Market Update: 12 June 2023
Rex International* (SGX: 5WH) - May production improves
SDX Energy PLC (AIM:SDX, OTC:SDXEF) - Egyptian sale under consideration
IGas Energy (LON: IGAS) - Preferred geothermal contractor
Caspian Sunrise PLC (AIM:CASP) - Sells 50% stake in vessel
Energy News
Brent Oil US$72.6/bbl vs US$76.1/bbl last Friday
WTI Oil US$67.9/bbl vs US$71.5/bbl last Friday
Henry Hub Gas US$2.26/mmBtu vs US$2.34/mmBtu last Friday
UK NBP Futures 72p/therm vs 69p/therm last Friday
TTF Dutch Futures €30/MWh vs €29/MWh last Friday
- Crude oil prices moved lower over the weekend ahead of the US Fed meeting as sentiment swung towards expectations for an interest rate hike.
- The US Baker Hughes rig count was down 1 unit to 695 rigs last week, with oil rigs up 1 to 556 units while gas rigs were down 2 to 135 units, as producers respond to lower gas prices by cutting investment levels.
Company News
Rex International* (SGX: 5WH) SGD0.165, Market Cap SGD215m: May production improves
- Rex reported average May production of 4.3kb/d gross on the Yumna Field in Block 50 offshore Oman, as reported by Masirah Oil (91.81% subsidiary).
- The Company also reported average March production net to Lime Petroleum (91.65% subsidiary) of 4.02kboe/d on the Brage field (33.84% WI) and 1.75kb/d on the Yme field (10% WI), offshore Norway.
- Yme production volumes were impacted boosted by a new development well that came online on 9th May, with a further well expected to commence production in September.
Sentiment on the stock has struggled in the last 12M due to a drop off in oil prices and several planned and unplanned stoppages that impacted the Company’s production volumes. However, the prior operational issues have been resolved and May reported volumes were over 10kboe/d allowing the Company to meet its near-term production target. The next phase of Rex’s evolution will be deciding how to recycle the positive cash flow generated by the asset base into new opportunities as it targets a 20kboe/d production level and also paying a regular quarterly cash dividend to investors.
*SP Angel acts as Corporate Broker to Rex International
SDX Energy PLC (AIM:SDX, OTC:SDXEF) 6.1p, Market Cap £12m: Egyptian sale under consideration
- SDX announced that the Board was aware of rumours concerning its Egyptian business and confirms that the Company has received multiple offers for the sale of its Egyptian assets, which the Board are evaluating.
- The Company said that any proposed transaction would be subject to the usual conditions associated with a transaction of this nature, including both Government and Shareholder approval.
- The Company commented it would provide further details in due course as well as further information on the plans to return value to its shareholders via organic and inorganic growth.
In 1Q22, the previous management team at SDX sold a 1/3 interest in its onshore Egypt South Disouq concession for $5.5m, which allowed the Company to crystallise value from this asset and return some of the proceeds to shareholders. However, following the blocking of a proposed merger last year, there have been sweeping changes across the C-suite and Board carried out in association with the Company’s new cornerstone shareholder, Aleph Commodities Limited, which aims to identify expansion plans with a focus on increasing production, reserves and shareholder returns. We look forward to a strategic update in due course.
IGas Energy (LON: IGAS) 15.4p, Market Cap £20m: Preferred geothermal contractor
- IGas announce that its geothermal business, GT Energy, has been selected by Salisbury NHS Foundation Trust as preferred contractor through the Carbon and Energy Fund (CEF) Framework.
- The next phase is the creation of an Innovation Partnership between GT Energy, the Trust and the CEF to work together through the project to deliver a geothermal heat plant for supply of renewable heat to the hospital.
- GT Energy will de-risk and develop the geothermal project from initial geological feasibility, through consenting, to construction of the wells and energy centre, with the heat supply expected to begin in early 2026.
A positive development for IGas, which believes that its nascent geothermal business could potentially be a key medium-term growth vector for the Company going forwards. Near-term, we expect management focus to remain on deploying its excess cash flows into maximising recovery from the existing asset base and developing near term incremental production opportunities to make utilise the £263m tax loss.
Caspian Sunrise PLC (AIM:CASP) 5.17p, Market Cap £116m: Sells 50% stake in vessel
- Caspian announced the conditional sale of 50% of the Caspian Explorer drilling vessel for $22.5m cash to Stepping Stone Investments (private), which is expected to result in a gross profit of $20m subject to approvals.
- The Company has returned the rig to recommence drilling on the Deep Well 802 on the Yelemes Deep structure in the BNG contract area (99% WI), onshore Kazakhstan, which had previously been suspended.
- Preparatory work has begun at Deep Well 803 on the Yelemes Deep structure, which the Company plans to spud in 3Q23 and complete before the YE23 in accordance with this year’s work programme commitments.
- Caspian commented that current production was 2kb/d and that work continues in the preparation of the FY22 financial statements, which are not now expected to be published until towards the end of this month.
- Caspian’s $3.7m investment in 2020 will now provide a significant influx of capital to the Company that can be used in the further development of the BNG resource potential. While the delays to drilling and the FY22 financial results are unsettling for shareholders, Caspian clearly felt sufficient confidence about the long-term outlook for its cash flows that it commenced dividends payments in 4Q22. We look forward to the results of its upcoming multi-well drilling programme and a strategy update at its AGM on 30th June.
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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