Client News
Beacon Energy Plc – Interim ResultsInterim Results
Beacon Energy (AIM:BCE), the full-cycle oil and gas company with a portfolio of production, development, appraisal and exploration onshore German assets through its wholly-owned subsidiary, Rhein Petroleum GmbH (“Rhein Petroleum”), is pleased to announce its Interim Results for the six months ended 30 June 2023.
Mark Rollins, Non-Executive Chairman of Beacon Energy, commented:
“During the period, the Board has worked tirelessly and has made excellent progress in delivering the Company’s strategy which is to pursue the acquisition of value enhancing opportunities to develop and grow a self-funding upstream oil & gas company.
The data we have gathered during the drilling of the SCHB2(2.) well indicates the potential for substantial reserve and production upside for the Stockstadt Mitte segment – up to and potentially more than the High Case (5.8 mmbbls) outlined in the Company’s December 2022 CPR which clearly bodes well for the long-term value we believe we can realise from the asset.
With the SCHB-2(2.) now safely and successfully completed, the Company’s priority is establishing flowrates through clean-up of the wellbore, and eventual installation of an Electrical Submersible Pump.
Based on the technical data acquired through the drill which demonstrated the high quality reservoir encountered at the well location, the Company’s technical analysis indicates that with a successful clean-up operation and implementation of artificial lift initiatives, the well has the potential to deliver in the region of 900 bopd net production to Beacon. At those flow rates, the Company would expect to deliver operating cash flows in excess of US$1.5 million per month (assuming $80/bbl Brent).
I would like to thank our new and existing shareholders for their ongoing support of the Company, management team and our strategy. We are very excited about the year ahead with an active work programme designed to create long-term value for Beacon’s shareholders.”
Enquiries:
Beacon Energy plc Larry Bottomley (CEO) / Stewart MacDonald (CFO) |
+44 (0)20 7466 5000 |
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Strand Hanson Limited (Financial and Nominated Adviser) Rory Murphy / James Bellman |
+44 (0)20 7409 3494 |
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Buchanan (Public Relations) Ben Romney / Barry Archer / George Pope |
+44 (0)20 7466 5000 |
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Tennyson Securities Limited (Joint Broker) Peter Krens / Ed Haig-Thomas |
+44 (0)20 7186 9030 |
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Chairman’s Statement
Dear fellow shareholders,
I am delighted to present the following statement in support of the interim results for the six months ended 30 June 2023.
During the period, the Board has worked tirelessly and has made excellent progress in delivering the Company’s strategy which is to pursue the acquisition of value enhancing opportunities to develop and grow a self-funding upstream oil & gas company.
On 16 December 2022, the Company was pleased to announce that it had entered into a conditional Share Purchase Agreement with Tulip Oil Holding B.V. and Deutsche Rohstoff A.G. for the purchase of the entire issued and to be issued share capital of Rhein Petroleum GmbH, (the “Transaction”), an established company with a full-cycle portfolio of largely operated production, development, appraisal and exploration assets located onshore Germany.
The Company successfully completed a fundraise of £6.0 million with new and existing shareholders in March 2023 despite challenging market conditions, providing capital to complete the Transaction. Critically, as the upfront consideration for the Transaction was paid in shares, the net funds raised for the acquisition process were to be deployed into the work programme and the Company was able to acquire the existing production facility, production, reserves and resources associated with Rhein Petroleum for zero upfront cash consideration. Following receipt of shareholder approval, the Company completed the Transaction on 11 April 2023. This represented a transformational, value enhancing transaction for shareholders, which was fully aligned with Beacon Energy’s growth strategy and provides the Company with a strong platform, underpinned by core value, to deliver the longer-term growth strategy.
Immediately upon completion of the Transaction, the Company secured a drilling rig to drill the SCHB-2 development well on the Erfelden field. Drilling operations commenced on 19 June 2023. Notwithstanding operational issues encountered during drilling, the Schwarzbach-2(2.) (“SCHB-2(2.)”) well reached total drill depth of 2,255m metres (1,717 metres True Vertical Depth) on 13 August 2023 with electric wireline well logging completed shortly thereafter.
On 11 September 2023, the Company announced an update on the SCHB-2(2.) well. The key updates in respect of the SCHB-2(2.) well were as follows:
· The SCHB-2(2.) well encountered an excellent 34-metre gross interval containing 28 metres of oil-bearing net reservoirs in the Pechelbronner-Schichten (“PBS”) sandstones within the Stockstadt Mitte segment of the Erfelden field.
· These oil-bearing reservoirs were encountered approximately 25 metres high and 10 metres thicker than prognosis, with porosities averaging 18% in the Lower PBS and 21% in the Upper PBS, with no water-bearing sands in the 42m hydrocarbon column.
· With all these metrics above or at the top of the range of pre-drill expectations, the likelihood is that this will result in a material upgrade to recoverable reserves in Stockstadt Mitte and a de-risking of 2.4 million barrels of contingent resources already ascribed to Schwarzbach South.
· Based on these excellent reservoir properties and the light oil recovered, standard oil-industry analysis indicates that an initial production rate in excess of 900 barrels of oil per day (“bopd”) could be achieved. Higher rates of production have been achieved on historic wells in the area.
· Following perforation and acidization, reservoir clean-up operations commenced on 8 September 2023, and since that time the well has produced a mixture of oil, gas and drilling fluids.
· Given delays in the programme, the drilling rig was released on 10 September 2023, with clean-up of the well to continue on site.
As a result of excellent drilling results and increased expectations around recoverable volumes and production, the Company successfully completed an oversubscribed fundraise of £4.3 million with new and existing shareholders on 15 September 2023. The additional funds will be utilised to satisfy outstanding costs associated with the well, fund further activities required to realise the full potential of the well and provide liquidity during the well clean-up process. As a result, the Company moves considerably closer to its goal of becoming a self-funding business.
Outlook
With the SCHB-2(2.) now safely and successfully completed, the Company’s priority is establishing flowrates through clean-up of the wellbore, and eventual installation of an Electrical Submersible Pump. Based on the technical data acquired through the drill which demonstrated the high quality reservoir encountered at the well location, the Company’s technical analysis indicates that with a successful clean-up operation and implementation of artificial lift initiatives, the well has the potential to deliver in the region of 900 bopd net production to Beacon. At those flow rates, the Company would expect to deliver operating cash flows in excess of US$1.5 million per month (assuming $80/bbl Brent).
In parallel, work will commence immediately to quantify expected reserve and resources increases and existing development plans will be updated to reflect learnings from the SCHB-2(2.) well and increased resource base with the aim of accelerating drilling and maximising the value of this highly attractive asset.
It only remains for me to thank our new and existing shareholders for their ongoing support of the Company, management team and our strategy. We are very excited about the year ahead with an active work programme designed to create long-term value for Beacon’s shareholders. We very much see the acquisition of Rhein Petroleum and the drilling of our first well as the first steps in our strategy to build a material international upstream oil and gas business with a focus on cash generative assets and those with the potential to add significant value in the short to medium term.
We look forward to providing updates on our progress as we move through the rest of the year.
Mark Rollins
Non-Executive Chairman
29 September 2023
Interim Results – 07:00:10 29 Sep 2023 – BCE News article | London Stock Exchange
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