Listen to our latest Investing Matters Podcast episode 'Uncovering opportunities with investment trusts' with The AIC's Richard Stone here.
Putin could have nailed the coffin for the Nord Stream supply to Europe. I believe Europe and the world (excluding China) will abandon future gas deals with Russia, and seek a supply from a responsible stable country. Australia's door will be open to very good offers soon!
Wintershall Dea, one of the main European investors in the Nord Stream 2 gas pipeline, said it expects to be compensated for the €730mn it has invested in the project if the fallout from Russia’s invasion of Ukraine prevents it from becoming operational.
The German group, which is Europe’s largest private energy exploration and production company, is one of five companies to have lent money to Russia’s Gazprom for the project, alongside Shell, Germany’s Uniper, France’s Engie and Austria’s OMV.
After years of supporting it, the German government announced on Tuesday that it would suspend the approval of Nord Stream 2, in retaliation for Russia’s actions.
US President Joe Biden said on Wednesday that his administration would also impose sanctions on Nord Stream 2 AG, the wholly owned Gazprom subsidiary building the pipeline.
In its annual report published on Thursday, Wintershall Dea said that “even if there might be a delay in commissioning due to the not yet completed certification process, we expect that the contractual obligations towards the financial investors will be fulfilled”.
It added: “Should the commissioning of Nord Stream 2 be prevented by political intervention, we assume that the project company will be able to enforce compensation claims. Currently, Wintershall Dea sees no reasonable scenario in which there will be political intervention without compensation.”
Oligarchs at the heart of Putin’s inner circle and banks which have bankrolled the Russian occupation of Crimea have been targeted by the first wave of UK sanctions in response to Russia’s further violation of Ukraine’s sovereignty.
Following the Prime Minister’s announcement to the House of Commons, Foreign Secretary Liz Truss is today (Tuesday 22 February) designating the initial tranche of sanctions on Russia. The sanctions package targets oligarchs and banks associated with the Kremlin.
Foreign Secretary Liz Truss said:
This first wave of sanctions will hit oligarchs and banks close to the Kremlin. It sends a clear message that the UK will use our economic heft to inflict pain on Russia and degrade their strategic interests.
And we are prepared to go much further if Russia does not pull back from the brink. We will curtail the ability of the Russian state and Russian companies to raise funds in our markets, prohibit a range of high tech exports, and further isolate Russian banks from the global economy.
These will be surgically targeted sanctions that will hit Russia hard.
Using new powers introduced on 10 February, the UK has frozen the assets and imposed travel bans on 3 leading members of the Russian elite of particular significance to the Kremlin: Gennady Timchenko, Russia’s sixth richest oligarch, and Boris and Igor Rotenberg, 2 long-standing associates of the regime.
Assets of 5 Russian banks involved in bankrolling the Russian occupation have also been frozen with immediate effect...
author avatar image
By Alex Finnis
Reporter
February 22, 2022 11:25 am
Boris Johnson has confirmed that the UK will impose sanctions on Russia, after Russian President Vladimir Putin ordered troops into Ukraine on Monday night.
It came after the Russian leader signed a decree recognising the Donetsk and Luhansk regions of eastern Ukraine as breakaway states.
President Putin said he had ordered troops and tanks into the regions as a “peacekeeping” mission, but Western leaders have interpreted this as a de facto military invasion.
The freshest exclusives and sharpest analysis, curated for your inbox
Enter your email
Health Secretary Sajid Javid told Sky News on Tuesday morning: “We are waking up to a very dark day in Europe.
“It’s clear from what we have already seen and found out today that Russia’s President Putin has decided to attack the sovereignty of Ukraine and its territorial integrity.
“We’ve seen that he’s recognised these breakaway eastern regions in Ukraine and we can already tell he’s sent in tanks and troops, so I think from that you can conclude that the invasion of Ukraine has begun.”
The Prime Minister has vowed to swiftly introduce the “first barrage” of sanctions against Russia, saying President Putin seems “bent on a full-scale invasion” of Ukraine. The US and EU have also confirmed they will place sanctions on Russia.
But what exactly does this mean? Here is everything you need to know.
What are sanctions?
Sanctions are measures imposed on a state, group or individual as punishment for certain actions.
There are three types of sanctions that are more commonly used; economic sanctions, diplomatic sanctions and military sanctions.
Here’s what they each mean:
Economic sanctions: commercial and financial penalties such as levying import duties on goods, restricting exports, refusing to trade with a state, investment bans and targeting companies from a state
Diplomatic sanctions: political measures that aim to demonstrate displeasure with or disapproval of certain actions, stopping short of taking economic or military steps, such reducing or removing diplomatic ties by, for example, getting rid of a state’s embassy
Military sanctions: military interventions, ranging from arms embargoes to air strikes and full-scale attacks
In 2020 the UK imposed sanctions on 49 people and organisations behind notorious human rights abuses, including Saudi Arabian officials involved in the 2018 murder of journalist Jamal Khashoggi, and those implicated in the death of Russian lawyer Sergei Magnitsky in 2009.
They had their UK assets frozen and were banned from entering the country.
What sanctions will the UK impose on Russia?
Ukraine is not part of Nato. If it were, Nato’s war alliance means that all 30 member states, including the US and UK, would have to launch an armed attack against Russia to protect Ukraine.
But since Ukraine is not a part of Nato, the Western response to a Russian invasion of Ukraine will initially focus on financial sanctions.
Foreign Secretary Liz Truss said on Monday that sanctions would be directed at Russian individuals and companies with assets in the UK, which will affect the Russian economy since many of its wealthy oligarchs have their cash tied up in the UK.
Following Tuesday’s Cobra meeting, the Prime Minister said the UK’s sanctions would hit the “economic interests that have been supporting Russia’s war machine”.
“They will hit Russia very hard and there is a lot more that we are going to do in the event of an invasion,”
If you log into the investor Meet platform on https://www.investormeetcompany.com/investor/meetings then you can access the recording of the meeting there. The platform is easy to use, so worthwhile.
I wasn't totally clear on the monetisation when Falcons share of the Beetaloo is sold. Did I hear correctly that our shares will be sold for cash, if so, does that mean that our 7 million acres in the Karoo will go with the sale?
Yes, I'd agree with Newty that todays Q&A was very good, the Q about the consistency of the geology was addressed, though this is something the operators are looking at and sharing their knowledge with each other.
It seems that two successful 2000m horizontal fracks this year will prove up 1/8th of our acreage at the appraisal in the region of $4000 per acre, as Newtofo states below:
POQ's indicated that potentially 1/8 of Falcon's acreage (that is accounted for in what Origin calls the Amungee zone with the current 6.6 TCF of contingent gas resources) could eventually be worth $4000 per acre. This would put that 125,000 acres very close to what POQ calls the "appraisal rate" -- if the next two horizontals in the Amungee, at 2 km in length, flow at 5 mm each. Since the remaining 7/8 of Falcon's one million acres would only be at the "exploration valuation" in later 2023 -- then that 875,000 acres may only be valued at $1000 per acre.
Recent Share Trades for Falcon Oil (FOG)
Date Time Trade Prc Volume
02-Feb-22 14:37:06 9.35 650,000
02-Feb-22 09:31:35 9.35 1,300,000
02-Feb-22 12:55:19 9.40 360,000
02-Feb-22 16:30:37 10.10 1,854,500
03-Feb-22 16:10:24 10.75 100,000
03-Feb-22 16:09:07 10.75 100,000
03-Feb-22 17:06:27 10.80 750,000
03-Feb-22 15:44:29 10.925 100,000
Managing Director and CEO, Joel Riddle, said:
"We are encouraged by the initial flow rates, which support and validate Tamboran's Mid-Velkerri shale model. The flow tests have proven that the hydrocarbon system is working as expected and, similar to the evolution of the best North American shales, the next steps are to optimise the results with larger and more effective fracture stimulation designs, with well design completion techniques expected to have a considerable impact on the ultimate recovery of these wells.
"The rocks are working as expected and the next steps are to optimise the results with larger and more effective fracture stimulation designs.
Thanks Schlemiel, it would be interesting to hear from one of our knowledgeable members to see what their take is on the news below:
The T2H well peaked at 4.0 mmscfd following a weather-related shut-in in mid-January 2022. The
well has since stabilised at a 14-day average of 1.7 mmscfd over a 660-metre unoptimised fracture
stimulated horizontal section (normalised at 2.6 mmscfd over 1,000-metres).
• The T3H well peaked at 10.0 mmscfd following shut-ins for the same weather-related event and
planned maintenance. The well has since stabilised at a 10-day average of 1.5 mmscfd over a 600-metre unoptimised fracture stimulated horizontal section (normalised at 2.5 mmscfd over 1,000-metres).
• Incorporating the results from the Tanumbirini 1 vertical, T2H and T3H wells, Tamboran has
developed an exclusive and independent model, using its own intellectual property, into
optimisating effective fracture stimulation within the Mid-Velkerri “B” shale formation.
• This modelling indicates that the Mid-Velkerri shale is capable of flowing gas in excess of
5 million standard cubic feet per day (“mmscfd”) per 1,000-metre, which has been verified by
independent subsurface expert, Subsurface Dynamics, Inc.
Europe woke up to the realism that we do need gas and the green vision is a distant fantasy at this moment. The EU has classified has as a Green transition fuel, then also a carbon zero fuel where carbon capture is employed. The Beetaloo future is secure if this holds, carbon capture will be employed in the Beetaloo, Joel Riddle all ready states this himself. The future is very bright! Speaking of which, I look forward to tonights sattelite images from H2!! GLA
Spot LNG shipments to Europe were pricing at roughly $44 per million British thermal units compared with about $38/Mmbtu in Asia.. During October and November prices in Asia had averaged $5/Mmbtu above those in Europe, the brokerage said.
Torbjorn Tornqvist, the founder and chief executive of Gunvor, the world’s biggest independent LNG trader, said he expected to see 15 to 20 cargoes, in addition to the normal flow, head to Europe in December and the same amount in January.
“Europe is clearly pricing itself to attract a lot of LNG and it needs it,” he said. “Without that, the supply situation could be very serious depending on the weather. Stocks are already low and will be exceptionally low by the end of the winter.”
Froley added that Royal Dutch Shell, which has an offtake agreement with the Pampa Melchorita LNG terminal in Peru, had been sending Peruvian LNG to the UK for the first time since 2019. Seven such Shell cargoes have arrived in the UK since the end of October, with four more cargoes scheduled “in coming weeks”, he said.
Like in continental Europe, UK gas prices have risen roughly 600 per cent since the start of the year, bankrupting more than two dozen domestic energy suppliers.
Gas accounts for about 40 per cent of UK electricity generation and heats the majority of homes. It depends on LNG shipments for roughly a fifth of total supply.
The carry and what remains.. I think that's the unknown, and we are unlikely to know until the time arrives for money to be sought, unless we receive an offer we can't refuse before the time comes.. We would hope that FOG is in a stronger position should there be the need for a raise!? GLA
I hear that we have 2 horizontals planned for this year, but I dont know where or when. It is thought that the Amungee is likely for one of the two horizontals -- as Origin has the well pad ready to go, along with very detailed seismic and prior data room drilling analysis that will help them lay down a fault free 2 km horizontal (thanks Newty).
There is a chance that Origin may go back to EP76 for the second horizontal, and that is based upon good data gathered from the vertical DFIT tests at EP76 with clear indications of wet gas witg TOC and saturation numbers were some of the best to date with a shallower depth.
Falcon is fully carried for costs upto $265 million, but it is unknown how much of those costs remain as Origin burn money fast.
Origin is usually slow off the block and don't detail their plans for the year ahead, so first results from the we'll are unlikely until fall (going from their past precident). But we have high hopes, this is likely to be our vintage year, Tamborans results will give an insight as to where we are heading.