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Source Rock Royalties Recognized as a Top 50 TSX Venture Exchange Company
Source Rock Royalties Ltd. Source Rock Royalties Ltd. ("Source Rock") (TSXV: SRR) (TSXV: SRR.WT), a pure-play oil and gas royalty company with an established portfolio of oil royalties, announces that it has been recognized by the TSX Venture Exchange (the "TSXV") as a 2024 Top 50 company. The TSX Venture 50 showcases the strongest performance on the TSXV over the last year. Comprised of 10 companies from five industry sectors, the ranking is based on market capitalization growth, share price appreciation and trading volume. More details can be found at: www.tsx.com/Venture50.
"We are proud to be named as a top performing TSXV company in the energy sector. Our balanced growth and yield business model allowed us to materially expand and diversify our portfolio of royalty production and lands, while also paying a strong dividend to shareholders, which was increased by 20% in 2023", stated Brad Docherty, President & CEO.
About Source Rock Royalties Ltd.Source Rock is a pure-play oil and gas royalty company with an existing portfolio of oil royalty interests concentrated in southeast Saskatchewan, central Alberta and west-central Saskatchewan. Source Rock targets a balanced growth and yield business model, using funds from operations to pursue accretive royalty acquisitions and to pay dividends. By leveraging its niche industry relationships, Source Rock identifies and acquires both existing royalty interests and newly created royalties through collaboration with industry partners. Source Rock's strategy is premised on maintaining a low-cost corporate structure and achieving a sustainable and scalable business, measured by growing funds from operations per share and maintaining a strong netback on its royalty production.
Forward-Looking StatementsThis news release includes forward-looking statements and forward-looking information within the meaning of Canadian securities laws. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes" or variations (including negative and grammatical variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements in this news release include statements regarding Source Rock's dividend strategy and the amount and timing of future dividends (and the sustainability thereof), the potential for future drilling on Source Rock's royalty lands, expectations regarding commodity prices, Source Rock's growth strategy and expectations with respect to future royalty acquisition and partnership opportunities, the ability to complete such acquisitions and establish such partnerships, and the estimated costs for Source Rock to run its business. Such statements and information are based on the current expectations of Source Rock's management and are based on assumptions and subject to risks and uncertainties. Although Source Rock's management believes that the assumptions underlying these statements and information are reasonable, they may prove to be incorrect. The forward-looking events and circumstances discussed in this news release may not occur by certain dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting Source Rock. Although Source Rock has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements and information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement or information can be guaranteed. Except as required by applicable securities laws, forward-looking statements and information speak only as of the date on which they are made and Source Rock undertakes no obligation to publicly update or revise any forward-looking statement or information, whether as a result of new information, future events or otherwise.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy of this release.
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Source Rock Royalties
Overview
Source Rock Royalties (TSXV:SRR) is a Calgary, Canada based company exclusively focused on oil & gas royalties in the provinces of Alberta and Saskatchewan. Source Rock's portfolio primarily consists of royalty interests focused on oil, with concentrations in southeast Saskatchewan, central Alberta and west-central Saskatchewan. The portfolio comprises:
- Various gross overriding royalty interests in southeast Saskatchewan.
- A gross overriding royalty in largely contiguous Clearwater interests in Central Alberta.
- A production volume royalty in Viking mineral rights in east-central Alberta.
- Various gross overriding royalties in central Alberta.
- Various gross overriding royalties in the west-central Saskatchewan Viking light oil play.
Source Rock Royalties offers investors low-risk and low-capital-cost exposure to the oil & gas sector in western Canada. The royalty business model offers the benefit of sharing in production revenue without exposure to the capital costs associated with drilling, development, maintenance, abandonment, environmental and other obligations.
Since its inception, Source Rock Royalties has consistently pursued royalty acquisitions, even amidst significant energy market fluctuations. The company has primarily concentrated on non-marketed royalty acquisitions rather than opportunities marketed through formal third-party processes. Leveraging strong relationships within the oil and gas sector in the Western Canadian Sedimentary Basin, Source Rock identifies and accesses niche royalty acquisitions.
Source Rock acquired new royalties worth nearly C$13 million in 2023 and a total of C$16.5 million since its IPO in March 2022. These acquisitions effectively doubled Source Rock’s royalty acreage, significantly enhancing both its current royalty production and its exposure to potential undeveloped drill locations. Source Rock generated C$6.6 million in royalty revenue in 2023, the highest in its 11-year history.
Source Rock endeavors to keep costs low, thereby maximizing cash flows. Aside from the CEO and CFO, additional technical oil and gas professionals are engaged by Source Rock as consultants on an as-needed basis. Currently, Source Rock Royalties employs only one full-time staff member. The low-cost base ensures consistent cash flows as evidenced by its more than 11-year track record of delivering positive funds from operations.
Strong cash flow allows the company to consistently pay and increase dividends. Source Rock has paid ~$17 million in dividends to shareholders since 2014. Source Rock increased its dividend twice in 2023, for a total increase of 20 percent.
The current monthly dividend is $0.006 and is sustainable given that it can comfortably be funded by current operations even at a lower oil price scenario of C$60/bbl (or US$50/bbl WTI).
The management and board of directors have a proven track record of creating value in the oil & gas industry. The insiders own 9.5 percent of Source Rock’s common shares, aligning their interest to that of the shareholders by directly participating in the same financings as outside shareholders since inception. The company has a strong institutional shareholder base with CN Rail Pension Fund owning approximately 21 percent of Source Rock’s common shares. Source Rock Royalties has a clean capital structure with only ~45 million common shares issued and outstanding.
Source Rock focuses on a balanced growth and yield model, limiting volatility in returns for shareholders. Source Rock offers investors a unique opportunity to gain exposure to the oil & gas sector.
Company Highlights
- Source Rock Royalties is a Calgary, Canada based pure-play oil and gas royalty company, with a focus on Alberta and Saskatchewan; the only junior oil and gas royalty company listed on the TSXV.
- Source Rock concentrates on acquiring royalties in areas with proved reserves, foreseeable future high rate-of-return drilling upside, and partnering with operators that are financially and operationally prudent.
- Owning and managing royalties is a capital-light business model offering the benefit of sharing in production revenue without exposure to the capital costs associated with drilling, development, maintenance, abandonment, environmental and other obligations.
- Source Rock Royalties has a diversified oil-focused portfolio of royalty interests concentrated in southeast Saskatchewan, central Alberta, and west-central Saskatchewan with well-positioned royalty payors. Oil exposure allows for a strong netback (profit) per barrel even during periods of lower commodity prices.
- Source Rock Royalties has a proven track record of executing on its balanced growth and yield business model. The company has achieved 11 years of positive cash flow and provided ~$17 million in dividends back to shareholders since 2014.
- Source Rock Royalties anticipates its current monthly dividend of $0.006 to be comfortably funded with cash flow by current operations down to oil prices of C$60/bbl (or US$50/bbl WTI).
- The management and board of directors have a proven track record of creating value in the oil & gas industry. The insiders own 9.5 percent of Source Rock’s common shares, aligning their interests to that of the shareholders.
- The company has a strong institutional shareholder base with CN Rail Pension Fund owning approximately 21 percent of Source Rock’s common shares.
- Insiders and key shareholders have an average cost on their shares of ~$0.90 (there were never any cheap Founders or seed shares issued).
- Source Rock Royalties does not use debt in its business and always maintains a cash balance (currently ~$2.2 million).
Royalty Assets
Source Rock's current portfolio comprises royalties primarily focused on oil (95 percent), spread across southeast Saskatchewan, central Alberta and west-central Saskatchewan. The company holds varying gross overriding royalties in more than 150,000 gross acres of land. Additionally, Source Rock owns a production volume royalty in Viking mineral interests situated in lands in east-central Alberta.
The majority of Source Rock's royalties are derived from top-line revenue, resulting in minimal exposure to deductions linked to production costs from wellbores and the sale of various commodities. Also, the majority of its current royalty payors are financially stable and possess robust capabilities to efficiently operate and enhance the value of the lands in which Source Rock holds royalties. Some of the key royalty payors include Whitecap Resources (TSX:WCP), Rubellite Energy (TSX:RBY), Surge Energy (TSX:SGY), Crescent Point Energy (TSX:CPG) and Anova Resources (Private), among many others.
1. SE Saskatchewan Light Oil Gross Overriding Royalties
The company holds gross overriding royalties in approximately 35,000 gross acres of land in southeast Saskatchewan. The key operators include Whitecap Resources, Vermilion Energy (TSX:VET), Anova Resources (Private), Crescent Point Energy, Tundra Oil & Gas (Private), ROK Resources (TSXV:ROK), Woodland Development (Private) and Saturn Oil & Gas (TSX:SOIL). Future development activities on gross overriding royalty lands will be focused on the Frobisher Formation. The Frobisher Formation, characterized by shallow depths and conventional light oil, does not necessitate hydraulic fracturing, making it one of Canada's most economically viable light oil plays.
2. Clearwater Heavy Oil Gross Overriding Royalty
The company holds a gross overriding royalty in approximately 61,440 net acres of land in the Figure Lake area of central Alberta. Rubellite Energy is the operator of gross overriding royalty lands and the production is entirely from the Clearwater Formation. The gross overriding royalty initially carries a royalty rate of 1.5 percent until the cumulative royalty revenue received by Source Rock matches the purchase price. At that point, the royalty rate decreases to 1 percent. The operator has committed to drill 59 horizontal wells on the lands by June 2026.
3. Hamilton Lake Unit Viking Light Oil Royalty
Source Rock earns a production volume royalty supported by production from Hamilton Lake Unit and Viking lands of Axiom Oil & Gas. Pursuant to the production volume royalty agreement, Source Rock's remaining entitlement to royalty volumes from the Hamilton Lake Unit is as follows:
- 2024 – 75 bbl/d; 2025 – 70 bbl/d; 2026 – 39 bbl/d
- 2027 to 2034 – 20 percent lower on a per-day basis than the prior calendar year; and
- January 1, 2035 – conversion to a 0.50 percent gross overriding royalty in the Hamilton Lake Unit or a $500,000 pay-out, at the discretion of the royalty payor.
4. Central Alberta and Saskatchewan Gross Overriding Royalties
Source Rock owns varying gross overriding royalties in approximately 60,000 gross acres of land located in west-central Saskatchewan and central Alberta. The west-central Saskatchewan gross overriding royalty lands produce predominantly light oil from the Viking and Mannville formations. The Central Alberta gross overriding royalties produce from various formations and include exposure to several low-decline properties that are under waterflood.
Management Team
Brad Docherty – President, Chairman and Chief Executive Officer
Brad Docherty is the Founder of Source Rock Royalties, and has held the positions of president, chief executive officer and chairman of the company since its incorporation. Previously, he was a corporate finance & securities lawyer at Gowlings and served as the president, CEO and director of Exito Energy and Exitio Energy II, both capital pool companies on the TSXV.
Cheryne Lowe – Chief Financial Officer
Cheryne Lowe is a seasoned financial professional with extensive experience in companies listed on the Toronto Stock Exchange and the TSX Venture Exchange. She also brings a background in the upstream oil and gas industry and the Canadian capital markets. Her most recent role was interim CFO at AgJunction (TSX:AJX), an agriculture technology company, which was acquired in late 2021. Previously, she served as CFO and corporate secretary at Pine Cliff Energy (TSX:PNE), and as vice-president finance and CFO at Orlen Upstream Canada and its predecessor, TriOil Resources. Lowe began her career with KPMG and later worked as an Institutional Research Associate with Tristone Capital.
John Bell – Director
John Bell is the president and chief financial officer at WCSB Blockchain Infrastructure. Prior to this, he served as the director of finance at Tidewater Midstream and Infrastructure (TSX:TWM).
Dean Potter – Director
Dean Potter serves as the executive chairman and CEO of Burgess Creek Exploration. Additionally, he is the president at DPX, a private company engaged in petroleum exploration and development. He is a member of the Saskatchewan oil and gas Hall of Fame and has more than 40 years of geological expertise that has been focused on making discoveries in SE Saskatchewan.
Gary McMurren – Director
Gary McMurren is the vice-president of engineering at Southern Energy (TSXV:SOU). He was previously the vice-president of engineering at Gulf Pine Energy Partners. Formerly, he held various engineering roles with Athabasca Oil (TSX:ATH).
Shaun Thiessen – Director
Shaun Thiessen is vice-president of land and business development at Astara Oil. Prior to this, he held the same title at Astra Oil from inception until its sale. Formerly, he was the director of land at PrairieSky Royalty (TSX:PSK).
Scott Rideout – Director
Scott Rideout is vice-president of land at Headwater Exploration (TSX:HWX). He was previously vice-president of land at both Baytex Energy (TSX:BTE) and Raging River Exploration (Private).
June-Marie Innes – Director
June-Marie Innes is currently CFO at Thread Innovations. She previously held progressively more senior roles at Tamarack Valley Energy (TSX:TVE).
Jordan Kevol – Director
Jordan Kevol is currently involved with Westgate Energy, a private oil and gas producer undertaking a listing on the TSXV. Previously, he was the president & CEO of Blackspur Oil.
This profile was written in collaboration with Couloir Capital.
BPH Energy Ltd (ASX: BPH) – Trading Halt
Description
The securities of BPH Energy Ltd (‘BPH’) will be placed in trading halt at the request of BPH, pending it releasing an announcement. Unless ASX decides otherwise, the securities will remain in trading halt until the earlier of the commencement of normal trading on Tuesday, 14 May 2024 or when the announcement is released to the market.
ASX Compliance
Click here for the full ASX Release
This article includes content from BPH Energy, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
Crescent Point Deal and TMX Completion Fuel Activity in Canadian Oil Market
Crescent Point Energy (TSX:CPG,NYSE:CPG) has struck a deal with Saturn Oil & Gas (TSX:SOIL,OTCQX:OILSF) to divest certain non-core assets in Saskatchewan as part of its long-term sustainability plan.
“This transaction allows us to realize value for these non-core assets which had limited impact in the Company’s future plans while continuing to focus on our priorities of operational execution, optimizing our balance sheet and increasing our return of capital,” said Craig Bryksa, president and CEO of Crescent Point, in a company press release.
The strategic move involves the sale of assets, including Flat Lake and Battrum, for cash consideration of C$600 million.
The assets being divested are projected to contribute 13,500 barrels of oil equivalent per day (boe/d) over the next year, predominantly in oil and liquids. This divestment is part of Crescent Point's broader goal of streamlining its operations and focusing on core assets, as evidenced by the recent closure of other non-core asset sales.
During Q1, Crescent Point sold its Swan Hills and Turner Valley assets for C$140 million.
On the back of this news, the company has revised its 2024 average production guidance to a range of 191,000 to 199,000 boe/d, reflecting a reduction of 7,000 boe/d compared to its prior guidance range midpoint.
Crescent Point said proceeds from the non-core dispositions will be used to reduce its outstanding debt.
Since 2021, Crescent Point has been actively engaged in major acquisitions, particularly in the Montney and Kaybob Duvernay oil and gas regions of Northwest Alberta.
The financing for Saturn's acquisition includes a US$625 million committed debt financing from Goldman Sachs (NYSE:GS), alongside a C$150 million reserves-based loan arranged by National Bank of Canada. A C$100 million bought-deal equity financing further supports the transaction, with gross proceeds directed to fund the acquisition.
"The acquired assets are a perfect fit with Saturn’s existing Saskatchewan operations and offer meaningful synergies,” said Saturn CEO John Jeffrey on Monday (May 6). “The Acquisition is highly accretive for our shareholders and consistent with our strategy of acquiring quality assets where we can apply our strategic operating approach to enhance margins, grow Adjusted EBITDA, and increase Free Funds Flow."
Commenting on the deal, BMO analyst Jeremy McCrea emphasized the importance of identifying critical junctures in oil and gas investing, noting that when it comes to exploration and production companies this can involve new ventures or enhanced field economics, which can "ultimately result in a multiple expansion."
"As Crescent Point effectively completes its transformation with its asset sale for C$600-million (slightly more than our expectations given AROs/3rd quartile inventory), its improved balance sheet and ROC metrics for the years ahead may make CPG a ‘premium name’. In time, a premium multiple should reflect this," he said.
Shares of the company rose following the news, reaching C$12.18 early on Tuesday (May 7), before pulling back slightly.
Trans Mountain pipeline opens after a decade of delays
Canada's oil and gas industry has been in the spotlight since the start of the month, when the Trans Mountain pipeline expansion (TMX) went into commercial service after 12 years of delays.
The 1,150 kilometer pipeline, which is operated by the federal government's Trans Mountain Corporation, is linked to an existing pipeline that was constructed in 1953 and provides a connection between Alberta and BC. Collectively, the twin pipelines are anticipated to transport approximately 890,000 barrels of oil per day to the west coast.
Project delays stemmed from legal challenges due to inadequate Indigenous consultation and environmental impact assessments, and were exacerbated by natural disasters, such as flooding in BC in 2012 and COVID-19.
Ian Anderson, the now-retired CEO of Trans Mountain and the person who oversaw most of the project’s construction, said that what comes next will be crucial for the pipeline’s future. “The question will be how quickly do they want to sell it? And what kind of process do they want to run to sell it?” he told the National Post.
TMX cost over US$25 billion to build, and Canada's Liberal government was forced to buy it in 2018. As the country looks to sell the operation, experts have doubts about whether it will be able to recoup its costs.
As the government goes through its options, Ottawa plans to start collecting tolls on the barrels passing through TMX daily, estimated at C$11.46 per barrel, potentially totaling nearly C$4 billion annually.
Don't forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
Elixir Energy
Overview
Elixir Energy (ASX:EXR) is a gas exploration and development company currently focused on its portfolio of natural gas assets in Queensland, Australia and Mongolia. As an early mover in both areas, Elixir Energy has been the first company ever to free-flow gas from the deep Taroom Trough in Queensland and flow gas of any description in Mongolia.
Elixir Energy’s Grandis Gas project in Queensland is located in the Taroom Trough in the Southern Bowen Basin, where Australia’s premier physical and commercial gas hub – Wallumbilla – is immediately adjacent. Market factors are now driving new rounds of drilling in the Taroom Trough contributing to its reputation as an emerging energy super basin with major electricity as well as gas infrastructure.
A successful free-flowing test was conducted on the Lorelle Sandstone and has indicated it could produce a commercial flow rate of gas, with the breakeven commercial initial flow rate estimated at 2.5 million cubic feet per day.Gas flow from Stage 1 Lorelle Sandstone post stimulation
Elixir Energy’s Nomgon coal-bed methane (CBM) project is located in Mongolia.
The Nomgon CBM project is in the South Gobi region of Mongolia and on the Chinese/Mongolian border. The ideal location of the asset provides access to excellent infrastructure, including planned pipelines and local mines as customers. The Nomgon project includes a CBM pilot production plant, which flowed gas in its early stages and is now moving to progressively de-water with a view to building up a sustained gas flow rate.
The company is led by a highly experienced team with direct histories in Queensland, Australia and Mongolia and expertise in the natural resources industry, community engagement and working with government stakeholders.
Company Highlights
- Elixir Energy (ASX:EXR) is an exploration and development company with energy assets in Australia and Mongolia, targeting natural gas and renewable energy/hydrogen.
- The company’s Grandis Gas project in Queensland is located in an established gas and oil region, with exceptional access to existing infrastructure and high gas prices.
- The region is currently hosting multi-operator activity, including by Shell.
- Elixir has discovered a deep free-flowing gas zone in Grandis – the first of its kind.
- The company was also the first to flow natural gas in Mongolia, pioneering production in the country.
- A management team with a wide range of expertise in the natural resources sector provides leadership for maximising the value of Elixir Energy’s assets.
Key Projects
Grandis Gas Project
The company’s asset in Queensland, Australia, covers approximately 1,000 square kilometers in an established oil and gas province. The project is well-suited for cost-effective transportation to domestic and international gas markets.
Project Highlights:
- Strong Local Infrastructure: The region's long history of oil and gas production has resulted in a robust infrastructure, including gas transportation and electricity transmission access – and community support for the industry.
- Adjacent to Current and Proposed Pipelines: The asset is located close to existing – and proposed gas pipelines to assist in efficient and low-cost transportation as production commences.
- Impressive Initial Flow Test Results: After a successful suite of DFITs, free-flowing test on the Lorelle Sandstone has been successfully stimulated. Elixir’s technical and economic modeling indicates the Lorelle Sandstone alone could produce a commercial flow rate of gas, with the breakeven commercial initial flow rate estimated at 2.5 million cubic feet per day.
Daydream-2 Lorelle Sandstone Flow Testing*
Nomgon CBM Project
Elixir Energy’s 100-percent-owned coal-bed methane (CBM) project is ideally located in the South Gobi region of Mongolia. This location gives the asset access to robust local infrastructure and close access to Chinese energy markets – the world’s largest.
Project Highlights:
- CBM Pilot Project In Production: The pilot plant passed a key production milestone of 200,000 square cubic feet per day in its early stages. Water production has progressed since these early flows with a view to de-pressuring the CBM reservoir, leading to sustained gas flows.
- District-scale Asset: The Nomgon project covers a significant 30,000 square kilometers in Mongolia. Initial exploration campaigns have been promising and indicate the potential for the asset to become a significant producer of regional energy markets.
Management Team
Richard Cottee - Non-executive Chairman
Richard Cottee was appointed as the non-executive chairman of the company on April 29, 2019. Cottee was the managing director of coal-seam-gas(CSG)-focused Queensland Gas Company (QGC) during its growth from a $20-million market capitalization junior explorer through to its acquisition by BG Group for $5.7 billion. QGC’s CSG assets are now operated by Shell and produce gas that is sold to China and other LNG markets.
Originally a lawyer, Cottee has spent the vast majority of his career in senior executive roles in the energy industry, including as CEO at CS Energy, NRG Europe, Central Petroleum and Nexus Energy. A 32-year veteran of the industry, Cottee is a strong business development professional and a graduate of The University of Queensland.
Neil Young - Managing Director and Chief Executive Officer
Neil Young was appointed to the board of Elixir on December 14, 2018, as its chief executive officer. Young has more than 20 years of experience in senior management positions in the upstream and downstream parts of the energy sector, focusing on business development, new ventures, gas marketing and general commercial functions. He has worked for a range of companies in the UK and Australia, including EY, Tarong Energy and Santos. Young founded Golden Horde Ltd in 2011 to explore gas on the Chinese border in Mongolia. He has also developed various new ventures in other countries including Kazakhstan, Japan and the USA. Young has an M.A. (Hons) joint degree in economics/politics from the University of Edinburgh.
Stephen Kelemen - Non-executive Director
Stephen Kelemen was appointed as the non-executive director of the company on May 6, 2019. Kelemen led Santos’ coal seam gas (CSG) team from its inception in 2004 and drove the growth in this area that allowed Santos to become one of Australia’s leading CSG companies.
An engineering graduate from Adelaide University, Kelemen served Santos for 38 years in multiple technical and leadership roles.
Kelemen is currently an adjunct professor at the University of Queensland’s Centre for Coal Seam Gas and also acts as a non-executive director on the boards of Galilee Energy (ASX:GLL) and Advent Energy.
Anna Sloboda - Non-executive Director
Anna Sloboda was appointed as the non-executive director of the company on October 1, 2020. Sloboda is a joint Belarusian/Australian citizen and has more than 20 years of experience in corporate finance, and in developing junior resource companies operating around the world.
Sloboda is currently an executive director of Red Citadel Resources Pty Ltd, a privately owned mineral resources exploration company with a range of projects in Africa and South America.
She also serves as an advisory committee member, maritime archaeology, at the Western Australian Museum.
Previously she was a co-founder of Trans-Tasman Resources and in that capacity had substantial experience in dealing with Chinese off-takers and partners. Other prior employers include Lehman Brothers, Clough and Curtin University.
Sloboda has a Master of Economics from Belarusian University and an executive MBA from Melbourne Business School.
Victoria Allinson - Company Secretary and Chief Financial Officer
Victoria Allinson is a fellow of The Association of Certified Chartered Accountants, a fellow of the Governance Institute of Australia and an NSX-nominated advisor. She has more than 30 years of accounting and auditing experience, including senior accounting positions in a number of listed companies and was an audit manager for Deloitte Touche Tohmatsu. Allinson has gained professional experience while living and working in both Australia and the United Kingdom.
Her previous experience has included being company secretary and CFO for a number of listed companies, including ASX-listed: Kiland, Safety Medical Products, Marmota Limited, Centrex Metals, Adelaide Energy, Enterprise Energy NL, and Island Sky Australia as well as several unlisted companies.
Top 5 Oil and Gas Stocks on the TSX and TSXV in 2024
The first quarter of 2024 saw increasing trends in Brent Crude and West Texas Intermediate prices, attributed to ongoing tensions from the Russia-Ukraine conflict and global economic conditions. OPEC countries' production cuts and Russia's commitment to reduce exports also supported prices.
Despite volatility, prices remained stable between US$70– US$87 per barrel. Natural gas prices, however, sank to multi decade lows due to warmer-than-expected weather and ample supply.
Looking ahead, FocusEconomics panelists forecast a 10 percent decline in spot prices for oil over the next decade, while gas prices are expected to remain below highs set in 2022, with potential declines in Asia and Europe and steady prices in the US. Increased US LNG export capacity could lead to price convergence among regions by 2025.
The price stability in the oil market also helped some oil and gas stocks register gains for the quarter. The five top oil and gas stocks on the TSX and TSXV listed below saw significant share price growth over the first three months of 2024. All year-to-date performance and share price data was obtained on April 25, 2024, using TradingView’s stock screener, and the top oil and gas stocks listed had market caps above C$10 million at that time.
1. Sintana Energy (TSXV:SEI)
Year-to-date gain: 222.7 percent; market cap: C$396.4 million; share price: C$1.07
Sintana Energy, an oil and gas exploration and development company, operates across five highly prospective onshore and offshore petroleum exploration licenses in Namibia and Colombia.
Share prices saw early year tailwinds after the company released two updates on exploration activity in Namibia’s Orange Basin. During the exploration campaign of Petroleum Exploration License 83 (PEL 83) two significant light oil discoveries were made in January.
February saw more share price growth when Sintana was listed on the TSX Venture 50 ranking as the top energy performer.
In mid-March Sintana announced the results of its warrant exercise activity, revealing an approximate 99 percent exercise rate, which generated an additional C$22.5 million in cash resources for the company. A few days later the company reported a third light oil discovery for the quarter in the Orange Basin.
Shares rose to a quarterly high of C$0.58 at the end of March.
2. MEG Energy (TSX:MEG)
Year-to-date gain: 31.8 percent; market cap: C$8.6 billion; current share price: C$31.57
MEG is an energy company with a focus on in situ thermal oil production in Alberta's southern Athabasca oil region. Utilizing innovative enhanced oil recovery projects, including steam-assisted gravity drainage extraction methods, the company aims to increase oil recovery responsibly while reducing carbon emissions.
Shares of MEG spent the three-month session trending higher reaching a Q1 high of C$31.48 at the end of March.
In late February MEG reported its fourth-quarter and full-year 2023 financial and operating results. Included in the results was record annual bitumen production and increased funds flow from operations.
MEG's production outlook for 2024 remains positive, with plans to optimize operations and enhance capital efficiency. Additionally, the company announced a capital allocation strategy focused on debt reduction and returning capital to shareholders.
On March 6, the energy company launched a share buyback program, aiming to repurchase up to 24,007,526 common shares between March 11, 2024, to March 10, 2025. This initiative is part of the company's strategy to enhance shareholder returns and reduce debt.
3. Obsidian Energy (TSX:OBE)
Year-to-date gain: 29.4 percent; market cap: C$912.9 million; current share price: C$11.79
Obsidian Energy is an intermediate-sized oil and gas producer, with a portfolio of assets that yield approximately 32,000 barrels of oil equivalent per day. The company's primary operations are in the Peace River, Cardium, and Viking regions of Alberta, Canada.
In early January, Obsidian released its full year 2023 results which included a 6 percent year-over-year increase. Later in the month the Calgary-based company provided the results of a 2023 independent reserves evaluation.
“We replaced 124 percent of 2023 production on a proved developed producing (PDP) basis, 157 percent on a total proved (1P) basis and 217 percent on a total proved plus probable (2P) basis,” the statement read.
In February Obsidian announced the completion of the first half 2024 capital program, highlighting ongoing development in the Willesden Green/Pembina assets in Cardium and exploration and appraisal activity in the Clearwater and Bluesky formations in Peace River.
Additionally, Optimization of Viking wells drilled in late 2023 yielded strong production results.
“Current production has surpassed 36,500 barrels of oil equivalent per day (boe/d) based on field estimates. Despite production impacts from January's cold weather, operations have resumed normalcy, with production slightly exceeding planned targets year-to-date, aided by strong initial rates from wells brought online in February,” the company said.
In March, Obsidian successfully completed a previously announced offer to purchase 2 million of its outstanding senior unsecured notes.
Share reached a quarterly high on March 31 and were trading for C$11.26.
4. Imperial Oil (TSX:IMO)
Year-to-date gain: 27.25 percent; market cap: C$51.92 billion; current share price: C$96.91
Calgary-based Imperial Oil is a prominent Canadian energy company involved in exploration, production, refining, and marketing of petroleum products. With a history spanning over 140 years, Imperial operates diverse assets across Canada, including oil sands, conventional crude oil, and natural gas assets.
On February 2, Imperial released its Q4 2023 results which highlighted upstream production of 452,000 gross oil-equivalent barrels per day, “marking its highest level in over three decades.”
Additionally, Imperial initiated steam injection at Cold Lake Grand Rapids, pioneering the industry's first deployment of a solvent assisted SAGD technology. Downstream operations performed strongly, with refinery capacity utilization reaching 94 percent, following the successful completion of the largest planned turnaround at the Sarnia site.
The company returned more than C$2.7 billion to shareholders, including the completion of a substantial issuer bid. Additionally, Imperial increased its quarterly dividend by 20 percent, from C$0.50 to C$0.60 cents per share. Lastly, the company released its annual corporate Sustainability report, highlighting its sustainability focus areas and achievements.
In March Imperial implemented temporary measures to ensure fuel supplies to Winnipeg during unplanned pipeline maintenance. The Winnipeg Products Pipeline, which transports gasoline, diesel, and jet fuel to the area, required preventative maintenance, including the replacement of a section under the Red River.
The work that began in mid-March is expected to take three months.
Shares marked a Q1 high of C$94.69 on March 31.
5. Condor Energies (TSX:CDR)
Year-to-date gain: 23.94 percent; market cap: C$99.4 million; current share price: C$1.76
Condor Energies concentrates on the exploration, development, and production of natural gas resources across Turkey, Kazakhstan, and Uzbekistan. Notably, the company is currently building Central Asia's inaugural liquefied natural gas facility.
Furthermore, in mid-2023, it disclosed the procurement of a lithium brine mining license in Kazakhstan.
In late January Condor secured a natural gas allocation from the Government of Kazakhstan for its maiden modular liquefied natural gas (LNG) production facility. The gas allocation will be instrumental in liquefying feed gas to produce up to 350 tonnes per day of LNG, equivalent to about 210,000 gallons per day, the company said.
Condor shares rose to a quarterly high of C$2.76 on February 20.
In March, the energy company began a production enhancement operation for eight natural gas-condensate fields in Uzbekistan. Gas output will be directed to the domestic market through state entity agreements. Condor has agreed to cover project costs and receive a share of the generated revenues. The production increase plans will be facilitated through several measures including artificial lift and drilling programs, exploring deeper horizons, and conducting seismic reprocessing.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Quarterly Activities Report for the Period Ended 31 March 2024
HIGHLIGHTS
- Daydream-2 successfully flowed from the Lorelle Sandstone without stimulation
- Very material increase in prospective resources in deep coals
- Analysis undertaken post end of quarter indicates the Lorelle alone could produce a commercial flow rate
- Daydream-2 program remains fully funded with current cash equivalent held of $11.9M
MANGAGING DIRECTOR’S REPORT TO SHAREHOLDERS FOR THE QUARTER
Following the drilling of the Daydream-2 well at the end of the December quarter, the March quarter has been one of intense analysis and preparation for the next phase of the Grandis appraisal program.
Just after the end of the quarter, that phase kicked off with the successful flowing of gas from the Lorelle Sandstone at ~4,200 metres – critically, without stimulation, which is a first for the Taroom Trough.1
This activity is occurring at a time of now widespread recognition that the East Coast Australian gas market faces imminent supply shortfalls, prices are high and expected to stay high, and growing international geo-political tensions put a premium on LNG supplies from stable countries like Australia.
Daydream-2 Lease during 2nd flow period of Lorelle Sandstone
The drilling of the Daydream-2 well late in 2023 finished up with a unexpected but very pleasant surprise – gas free flowing from a formation at a depth of 4,200 metres (called the Lorelle sandstone) – something not encountered in the Taroom Trough before.
The primary targets of Daydream-2 are tight gas and coal formations that require stimulation to flow – a free-flowing zone adds a lot to these in terms of economics (lower costs, possibly lower decline rates, energy in the well-bore, etc).
In January we undertook laboratory analysis of samples obtained from the sands captured at the wellsite from the Lorelle sandstone. This work identified clay rims on the sands that preserved porosity in this highly pressured deep zone. These results are analogous with the high productivity deep Permian section of the Perth Basin which has been a source of enormous success in recent years.2
Click here for the full ASX Release
This article includes content from Elixir Energy, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
March 2024 Quarter (“Quarter”) Operations Report
Clean Hydrogen Technologies
On 2 August 2022 BPH announced that, following its shareholders’ meeting on 21 June 2022 at which shareholders voted unanimously to approve an investment in hydrogen technology company Clean Hydrogen Technologies Corporation (“Clean Hydrogen” or “Vendor” or “Borrower”), BPH and its investee Advent Energy Ltd (“Advent” or “Lender”), together the “Purchasers”, settled for the acquisition of a 10% interest in Clean Hydrogen for US$1,000,000 (“Cash Consideration”) (8% BPH and 2 % Advent).
The Purchasers had a first right of refusal to invest further in Clean Hydrogen to a maximum of a further US$1,000,000 for an additional 10% interest. The Purchasers loaned a further US$950,000 (“Additional Cash Consideration”) under this agreement and the Purchasers and Clean Hydrogen will execute a Loan Conversion Agreement which will enable the conversion of the US$950,000 loan into the relevant Subscription Shares Tranche 2, representing the Purchasers further 9.5% interest in Clean Hydrogen. BPH now has an interest of 15.6% and Advent has an interest of 3.9% interest in Clean Hydrogen. Clean Hydrogen have issued 760 share options to BPH and 190 share options to Advent, with an exercise price of USD$3,000 each, exercisable immediately, with the option to convert into shares in Clean Hydrogen expiring ten years from the date of issue. During the Quarter BPH exercised 42 of these options by paying Clean Hydrogen a total exercise price of US$126,000.
The parties acknowledge and agree that the Cash Consideration and Additional Cash Consideration shall be used by Clean Hydrogen to design, build, produce and test a reactor that can produce a minimum of 3.2kgs and as high as 15kgs of hydrogen per hour and to submit at least 2 new patents in an agreed geography, relevant to the production of hydrogen from proprietary technology.
On 22 February 2024 BPH announced that Clean Hydrogen had moved from proof of concept to production.
Clean Hydrogen cracks hydrocarbons from natural gas using a process called thermo-catalytic pyrolysis which combines heat, a catalyst and has no oxygen. Clean Hydrogen’s feedstock is natural gases hydro-carbons. Importantly there are no CO2 emissions from the core process since the carbon becomes a solid carbon composite product, thus rendering natural gas a clean (no CO2 emissions) source of two products, turquoise hydrogen and solid carbon composite.
Turquoise Hydrogen is the industry term used for hydrogen sourced from natural gases hydrocarbons using thermo-catalytic pyrolysis. Since there are no CO2 emissions the carbon becomes solid in the form of a fine black dust type material which in Clean Hydrogen’s case is a carbon composite made from CNTs (Carbon Nanotubes) and Alumina (ceramics). Carbon Nanotubes have unusual mechanical properties to reinforce their Alumina composite, acting as a toughening agent. CNTs have a tensile strength greater than steel, conductivity greater than copper and thermal dissipation greater than diamonds. They also resist corrosion and fatigue (ref: https://www.assemblymag.com/articles/93180-can-carbon-nanotubes-replace-copper).
Click here for the full ASX Release
This article includes content from BPH Energy, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
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