Malcy’s Blog: Oil price, Kistos, Petro Matad, Sound, Chariot.

WTI (July) $74.84 +$3.07, Brent (Aug) $76.45 +$3.22, Diff -$1.61 +15c.

USNG (July) $3.85 +10c, UKNG (July) 93.54p +3.37p, TTF (July) €39.8 +€1.075.

Oil price

Oil rose sharply again on news that the US President had left the G7 meting to head for the situations room in The White House from where he said that needed ‘unconditional surrender’ from Iran and that they had had their chance in extensive talks up til now. 

Separately eyes were probably off the API inventory stats but they showed a draw of 10.133m barrels of crude which if equalled by the API stats later today would indeed make the analysts at Macquarie bank happy as they have called the API number at a 6.5m draw. 

Kistos

Kistos notes the announcement made today by Vår Energi, the operator of the Balder Area, regarding a Final Investment Decision (“FID”) for Phase VI of the Balder Area development taken by Vår Energi and the Company.

This announcement comes ahead of the expected imminent first production from the Balder Future project. Once online, the project is expected to increase the area’s peak daily production by 80,000 barrels of oil equivalent produced per day (boepd) (gross), a significant increase on the area’s current peak daily production of circa 30,000 boepd (gross).

Full Vår Energi press release below:

 Vår Energi ASA  and licence partner Kistos Energy Norway AS have reached the final investment decision (FID) for the Balder Phase VI project in the Balder area. The fast-track development will be a key contributor to sustaining long term, high-value production through the newly installed Jotun floating production storage offloading vessel (FPSO).

COO of Vår Energi, Torger Rød, said:

“The Balder area in the North Sea is one of Vår Energi’s core hubs and constitutes significant future resource potential. With the Jotun FPSO now installed as the new area host, we will continue to unlock additional high value barrels from the Balder area through several phases of new developments and field optimisations. This includes Balder phase V, which will come on stream later this year. And with the FID for Balder Phase VI we are taking yet another important step to sustain production from the area through short time to market developments.”

Vår Energi is on track to reach production levels of more than 400 thousand barrels of oil equivalent per day (kboepd) in fourth quarter this year and the Company aims to organically sustain production long term through developing a highly attractive portfolio of around 30 early phase projects. Balder Phase VI is one of around eight project sanctions expected this year.

The Balder Phase VI project will develop around 15 million barrels of oil equivalent (mmboe) of gross proved plus probable (2P) reserves for a capital spend of NOK 2.6 billion (USD 260 million) gross. The project has strong economics, with a break-even well below 35 USD per barrel, IRR above 35% and will pay back in less than a year from start of production at current prices. The project consists of one additional multilateral production well, installation of a new subsea template, and a flowline that will be tied into the Jotun FPSO. The sanctioning of Balder Phase VI aligns with Vår Energi’s strategy of maximising value in core hub areas by utilising existing capacity and infrastructure and demonstrates how the upgraded Jotun FPSO will contribute to continued value creation in the area. Balder Phase VI is expected to come onstream by the end of 2026.

In addition, in the Balder area several additional early phase projects are also being progressed, including Balder Next. The Balder Next project is targeting additional gross contingent resources of around 55 mmboe. The project consists of taking the Balder Floating Production Unit (FPU) to shore for decommissioning, planned in 2028. Selected wells producing though Balder FPU will be transferred to the Jotun FPSO. In addition, production will be accelerated as part of the Jotun FPSO debottlenecking project to increase production capacity on the FPSO, as well as developing new production wells. The decommissioning of Balder FPU is expected to reduce operating costs by approximately USD 130 million gross per annum and reduce CO₂ emissions by around 80,000 tonnes gross per year.

With Jotun FPSO serving as the new area host at the Balder field, production is expected to remain at 70-80 kboepd gross towards 2030.

“While moving projects forward at pace, a major portion of our portfolio and capital remains uncommitted, allowing for a high degree of flexibility. This provides resilience and robustness to navigate through the cycles, whilst we continue to move high value projects forward at the right time”, Mr Rød concluded.

Vår Energi is operator (90%) of the Balder field, with Kistos Energy Norway AS as partner (10%).

This news that FID has been made for the Balder Phase V1 is exceptionally good news for Kistos despite it being well flagged, as is the fact that first oil is still expected perhaps as soon as later this month. The market however should now be able to start getting excited about what this means for Kistos and that is a high, extended and extremely valuable income stream from which to work. 

With the shares doubling this year it may look like that is already in there but I think that the least one could do is expect another doubling and so there remains plenty of upside from here. With this hurdle out of the way I expect the Kistos team to redouble their efforts in the inorganic department…

Petro Matad

Petro Matad has provided the following update.

Under its Oil Sales Agreement, Petro Matad has received from PetroChina partial payment of its invoice for Block XX oil production from the October 2024 start-up of Heron 1 to the end of April 2025. Gross proceeds of $1.18 million were received representing 70% of the invoiced amount. PetroChina has withheld 30% pending confirmation from the Mongolian tax authorities that there will be no customs, VAT or other tax charges levied on them in their role as processor and transporter of the oil. After payment of royalty and the government’s share of the revenue, Petro Matad’s net receipt from this payment is $0.81 million.

The invoice for production in the month of May has been submitted as per the terms of the agreement and is being processed.

Petro Matad is discussing the oil sales arrangements with the tax authorities to secure the confirmation PetroChina has requested. In the Company’s view, the law and precedent are clear that customs duties and VAT do not apply under the Production Sharing Contract. PetroChina’s processing and transportation of Block XX production as third-party business is something new for Mongolia but with services being charged at cost and representing a very small element of the overall value, there should be no, or minimal, tax impact. As such, Petro Matad views the withholding of 30% in no way representative of any uncertainty that remains, but in the spirit of collaboration shown by the parties to the agreement and in the interests of starting receipt of funds from commercial oil sales, the withholding has been acknowledged until the tax authorities have provided their guidance.

Mike Buck, CEO of Petro Matad, said:

“We are delighted to have received the first payment for Heron 1 oil under our oil sales agreement. The withholding of funds for matters raised by Petro Matad during months of discussion that were only declared by the counterparty to be of concern at the last minute is frustrating but we are working diligently to secure the confirmation that PetroChina has requested so that the withheld amount can be paid and future invoices can be paid in full.”

Good enough for me and Mike Buck can almost go off duty if you assume that the remaining payment is only a matter of time but the words tax authorities and customs strike terror in my heart. But it was never going to be easy so congratulations on getting this far…

The following articles were in the blog yesterday and tagged as such but I neglected to add them to the headline companies appearing. Accordingly here they are again in case you thought I hadn’t commented…

Sound Energy

Sound has announced completion of the regional screening study for natural hydrogen and helium undertaken in collaboration with Getech Group Plc, a global leader in locating essential energy and mineral resources crucial for the energy transition.

On 28 October 2024 the Company announced entry into an Exploration Collaboration Agreement (the “Agreement”) with Getech.  Pursuant to the Agreement, the parties will collaborate to seek to explore for naturally occurring hydrogen and helium in Morocco. The initial phase of the Agreement comprised a regional screening study to identify areas of potential interest for more detailed assessment by the parties.

The Company is pleased to announce that the regional screening study has been completed and has identified areas of significant prospective potential for natural hydrogen and helium occurrence sufficient to warrant further study. The Company and Getech intend, under the terms of the Agreement, to form a Joint Venture and negotiate jointly exclusive rights for the exploration and exploitation of hydrogen and helium resources in Morocco, progressing towards necessary geophysical and drilling activities to unlock potential deposits.

John Argent, VP Geoscience of Sound Energy, commented:

“We are pleased with the outcome of the regional screening study, which applied Getech’s proprietary geologically genetic workflows to identify and de-risk areas with potential for hydrogen and helium across the whole of Morocco. The study has yielded several high-potential targets that will now be the focus of our next phase of evaluation to refine a more targeted exploration programme. As we deepen our collaboration with Getech, we will continue to leverage our local partnerships and operational expertise to unlock value. We see this as a strong validation of our joint approach and a meaningful step forward in our strategy to establish a leading position in the emerging natural hydrogen and helium sector.”

Sound has also announced that it has signed an exclusive term sheet with Gaia Energy Ltd. (“Gaia”), a specialist in renewable energy, for the development of up to 270 MW of installed capacity of PV solar power at various locations in Morocco. 

Taking advantage of the liberalised medium voltage (“MV”) grid in Morocco, the Company and Gaia propose to enter into a Joint Venture and aim to construct solar power sites at ten or more locations close to MV substations and therefore customers. Gaia has commenced feasibility studies at a number of sites. Such studies include measurement and modelling of solar irradiation, land access studies, grid connection and capacity assessments. The next steps, upon formalisation of the JV, are to carry out the formal applications for grid capacity, other regulatory requirements, and negotiation of power purchase agreements (“PPAs”).

Sound is putting some long term ground bait down in renewable power in Morocco. In solar it is partnering with Gaia for up to 270 MW of installed capacity and is joining with Getech in natural hydrogen and helium. I’m due a meeting with Sound Chairman Graham Lyon so will add more after i’ve heard from him. 

Chariot

Chariot has announced the result of its Open Offer pursuant to the Fundraising announced on 23 May 2025.

The Company is pleased to announce that it has received valid acceptances from Qualifying Shareholders in respect of 62,270,970 Open Offer Shares, representing a take-up of over 119 per cent of the 52,279,027 Open Offer Shares available.

All Qualifying Shareholders who have validly applied for Open Offer Shares will receive their full Basic Entitlement. Applications for Open Offer Shares under the Excess Application Facility will be scaled back on a pro-rata basis of the excess shares applied for, with the same scaling methodology to be applied to each shareholder who applied for Excess Entitlements. Accordingly, the Open Offer has conditionally raised total gross proceeds of approximately US$1 million (£0.7 million).

The issuance of the Open Offer Shares is subject to and conditional on the passing of the Resolutions at the General Meeting to be held on 18 June 2025.

Julian Maurice-Williams, CFO of Chariot, commented:

“We are very pleased to announce the results of this Open Offer and would like to thank our shareholders for their ongoing support. This brings the total funds raised to US$7.1 million and we look forward to delivering on our plans across our Upstream and Renewable Power businesses over the coming months.”

A good level of oversubscription for Chariot and despite the recent problems at Anchois the company has a strong potential programme in both the upstream and in the renewable power businesses. The company hasn’t finished at Anchois in Morocco and they have assets in Namibia and have been seen around places in Africa such as Mauritania and elsewhere, the power business has huge potential in a continent that advertises its need for power almost every day.