Global is pleased to announce its interim results for the six months ended 31 December 2022.
Operational
· Recent purchase by Global of additional 2D seismic data in Namibian Walvis Basin - further technical interpretation underway on principal prospects (Marula and Welwitschia Deep) and leads in the eastern part of PEL0094, seeking a material increase in resources.
· Agreement reached to sponsor an Environmental Impact Assessment, ahead of a multi-client 3D seismic data survey covering a large part of the Walvis Basin, planned later in 2023.
· In the Orange Basin to the south, extensive exploration and appraisal drilling was announced by Shell and TotalEnergies, following their respective Graff and Venus discoveries in early 2022. The first of the new wells - Shell's Jonker-1X - recently reported to be a light oil discovery . The apparent technical similarities in both source and reservoir between these discoveries and the prospectivity in Global's own Licence is highly encouraging.
· In Italy, dialogue with the authorities regarding the Company's permit applications in the Adriatic Sea is ongoing.
Financial
· Further successful equity raise with gross proceeds of £0.8 million in August 2022, strengthening the Company's finances and enabling continued exploration activities in Namibia, including entering the remaining one year Initial Exploration Period until September 2023 on PEL0094.
· Cash balance at period end US$1,029,007 (30 June 2022: US$1,139,775), reflecting ongoing expenditure partly offset by the equity raise in the period.
· Loss after tax US$695,619 (2021: loss US$825,890), the reduction resulting from lower G&A costs.
Strategy and Outlook
The recent drilling successes have brought a very strong boost to both industry and investor confidence in relation to Namibian offshore exploration generally, albeit with an initial focus on the Orange Basin. Global believes it is well positioned to benefit from this and is continuing with its farm-out process to fund the next stage of exploration on its Licence.
In Italy, the Company is seeking to progress its permit applications.
Finally, the Company will continue to explore all strategic alternatives in order to maximise shareholder value.
We are pleased to present to you the Global Petroleum Limited ("Global" or the "Company") Interim Financial Report for the six months ended 31 December 2022.
The Company's focus during the reporting period, and subsequently, has been on ongoing exploration work and its farm-out process in respect of its Namibian licence PEL0094 ("Licence"), and the continued strengthening of its finances in order to maintain its options for the Licence and/or the possible pursuit of other strategic investments. It has also continued to engage with the Italian authorities regarding the Company's exploration permit applications.
In April 2022 the Company announced that the Namibian authorities had granted a one year extension to the Initial Exploration Period of the Licence, from September 2022 to September 2023, and during the reporting period Global has continued with its technical work.
As previously reported, the Company's work has established that in all cases the source rock is mature in the northern Walvis Basin and that sufficient volumes of hydrocarbons have migrated into the prospects previously identified. Oil seeps have also been located - via a satellite radar study - within the boundaries of the Licence, thus further supporting the Company's interpretation of a working petroleum system in the area.
In addition, in November 2022 Global announced it had agreed to sponsor an Environmental Impact Assessment ("EIA") with Searcher Geodata UK Ltd ("Searcher"), ahead of a multi-client 3D seismic data survey planned by Searcher in the Walvis Basin in 2023. The area of the EIA sponsored by Global covers a large section of the Walvis Basin, extending well beyond the boundaries of PEL0094.
In February 2022, the oil and gas exploration sector offshore Namibia was transformed by the announcement of two significant discoveries of oil and gas in the Orange Basin to the south, heralding a new petroleum province offshore Namibia.
Firstly, the Shell operated Graff-1 well made a discovery of light oil in both primary and secondary targets and was closely followed by the Shell's La Rona-1 well. Shell subsequently stated that it would drill more appraisal and exploration wells in order to prove commerciality and to design the optimal development plan, commencing with the Jonker-1X exploration well to the west of the Graff-1 discovery. The Company notes the recent announcements by Shell's partner, NAMCOR, that a light oil discovery was made by Jonker-1X, which completed drilling in early March 2023 and that appraisal drilling is planned to determine the size and recoverable resources potential of the discovery.
The result of Shell's Graff-1 well was followed shortly afterwards by an announcement that the Venus-1X well, operated by TotalEnergies, had discovered light oil with associated gas. In February 2023 TotalEnergies confirmed that it had contracted two drilling rigs to drill and test an exploration well and two appraisal wells on its Orange Basin blocks, as well as to re-enter and test its original discovery, Venus-1X. TotalEnergies stated that the aim of this drilling campaign is to ascertain the scale of resources in the area with a view to pursuing a fast-track development.
The Graff and Venus discoveries, and Global's prospects and leads on PEL0094, are all interpreted by the Company to be sourced by the Barremian-Aptian Kudu Shale. The apparent technical similarities in both source and reservoir between these discoveries and the prospectivity in our own Licence is highly encouraging. Accordingly, the Company believes that the Walvis Basin, where PEL0094 is situated, also has the potential to be extremely successful, and has the advantage of much shallower water depths generally than the discoveries in the south.
As the Company anticipated, following the discoveries potential farminees have first looked for possible opportunities in the Orange Basin. We believe that there is now firm evidence of interest shifting also to the Walvis Basin. Global believes that it is timely to carry out further work as, on the basis of the interpretation and studies which the Company has carried out to date, it is reasonable to conclude that such work could increase materially the resource numbers in PEL0094.
The Company has therefore recently purchased additional 2D seismic data. Further technical interpretation is currently underway both on the principal prospects, Marula and Welwitschia Deep, and in particular on the leads in the eastern part of the Licence, with the objective of proving up further resources and better defining those already reported.
The Company will of course provide further operational updates, as and when there is anything material to report.
In Italy, following the 'Plan for Sustainable Energy Transition of Appropriate Areas' ("Plan") which came into effect in February 2022, the Company provided the Italian authorities technical evidence of the gas prospectivity in relation to the Company's four licence applications in the Adriatic Sea ("Applications").
A key structural component of the Plan is the provision that in future only exploration for gas (as opposed to oil) will be permitted in Italy, both onshore and offshore. With specific regard to the Applications, the Plan also provides that certain sections of the application areas as previously constituted are deemed to be excluded.
The Italian Ministry of Ecological Transition ('Ministry') informed Global that the Company's exploration objectives in the amended Applications are in compliance with the provisions of the Plan. The Company has submitted further documentation during the reporting period accordingly, and is currently awaiting further dialogue with the Ministry. If the Applications are ultimately successful and the Company decides to accept award of exploration permits, we would seek a partner at the appropriate time.
Corporate
The strengthening of the Company's financial position, which commenced in 2020, has now seen four successful equity share placings which have raised combined total gross proceeds of £4.2 million (excluding any further proceeds from the future potential exercise of associated warrants). The most recent of these was undertaken during the reporting period, in late August 2022, and raised gross proceeds of £0.8 million.
We are pleased to have successfully undertaken this strengthening of Global's finances, and are delighted to welcome new shareholders to the Company.
Proceeds from these equity raises have enabled the Company to continue its exploration activities in Namibia, including entering the remaining one year Initial Exploration Period on PEL0094 until September 2023, together with ongoing efforts to farm-out part of its equity in the Licence.
Financial
During the half-year ended 31 December 2022, the Group recorded a loss after tax of US$695,619 (2021: US$825,890). Cash balances at 31 December 2022 amounted to US$1,029,007 (30 June 2022: US$1,139,775), the decrease reflecting ongoing expenditure partly offset by the proceeds from the equity raise completed in August 2022. The Group has no debt outside of suppliers who are settled on normal commercial terms.
Strategy and Outlook
The recent drilling successes have brought a very strong boost to both industry and investor confidence in relation to Namibian offshore exploration generally, albeit with an initial focus on the Orange Basin. We believe that Global is well positioned to benefit from this, and we are continuing with our farm-out process to fund the next stage of exploration on our Licence.
In Italy, we are seeking to progress our Applications in the Adriatic Sea.
Finally, the Company will continue to explore all strategic alternatives in order to maximise shareholder value.
Namibian Project
The Namibian Project consists of an operated 78 per cent participating interest in Petroleum Exploration Licence ("PEL") 0094 (acquired in 2018) which covers Block 2011A (see Figure 1). The Company also previously held an operated 85 per cent participating interest in PEL0029 covering Blocks 1910B and 2010A. PEL0029 expired on 3 December 2020, enabling the Company to focus its technical efforts on PEL0094.
In July 2020 the Company announced updated estimates of Prospective Resources for PEL0094 after interpretation of the existing 3D seismic data, licensed from the Namibian State Oil Company, NAMCOR, in March 2020. The interpretation of the 3D seismic data led to increased confidence in the two prospects, Marula and Welwitschia Deep.
Over the course of 2020 the Company purchased historic 2D seismic data, and commissioned an AVO study. Interpretation of this data plus the studies enabled the source rock to be mapped with even further confidence into Global's acreage. This work also helped improve interpretation of the Marula prospect (increasing the geological chance of success of Marula), as well as our understanding of the relatively under-explored eastern part of the block, vindicating the Company's view that the overall acreage is highly prospective.
Consequently, in January 2021 the Company announced an updated estimate of Prospective Resources for PEL0094. The additional Prospective Resources in the east of PEL0094 consist of 7 new leads with a total unrisked gross Prospective Resources (Best Estimate) of 2,048 million barrels of oil ("barrels"). As previously reported, the pre-existing prospects - Marula and Welwitschia Deep - contain a total of 881 million barrels, making a new total on the licence of 2,929 million barrels unrisked gross Prospective Resources (Best Estimate).
Regarding the Prospective Resources attributable to Global, the total unrisked net Prospective Resources (Best Estimate) now total 2,284 million barrels compared with the previous number of 687 million barrels net to Global - which related to Marula and Welwitschia Deep alone.
In April 2022 the Company announced that the Namibian authorities had granted a one-year extension to the Initial Exploration Period, from September 2022 to September 2023 and during the reporting period Global has continued with its technical work.
After successfully mapping, with the latest technology, the Barremian-Aptian Kudu Shale source rock from previous drilling in the Walvis Basin into its licence area, in late 2021 the Company worked with the well-regarded geochemical consultancy IGI to build a number of petroleum systems models for the Walvis Basin. This study was further updated in mid - 2022 and predicts that in all cases the source rock is mature in the northern Walvis Basin and that sufficient volumes of hydrocarbons have migrated into the prospects in PEL0094. In June 2022 the Company licensed a satellite radar oil seep study over the Walvis, in which a number of oil seeps have been identified within PEL0094. This further supports the Company's interpretation of a working petroleum system in the area.
In addition, in November 2022 Global announced it had agreed to sponsor an Environmental Impact Assessment ("EIA") with Searcher Geodata UK Ltd ("Searcher"), ahead of a multi-client 3D seismic data survey planned by Searcher in the Walvis Basin in 2023. The area of the EIA sponsored by Global covers a large section of the Walvis Basin, extending well beyond the boundaries of PEL0094.
In February 2022, the oil and gas exploration sector in Namibia was transformed by the announcement of two significant discoveries of oil and gas in the Orange Basin to the south, heralding a new petroleum province offshore Namibia.
Firstly, the Shell operated Graff-1 well made a discovery of light oil in both primary and secondary targets and was closely followed by the Shell's La Rona-1 well. Shell subsequently stated that it would drill more appraisal and exploration wells in order to prove commerciality and to design the optimal development plan, commencing with the Jonker-1X exploration well to the west of the Graff-1 discovery. The Company notes the recent announcements by Shell's partner, NAMCOR, that a light oil discovery was made by Jonker-1X, which completed drilling in early March 2023 and that appraisal drilling is planned to determine the size and recoverable resources potential of the discovery.
The result of Shell's Graff-1 well was followed shortly afterwards by an announcement that the Venus-1X well, operated by TotalEnergies,had discovered light oil with associated gas. In February 2023 TotalEnergies confirmed that it had contracted two drilling rigs to drill and test an exploration well and two appraisal wells on its Orange Basin blocks, as well as to re-enter and test its original discovery, Venus-1X. TotalEnergies stated that the aim of this drilling campaign is to ascertain the scale of resources in the area with a view to pursuing a fast-track development.
The Graff and Venus discoveries, and Global's prospects and leads on PEL0094, are all interpreted by the Company to be sourced by the Barremian-Aptian Kudu Shale. The apparent technical similarities in both source and reservoir between these discoveries and the prospectivity in our own Licence is highly encouraging. Accordingly the Company believes that the Walvis Basin, where PEL0094 is situated, also has the potential to be extremely successful, and has the advantage of much shallower water depths generally than the discoveries in the south.
As the Company anticipated, following the discoveries potential farminees have first looked for possible opportunities in the Orange Basin. We believe that there is now firm evidence of interest shifting also to the Walvis Basin. Global believes that it is timely to carry out further work as, on the basis of the interpretation and studies which the Company has carried out to date, it is reasonable to conclude that such work could increase materially the resource numbers in PEL0094.
The Company has therefore recently purchased additional 2D seismic data. Further technical interpretation is currently underway both on the principal prospects, Marula and Welwitschia Deep, and in particular on the leads in the eastern part of the Licence, with the objective of proving up further resources and better defining those already reported.
The Company will of course provide further operational updates, as and when there is anything material to report.
Permit Applications Offshore Italy
In August 2013, the Company submitted applications, proposed work programmes and budgets to the Italian Ministry of Economic Development for four exploration areas offshore Italy in the southern Adriatic (the "Applications"). The Company's four Application blocks are contiguous with the Italian median lines abutting Croatia, Montenegro and Albania respectively (see Figure 2 below).
As previously reported, various local authorities and interest groups appealed to either the Rome Tribunal or the President of the Republic against the Environmental Decrees in relation to the applications of the four areas. Publication of Environmental Decrees is the final administrative stage before grant of the permits. All first instance appeals made to the Rome Tribunal and to the President of the Republic were subsequently adjudicated in Global's favour.
However, Puglia, as the Italian region principally interested, made additional appeals to the Council of State (the highest level of appeal in Italy) against the judgements of the Rome Tribunal. The subsequent appeals were heard by the Council of State in January 2020, and in February 2020 the Council of State issued a judgement. Essentially, the Council of State suspended the proceedings before it and referred the matter to the European Court, requesting the Court to rule whether the four Applications contravene a relevant EU Directive relating to the maximum permissible size of individual permits, in particular having regard to the fact that the four permit applications are contiguous.
The judgement of the European Court was announced by the Company in January 2022. The Court found, in effect, that the Company's Applications do not contravene EU law.
Separately from the appeals process above, in February 2019 the Italian Parliament passed a Bill suspending all hydrocarbon exploration activities - including permit applications - for a period of 18 months. Under the proposed legislation, a Government-appointed Commission was to review all onshore and offshore areas for the stated purpose of evaluating their suitability for hydrocarbon exploration and development in the future. In doing so, the suitability of such activities in the context of social, industrial, urban, water source and environmental factors were to be evaluated. In offshore areas, suitability would additionally be assessed having regard to the impact of such activity on the littoral environment, marine ecosystems and shipping routes. Following the 18-month evaluation period, the intention was that a Hydrocarbon Plan would be activated, setting out a strategy for future exploration and development. Following the expiry of its initial 18-month term, the moratorium was extended twice.
In February 2022, the 'Plan for Sustainable Energy Transition of Appropriate Areas' ("Plan") was published and came into legal effect.
A key structural component of the Plan is the provision that in future only exploration for gas (as opposed to oil) will be permitted in Italy, both onshore and offshore. With specific regard to the Applications, the Plan also provides that certain sections of the application areas as previously constituted are deemed to be excluded, a process referred to by the relevant authorities as "re-perimeterisation".
Notwithstanding the Company's reservations as to the practicality of gas-only exploration - a reservation which Global believes is widely shared within the Energy Industry and beyond - the Company provided the Italian authorities technical evidence of the gas prospectivity within the reduced application areas, also thereby accepting the re-perimeterisation of those areas.
The Italian Ministry of Ecological Transition ("Ministry") subsequently informed Global that the Company's exploration objectives in the amended Applications are in compliance with the provisions of the Plan. The Company has submitted further documentation during the reporting period accordingly, and is currently awaiting further dialogue with the Italian Ministry. If the Applications are ultimately successful and the Company decides to accept award of exploration permits, it would seek a partner at the appropriate time.
