes
Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) - Paradox spill
Panoro Energy (OTC:PESAF, OSL:PEN) & BW Energy (FRA: 6BW) - First oil from Phase I
Energy News
Brent Oil US$84.7/bbl vs US84.7/bbl last Thursday
WTI Oil US$80.3/bbl vs US$80.3/bbl last Thursday
Henry Hub Gas US$2.16/mmBtu vs US$2.14/mmBtu last Thursday
UK NBP Futures 102p/therm vs 106p/therm last Thursday
TTF Dutch Futures €43/MWh vs €44/MWh last Thursday
- Crude oil prices were broadly unchanged over the Easter weekend as the market waits for more data to better understand the impact on global demand and supply dynamics.
- The US Baker Hughes rig count was down 4 units to 751 rigs last week (+62 y/y), with oil rigs down 2 to 586 and gas rigs down 2 to 158 units. The frac spread count was up 5 units to 295 completion crews (+22 y/y).
- The US EIA storage report detailed a draw of 23bcf to 1,830bcf last week, with storage levels now 31.9% above last year and 19.5% above the 5-year average.
- The Energiser is celebrating its 1st birthday today, thanks for your support from the team at SP Angel Energy.
Company News
Mosman Oil and Gas Ltd (AIM:MSMN)* 0.074p, Market Cap £4.7m: Cinnabar gas tie-in
- Mosman raised £300k (before expenses) on Friday by placing 545m new shares @ 0.055p/sh to partly fund the tie-in of the Cinnabar well (75% WI) gas flowline to the gas trunkline, which is required for the sale of gas.
Mosman is now focussing the Company’s resources on increasing production at the Stanley and Cinnabar fields, while also progressing the strategic review of the EP145 permit in Australia. The Cinnabar development could be potentially transformational for Mosman, as it should be possible to drill several more wells at 40-acre spacing across its acreage to boost its group production and cash flows. With a number of irons in the fire, management has initiated a corporate review and we expect further updates this year on the capital allocation priorities of the business.
*SP Angel acts as Nominated Advisor and Broker to Mosman Oil & Gas
Beacon Energy PLC (AIM:BCE) 0.12p, Market Cap £12.6m: Reverse takeover closes
- Beacon announced the completion of the Rhein Petroleum (private) acquisition and now has a full-cycle portfolio of largely operated production, development, appraisal and exploration assets in onshore Germany.
- The Company has contracted a rig to commence drilling in mid-June on the Schwarzbach-2 (SCHB-2) development well in the Erfelden Field (100% WI), which can be tied-in to existing facilities on success.
- Following a reverse takeover and £6m raise, Beacon’s shares have been re-admitted to trading on AIM with a clearly defined strategy to build a self-funding business underpinned by existing production and reserves, with cash flows from operating activities directed into further value enhancing organic production growth in the coming years. Shareholders will look to the results from the SCHB-2 development well and the near-term work programme to enhance production and cash flow to drive the story.
Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) 4.3p, Market Cap £69m: Paradox spill
- Zephyr announced a significant well control incident on the State 36-2 LNW-CC well that led to a hydrocarbon spill at the Company’s flagship project in the Paradox Basin.
- The Company reported that well control efforts have proved successful and surface impacts appear to be limited to an immediate area around the pad, with clean-up efforts already under way at the site.
- The Company will provide a further update in due course once it has had the opportunity to comprehensively assess the situation and complete any necessary additional well work prior to flow testing.
- The shares are down ~15% in early trading following news of a hydrocarbon spill at the State 36-2 well, which thankfully appears to be limited in impact and scale. This is unfortunate for the Company, where shareholders had been looking forward to a period of significant near-term news flow aimed at unlocking the resource potential of its 45,000-acre position in the Paradox Basin in Utah, onshore US. While start-up issues are not unexpected in a new play, the Company is confident that testing results will ultimately confirm commerciality. Zephyr plans to integrate the production test results from the State 36-2 well, along with results from the flow test on the State 16-2 well, into the Company’s overall reservoir model that will help to define the next steps for the development of its flagship Paradox project.
Panoro Energy (OTC:PESAF, OSL:PEN) NOK28, Market Cap NOK3.2bn: First oil from Phase I
- Panoro (17.5% WI) and BW Energy (FRA: 6BW), 73.5% WI) announced first oil from the DHIBM-3H development well at the Hibiscus Ruche Phase I development on the Dussafu Marin Permit offshore Gabon.
- This is the first of six planned production wells and is currently flowing at 6kb/d from the prolific Gamba reservoir, in line with expectations. Drilling of the next production well is now underway.
- The Hibiscus / Ruche Phase 1 drilling campaign targets four Hibiscus Gamba and two Ruche Gamba wells which are expected to add c.30kb/d gross production when all wells are completed in early 2024.
- The Company commented that commissioning of the new gas lift compressor onboard the FPSO BW Adolo is now in process to support production from all six existing production wells at the Tortue field.
Panoro has entered a phase of continual drilling activity that should deliver a step-change in production and increase its exposure to the current high oil price environment. In addition to this year’s planned $75m capex programme and scheduled $20m debt repayment, the Company has also declared an inaugural quarterly dividend and set out a framework for shareholder returns that will boost the $20m intended cash return subject to higher post-hedge realisations through buybacks and/or special dividends.
Research
David Mirzai – David.Mirzai@spangel.co.uk – 0203 470 0473
Sales
Richard Parlons – Richard.Parlons@spangel.co.uk - 0203 470 0472
Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
Rob Rees – Rob.Rees@spangel.co.uk - 0203 470 0535
Abigail Wayne – Abigail.Wayne@spangel.co.uk - 0203 470 0534
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+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
Sources of commodity prices
Oil Brent - ICE
Natural Gas - NYMEX
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