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Malcy’s Blog – Wentworth Resources; Bahamas Petroleum and Jersey Oil & Gas

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Oil price, PetroTal, Wentworth, BPC, JOG. And finally…

WTI $53.55 +$1.35, Brent $56.35 +$1.31, Diff -$2.80 -4c, NG $2.85 +29c, UKNG 48p -3p

 

Oil price

Another good day for crude and as I write both WTI and Brent are up another $1.20. Most influences on the oil price are pretty positive at the moment, primarily Reuters saying that January Opec compliance was high and as we move into February the Saudi cut is manifesting itself.

The Baker Hughes CEO has said that he sees a positive pick up in oil demand coming through, not just in the US but data from China is also beginning to wind up. That will feed through to a continued draw down in stocks around the world and the backwardation in both WTI and Brent is positive. With Dan Yergin himself looking for a range of $50-65 and of course this week’s G Sachs forecast of $65 by July I would reiterate the mantra from MbS who said short the oil price if you dare.

More locally, the storms in the North East of the US have had an effect on natural gas prices whilst today’s retail gasoline prices are still showing strength, not always a good sign on Groundhog Day…A gallon of Exxon’s finest will rush you some $2.409 this week going up to $3.323 in California which shows the difference across the country. Countrywide the price is up 1.7c w/w, 16c m/m but still only just holding onto a fall of 4.6c y/y.

 

PetroTal Corp (AIM:PTAL)

PTAL has successfully completed the placement of a 3 year $100m senior secured bond with a fixed coupon of 12% and a borrowing limit of $125m.

PetroTal intends to use the net proceeds from the Bond to repay all existing outstanding loans (in particular the restructured derivative liability with Petroperu, details of which were announced on January 19, 2021), to finance the continued development of the Bretana oil field, to provide support for crude oil hedging transactions, and to finance potential acquisitions.

The Bond is expected to close on or about February 16, 2021, subject to customary closing conditions. 

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

 “PetroTal is pleased with the investor interest in this $100 million inaugural bond offering. This financing significantly enhances PetroTal’s liquidity and will immediately lead to a return to development activity at the Bretana oil field, with the next well expected to commence drilling by the end of Q1 2021.  Additionally, the bond offering provides PetroTal with capital that enables us to pursue synergistic and accretive transactions to diversify the Company’s operations.  As promised to our shareholders, all this will allow PetroTal to exit this pandemic crisis stronger than before.”

I am very happy that PetroTal has come through a difficult time last year in such a strong position. With this financial reconstruction it can pay off existing loans and restructure in order to be able to take advantage of opportunities as well as ‘support hedging transactions’. Add to that the additional export routes and I am very positive about how things look for PTAL at present.

 

Wentworth Resources (AIM:WEN)

An operational and reserves update from Wentworth today where to date, there have been zero reported cases of COVID-19 at Mnazi Bay. Employee safety remains a top priority and robust precautionary measures remain in place

Wentworth’s share of gross 2P Reserves as at 31 December 2020 estimated by RPS Group to be 142.2 Bcf (23.7 mmboe) with a post-tax NPV10 of $116.6 million. The Company remains debt free with $17.8 million cash on hand as at 31 December 2020 and production guidance for full-year 2021 has been set at 65-75 MMscf/day (gross).

In the Mnazi Bay Operations and Operational Outlook the company confirm that the repairs to the MB-2 flowline were completed on time on 9 December 2020 and the well has continued to perform in line with expectations. A planned slickline campaign commenced on 22 January 2021 which primarily includes a continuation of the Mnazi Bay Partners’ ongoing pressure monitoring programmes.

RPS Group, an independent third-party reserves evaluator, performed a CPR for the Company with an effective date of 31 December 2020.  The updated full field 2P gross reserves for Mnazi Bay are 445.3 Bcf (90.8 Bcf being Wentworth’s share of net reserves).  This compares to 468.9 Bcf as at 31 December 2019. As full-year 2020 gross production totalled 23.9 Bcf (gross), this demonstrates a minimal change attributable to technical and economic factors to previous reserves estimates.

The NPV10 after tax for the 2P reserves as at 31 December 2020 is $116.6 million net to Wentworth. This compares to $118.6 million for 2019.  It should be noted that during 2020, Wentworth increased its cash position to $17.8 million (unaudited), while distributing $3.2 million in dividends, compared to cash of $13.5 million as at 31 December 2019.

Katherine Roe, CEO, commented:

“The results of our 2020 Competent Persons Report show the continued strong technical fundamentals underlying the Mnazi Bay field and its potential to generate strong, long-term free cash flows that  form the basis of our sustainable dividend policy.  We look forward to continuing to use our fiscal discipline and financial performance to create further value for shareholders.”

Wentworth has proved over the last year just how strong and flexible it is, with it s fixed price protection and very low cost of production it makes it one of the most profitable businesses in the sector. This enables it to not only pay a highly respectable dividend which yields some 8% but it has cash balances that give it the scope to expand the portfolio should the right opportunities appear. Top quality management has proved to have the confidence of a blue chip shareholder base who are as supportive as any in the sector. I’m very happy to have WEN in the Bucket List.

 

Bahamas Petroleum (LON:BPC)

Just an erratum on BPC this morning following the link I put in the blog yesterday with an interview I gave to IGTV. As the interview drew to a close I was hurrying the last section of the list and in that process I missed BPC which was simply an error. For those many people who picked up on the mistake I apologise and for those who wanted to know my reasons for including the company this is the appropriate section.

Two to go and Bahamas Petroleum has been waiting to drill here for many years, now is the time as Perseverance#1 is due to spud anytime soon. With its billion barrel++ opportunity it is still going to be one of the biggest wildcat wells for many a year but things have changed at BPC as since the acquisition of Columbus the company is no longer a one trick pony. Whatever happens at P#1  the company has onshore Trinidad with exploration upside at Saffron plus acreage in Suriname and more to look at.

So, that was written in December, four days before the P#1 well spudded and with this Thursday being the 45th day the market is rightly warming up for some news. Nothing changes with regard to my call, following the well result priorities may change but the way the company is going to move forwards won’t, this is a changed beast.

 

Jersey Oil & Gas (LON:JOG)

I wouldn’t normally just note individual company’s videos and corporate presentation but apart from the fact that these two are very good, they show really well how important the Buchan oil field and the GBA is to JOG. Worth taking a look as the Buchan Hub begins to take shape.

‘Jersey Oil & Gas, an independent upstream oil and gas company ‎focused on the UK Continental Shelf region of the North Sea, is pleased to announce the availability of an updated corporate animation video, which illustrates our vision for resuming future production from our 100% owned and operated Buchan oil field in addition to the wider Greater Buchan Area.  This is accompanied by a corporate presentation’.

The Buchan Oil Field – A New Beginning Corporate video is available to view on the Company’s website at: www.jerseyoilandgas.com/media/videos/

Jersey Oil and Gas Corporate Presentation is available to download on the Company’s website at: www.jerseyoilandgas.com/investors/presentations/

 

And finally…

No peace for the wicked and the Prem is back tonight, surely a six pointer as the Blades host the Baggies, the Gooners go to the Wolves, the Red Devils host the Saints and in the avian derby the Magpies host the Eagles…

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