Tensions between Israel and Hezbollah are at an all-time high

Politics, geopolitics and conflicts

South Sudan said this week it had reached an agreement with the SAF (Sudan Armed Forces) in neighboring Sudan to resume crude oil exports, which had been halted as a casualty of Sudan’s ongoing civil war. Officials now say the pipeline has been repaired. Landlocked South Sudan takes its oil to market through the Petrodar pipeline, which leads to Port Sudan. Petrodar was damaged in February in the armed conflict between the SAF and the paramilitary Rapid Support Forces. There could still be some delays in restarting the pipeline, and if it is restarted, South Sudan will ship about 150,000 bpd through Sudan, whose SAF is in desperate need of reduced shipping.

In the Middle East, the aftermath of the explosion of pagers and walkie-talkies belonging to Hezbollah figures and orchestrated by Israel was followed by Hezbollah threats and an Israeli pre-emptive strike on southern Lebanon, with Hezbollah retaliating. By Friday morning, about 20 people had been killed by exploding wireless devices and another 450 injured. This ongoing incident has created outrage in Lebanon, where citizens are advised to stay away from crowds. The Israeli military claims to have hit more than 100 rocket launchers as well as a weapons depot. We foresee a steady increase in the scope and intensity of this conflict, but while the world is still waiting for that Iranian retaliation (which the news media has already forgotten), a Hezbollah…

Politics, geopolitics and conflicts

South Sudan said this week it had reached an agreement with the SAF (Sudan Armed Forces) in neighboring Sudan to resume crude oil exports, which had been halted as a casualty of Sudan’s ongoing civil war. Officials now say the pipeline has been repaired. Landlocked South Sudan takes its oil to market through the Petrodar pipeline, which leads to Port Sudan. Petrodar was damaged in February in the armed conflict between the SAF and the Paramilitary Rapid Support Forces. There could still be some delays in restarting the pipeline, and if it is restarted, South Sudan will ship about 150,000 barrels per day through Sudan, whose SAF desperately needs the shipping cut.

In the Middle East, the aftermath of the explosion of pagers and walkie-talkies belonging to Hezbollah figures and orchestrated by Israel was followed by Hezbollah threats and an Israeli pre-emptive strike on southern Lebanon, with Hezbollah retaliating. By Friday morning, about 20 people had been killed by exploding wireless devices and another 450 injured. This ongoing incident has created a stir in Lebanon, where citizens are advised to stay away from crowds. The Israeli military claims to have hit more than 100 rocket launchers as well as a weapons depot. We foresee a steady increase in the scope and intensity of this conflict, but while the world is still waiting for that Iranian retaliation (which the news media has already forgotten), it is likely that even a Hezbollah crackdown will fall more flat than it suggests public oaths.

In another branch of this war, the Houthis continue to target the Red Sea, with the US denying rumors of a recent olive leaf extended to the group. The Houthis claimed this week that Washington had promised to remove them from the terrorism blacklist, the State Department pushing that line of thinking, in exchange for a Houthi commitment to halt the attack on this vital shipping channel. Washington’s denial of the rumor came with a note that the Houthis are masters of propaganda.

Discovery and development

Equinor and partners made an oil and gas discovery in the Gudrun field, North Sea, through exploration wells 15/3-13 S and 15/3-13 A. Initial estimates indicate recoverable volumes of up to 1.2 million Sm³ equivalent oil in the intra-Draupne formation and up to 1.3 million Sm³ in the Hugin formation. Despite gas being encountered in both formations, reservoir quality has varied and no formation testing has been performed. Both wells were plugged and abandoned following extensive data collection.

Trans Canada Gold Corp. successfully placed its second multilateral well in the GP reservoir near Lloydminster, Alberta, on production since September 7. The well is recovering drilling fluids with increasing oil recovery and stabilized production rates will be released soon. The company holds an 18.75% interest in the well and has acquired additional land in the AMI to expand future drilling opportunities. Croverro Energy is the operator.

Turkey plans to send frigates into Somali waters to protect the Oruc Reis, a Turkish research vessel, as it conducts energy exploration next month under a deal with Somalia. The ship will conduct a 3D seismic survey in three licensed areas of Somalia’s seas, each with an area of ​​5,000 km2, with the Turkish naval forces for protection against threats such as piracy. This is Turkey’s first exploration operation in the open ocean, and initial data suggest potential oil discoveries. Any oil found will be shared with Somalia under a PSA, with potential for commercialization.

Equinor’s FPSO has reached the Johan Castberg oil field in the Barents Sea, marking a significant milestone for the project. The FPSO, with a storage capacity of 1.1 million barrels, is due to start production by the end of the year and is expected to reach 220,000 bpd. The development includes 30 wells on subsea templates, with drilling continuing until 2026. Equinor holds a 50% stake in the project, while Vår Energi and Petoro hold 30% and 20% respectively.

ExxonMobil’s Persephone exploration well in Newfoundland’s orphan basin failed to discover commercial hydrocarbons, a major disappointment for the company and its partner Qatar Energy. Despite high hopes, the wild well, drilled by Stena DrillMax, showed no viable oil reserves. This follows a similar result from Equinor and BP’s Sitka well in the Flemish Pass, which was also deemed technically viable but not commercially viable. The failures highlight the challenges of frontier exploration in offshore Newfoundland, with low success rates for commercial discoveries.

Mineral Resources Limited has announced substantial oil and gas discoveries in the Perth Basin in Western Australia, with primary resources for the Lockyer Gas Project and the Eregrulla Oil Project. The Lockyer Gas project revealed a 2C contingent gas resource of 435 petajoules, alongside a prospective resource of 1,420 bcf. The Eregrulla Oil project reported 31.6 million barrels of oil equivalent, one of the largest onshore oil discoveries in the region since 1964. Both projects are being evaluated for development and partnership opportunities.

Deals, mergers and acquisitions

Battalion Oil (NYSE: BATL ) has amended its merger agreement with Fury Resources, in which Fury will acquire all of the outstanding shares of Battalion for $7.00 per share in cash. Preferred stockholders will exchange their shares for Fury preferred stock. The transaction is expected to close in Q4 2024, pending shareholder approval. Fury has secured $548 million in equity commitments and expects to have $100 million in cash after the deal. This acquisition is strategic for Fury, providing access to high yield and growth opportunities in a prolific basin, while retaining the former CEO of Battalion to lead asset development.

Chesapeake Energy’s $7.4 billion acquisition of Southwestern Energy is now expected to close in early Q4 2024 following delays due to a second information request from the FTC. Originally planned for Q2 2024, the merger aims to strengthen Chesapeake’s position in the US natural gas market. Chesapeake CEO Nick Dell’Osso highlighted the ongoing oversupply challenges in the market, indicating that the company will manage supply adjustments with caution.

Matador Resources has completed its $1.832 billion acquisition of Ameredev II Parent, LLC, securing 33,500 net contiguous acres in the Delaware Basin. The acquisition also brings expected production up to 26,500 BOE per day for the remainder of Q3 2024, with a slight decline anticipated in Q4 before picking up again in early 2025. Additionally, Matador gains 431 operated locations and 118 million BOE in proved reserves. This deal increases Matador’s total net acreage in the Delaware Basin to more than 190,000.

MidOcean Energy, a subsidiary of EIG, will increase its stake in Peru LNG (PLNG) from 20% to 35% by acquiring an additional 15% from Hunt Oil Company. Aramco is fully financing the acquisition, raising its interest in MidOcean to 49% and indirectly gaining a 17.2% stake in PLNG. This move strengthens both MidOcean’s and Aramco’s positions in the global LNG market. Hunt Oil will retain 35% of PLNG and will remain its operator. PLNG is the only LNG export facility in South America, processing 4.45 million tons of LNG annually.