Today’s Oil & Gas Update – Serinus Energy

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Today’s Oil & Gas Update – Serinus Energy

Oil & Gas Daily Flow

Non-Independent Research; Marketing & Sales Commentary – MiFID II exempt information – see disclaimer below

Market Update: Friday 20 March 2020 

Serinus Energy (LON:SENX): Production remains unaffected in Romania and Tunisia

Energy Prices         

Brent Oil US$30.3/bbl vs US$26.5/bbl yesterday

WTI Oil US$27.3bbl vs US$23.0bbl yesterday

Natural Gas US$1.67/mmbtu vs US$1.67/mmbtu yesterday

Oil Price News

Who will blink first – OPEC or Russia? Saudi Arabia is already feeling the pain of very low oil prices confirming today that it will cut spending by 5%, or US$13.3bn, to offset the impact of plunging oil prices and the effects of the Coronavirus on its economic outlook

Saudi has c.US$500bn (compared to US$1.7tn during the 2014 oil price war) in foreign reserves, but with oil prices plummeting to c.US$30/bbl and tourism revenue drying up due to a suspension of the Muslim pilgrimage to Mecca, it was expected the Kingdom would make cuts to its spending

Oil prices plunged as Saudis moved to flood the market and dominate sales amid a slowdown in demand for oil worldwide

Saudi Crown Prince Mohammed bin Salman has long been pushing to diversify the economy away from reliance on oil for revenue

Despite broad efforts at transforming the economy, the country continues to rely on higher oil prices of US$80/bbl to balance its budget

Russia on the other hand requires c.US$50/bbl for fiscal breakeven given its more diversified economy, however its treasury reserves are also severely reducing

All this would suggest that an intervention from the major producers will come sooner rather than later

Gas Price News

Natural gas prices moved higher on Thursday despite a smaller than expected draw in natural gas inventories reported by the Department of Energy

This follows Wednesday’s price action which same natural gas prices hit a fresh all-time low of 1.55

Drilling rigs are likely to halt production, as oil prices dipped into the low to mid-’20s

Warmer than expected weather is expected to cover the east coast for the next 6-10 and 8-14 days which is likely to weigh on prices

Company News

Serinus Energy (LON:SENX): Production remains unaffected in Romania and Tunisia

Share price: 9.0p, Market Cap: £19.0m

Serinus has confirmed that its producing operations across Romania and Tunisia have not been impacted by the COVID-19 pandemic.

In Romania, at the Company’s Moftinu gas project, which started production in April 2019, routine maintenance is expected to be carried out on the gas plant in May 2020. 

The maintenance program includes a program of well performance monitoring and is expected to last 10 days.  

The producing wells, Moftinu-1003, Moftinu-1004 and Moftionu-1007 continue to produce according to the expected production plan. 

As previously announced, the Moftinu – 1004 well has been producing since 16 February 2020 and is performing as expected.

The Company has permitted a 148 km2 3D programme area in the Berveni area just north of the Moftinu gas plant and reached land access agreements with all landowners within the seismic acquisition area.

Serinus was planning to order the mobilisation of the seismic equipment and staff to begin the program imminently. However, due to uncertainty regarding the COVID-19 pandemic and the impacts on travel and services in Romania and Satu Mare County, the Company has postponed giving the order to carry out the mobilisation of the heavy equipment and personnel.

The Company has been granted a 12-month extension to the third exploration phase on the Satu Mare concession in order for it to be able to carry out seismic acquisition program that is the last work commitment to be completed under this phase.

In Tunisia, as previously announced, the Chouech Es Saida field was restarted with production resuming from all four wells in August 2019.

In addition, Serinus has today confirmed that it has restarted the EC-1 well in the Ech Chouech licence area, bringing the number of producing wells to five in the Chouech area.

Oil production from the wells continues to increase as the water cuts from the wells diminish.

Operations at the Sabria field continue as normal. In January, the Company performed a coil-tubing operation on the Win-12bis well in order to remove a potential blockage that was the suspected cause of lower production levels after the field was brought back on production following the shut-in from May to September 2017. Production from this well has been gradually increasing since the operation was successfully completed.

On a corporate level, the Company has begun discussions with the EBRD (current lender) to assess the impact of the current situation and examine options available to manage through this period of uncertainty.

Our take: Given that operations in Romania and Tunisia are so far unaffected by COVID-19, Serinus continues to produce at pre-virus rates and shareholders will hope this continues. It is also worth noting that Moftinu 1004 is flowing at commercial rates and provides additional gas production to the Moftinu Gas Plant, against the backdrop of very attractive fiscal terms in Romania. Additional near-term low-risk exploration potential has been identified in areas immediately adjacent to the Moftinu development, which share the same reservoir, trap, seal and charge characteristics as Moftinu, and a 12 month extension to the exploration phase will allow further breathing space to exploit this potentially prolific acreage.

Research – Oil & Gas

Sam Wahab – 0203 470 0473

[email protected]

Sales

Richard Parlons – 020 3470 0472

Abigail Wayne – 020 3470 0534

Rob Rees – 020 3470 0535  

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

Sources of commodity prices

Oil Brent, WTI

ICE

Natural Gas

NYMEX

Proactiveinvestors.co.uk

News For Oil

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