WTI $40.31 +38c, Brent $41.94 +17c, Diff -$1.63 -21c, NG $2.25 +12c

Oil price

See saw oil prices with the market trying to exercise downwards pressure as the virus continues to grow internationally but those with the vaccine are also getting more confident every day. So while demand is still in the doldrums and the effects of Libya coming back and Iraq cheating are important they are somewhat peripheral.

Genel Energy

As if to prove just how strong the company is Genel has announced that it has successfully completed the issue of a new $300m senior unsecured bond with a maturity of October 2025 and carrying a fixed rate of 9.25% pa.

The company has agreed to repurchase $223m of the existing $300m issue dated December 2022 and has the option to call the outstanding amount in December 2020 at a price equal to 105% of the nominal amount.

In addition to that, the company announce that they have received payments for August oil sales from the KRG to the tune of a net $2.6m from Taq Taq and $8.2m from Tawke which is further welcome news.

The news on the refinancing is particularly good, moving the date out not only shows confidence by debt markets and gives the company certainty over the liquidity for ‘years to come’. Genel prides itself on its robust balance sheet and this strength provides the foundation for the exciting capital investment programme.

Not to put too finer point on this the management has done a great job in making the balance sheet ‘bullet proof’ so that they can continue their prudent investment in growth and shareholders will be happy that this strength should provide comfort on distributions as well.

San Leon Energy

Interims from San Leon today but the most important figure and cash and equivalents at 30th June were $35.6m, at the 18th September $22.6m. (Not including $6.8m held in escrow for Oza transaction)

During the year to date the company has received $41.5m in relation to payments due to San Leon under the Loan Notes. In addition the Company is scheduled to continue to be repaid against the Loan Notes, the balance of which is currently US$88.7 million, on a cash receipts basis.

During the year there was a share repurchase of $2m and a special dividend of $33.3m was paid in May giving a historic yield of some 30%. At that time, 7th May,  CEO Oisin Fanning bought 98m shares taking his interest to 24%.

Since the balance sheet date the company has done the ELI deal ($15m loan and 10% interest) and is waiting on completion of the OZA deal with Decklar Petroleum (which is a $7.5m loan and 15% interest) play.

San Leon has a strategy which is proving incredibly rewarding for shareholders, the lending of money is a highly effective and profitable use of capital whereby the company get all their money back and keep a very profitable interest in the company into the bargain. Where else might you lend $175m, get $190m back and still have $100m to come?

As for the country risk often associated with Nigeria it is worth noting that it has always been political risk not geological risk. Lending here is protecting shareholders and the lending is investment, not trying to raise money on the street.

I have been looking at SLE again in recent months, I have had several interviews with CEO Oisin Fanning, one on Core Finance and will be doing another one soon. I am convinced that the model works and the historic yield of 30% looks like it will be the same for next year, after all the money continues to come in and opportunities are not dying out.

I may be wrong but this does look like a simple risk and reward which is tilted heavily towards the investor. I have assessed country risk which is no higher than most comparable others and we know that Nigeria is seeing inbound investment for oil and gas projects including the marginal field bid round which seems to be attracting attention. This is all about the risk and when you have a 30% yield on your side the company is protecting shareholders by using its capital so efficiently, a no brainer, yes it probably is….

Bahamas Petroleum- Dreaming of a black Christmas

BPC has announced that the company has received formal notification from Stena Drilling that they have nominated the Stena IceMAX as the rig for drilling the Perseverance #1 drilling campaign.

The notification also stated that the start of the contracted window, the 15th December 2020, as the approximate time of the drill ship arriving in the field, with an associated anticipated well spud date some 3 – 4 days later once the rig is on station.

The well is targeting recoverable P50 oil resources of 0.77bn barrels with an upside of 1.44bn barrels. The company say that ‘given confirmation of the anticipated arrival time for the IceMAX in the field, project implementation, previously defined and ongoing in March 2020 prior to the Covid-19 related postponement of work, will now be reactivated to align with a spud in approximately 3 months’.

Simon Potter, Chief Executive Officer of BPC, said:

“In March 2020, the Company was within weeks of commencing the drilling of the Perseverance #1 well when compelled to defer operations due to the anticipated impacts of the Covid-19 pandemic. As might be expected when such an advanced well plan is halted so close to final implementation, major elements were already in train or sufficiently well established such that reactivation is a relatively straightforward matter. With the clarity of the anticipated delivery date of the Stena IceMAX into the field this work can now be reactivated against a detailed timetable and progressed. I very much look forward to updating shareholders in the coming months as we get closer to drilling.”

This is at long last the start of a process that patient BPC shareholders have been waiting for in some cases for many years. But the difference now is that with dynamic new management, sound funding and a balanced portfolio in place in case of disappointment, shareholders can dream of a huge 100% owned success without the downside meaning total misery. Let battle commence…

Jadestone Energy

Jadestone announce that the Maari acquisition long stop date has been moved from November 15th 2020 to January 31st 2021. This is due to the fact that the deal needs NZ Government approval and with an election campaign in the offing this is a wise precaution, no worries as they say in all the best bars…

Pantheon Resources

Pantheon has received resource confirmation from the  Talitha SMD horizon of 302MMBO Prospective Resource, oil was encountered in each of the horizons. This gave $2.7bn NPV10 based on the current forward curve and $8.92NPV10 per barrel.

It is confirmed to be appraisal rather than exploration which should significantly de-risk what is a potential very substantial play and that is before the Kuparuk horizon which for seasoned Alaska followers gives us the vapours.

The company have still to report any success on the farm-out, but to be frank one would expect more news on that once these two resources estimates are out. There is little doubt that the upcoming few months could transform this company as the potential numbers are sky high as are the hopes of the shareholders…

And finally…

The Russian GP at Sochi is on Sunday, in today’s practice the Mercs were streets ahead.

In the footy the big game isnt until Monday night but tomorrow sees the Red Devils at the Seagulls, the Eagles host the Toffees, the Baggies host Chelski and Burnley host the Saints. On Sunday sees the Yorkshire derby as Leeds visit the Blades, Spurs host the Magpies, the Foxes go to the Noisy Neighbours and the Hammers host the Wolves.