New Regions Being Developed to Produce More Oil Amid Government’s Calls for More Output
When surveyed by the Federal Reserve Bank of Dallas, executives at 141 oil companies offered many reasons their companies weren’t pumping more oil, including worker shortages, sand shortages, and that investors didn’t want to hasten an early end to the high prices. Despite calls from the US Energy Secretary that oil and gas output will continue to increase, many of the largest producers haven’t indicated any urgency to grow. Where there is growth, it’s being seen in places like the Gulf of Mexico, where majors such as BP (NYSE:BP), Shell (NYSE:SHEL), and Murphy Oil (NYSE:MUR), as well as in Utah, where Crescent Energy (NYSE:CRGY) and Petroteq Energy (OTC:PQEFF) are working to develop previously lesser-desired basins.
A report in the New York Times back in 2018 titled A Plan to Unlock Billions of Barrels of Oil From Utah’s Sands, described the incredible potential of the state’s underdeveloped oil reserves. At that time, Utah accounted for just 1 of every 100 barrels of US oil produced nationwide, and now accounts for 13 in every 100 barrels of crude oil produced in the Rocky Mountain region.
Featured throughout the NYT piece was Petroteq Energy, Inc. (OTC:PQEFF), which has continued to develop its Clean Oil Recovery Technology (CORT) process, having proven it’s capable of producing oil from oil sands without the use of water, nor producing wastewater nor tailings ponds. The Petroteq technology is unique because it produces no emissions, and uses a facility that has a small land footprint.
“Our management team is pleased that Petroteq has unlocked an economically feasible process that is eco-friendly, which I believe positions our company to contribute to solving the global energy crisis,” said Petroteq’s CEO and CTO, Vladimir Podlipsky, PhD.
Recently the company updated and completed their design using this proprietary oil-extraction and remediation technology for a planned oil sands extraction plant, capable of handling 5,000 barrels per day with partners Valkor, LLC.
Petroteq’s proposal is for a combined unit a turnkey system to handle as much as 8,000 tons of sand per day with a target of EPA Tier 1 quality for the resulting sand—a crucial commodity that’s caused alarm for its global shortages.
Through the use of a patented solvent, Petroteq washes the sand of oil, recycling almost 100% for continued use with no negative environmental impact. The cleaned sand can then be utilized economically for the broad range in residential and commercial use.
Back in February, Petroteq shared a third-party cash flow analysis prepared by Broadlands, focused on the markets available for the sale of the three categories of by-product sands.
Broadlands noted that an extraction plant producing 5,000 bpd could (as estimated by Petroteq) be capable of yielding 6,000 tons of sand per day or 1,860,000 tons per year (based on 310 operating days per year and operating 24 hours per day), and that silica flour is postulated to be 15% of the saleable product, fracking quality sand 55%, and bulk sand 30%.
The analysis returned a base case NPV of $1.285 billion, $602 million, and $341 million, based on a pre-income tax basis, at discount rates of 0.0, 7.5 and 15%, respectively.
Now Petroteq is in the midst of a potential takeover by ESG-focused equity firm Viston United Swiss AG, which has a current deadline of acceptance by all shareholders of June 17th, 2022. So far the offer has been favorably received by the entire Petroteq team, with unanimous intention to tender shares from the Board of Directors, the company’s Founder, Former Chairman and CEO Alex Blyumkin, and one of the company’s largest shareholders, Cantone Asset Management, LLC.
“Our intentions are to continue evolving toward future expansion and revenue growth, regardless of the on-going takeover-bid from Viston United Swiss AG,” said Podlipsky. “Management of Petroteq continues to manage the business of Petroteq, while making utmost effort to maximize shareholder value.”
Viston’s offer involved a premium price valuation of approximately 279% over the closing price of the Common Shares on the TSX Venture Exchange on August 6, 2021, and a 1,032% premium to the 52-week volume weighted average trading price on the TSX-V prior to the offer originally made in April 2021, before the Canadian shares were halted. The offer itself is valued at a considerable premium over the market price, with a 100% all-cash consideration of C$0.74 per common share.
Meanwhile, Petroteq’s US shares continue to trade on the OTC under the PQEFF symbol, shares of Petroteq closed at approximate US$0.31 (~C$0.40) on May 2 2022. At that price point, the C$0.74 (US$0.59) still represents a nearly 60% premium over the more current trading price.
“Our advances in engineering work exemplify our intentions to continue to operate the Company toward future expansion and revenue growth, regardless of the on-going offer from Viston United Swiss AG,” added Podlipsky.
Though it makes up less than 1% of the nation’s output, Utah is pumping the most oil in the state since late 2014.
Earlier this year, oil producer Crescent Energy Company (NYSE:CRGY) said would buy assets in Utah’s Uinta Basin for $815 million in cash and plans to operate two rigs there this year—before later settling at a severely discounted price of $690 million.
“We are excited to close this highly accretive transaction and expand our Rockies position,” said Crescent CEO David Rockecharlie. “The transaction adds significant cash flow and a multiyear inventory of high-quality oil-weighted undeveloped locations to our existing asset base.”
The Uinta acquisition included approximately 145,000 contiguous net acres in Utah producing about 30,000 boe/d, roughly 65% oil.
“The Uinta transaction clearly demonstrates Crescent’s competitive strengths and ability to deliver shareholder value through accretive acquisitions,” said Crescent Chairman John Goff. “We continue to see significant opportunity in today’s market to create long-term value for our shareholders through consolidation.”
Another region that’s gaining attention is the Gulf of Mexico, which is seeing a new wave of offshore platforms coming online.
Recently in April, the first production was reported from the jointly-owned behemoth offshore asset the King’s Quay, off the coast of Louisiana, operated by a Murphy Oil Corporation (NYSE:MUR) subsidiary.
“I am proud of our team’s accomplishments these past three years with the fabrication and installation of the King’s Quay FPS and our subsea flowline systems, as well as drilling and completing the wells,” said Roger W. Jenkins, President and CEO of Murphy Oil. “I look forward to the ongoing production growth from the Gulf of Mexico as the remainder of the wells come online throughout 2022.”
The King’s Quay FPS is designed to process 85 thousand barrels of oil per day and 100 million cubic feet of natural gas per day.
It took 13 years for Shell plc (NYSE:SHEL) from the initial discovery of the Vito oilfield far off the coast of Texas. Finally, later this year the 20-story production facility is expected to begin pumping the equivalent of up to 100,000 barrels daily from beneath the Gulf of Mexico (GOM).
The Vito project was close to getting the go-ahead in 2014 when Saudi Arabia flooded the global market with cheap crude to hurt U.S. shale producers. The platform was redesigned in 2015 to slash the price tag by 70 percent. When Vito departs coastal waters in June to finally tap the subsea field, it’s designed to work for 25 years.
Shell, which competes with BP plc (NYSE:BP) for the title of top U.S. Gulf oil producer, has pledged to use the proceeds from its lower-emissions offshore oil business to help fund its energy transition and investments in wind and solar.
BP is also banking on the addition more low-carbon barrels of oil through its new Argos platform, as being vital to the company’s energy transition roadmap. The $9 billion 60,000-ton semisubmersible is currently located in Green Canyon Block 780, about 6 miles from its original Mad Dog spar, and is expected to add 140,000 boe/d at peak.
“Our assets in the GOM continue to meet demand and are an example of how to do it safely,” said Starlee Sykes, BP’s Senior Vice President for Gulf of Mexico and Canada. “The GOM business produces some of BP’s highest-quality barrels. It is a core area for BP and will be for the foreseeable future … as operator and partner.”
Over the next decade, BP’s oil and gas operations are expected to shrink as the company targets value over volume as part of its net-zero ambitions including the reduction of operations emissions by 40% by 2030 globally.
“Net zero is a worthy goal in any context,” added Sykes. “We don’t have all of the answers. It means producing less over time. All types of energy creation have issues. It is a tough problem to solve. No solution is perfect but I’m optimistic that we will continue to make progress.”
Article Source: https://usanewsgroup.com/2022/03/25/this-quick-turnaround-takeover-is-the-kind-of-play-smart-investors-snap-up-in-a-heartbeat
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