Market Update: 20 April 2023
Trinity Exploration & Production PLC (AIM:TRIN) - Trintes fully online
Deltic Energy PLC (AIM:DELT) - Pensacola studies continue
Clean Power Hydrogen PLC (AIM:CPH2) - Improving outlook
Energy News
Brent Oil US$81.5/bbl vs US82.8/bbl yesterday
WTI Oil US$77.6/bbl vs US$79.1/bbl yesterday
Henry Hub Gas US$2.23/mmBtu vs US$2.37/mmBtu yesterday
UK NBP Futures 97p/therm vs 102p/therm yesterday
TTF Dutch Futures €41/MWh vs €42/MWh yesterday
- Crude oil prices edged lower as the EIA reported a 4.5mb US crude inventory draw last week, offset by a 1.3mb gasoline build and little change to distillate stocks, with refinery utilisation increasing 1.7% to 91%.
- European energy prices were stable as EU natural gas storage levels rose 1% w/w to 56.6% full (vs 36.4% 5-year average), with builds in France and Italy accounting for over half the 7TWh increase to 638TWh.
Company News
Trinity Exploration & Production PLC (AIM:TRIN) 87p, Market Cap £33m: Trintes fully online
- Trinity announced that production has restarted from all wells following a stoppage due to a generator-related fire on the Company’s Bravo Platform in the Trintes Field (100% WI), offshore east coast Trinidad.
Fortunately for Trinity, the fire was quickly extinguished and no hydrocarbons were released into the environment as a result of this incident, allowing production to resume after repairs involving about a week’s shutdown. Attention now moves towards the FY22 results and FY23 guidance that are expected in early 2Q23. Investor focus remains on the current paused onshore drilling campaign, which includes a high angle and also a deeper well that are expected to deliver a meaningful step-change in production and reserves on success. In our view, Trinity’s intention to implement shareholder cash returns once its current drilling programme has completed may suffer some creep into the latter half of the year, but the Board has already bought back ~0.7m shares in its current share buyback programme and we expect a strategic update at the upcoming FY22 results presentation.
Deltic Energy PLC (AIM:DELT) 1.92p, Market Cap £36m: Pensacola studies continue
- Deltic reported FY23 results and also announced a cash position of £15.1m at end 1Q23, with a further £5.6m of Pensacola well costs expected to be paid after this date.
- The Company has no material cost exposure until the anticipated return to drilling in 2H24 and commented that it was aware that Capricorn Energy (CNE LN) was trying to farm-out their JV offshore UK licences (40% WI).
- Deltic is considering options, including potential full or partial monetisation of the c.300bcf Shell-operated Pensacola gas discovery (30% WI) in the UK Southern North Sea with appraisal drilling anticipated late 2024.
- The Company expects to drill an exploration well on the similar-sized Selene gas prospect (50% WI) in the UK Southern North Sea during the Summer of 2024.
Management was eager to point out on the call that the share price did not reflect the value of the Pensacola discovery, where it would look to reduce licence equity realising near term value whilst mitigating future cost exposure. There was also greater detail on the potential for a significant oil leg in the reservoir and de-risking of nearby prospectivity, with further details promised following post-well studies to fully understand the potential upside. A commercial gas discovery would mark the culmination of a progressive 12M for the Company and further proof of its ability to identify early-stage opportunities and take them from licensing through to drilling whilst introducing high quality partners. Deltic said it is funded to 3Q24 and is considering all financing options as it pursues a strategy to become a leading UK gas explorer.
Clean Power Hydrogen PLC (AIM:CPH2) 15p, Market Cap £40m: Improving outlook
- CPH2 announced five MFE220 electrolyser orders as at YE22 with combined sales value of £6.5m, of which £1.8m has been received as deposits and contributed to a £15.3m cash-equivalent position at end-December.
- The Company expects to have full MFE110 units on test in 2Q23 and anticipates delivery of three MFE110 units to customer sites and subsequent testing scheduled to be completed in 2H23.
- CPH2 has resolved the potential issue that existed in the cryostat (the component enabling separation of hydrogen and oxygen using cryogenics) with a redesign for new units that avoids the issue.
- MFE110 tests are expected to be accommodated into the MFE220 final design and CPH2 expects the first MFE220 units to be manufactured, tested, and delivered to customers by the end of 2023.
Following the IPO in 1Q22, this has been a disappointing year for investors as CPH2 has experienced delays and engineering issues in the Company’s transition from an R&D technology company towards a commercial manufacturing operation. However, focus is now on the completion and acceptance testing of the de-rated MFE110 units, which will lead to the finalisation of the MFE220 1MW electrolyser that should provide the platform to achieve commercial success. In addition, CPH2 has signed three major licencing agreements as part of a strategic aim to have 4GW of annual production by the end of 2030, of which 1GW will be manufactured by CPH2 and 3GW will be manufactured under licence. We look forward to an update on the testing of the MFE110 units over the next 6M.
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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Sources of commodity prices
Oil Brent - ICE
Natural Gas - NYMEX
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