Predator Posts Operating Loss of $2.9MM for First Half

Predator Oil and Gas Holdings PLC reported $2.9 million (GBP 2.36 million) in operating loss for the first half of 2023, compared to a loss of $738,000 (GBP 600,000) for the six months ended June 2022.

The increase in operating loss is mostly attributable to increased drilling activity in Morocco, which is deemed vital to adding potential gas resources and ultimately creating shareholder value, it said in an earnings release Tuesday.

Predator is the operator of the Guercif Petroleum Agreement onshore Morocco, which is prospective for Tertiary gas less than 6.2 miles (10 kilometers) from the Maghreb gas pipeline.  The company’s MOU-1 well, drilled in 2021, and the MOU-3 well, drilled in 2023, have been completed for rigless testing in 2023, Predator said, adding that its focus is on supplying compressed natural gas to the Moroccan industrial market. Further drilling activity is being progressed to evaluate Jurassic prospects, the company said.

The first six months of 2023 have seen Predator “successfully plan and implement a three-well drilling program onshore Morocco in line with its strategy of focusing on high impact drilling for gas in Morocco”, executive chairman Paul Griffiths said.

“Results from the MOU-3 well completed for rigless testing in June were particularly encouraging and helped to de-risk the Compressed Natural Gas (CNG) development case”, Griffiths added, adding that “this is the company's preferred scenario for supplying the industrial gas market in Morocco to help reduce reliance on carbon-intensive Liquified Petroleum Gas imports”.

The MOU-3 results also confirmed the interpretation of the results of the MOU-1 well and established a new gas basin covering up to 92.7 square miles (240 square kilometers) in the northwest corner of the Guercif Licence, creating the opportunity to reassess a previously unexplored part of the license from the perspective of developing new gas prospects at several different geological levels, Predator said.

Predator noted that CNG offers a simpler solution to deliver gas to dispersed industrial users compared to investing in pipeline infrastructure, which “requires more fixed capital investment, takes longer to construct due to requirements for environmental approvals and land permitting, and necessitates initially deploying more risk capital for drilling”. In contrast, CNG is a flexible and scalable development where additional capital expenditure can be funded organically and proportionally “given Morocco's very favorable fiscal regime”, Predator said.

Predator’s drilling program is aimed at defining the minimal, relatively modest flow rates required for a scalable CNG development to create a revenue-generating business. At the same time, the company said it is open to discovering larger volumes of gas for which future markets might include gas-to-power and export to Europe via the Maghreb gas pipeline, which runs through the area drilled by the company. First gas production is targeted in 2024, according to the release.

"This has been a particularly active period for the company as we have begun executing a multi-well drilling program onshore Morocco”, Predator Executive Chairman Paul Griffiths said. “Operations have been managed efficiently and initial drilling results are very encouraging. MOU-3 results have so far exceeded management's pre-drill expectations”.

“Market sentiment has changed for the oil and gas sector in the early part of 2023 and those companies that are activity driven and focused on drilling and delivering near-term value with a reasonable expectation of early monetization are being favored by investors in the sector”, Griffiths noted. “Gas is a commodity in Morocco which is much in demand and the industrial market ensures gas price stability within a favorable fiscal regime that facilitates longer-term planning and creates greater certainty for asset valuation independent of global pricing trends”.

“Our strength lies in being an early mover to identify value-creating opportunities and to patiently bring them to a stage where early monetization is a realistic goal”, Griffiths said.

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