WTI (Feb)* $69.38 +45c, Brent (Feb) $72.88 -51c, Diff -$3.50 +69c.

USNG (Jan) $3.59 +21c, UKNG (Jan) 111.4p +8.8p, TTF (Jan) €44.15 +€2.98.

*Denotes WTI January contract expiry. 

Oil price

Oil has fallen this week, a combination of the potential ceasefire in the Middle East as well as the Fed decision on rates which has led to a strong greenback.

Inventory figures were good but mixed, the API had the bigger crude draw and the EIA a good draw in distillates, to be expected at this time of year. The WTI January contract expired quite well and rose into February although both are down a bit today.

Savannah Energy

Further to its announcement on 3 December 2024, the Company advises that its ordinary shares remain suspended from trading on AIM pending publication of an AIM Admission Document setting out, inter alia, details of a proposed alternative transaction in respect of the ex-PETRONAS assets in South Sudan, should it be concluded, or confirmation is provided that a proposed alternative transaction is not proceeding.

In this regard, since the last announcement, an affiliate of Savannah has signed an agreement with another energy company to discuss collaboration in relation to the potential alternative transaction. A further update on progress, and associated matters, is expected to be made by the end of February 2025.

This announcement must give some cheer to SAVE shareholders for whom the wait for a conclusion of a deal with regard to the ex-Petronas assets in South Sudan has been, like the negotiations, quite protracted. Today it seems that Savannah are now in discussions with another company with regard to a potential transaction to acquire the ex-PETRONAS assets and that the shares remain suspended.

Pharos Energy

Pharos has announced that the applications for five-year licence extensions to the Company’s two producing assets in Vietnam, the TGT and CNV fields, have been formally granted by the Vietnamese Government to the Hoang Long Joint Operating Company and the Hoan Vu Joint Operating Company respectively. The partners in the JOCs will now formally approve and enter into supplementary documentation to finalise the extensions. This will result in extension of the licence for the TGT field to 7 December 2031, and extension of the licence for the CNV field to 15 December 2032.

Highlights:

·      Potential to increase TGT and CNV’s Net Present Value by more than 50%

·      Increase to estimated year-end 2024 2P reserves of approximately 10%* in Vietnam

·      Scope for further reserves increase of approximately 70%* with the work programme of additional infill drilling and success in the appraisal programme

Katherine Roe, Chief Executive Officer, commented:

“The granting of the TGT and CNV licence extensions is a significant milestone for the Company and a key catalyst to unlocking untapped potential within our existing portfolio. This is very welcome news and allows us to prioritise future investment to extract and grow value from our assets. I would like to thank our team in Vietnam for their hard work in securing the approvals; they are testament to Pharos’ long-nurtured working relationships and our standing in-country as a valued industry participant. I would also like to thank the Vietnamese Government and we look forward to working with them throughout the extended period.

Pharos is well positioned for future growth and we remain committed to continue supporting the Vietnamese Government’s energy security agenda through our investments in TGT and CNV, as well as progressing our exciting position in Blocks 125 & 126.”

Pharos has received a pair of wonderful Christmas gifts from the East that have genuinely enhanced the upside in its Vietnamese  portfolio and is as CEO Katherine Roe says above is ‘a significant milestone for the company and a key catalyst to unlocking untapped potential within our existing portfolio’. 

Whilst the news may have been to a certain extent expected by the company and the market, these things are never nailed on and the fact that Pharos has such a good reputation in the area and its team have a fantastic relationship in Vietnam pays tribute to them. 

The transaction if one can call it that, brings a significant addition of value to Pharos and the NPV of TGT and CNV is estimated at up more than 50%. With estimated year-end 2024 2P reserves expected to increase by c.10% and the company expecting scope for further reserves increase of approximately 70% assuming the work programme of additional infill drilling and success in the appraisal programme I am massively impressed.

Accordingly the share price should have increased by a great deal more than it has today and I am sure that once the market realises quite how much upside that this has delivered for Pharos in all areas of its Vietnamese portfolio and accordingly I’m really happy that it will be a leading member of the 2025 Bucket List.

  Potential to increase TGT and CNV’s Net Present Value by more than 50%

·      Increase to estimated year-end 2024 2P reserves of approximately 10%* in Vietnam

·      Scope for further reserves increase of approximately 70%* with the work programme of additional infill drilling and success in the appraisal programme

These licence extensions provide the catalyst for initiating the planned work programme expected to commence with the drilling of an appraisal well in the TGT field in Q4 2025. The extensions also unlock value with the drilling of additional infill wells. The extensions are expected to result in an increase to the TGT and CNV 2024 year-end 2P reserves of approximately 10%*, with potential to further increase reserves through appraisal success and infill wells. Based on internal management analysis, the extensions have the ability to increase the NPV of TGT and CNV by more than 50%.

In consideration for granting the licence extensions, Pharos’ working interest will reduce after the current licences expire in December 2026 and 2027 respectively. The working interest for TGT will change from 30.5% to 25.3% and likewise, CNV will change from 25% to 20%. The extensions are accompanied by an agreed work programme commitment of 3D seismic reprocessing and one appraisal well on each field. Certain other licence terms have been revised to be consistent with precedent extensions granted to other operators by the Vietnamese Government and are in line with the current Petroleum Law provisions. 

For more information on the terms of the licence extensions, please visit https://www.pharos.energy/investors/results-reports-and-presentations/.

(*) Estimated reserves are not audited and subject to further review and amendment. Further volumes are adjusted for revised working interests and include a progression of 2C with additional drilling and prospective resources with appraisal success.  

 

And finally…

The Prem will be loaded with fixtures which come thick and fast over the next fortnight. Tomorrow Villa entertain the Noisy Neighbours who can’t buy a result at the moment, Forest are at the Bees, the Tractor Boys host the Magpies and the Seagulls nip up the M23 to play the Happy Christmas Hammers.

On Sunday Chelsea visit the Toffees, the Cottagers host the Saints, the Cherries visit the Theatre of Dreams, in my favourite derby name the Foxes host the Wolves and in the big game Liverpool go to White Hart Lane.

Lots of racing as you would expect but Ascot tomorrow has always been a great Christmas Card and of course with Boxing Day to look forward to…

And in rugby union the RFU Chairman Tom Ilube has resigned over the shame over executive pay and the world wait to hear what Bill Sweeney, the £1.1m Chief Executive has to say…