FN Media Group Presents Oilprice.com Market Commentary
London – March 6, 2024 – At this moment, a fast-moving development is unfolding in Europe’s energy industry that is gaining more attention by the day. Europe’s energy crisis, triggered by Russia’s early 2022 invasion of Ukraine, put an end to decades of reliance on cheap natural gas supplies from Russia. In the short term, this meant significantly higher energy prices throughout Europe, with energy costs rising by 40.8% annually within the EU as of September 2022. Companies mentioned in this release include: TotalEnergies (NYSE:TTE), Eni (NYSE:E), Equinor (NYSE:EQNR), BP plc (NYSE:BP), Shell plc (NYSE:SHEL).
While natural gas prices have pulled back a bit over the past several months, the fact remains that Europe is badly in need of a long-term solution for its natural gas needs.
And one company is emerging as a potential leader in the race for home-grown solutions to energy crisis: MCF Energy (MCF.V; MCFNF.QX). This is an exciting player in Europe, with an array of assets that offer unique exposure to domestic natural gas.
The team leading MCF quickly recognized this opportunity to help strengthen Europe’s energy security…
And they bring with them extensive expertise in the European energy markets and geology, as well as an impressive track record in capital markets.
Potentially Massive European Natural Resources… Overlooked for Decades
Because most of Europe was so dependent on cheap Russian gas, a number of potentially massive resource opportunities within Europe have been sitting idle.
With decades of experience in the energy sector, and a deep understanding of Europe’s geology, the team was uniquely qualified to search for the most promising assets to help spur European production.
The company’s two highest-priority projects have a clear path to market, and are located in two of Europe’s most supportive jurisdictions.
Welchau: Up to a Trillion Cubic Feet Prospect in Austria
Located in the foothills of the Austrian Alps, the Welchau Gas Prospect contains over 140 meters of potential oil and gas-bearing thickness and carries the potential for up a trillion cubic feet of natural gas. The property is analogous to large anticline structures discovered in Kurdistan and the Italian Apennines. In fact, the structure at Welchau is so large you can actually see it from space.
Another well was drilled back in the 1980s just five kilometers away from Welchau, the Molln-1 well flowed at 3.5 million per day and had 40 barrels of condensate for every 1000 cubic feet of natural gas. This well was never produced probably due to economic reasons at that time when companies were mainly looking for oil.
The existence of this well strongly suggests that there is gas and condensate in the system with a good sealing layer, helping significantly de-risk the project for the company.
The company is moving quickly on the Welchau gas prospect agreeing to fund the Welchau-1 well costs up to 50% of the cap of EUR 5.1 million to earn a 25% economic interest in the Welchau Investment Area.
The Welchau gas prospect has significant gas resource potential, located in the heart of Europe at a relatively shallow drill depth and proximal to gas pipelines. Welchau is targeting the same reservoirs as the nearby Molln-1 well, which tested gas in 1989.
The company announced that its investment partner and operator, ADX Energy Ltd., had spudded the Welchau well on February 24, 2024 Drilling is expected to take 39 days.
German Assets: Genexco Acquisition Brings Licenses for Four Large-Scale Project Areas
In April 2023, MCF Energy (MCF.V; MCFNF.QX) acquired 100% of Genexco GmbH, a private German oil and gas company. This acquisition helped position the company as a future leader in natural gas exploration in Germany with 100% ownership of four licenses of German natural gas exploration and development projects with a local German-speaking staff and office.
These projects include:
Lech:
Lech is a concession in Bavaria covering 10 square kilometers with three previously drilled wells and two discoveries. One well-tested gas at a rate of over 24 MMCFD and a second, deeper well which produced oil with gas at a rate of about 180 BOPD. The third well encountered the Oil/Water contact in a separate fault block from the discovery wells.
Reentry of the property’s Kinsau #1 well is planned in Q2 of 2024. This is the gas well which tested at a maximum flow rate of over 24 MMCFD in 1983. With improved stimulation technology over the past 40 years the company hopes to improve on these production rates.
The company also acquired Lech East, a substantial license spanning approximately 100 km² in Southwest Bavaria, Germany. Modern 3D seismic interpretation, aided by Machine Learning and AI, has yielded very promising prospects. The company plans a EUR 4.6 million exploration program at Lech East, including well drilling.
Reudnitz Gas Field
Reudnitz is located approximately 70 kilometers southeast of Berlin in a rural area, with proven phases: Helium (Approx. 0.2%) and methane (14-20%) associated with high nitrogen content (>80%). The gas separation technologies and economics are well established to capture these resources.
Gaffney Cline & Associates (“GCA”) has independently assessed the best estimate (P50) of 118.7 Billion cubic feet (BCF) of Methane, and 1.06 BCF of Helium resource. Separately, GCA has 4.4 million barrels of oil in the shallower Zechstein formation.
Erlenwiese Exploration License
The company also acquired a significant exploration concession named Erlenwiese, spanning 87 km² in Western Germany. MCF Energy (MCF.V; MCFNF.QX) has acquired the latest 2D and is in the process of obtaining the available 3D seismic data. The company plans to perform its own AI and Machine-Learning analysis to further supplement and de-risk its geological and geophysical analysis of the area.
Keep An Eye On Big Companies, As Well
TotalEnergies (NYSE:TTE) has firmly positioned itself as a leader in the transition to cleaner energy, navigating the complexities of the global energy landscape with a multifaceted strategy. Beyond its investments in gas and LNG infrastructure, TotalEnergies is pursuing sustainable projects to diversify its portfolio.
TotalEnergies’ approach to oil, its traditional stronghold, is equally forward-thinking. The company is pioneering carbon capture, utilization, and storage (CCUS) technologies and biofuels, aiming to reduce the carbon intensity of its products.
Eni (NYSE:E) distinguishes itself with a strategic focus that balances its rich heritage in oil and gas with a clear vision for the energy future. Eni’s advancements in the natural gas sector, underscore its role in securing Europe’s supply while transitioning to cleaner energy sources.
Its initiatives in green refining and the development of proprietary technologies to convert fossil fuels into renewable energy sources highlight Eni’s proactive approach to addressing the challenge of meeting energy demand while reducing environmental impact.
Equinor (NYSE:EQNR), with its strategic pivot towards renewable energy, is emerging as a key player in Europe’s green transition. Norway’s energy powerhouse is leveraging its extensive experience in offshore operations to lead in offshore wind, a critical component of Europe’s renewable energy strategy.
Equinor’s oil and gas operations continue to be optimized for efficiency and sustainability, with a focus on reducing emissions and enhancing safety measures. The company’s leadership in electrifying offshore platforms exemplifies its innovative approach to traditional energy sectors.
BP plc (NYSE:BP) stands as a beacon of innovation and adaptability in the global energy sector, notably within Europe’s energy landscape. In response to the continental shift towards cleaner energy sources, BP has significantly increased its investments in the natural gas arena, including the development of pipelines and liquefied natural gas (LNG) terminals.
Despite the burgeoning focus on natural gas, oil remains a cornerstone of BP’s business model. The company has embarked on multiple initiatives aimed at ensuring that its oil exploration and production processes are sustainable.
Shell plc (NYSE:SHEL) is navigating the complex dynamics of the global energy market with a diversified and forward-thinking strategy. The company has significantly expanded its ventures in natural gas and LNG terminals, reflecting a concerted effort to adapt to Europe’s changing consumption patterns towards cleaner energy sources.
Shell’s approach to the energy sector is characterized by its commitment to diversity and innovation. The company’s extensive oil operations provide a foundation of stability and robustness, while its strategic investments in gas and emerging technologies like hydrogen and carbon capture underscore its vision.
By. Tom Kool
Forward-Looking Statements
This publication contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this publication include that large oil and gas companies will continue to focus on offshore natural gas resources; that domestic onshore natural gas assets in Europe will provide a more affordable energy source than offshore resources; that demand for natural gas will continue to increase in Europe and Germany; that Russia will not supply the majority of natural gas in Germany and Europe; that natural gas will continue to be utilized as a main energy source in Germany and other European countries and demand for natural gas, and in particular domestic natural gas, will continue and increase in the future; that MCF Energy Ltd. (the “Company”) can replicate the previous success of its key investors and management in developing and selling valuable energy assets; that the natural gas projects of the Company will be successfully tested and developed; that the Company can develop and supply a safe, domestic source of energy to European countries; that natural gas will be reclassified as sustainable energy which will support the development of the Company’s assets; that imports of liquified natural gas will not be sustainable for Europe and that European countries will need to rely on domestic sources of natural gas; that the Company expects to obtain significant attention due to its upcoming drilling plans combined with Europe desperate for domestic natural gas supply; that the upcoming drilling on the Company’s projects will be successful; that the Company’s projects will contain commercial amounts of natural gas; that the Company can finance ongoing operations and development; that the Company can achieve its business plans and objectives as anticipated. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that large oil and gas companies will start focusing on the development of domestic natural gas resources; that the natural gas resources of competitors will be more successful or obtain a greater share of market supply; that offshore liquified natural gas assets will be favored over domestic resources for various reasons; that alternative technologies will replace natural gas as a mainstream energy source in Europe and elsewhere; that demand for natural gas will not continue to increase as expected for various reasons, including climate change and emerging technologies; that political changes will result in Russia or other countries providing natural gas supplies in future; that the Company may fail to replicate the previous success of its key investors and management in developing and selling valuable energy assets; that the natural gas projects of the Company may fail to be successfully tested and developed; that the Company’s projects may not contain commercial amounts of natural gas; that the Company may be unable to develop and supply a safe, domestic source of energy to European countries; that natural gas may not be reclassified as sustainable energy or may be replaced by other energy sources; that the upcoming drilling on the Company’s projects may be unsuccessful or may be less positive than expected; that the Company’s projects may not contain commercial amounts of natural gas; that the Company may be unable to finance its ongoing operations and development; that the Company can achieve its business plans and objectives as anticipated; that the Company may be unable to finance its ongoing operations and development; that the business of the Company may be unsuccessful for various reasons. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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