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The government will not back Equinor, Ithaca and Shell.

Th aeirre obvious implications for Buchan and I would think Shell will accelerate plans to move their listing to the US and Equinor will scale back UK investment plans.

https://www.bbc.co.uk/news/articles/c30393m4z50o

aimo

Serica upgrades to OpenText to join the majority of the top 100 energy and engineering organizations.

https://tech.eu/2024/08/12/opentext-partners-with-serica-energy-to-optimise-oil-and-gas-production/

I'm just listening to the Q&A's, an analyst from Morgan Stanley asked about the position with regards to UK tax.

Ithaca said that they are working with the rest of the industry collaboratively, they met with OEUK yesterday and are meeting a government minister tomorrow to continue duscussions. They said the first discussions with HMG related to tax went 'well'. They said they are trying to make sure that the people making the decisions understand the implications of their decisions and see no reason why the O&G industry should not benefit from the same allowances as businesses in other sectors. They said whatever trajectory we choose take to net zero hydrocarbons will be needed for 25+ years, the government needs to decide if they want to import them or produce them domestically, taking into account jobs and balance of payments etc.

I think they are playing softly softly... for now

In answer to an earlier question they said the world is a big place and we have options

aimo

The decision was as expected, Var practically confirmed this in the Q2 results.

Yes, there's an $8.8m post tax capex cost increase for the delay.

However, the mooring system has been re-designed so that we can get Jotun on station early in the spring, even if the weather is still a little fresh.

The best outcome for us would be a production start on the 1st of June, saving us the full $45m payment to bondholders.

We are nearly there now, a 10% stake in a newly refurbished FPSO, designed to operate beyond 2045, in a stable tax regime not prone to knee jerk reactions.

~20 million barrels of norwegian crude with a projected opex of just $5 per barrel.

aimo

FINANCIAL

KENAS entered a new financing and lifting agreement (a produced quantity or PQ arrangement) with an international oil major commencing in January 2024. Under the terms of this arrangement, KENAS is paid for its production on a monthly basis but the offtaker only lifts KENAS’ entitlement of crude oil once it is sufficient to fill an offload tanker. In the second quarter, KENAS offloaded one cargo of crude oil totaling 500 kbbl from the Balder FPU, at a provisional price of USD 82.36 per bbl. In addition, based on the agreed PQ volumes for the second quarter, pre-payments of agreed PQ volume not lifted per June 30 amounted to USD 0.6 million. Total revenue from sale of hydrocarbons in the second quarter amounted to USD 40.8 million including final price adjustment for the cargo lifted in January 2024. At the end of June 2024, KENAS had cash at bank of USD 12.5 million, of which USD 0.1 million was restricted. KENAS had drawn USD 38.9 million under the terms of the revolving credit facility from its parent company, Kistos plc, by the end of the second quarter of 2024. In early December 2024, the Company expects to receive a total tax refund of approximately NOK 900 million, excluding interest, for the fiscal year 2023.

OPERATIONAL

Production from the Balder Area has been stable during the first half of 2024.

Production was 2,721 b/d net to KENAS in the second quarter of 2024, with production efficiency of 89%. This compared to 2,853 b/d and 96% production efficiency in the first quarter of 2024. The difference in production efficiency between the quarters reflects planned maintenance. A new Ringhorne well was brought onstream in May and is performing as expected. During the third quarter there will be a drilling break due to planned maintenance, after which the program will resume.

BALDER X

The Jotun FPSO will enable the delivery of future value in the Balder Area by unlocking gross production of approximately 90,000 boepd (gross) and with low operating costs of around US$5 per boe. The Operator, Vår Energi ASA, has taken actions to increase the pace of the remaining construction and commissioning. This has yielded results, and the FPSO is nearing completion. The mooring system has been re-designed to reduce potential weather constraints for installation. This would allow for installation in 2024 if sail-away occurs in September or earlier than anticipated in 2025 should sail away be postponed until early next year. Start-up in the fourth quarter of 2024 remains the Operator’s target. The Operator’s key consideration is to ensure work on Jotun is not carried over into the offshore hook-up phase. In the scenario where installation slips to next year, the expected start-up is by the end of the second quarter. Through the mooring system, design flexibility has been added to the FPSO installation arrangements, giving optionality regarding the timing of installation. Other elements of the project are largely complete. All subsea facilities have been installed and all 14 production wells drilled and completed, whilst the single water injector well was completed in July. The Operator’s assessment is that if first oil moves to 2025, this principally will be a schedule issue, and will not have a material impact on the overall cost of the project. The Operator will provide an update on progress towards the end of August, when a decision is made on the timing of installation of the FPSO. The Jotun FPSO also unlocks future growth opportunities in the area. The Balder Phase V project is being progressed and involves the drilling of six production wells to utilize the remaining subsea template well slots and capture 2P reserves of approximately 30 million barrels (gross). The drilling of these wells will commence in the first half of 2025 and be completed in 2026. Balder Phase VI, which would include new subsea facilities and wells, is being reviewed and planned. On 8th February 2024, the operator released its “Annual statement of reserves

2023” in which it estimated gross 2P reserves for the Balder Area at 219 MMboe (21.9 MMboe net to KENAS).

Accounts to the period from 1st January to 30th Sept 2023 were filed at the end of July, link below.

https://find-and-update.company-information.service.gov.uk/company/12371828/filing-history/MzQyOTc0NTQ4NGFkaXF6a2N4/document?format=pdf&download=0

*Hitec should pay the buyer to take this off their hands*

Hitec paid over the odds for assets and are reported to now want out for around $1bn including debt.

They only made $150m after tax profit on revenue of $2bn in 2023. They have debt of around $792m and decom liabilities of $850m.

Not for me, this looks like a money pit.

Hitec should pay th

To be fair most of the board are already well invested in the company.

Andrew Austin has ~14m shares.

Peter Mann ~1.2m shares.

Richard Benmore ~1.1m shares.

Alan Booth ~230k shares.

Richard Slape ~129k shares.

The only member of the board without an interest is non exec Steve Pawson as far as I know

I'll be interested to see how many of the staff take up their right to the share incentive plan. Invest up to £1800 per year and get a free share for each one you buy is a pretty generous scheme. I think we only have around 40 staff, so it's not going to impact the share price, but will show how much confidence for the future the 'boots on the ground' have.

aimo

Mr Latin made three points very clear in the interview, this is what he said, give or take.

1. Capital allowances mean that businesses can offset investments against tax. If the ability to do this is reduced then companies like Serica won’t invest..

2. What’s going to happen if we don’t invest is there will actually be less tax revenues, there will be a lot of job losses, there will be reduced security and it will be worse for the environment.

3. One of the things, perhaps, to consider is this production that’s declining, it’ll nosedive off the cliff if we take the investment away and at the bottom of the cliff there’s a heard of elephants waiting and those elephants are called decommissioning.

Labour isn't listening, they have decided that the oil and gas industry is a political pawn worthy of sacrifice.

However, if the mainstream media could report the problems facing the industry in an even handed way I think most people in the UK would 'get it'

If the people get it then Labour would listen.

aimo

*Oil/Gas split roughly 40/60*

Production was down from 9.5k barrels per day to just 6.2k barrels per day in May. Production in the UK fell off a cliff, from 3.7k barrels per day in April to just 1.0k barrels per day in May. Norway and the Netherlands were down around 10% on the prior month too. Oil/Gas split roughly 50/50.

Breakdown.

UK

Net 20% to Kistos 999boepd of gas and 45b/d of oil

Netherlands

Net 60% to Kistos 2612boepd of gas

Norway

Net 10% to Kistos 2584b/d of oil

aimo

Miliband, Reeves and Starmer are not listening. By the time the three stooges are stopped there will be nothing left to save.

Commenting, David Whitehouse Offshore Energies UK chief executive said:

“This is not partnership working between government and industry. These announcements have been made without meaningful engagement with this sector.

“We recognise the Government has significant spending challenges to manage but today’s announcement will only serve to rock confidence further.

“The offshore energy sector supports over 200,000 jobs. These are real people, working in our energy industry today. Today’s announcement jeopardises jobs in communities across the UK. This is something the Prime Minister committed in his manifesto not to do.

“Announcements like this without engagement is no way to treat these hard-working people.

“We have tonight spoken to the Treasury Minister and expect further and urgent engagement with the sector.”

aimo

At the bottom of yesterday's policy paper detailing changes to the EPL is this statement:

"Next steps

The government will set out further detail of its approach at the Budget following engagement with stakeholders. All changes will be legislated for in the next Finance Bill.

After a period of change, the government also recognises the importance of providing the oil and gas industry with long-term certainty on taxation. The government will therefore work with the industry and others to develop and implement a successor regime for responding to price shocks after the Energy Profits Levy ceases."

Can't these bufoons see that by the time EPL ceases in March 2030 there will be no industry left? Just the fact that they call it a 'regime' tells you everything you need to know about this Labour government.

We should run down our UK assets with as little spend as possible and merge with Kistos concentrating our spend in Norway and the Netherlands.

aimo

It is woth rembering the contingent payment part of the MMIE acquisition. If the first oil date is after the 31st of May 2025 we save ourselves a $45m payment to bondholders. In that event there would be some warrants to be issued and others

cancelled leaving bondholders with 6m warrants exercisable at 385p per share.

385p per share! I'm sure we'd all be happy to see those warrants exercised before expiry on the 18th of April 2028...

aimo.

" A contingent payment of US$45MM will be made to the MIME02 bondholders in the event 500,000 bbl (gross) have been offloaded and sold from the Jotun FPSO by 31 December 2024. This will decline to $30MM from 1 January 2025 to 28th February 2025, to US$15MM from 1 March 2025 to 31 May 2025, and to zero thereafter.

· If 500,000 bbl (gross) has not been offloaded and sold from the Jotun FPSO by 31 May 2025, the holders of Mime's Nordic Bonds will be allocated up to 2.4 million warrants exercisable into Kistos ordinary shares at a price of 385p each. The warrants can be exercised between 30 June 2025 and 18 April 2028. Simultaneously, up to 1.9 million of the 5.5 million warrants issued as consideration for the Mime shares will be cancelled."

I would hope that every investor has read and understands the notes to the consolidated financial statements, I certainly have.

If any of the negative scenarios threaten us breaching the $10m liquidity covenant I see no problem in us obtaining the necessary funding to tide us over until we receive the ~ 83m euro tax repayment at the end of this year.

In 2022 we retired 46% of outstanding debt by repurchasing €68 million of Nordic Bonds, leaving €82 million outstanding. Then In 2023 we retired the remaining €82 million originally issued by Kistos NL2 as part of the acquisition of Tulip Oil. The rationale being that it will save €15 million on future interest costs.

Our record on repaying debt is golden.

We have spread ourselves a little thin uneccessarily you could argue. Repaying debt before it was due and the £25m purchase of the gas storage assets from cash for example. However, the company is one of the few on AIM that actually studies risk to a finite degree and commuicates that risk to shareholders.

There are many oilies out there with incredibly risky balance sheets who do not go into any where near as much detail in their results.

I'm happy to remain invested.

aimo

The trickle of automatic dividend re-investment of small shareholders will continue beyond next week imho.

Interactive investor dividends are being re-invested as of today, clients hold ~3.5% of Serica.

However, Hargreaves Lansdown only reinvest dividends between the 11th and 21st of each month, clients hold ~4.3% of Serica.

So, no dividend re-investment from HL until the after the 10th of August.

aimo

I think you are right there Sasa, I take it to be a capital transaction too. If it was an automatic re-investment I'd expect it to go through tomorrow or Friday. I think Dave has simply had the dividend paid to his capital account and funded today's purchase from that. I assume he is aiming to get ahead of the (hopefully wall of cash that will pour in tomorrow and Friday.

I have done the same today...... a fool and their money are easily parted!

He's re-invested his dividend, give or take.