Oil price, Predator, Deltic. And finally…

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WTI $63.58 +$1.64, Brent $66.44 +1.33, Diff -$2.86 -20c, NG $2.92 -4c, UKNG 62.75p -0.46p

Oil price

Oil ended last week down, $1.79 for WTI and  $2.27 for Brent as the combination of increased Covid 19 in India and the Far East and the alleged progress by Iran in the nuclear talks poured cold water on the rally. But today oil is up a dollar or so and although the bears have had a few days in the sun we are still not far from the recent peaks.

Not that it would make any difference but the hijack of a Ryan Air flight at the weekend by the Belarus dictator can only heighten tension if only with Michael O’Leary. Finally the rig count on Friday was up 2 units overall to 455 and up 4 to 356 in oil.

Predator Oil & Gas

Predator has announced an operational update this morning updating on Morocco, Trinidad and Ireland. 

In Morocco, Following the successful completion of permitting and survey requirements, Predator Gas Ventures Morocco Branch (“PGVMB”) has awarded the contract for the construction of the MOU-1 well pad platform and the improvement and extension of up to 5 kilometres of access roads to Moroccan company Skayavers Sarl. Civil works are to start immediately to facilitate the commencement of drilling activities next month.

In Trinidad at the Inniss-Trinity C02 EOR project C02 injection recommenced, after receiving all regulatory consents and permits, at the AT-5X well on 1 April 2021. By 18 May 159.7 metric tonnes of C02 had been injected, compared to 461.73 metric tonnes in 2020. Cumulative volume of C02 injected for 2020 and 2021 as of 18 May 2021 is 621.43 metric tonnes. C02 injection has only been conducted during daylight hours to align operational activity with local COVID-19 restrictions and recently introduced lockdown curfews.

Based on the results of the 2020 Pilot C02 EOR project and reservoir engineering forecasts, it was estimated that an average daily C02 injection rate of 10 metric tonnes  would be needed to increase reservoir pressures to the required level in order to optimise enhanced oil production. However based on the real-time downhole reservoir pressure data collected from 1 April to 18 May 2021, the rate of reservoir pressure build-up at AT-5X appears to be moderately more effective than the pre-injection forecasts predicted. This is despite the smaller cumulative volume of C02 injected compared to last year. As a consequence of these unexpected but positive results to date, the current C02 injection programme will remain unchanged, but closely monitored, for the immediate future.

Based on the 2020 Pilot C02 EOR data, the potential impact of C02 injection on enhanced oil production will not be realised until at least 62 days from first C02 injection on 1 April 2021. Further analysis of the results and the impact on enhanced oil production at the monitoring well will therefore be carried out in June. Previously identified wells requiring workovers to return the wells to production will be prioritised at that time based on those wells showing the first response to cumulative C02 injection. With regards to the above the company has signed HOA’s for CO2 EOR services and a JV service entity project in Trinidad.

Predator is also addressing Floating Storage and Regasification Units (“FSRU”) for importing LNG In Morocco and in Ireland. 

PGVMB is submitting a response to AMI No.1/DC/2021 dated 26 April 2021 issued by the Department of Energy and Mines Fuel Department in Morocco:  “Call for expressions of interest in the Construction and operation of a FSRU” for Morocco to import LNG. Deadline for submissions is 31 May 2021.

The initial scope of the FSRU project is for an annual requirement of 1.1 BCM by 2025 rising to 1.7 BCM in 2030 and 3 BCM in 2040. By comparison Predator LNG Ireland Ltd has a scoping annual requirement of 2.6 BCM for its FSRU design concept for the Republic of Ireland (“ROI”).

PGVMB is utilising its experience and know-how that it has acquired through the development of its FSRU concept for security and diversity of energy supply for the ROI together with management’s involvement with infrastructure stakeholders and regulatory authorities developed over many years in the gas sector in the ROI.

The FSRU project is envisaged to be a much longer term project that does not compete with the Company’s short- and medium-term plans to explore for, appraise and develop gas in its Guercif licence onshore northern Morocco. It is potentially a complementary addition to the Company’s business development strategy for Morocco to increase both materiality and the potential for future gas exports to Europe once the domestic Moroccan gas market reaches capacity. Guercif is ideally located adjacent to the Maghreb gas pipeline to support multiple development scenarios both for the domestic and international gas markets.

Discussions and negotiations continue regarding the potential for three additional Collaboration Agreements with European companies specifically in relation to the FSRU concept both in the ROI and Morocco that potentially may lead to further announcements in the coming weeks should these discussions and negotiations successfully conclude on terms acceptable to the Company.

Paul Griffiths, CEO of Predator Oil & Gas Holdings PLC commented:

“The preparation of the MOU-1 drilling location is an important milestone paving the way for the drilling operations to start during June, subject to the timing of the completion of the current SDX Energy drilling programme in the Rharb Basin. However today’s announcement also shows that we continue to develop new business relationships and opportunities to ensure that we maintain the ability to attract substantive industry partners capable of financing key parts of our  business development strategy when required to do so.” 

Due to its nature I have had to copy verbatim a good deal of the PRD announcements today but they are, in my view particularly important. The market is rightly concentrating on the upcoming drilling in Morocco and the share price is looking forward to that. Having said that investors are very aware that the other key parts of Predator in Trinidad and Ireland are also receiving as much attention from the board which it is most notably saying that ‘industry partners capable of financing key parts of our business development strategy when required to do so’ as Paul Griffiths has always promised. The shares have continued to do well and I think that there is more upside in a number of areas.

Deltic Energy

Deltic has announced that  Shell U.K, its Joint Venture Partner and Operator of Licence P2252, has appointed Fugro GB North Marine Limited to carry out geophysical and geotechnical site survey works over the Pensacola Prospect in preparation for the drilling of the Pensacola exploration well. The site survey is expected to commence at the end of July 2021 and be completed in Q3 2021.

 Graham Swindells, Chief Executive of Deltic Energy, commented:

“The commissioning of the site survey is a key part of the well planning process and represents an important milestone as the Joint Venture continues the preparatory works required in advance of the drilling of the high impact exploration well on the Pensacola prospect. We look forward to continuing to progress through the planning phase towards drilling in May 2022.”

Deltic’s share price has been a poor performer so far this year reflecting that although the Pensacola well is exciting it is still a long way off. As we see this announcement promising the site survey this year the actual drilling is now only a year away which is a long time but the clock is ticking more realistically.

And finally…

Quite some weekend of sport led obviously by the mighty St Johnstone winning the Scottish Cup and claiming the domestic cup double and qualifying for the Boropa Cup next season.

The last day of the Prem only sorted one thing and that was the Foxes, who were leading against Spurs but gave it up and with it a CL place for next year.

The Championship Play-off, a game worth some £150m apparently will take place next weekend between Brentford and Swansea after their semi-final wins at the weekend, sorry for the Tykes fan!

Max Verstappen won at Monaco without breaking sweat after one Ferrari and both Mercs committed hari kiri but full marks to Lando for his first podium.

And I can’t believe it that Phil Mickelson is the oldest winner of a major but whatever, the big lefty has done it for them, the oldies and the gamblers, a joy to watch.

Finally, farewell to legendary trainer and gambler Barney Curley who masterminded the greatest coup in horse racing history after which the bookies tried every way of not paying out. Nick Townsend’s book, The Sure Thing is a must read for all sports fans and I have just ironically finished the updated version.

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