Proactive weekly oil and gas news summary including Ithaca Energy, Gulf Keystone Petroleum and Leni Gas & Oil


In North Sea news this week, Ithaca  Energy (LON:IAE) revealed positive results from the Stella field development project, which is now progressing rapidly.

The Greater Stella Area (GSA) oil field development is perhaps the most significant growth driver for the North Sea focused AIM explorer & producer (E&P) which had already established production at the Athena field and recently expanded further with the acquisition of Valiant Petroleum.

The A1 well, the first development well on the Stella field, has now been drilled successfully and has flowed at over 10,000 barrels of oil equivalent per day, comprising 6,499 barrels of oil and 26mln cubic feet of ‘liquid rich’ gas.

Chief executive Iain McKendrick described the result as an ‘enormous leap forward’ in de-risking the project.

"The well has accessed the reserves it was designed to recover and the test confirms the presence and extremely high quality and deliverability of the reservoir sands,” he said.

Meanwhile, Leyshon Resources (LON:LRL) this week lifted the veil on its corporate strategy, which will see the spinning out of a new listed company.

Subsequently there will be two entities: Leyshon Energy, which will own the Chinese gas interests and cash reserves of around US$35mln; and the Leyshon Resources business, which will hope to repeat the group’s past success in the mining sector.

Alongside Chinese investors, the ‘resources’ company will acquire new mining projects in a bid to take advantage of depressed asset values in the sector.

According to Leyshon, the move will also allow it to focus on the million tonnes Leyshon gold project, while allowing investors to benefit from a more transparent market value for the Zijinshan gas project via the new energy firm.

Elsewhere, Empyrean Energy (LON:EME) told investors that detailed development plans for the Sugarloaf shale project, in Texas’s Eagle Ford play, will be available later this year.

Empyrean noted that the permit lodged by the project operator Marathon Oil for new wells have implied a denser 40 acre spacing between wells.

The statement highlights that, while it could be seen as encouraging, Marathon is carrying out a study and testing programme to establish optimal well spacing for the full commercial development of the field.

Also last week, broker Canaccord applauded IGas’s (LON:IGAS) putative £8.95mln acquisition of Caithness Oil, restating its ‘buy’ advice, while tweaking up its price target to 181p a share.

The deal will see IGas acquire licences in Scotland’s Moray Firth, including the Lybster Field, discovered in 1996 by Premier Oil but put into production in May 2012.

On the face of it the new assets, offshore North Sea, couldn’t be further removed from the shale projects, but, by keeping the firm’s cash-generation topped up, the newly added fields play an important role.

Leni Gas and Oil (LON:LGO) anticipates more due diligence will be carried out in the next few weeks regarding a possible joint venture with Maxim Resources in Trinidad.

The company said it has agreed to extend the deadline to close the deal. A transaction could now be completed at the end of September, it said.

According to LGO, the intention is still to pay cash for the company, subject to the closing of the funding arrangements with the Meridian SECZ.

A tie-up with Maxim would add the South Erin block to LGO’s portfolio.

AIM heavyweight Gulf Keystone Petroleum (LON:GKP) shares shot up on Tuesday after it came out on top in its long and well-documented court case with Excalibur Ventures.

In a packed courtroom at the Royal Courts of Justice in London, with GKP boss Todd Kozel in attendance, Judge Christopher Clarke ruled Excalibur had no valid claim over the Shaikan Field in Kurdistan or any of GKP’s other assets in Iraq.

Excalibur, led by former US special forces operative Rex Wempen, was claiming up to US$1.6bn in compensation in one of the most close followed commercial litigation claims in recent years.

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