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Proactive weekly oil & gas highlights: Union Jack Oil, United Oil & Gas, 88 Energy, Genel Energy …


There was good news this week for Union Jack Oil PLC (LON:UJO) which on Thursday told investors that its 16.665% owned West Newton B1Z appraisal well in Yorkshire has encountered a substantial hydrocarbon column.

West Newton B1Z is an appraisal of the discovery made previously in the WNA-1 well which is located some 2.5 kilometres away, to the south. The well result so far de-risks the project and is described by the company as “a significant step forward” towards development.

The hydrocarbon column is seen to span 62 metres gross albeit, pending confirmation of data, the company said in a statement, highlighting scope for the overall hydrocarbon column to considerably exceed the currently identified interval.

Also on the up, on Monday, United Oil & Gas PLC (LON:UOG) highlighted estimates by consultant Gaffney Cline & Associates which sees some 2.4bn barrels of potential resources in the Walton Morant licence, offshore Jamaica. It comes as the company advances a farm-out process to bring a new partner into the Walton Morant project.

The prospective resource is estimated across a total of 11 prospects. Colibri, the most advanced of the prospects, is now estimated to host some 406mln barrels, up around 77% from prior estimates, meanwhile, the Thunderball prospect is another stand-out prospect with an estimated 603mln barrels.

United U&G said the new estimate deepens understanding of the world-class potential of Walton Morant licence.

The move led two brokers to raise their target prices for United Oil & Gas the following day. Based on a risked valuation of Walton Morant, Cenkos raised its share price target for United Oil & Gas overall to 21.2p from 18.1p and added that unrisked, the value of its assets is 108p.

Optiva also raised its price target for United Oil & Gas to 25.1p from 20.5p and noted that the current share price is more than covered by its valuation of the company’s 22% interest in the Abu Sennan producing asset in Egypt, which is currently performing strongly.

88 Energy Ltd (LON:88E) announced on Monday that it has signed-up a rig contractor for the proposed Merlin and Harrier exploration wells, drilling on the first of which is slated for February.

The move follows the previous week’s farm-out news which sees an American oil and gas consortium, Alaska Peregrine Development Company (APDC) agree to acquire 50% of Project Peregrine. In return, APDC will fund the majority of drill costs for the Merlin-1 well, located within Project Peregrine. It has committed to spend up to US$11.3mln on the project.

88 Energy said it has executed a rig contract All American Oilfield for the use of Rig 111 to drill the Merlin-1 and Harrier-1 wells. At the same time, it noted that permitting and planning remains on schedule for the spud of Merlin-1 in mid-to-late February.

Genel Energy PLC (LON:GENL) got a boost on. Friday from news that it has received notice from the Kurdistan Regional Government (KRG) that override payments, whereby the company receives 4.5% of monthly Tawke gross field revenues, will resume with the January 2021 invoice, to be paid in February 2021.

Assuming the prevailing oil price, this translates into over $5mln of additional cash proceeds on a monthly basis, the group said.

On Thursday, ADM Energy PLC (LON:ADME) announced the completion of its transaction to acquire an additional 2.25% interest in OML 113. The company’s stake in the project increases to 4.9% as a result of the transaction. The corresponding profit and cost bearing interests increase to 9.2% and 12.3% respectively.

Its net share of production is expected to rise to 196 barrels of oil per day (bopd), from 106 bopd.

On the same day, Zephyr Energy PLC (LON:ZPHR) revealed that it is continuing its countdown to the start of drilling later this month. The company pointed out that the State 16-2 well in Utah’s Paradox basin is slated to spud by December 3, 2020, and it remains “firmly on track” to deliver this key objective.

It noted significant progress on and off-site over the past two months – including the assembly of a project team, permitting, site and road works, the appointment of rig contractor, and securing funding support.

Earlier in the week, Falcon Oil & Gas Ltd (LON:FOG, CVE:FO) told investors that the Beetaloo joint venture partners have decided to carry out necessary intervention work in the recently drilled Kyalla 117 well without delay.

As previously announced in November, the well had continued to produce frack fluid during a prolonged ‘flowback’ phase and a measurable gas breakthrough had yet to occur.

Falcon confirmed that the intervention programme will be undertaken without delay. All necessary equipment and consumables for the nitrogen lift are now being prepared to mobilise to the well site.

Not quite so positive news came from U.S. Oil & Gas PLC (USOIL) which on Monday told investors that the Eblana-9 well at Hot Creek Valley, in Nevada, did not encounter commercial hydrocarbons and is being plugged and abandoned.

The Eblana-9 well was drilled down to a depth of 5,250 feet, the company said. It penetrated three potential zones, as targeted, and the company said whilst there was evidence of hydrocarbon migration above cap rock there was no evidence of migration in the targeted zones.

“We are extremely disappointed with the outcome of the Eblana-9 drill,” said chief executive Brian McDonnell in a statement. “However, we still believe there is a working oil system on our lease acreage in Hot Creek Valley.”

Then on Friday, U.S. Oil & Gas said it had successfully plugged the Eblana-9 well, with the site now ready for remediation. The group said its technical team is currently reviewing downhole data from the Eblana-9 well, along with all previously collected and analysed data, to revise the company’s picture of the oil system in the East and to identify possible additional drill targets.

Meanwhile, Bahamas Petroleum Company PLC (LON:BPC) on Thursday updated on an application to the Supreme Court of The Bahamas, made by activists, seeking a judicial review of the government’s decision in February to grant environmental authorisation for the imminent Perseverance exploration well.

BPC told investors that it understands that the Bahamas government will oppose the application, meanwhile, BPC intends to apply to the court to be heard as a person affected and to oppose the application.

Moreover, it added that given drilling operations are scheduled to begin before the end of December it is anticipated that the application for a stay will be determined definitively by the Court on an expedited basis.

On the results front, ADES International Holding PLC (LON:ADES) said it has shown an ability to adapt to unfavourable market conditions as it confirmed revenue growth over the first nine months of 2020.

In a trading update for the third quarter, the firm reported US$349mln of revenue in the nine months ended September 30, 2020, up 2% on the US$342mln marked at the same point last year.

Third-quarter revenue amounted to US$100mln and the group’s earnings margin was described as in-line with the first half of 2020. ADES repeated its full-year guidance, which is for a ‘broadly flat’ performance.

Looking at alternative fuels, Helium One Global Ltd (LON:HE1) made a strong start to life on the London Stock Exchange this week, trading at a large premium to its placing price.

The company joined AIM following its amalgamation with Attis Oil and Gas and raised £6mln through an oversubscribed share placing with institutional and other investors paying 2.84p per share for an initial market value of around £14.1mln.

After almost doubling on initial first-day trading, Helium One shares ended the week at 7.25p, a very inflated price.

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