Oil & Gas Daily Flow
Non-Independent Research; Marketing & Sales Commentary - MiFID II exempt information – see disclaimer below
Market Update: Tuesday 23 March 2021
Pantheon Resources (AIM:PANR): Formal approval received from the Alaska Department of Natural Resources
UK Oil & Gas (AIm:UKOG): UKOG steps up activity ahead of appraisal drilling in Turkey
Energy Prices
Brent Oil US$63.5/bbl vs US$64.2/bbl yesterday
WTI Oil US$60.5/bbl vs US$61.0/bbl yesterday
Natural Gas US$2.55/mmbtu vs US$2.51/mmbtu yesterday
Oil Price News
- Despite a sell down last week, factors have started to emerge in recent weeks that point to a correction in oil demand and which point to a rebound to stronger levels in the second half of this year
- Currently, oil demand trends in different regions are mixed, with the picture in Europe clouded by renewed lockdowns and sluggish vaccination programs in many countries
- But travel and consumption patterns in the world’s top oil consumer, the US, and in the world’s top oil importer, China, point to recovering demand for petroleum products
- Those two countries, major consumers of crude, could lead global oil demand out of the woods and lead the global consumption rebound later this year
- Travel statistics show that US consumers are driving and flying this month at the highest rate since the pandemic forced the US into lockdowns in March last year
- Chinese demand for road fuels is back to pre-COVID levels, with airline travel also rebounding from last year’s lows
- As recent months have shown, the global oil demand recovery will not be a straight line up, with unknowns around virus variants and vaccination passports
Gas Price News
- Natural Gas Prices moved higher yesterday, testing resistance levels and rising more than 1.8%
- The rally came despite the forecast of moderating temperatures that is expected to move eastward and keep the climate above normal for the next 8-14 days
- Demand declined last week in the US as the heating season approaches the end
- Asian demand for US exports was strong throughout the winter and now, heading into spring, European demand is mounting as storage levels on the continent dwindled substantially in recent months
- Since Winter Storm Uri resulted in reduced outages and gas conversation for residential use in Texas, LNG demand has risen 10.0Bcf/d in the past month
- Further demand gains are possible – perhaps even eclipsing 12.0Bcf/d if all terminals achieve maximum demonstrated demand levels at the same time
- Gains in LNG feed gas and Gulf Coast industrial demand for natural gas this week may help offset declines in weather-driven demand, allowing small withdrawals to continue near-term
Company News
Pantheon Resources (AIM:PANR): Formal approval received from the Alaska Department of Natural Resources
Share Price: 39p, Market Cap: £240m
Further to its announcement in January 2021, PANR has confirmed the Company has now received formal approval from the Alaska Department of Natural Resources for the acquisition of 100% of the share capital of Borealis.
Borealis owns a 10.8% working interest in each of the 16 leases in the Talitha Unit and thus the completion of this transaction increases PANR’s working interest in the Talitha Unit from 89.2% to 100% (with Pantheon's net revenue interest increasing from 77.05% to 86.0%).
In consideration for the acquisition, Pantheon will issue to the Vendor, Otto Energy, 14.3m ordinary fully paid shares which are subject to a lock-up until 30 June 2021.
The Company has successfully completed the sidetrack to the Kuparuk section of the Talitha #A well, have set a liner and perforated the Kuparuk.
Testing operations are expected to commence shortly.
Management has confirmed the Company will provide an update on completion of the initial phase of testing operations which is expected to be early next week.
Our take: Adding a further interest in this material play further highlights management’s confidence in the medium-term viability of the field. As announced recently, oil has been encountered in the Kuparuk Formation which is a major regional producer on the Alaska North Slope and a successful test would represent a significant event for PANR. Following completion, the Company will own a 100% working interest in not only Talitha, but all of its Alaska North Slope projects which collectively span 160,000 contiguous acres, over 90% of which is covered by proprietary 3D seismic.
UK Oil & Gas (AIM:UKOG): UKOG steps up activity ahead of appraisal drilling in Turkey
Share price: 0.13p, Market Cap: £16m
UKOG has confirmed that construction of the Basur-3 appraisal well's drilling pad and access road has now commenced.
Construction works, located within the Company's 50% owned 305 km² Resan licence, are scheduled to last approximately 60 days.
The Basur-3 location lies approximately 1.2km north and geologically updip from the 1964 Basur-1 oil discovery well, which as detailed in the Company's 14 October 2020 and 15 January 2021 releases, produced 500bbls of oil from a short 6-hour swab test, which management has extrapolated to a daily rate of 2,000bopd.
UKOG's 50% net share is estimated to be 18.6MMbbls (mean case) and 33.6MMbbls (high case).
Our take: Basur-3 represents a material play for UKOG in Turkey, being the first modern appraisal well designed to confirm the extent and commerciality of the discovered Basur-Resan Mardin oil pool, will test the north western structural culmination of the 45 km² Basur-Resan geological structure. In terms of volumes, the Basur-Resan's Mardin oil pool is estimated to contain aggregate gross mean and high case discovered recoverable resources of 37.2MMbbls and 67MMbbls respectively. Elsewhere in the UK, the Company recently undertook a successful short intervention at HH-1, seeking to further optimise oil flow via reperforating the full Portland oil producing section, including a new simplified production tubing string and by setting the downhole pump at a deeper level to increase pumping efficiency.
Research – Oil & Gas
Sam Wahab - 0203 470 0473 / 0784 385 5037
sam.wahab@spangel.co.uk
Sales
Richard Parlons – 020 3470 0472
Abigail Wayne – 020 3470 0534
Rob Rees – 020 3470 0535
Grant Barker – 020 3470 0471
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Sources of commodity prices
Oil Brent, WTI - ICE
Natural Gas - NYMEX
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