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Malcy's Blog - Oil price, Predator, Solo, Zephyr, TMS

Oil price A very modest fall yesterday, today it’s a small rise but no massive direction from the market. Yesterday the meeting of the Opec JMMC gave some cheer to the market by saying that it would ‘support the market’ whilst the KSA is still emphasising its ‘commitment and intent’ to the oil price.

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Oil price, Predator, Solo, Zephyr, TMS.

WTI $40.83 -5c, Brent $42.62 -31c, Diff -$1.79 -26c, NG $2.80 +2c

Oil price

A very modest fall yesterday, today it’s a small rise but no massive direction from the market. Yesterday the meeting of the Opec JMMC gave some cheer to the market by saying that it would ‘support the market’ whilst the KSA is still emphasising its ‘commitment and intent’ to the oil price.

The continuing return of Libyan crude will be worrying the JMMC but it’s probably the aggressive rise in Covid numbers hitting demand that is of bigger worry. Retail gasoline prices are still flat, at $2.150 per gallon it is down 1.7c on the week, 1.8c on the month and 66.2c y/y.

There is still activity in the US shale in terms of corporate and M&A, yesterday ConocoPhillips confirmed that it was buying Concho for $9.7bn in the biggest deal in the space since prices fell and it looks like Pioneer are planning a takeover of Parsley, which is mainly interesting as it pitches father v son who are CEO’s of the two companies…

 

Predator Oil & Gas (LON:PRD)

PRD announces that with regard to its CO2 EOR operation in Trinidad that the Energy Ministry has granted approval for the use of the CO2 Recovery system, installed and commissioned by Predator and Massy Gas Products, associated with the CO2 Pilot Project at the FRAM Exploration Gathering Station #4 in the Inniss-Trinity field.

The company also states that the carbon dioxide injection and delivery system and site layout has been independently inspected to ensure that the highest HSE standards possible are applied to enable operations to continue uninterrupted during the COVID-19 public health emergency.

Paul Griffiths, Chief Executive of Predator, commented:

“This is an important development that allows us to separately process enhanced oil production from CO2 EOR operations for sale and export through the existing pipeline infrastructure.” 

So this is further good news from Predator, indeed the company has had a good week with positive comments in Ireland with regards to its LNG plans and with ConocoPhillips buying Concho Resources (see above) indicating that it proves they are well and truly putting oil and gas at the forefront of their plans, having just bought a substantial piece of acreage adjacent to PRD in Morocco, gas is also a big part of their future.

 

Solo Oil (AIM:SOLO)

A Helium One update from Solo today, they hold 12% of the company targeting ‘attractive production and development opportunities within the European energy market’.

Helium One has received renewal offer letters for 12 of the 16 prospective licenses initially requested from the Tanzanian Authorities, with a further four awaiting a decision. In total, including the 12 renewals received, four pending and other active licenses, Helium One holds 4,512km2 of prospective licenses, with a further eight under application.

‘Following a study by the Independent consultant SRK Consulting Ltd, completed in October 2019, the resource at Rukwa has been estimated at an un-risked Prospective Helium P50 Resource of 138 bcf (Best Estimate), with outcomes ranging from 30 Bcf (1U) to 521 Bcf (3U). The study further notes a 2U Risked Prospective Resource of 14.0 Bcf. The prospective resource has been identified within 21 discrete prospects, with closures mapped at multiple stratigraphic levels’.

The quote above is used as it explains better than I can the quantum of the potential at H1, the big question is how that value should be demonstrated for all shareholders. I have heard around on the street in recent weeks that H1 is gearing up for an IPO, in which case this comment seems to be fairly accurate. ‘The Company also continues to actively assess a listing on an international stock exchange in order to access capital to fund future activity’.

Tom Reynolds, CEO at Solo Oil, comments: “Solo continues to maintain close dialogue with the Helium One team and are pleased to note the progress being made on multiple fronts, all of which bodes well for our legacy investment in this exciting opportunity.  In particular, the license renewals point to progress above surface, and the initial resource estimates emphasise the potential scale of the sub-surface opportunity.

As the supply / demand imbalance for this important element continue to increase globally, Helium One remains well placed to generate a significant long-term return on our investment.”

The fact that H1 is now starting to come out to the market with thoughts about de-risking its inventory through a drilling programme, as well as thinking about how it should finance its future, means that investors such as Solo are able to make valued judgements on this process. Any move to more transparency in such valuations are obviously good news for Solo and its future as a modern, gas facing company, this caps a good month for Solo and Jon Fitzpatrick and other investors.

 

Zephyr Energy (LON:ZPHR)

Yesterday I was able to catch up with Colin Harrington, CEO of Zephyr and a very substantial investor in the company to chat about recent news regarding the Paradox Basin and also last week’s fund raise. The future for Zephyr from a very low market base looks to me to be incredibly positive.

Core Finance CEO interview: Colin Harrington of Zephyr Energy

Total Market Solutions

Part 2 of my Podcast with Total Markets Solutions held over from Friday, the companies covered here, along with approximate times they come in are as follows: SQZ 00 minutes 40 seconds, IOG 2.30, DELT 03.08, IGAS 06.20, JOG 06.30, JSE 08.30, AEX 09.30, SOLO 11.00, WEN 12.40, ZPHR 13.30, TXP 17.30.

Total Market Solutions interview: Malcy Talks Oil & Gas XXIII part 2

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