Malcy’s Blog: Flash blog: Diversified, NTOG.

A flash blog today as I have meetings in the smoke, will report back as appropriate.

Don’t forget it’s the start of the three day Aintree festival with the grand National on Saturday…

Diversified Energy Company

Diversified has released its sixth annual Sustainability Report, Winning Through Collaboration, highlighting the Company’s sustainability actions and achievements in 2024. As the champion of the strategy of managing proved, developed, producing (PDP) assets, Diversified is the only publicly traded company dedicated to this approach, leveraging operational scale, vertical integration, and a proprietary technology platform to drive efficiency and long-term value.

With Diversified’s Smarter Asset Management approach to asset stewardship, combined with the inherent benefits of natural gas, the Company is well-positioned to meet modern energy challenges while delivering the reliable, lower-carbon energy needed to balance growing demand with innovation in energy supply. The report details Diversified’s continued progress in advancing operational excellence, reducing environmental impacts, and enhancing employee safety. Key highlights include:

Protecting Our Environment

• Reduced methane intensity by ~13% year-over-year to 0.7 MT CO2e per MMcfe; a 56% reduction as compared to 2020 baseline (1.6 MT CO2e per MMcfe)
• 459 pneumatic devices and pumps were eliminated or converted to non-emitting through the work of DEC’s Pneumatics Task Force and individual field teams
• Conducted 152,000 voluntary emission detection surveys; maintaining a ~98% no-leak rate company-wide on surveyed assets
• Achieved a third consecutive year of Oil and Gas Methane Partnership 2.0 (OGMP) Gold Standard

Supporting Our Employees

• Improved personal safety performance with a 30% reduction in TRIR while simultaneously realizing a 52% reduction in contractors with a high TRIR score
• Our 2024 motor vehicle incident rate was 0.34 incidents per miles driven, a 38% decrease from 2023 even as we increased our total number of miles driven by nearly 11%
• Introduced new employee physical and mental wellness programs

Serving Our Communities

• Contributed over $1 billion of economic impact to state GDPs through employment and operations for a third consecutive year
• Strengthened community outreach efforts to include $2.1 million in community contributions, grants and support programs
  • More than 25% of community outreach was distributed to socio-economically disadvantaged geographic regions

Commenting on the report, CEO Rusty Hutson, Jr. said:

“Diversified Energy remains committed to delivering reliable, affordable, and sustainable energy. In 2024, our OneDEC culture flourished, empowering our employees to drive innovation, collaborate, and share knowledge, turning ideas into real solutions. Our Sustainability Report highlights our focus on responsible operations, from reducing emissions to safely retiring wells, all while supporting communities and local economies. As the publicly traded PDP Champion, executing the differentiated strategy focused on improving currently producing assets, we are proud to be the Right Company at the Right Time, providing critically needed energy while leading the way in sustainability.”

Diversified sets a great deal of store by its annual Sustainability Report and this year is no exception. Whilst some investors can have more or less association with such views it can only be for the good if the company sets out its best-in-class standards.

NTOG

Nostra Terra has provided the following update.

Highlights

·    Working interest partner has agreed on a location to drill the Fouke 3 well (32.5% NTOG), with planning ongoing and operational work likely to commence in Q3 2025.

·    Four of the five Pine Mills Phase 2 well workovers are now complete.

·    Total Company oil production is currently averaging ca.130 bopd net.

·    Production from Pine Mills, currently at 90 bopd net, is expected to increase to between 100 and 135 bopd net on completion in a fortnight following field electrical upgrades.

·    Encouraging results seen from the waterflood restart where two pumping units have been upsized to handle increased fluid flow in the north of the field.

·    An additional Electrical Submersible Pump (“ESP”) has been ordered to handle increased volumes in a third well in the north of the field.

Paul Welch, Nostra Terra’s Chief Executive Officer, said:

“Our partner in the Fouke area, Cypress Operating Co., has agreed to drill a third development well at the location proposed by our technical team.  This location, as mapped, has been estimated to contain over 300,000 barrels of oil in place and, if successful, can be produced at the maximum new field allowable rate of 124 bopd, the same rates at which each of the Fouke 1 and 2 wells initially produced.  Planning for this new well has commenced, and a team was in the field this week looking at potential surface drilling locations. We look forward to working with our partner to get this well drilled as soon as practically possible.”

“Additionally, our Phase 2 workover program continues to progress with a workover rig now on the last well of the 5-well program.  Production from Pine Mills is expected to increase to between 100 and 135 bopd net on completion in a fortnight following field electrical upgrades.”

“We are also starting to see volumes increase in the north of the field due to the restarted waterflood in the area.  Two pumping units have been upsized, and a third well, with an ESP, will be upgraded to handle increased fluid flow in the area. We are greatly encouraged by the positive response we are seeing and are significantly increasing the fluid treating capacity in the near term to deal with that opportunity.  These upgrades will be paid for out of NTOG’s existing cash reserves.”

“Finally, it has been both a busy and rewarding time as we successfully increase oil production at Pine Mills to levels we have not seen since it was first acquired five years ago.  We expect to complete the Phase 2 workover program and have all the wells online and producing ahead of the next field debt re-determination by our facility provider at the end of the quarter.  I look forward to reporting on the final results of the Phase 2 workover program once finished.”

With production increasing to 100-135 bopd in a fortnight operationally things are going well at NTOG under Paul Welch. Today’s news that Cypress Operating Co, its Working Interest partner has agreed to drill a third development well at the location proposed by the NTOG technical team is therefore to be welcomed.

NTOG is without doubt worth keeping on the radar screen,  Paul Welch has serious plans and whilst current production is quite modest the outlook is indeed ambitious. 

Production

Company oil production continues to average 130 bopd net, with the Pine Mills wells contributing about 90 bopd net. This rate is below the field’s current production capacity due to the ongoing workover activity in the field. Bringing online wells which have been idle for many years requires field infrastructure to be upgraded, primarily electrical power systems, and these upgrades require portions of the field to be shut down while they are undertaken. These shutdowns reduce the field’s overall daily production volumes. The electrical upgrades and final workover will be complete in a fortnight, after which no further scheduled shutdowns are planned, and the average daily rates from the Pine Mills alone are expected to increase to between 100 and 135 bopd net for the foreseeable future.  

Fouke 3 Well

All partners have technically agreed on the Fouke 3 well location. The operator, Cypress Drilling, will now go out to tender for a drilling rig, stake and permit the location, and then prepare a detailed budget and timeline for the well.  After which, the well location construction will be undertaken and the drilling permit obtained.  The well is targeted to be drilled in Q3 2025 but is dependent upon rig availability. 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014, as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.