Oil price, Union Jack/Egdon, Kistos.
WTI $40.29 +$3.15, Brent $42.40 +$2.95, Diff -$2.11 -20c, NG $2.86 -3c
Well, the bears can’t say they werent warned and that news of a vaccine would come from left field, combine that with a tip from the KSA not to be short and hey presto! News about the vaccine did however take everyone by surprise and although markets settled a bit, it seems that with other products not far away using similar metrics things appear slightly rosier. Is FAANG being replaced by GOAT (Get Out And Travel) we must ask?
Finally on the bullish front, the Saudi Energy Minister said yesterday at a conference that Opec+ cuts ‘would be adjusted’ and that ‘friends are heartily committed to the principle of tweaking’.
Retail gasoline day and prices continue to drift, at $2.096 a gallon of gasoline in the States is down 1.6c w/w, 7.6c m/m and 51.9c y/y.
A Biscathorpe Planning Update today as the partners apply for planning for a side-track drilling operation, associated testing and potentially long term oil production on site. This will need an Environmental Statement including specialist reports and assessments after a detailed technical evaluation by the PEDL253 Joint Venture has identified accessible drilling target areas on the Biscathorpe Prospect, where evidence for a thickened Westphalian sandstone reservoir interval is evident on the reprocessed 3-D seismic.
Operator Egdon states ‘These areas can be targeted by a side-track of the existing Biscathorpe-2 well which was suspended following drilling operations in 2019. The proposed side-track will also target the oil column logged in the underlying Dinantian Carbonate in Biscathorpe-2’.
Union Jack has already noted that ‘Economic modelling showed that Biscathorpe was a financially robust project even in the current oil price environment and that the principal Westphalian sandstone target has an estimated un-risked gross NPV(10) of £55.6 million. This is very good news for both UJO and EDR.
Break-even full-cycle economics (including all capital costs) were estimated to be (NPV(10) US$18.07 per barrel of oil and a 57 metre oil bearing section in the Dinantian Carbonate of Biscathrope-2 represents a secondary target with potentially significant commercial upside. Finally, future identified drill targets are accessible via a side-track of the suspended Biscathorpe-2 well’.
Commenting, Mark Abbott, Managing Director of Egdon Resources PLC, said:
“Biscathorpe represents a material and financially robust opportunity to secure a lower carbon footprint (when compared to imports) indigenous source of oil which would generate local and regional economic benefits. Our planning application will include long term production, which if approved would provide clarity on planning, ahead of further drilling and would enable rapid development in a success case”.
If you didn’t already know Kistos is Greek for the rockrose flowering plant family so now you get the picture, in other words Andrew Austin is back and Kistos is the vehicle.
The Aim 10 day submission document released this morning says that it aiming to create value by investing in and acquiring and managing companies in the energy sector. This includes onshore and offshore hydrocarbon production, energy storage, infrastructure and energy generation projects in the UK and Continental Europe.
Specifically, I suspect that we are talking gas and energy transition deals in the ‘£20-100m range’ of Enterprise Value with ‘further equity issuance and debt where appropriate’. It is appropriate, given RockRose’ history to look at the ‘Nature of returns: it is anticipated that returns to Shareholders will be delivered through a combination of an appreciation in the Company’s share price and, at an appropriate time, through the adoption of a progressive dividend policy which will be linked to the strategy objective of a strong focus on cash flow generation’.
Andrew Austin will own some 29% of the business and the rest of the management team around 13.2%. The board, all non-executive at present is definitely high-powered with Richard Benmore and Julie Barlow joining from positions at RRE and the significant hire of industry legend Alan Booth.
There will be much more to add in coming days and weeks but I am sure that after the success of RockRose there will be plenty of institutions and a solid retail interest in this upcoming IPO which is being handled by Panmures.