MCF Energy: Strengthening Europe’s Energy Independence

The European Energy crisis has cost the countries involved hundreds of billions of dollars in cost-of-living subsidies and wholesale price regulations. This is because Putin has been using the Russian gas supply as a political weapon against Europe.

Of course, this has spurred the EU and European nations to be more motivated than ever to secure energy security. Prices are volatile across the continent, as shown in monthly updates from the continent’s Energy Price Index:

Governments have been spending a fortune to stabilize the region, subsequently creating an environment where governments and regulators are far more motivated to work with fossil fuel companies. 

Even if the war with Ukraine ends soon, the continent can no longer consider Russia to be a trusted energy partner, so alternative solutions are necessary, not temporarily but permanently.

Following this, The Biden-Harris Administration paused LNG export decisions to conduct comprehensive updates on analyses concerning energy costs, greenhouse gas emissions, and methane impacts. This move marked a big change in the global energy regulatory environment and shocked industry analysts and professionals alike. While the US remains committed to supporting allies like the EU, this decision underscores the fluid nature of energy policies and serves as a reminder that things can change on a dime. It further highlights the importance of self-reliance in securing energy supplies for assured stability.

With so much tension, division and unrest in the world, there’s no doubt geopolitics present an ongoing underlying threat.

US LNG exports have been vital for Europe, but this dependency gives the US a significant influence over Europe's energy security.

If President Donald Trump returns to power in 2024, there’s speculation he may leverage US LNG exports for political gains, such as imposing a US security tariff or affecting NATO contributions. Indeed, Trump's past actions and statements suggest he might use energy trade as a tool for his policy goals.

Irrespective of geopolitical tensions, war, or regulatory changes affecting Europe’s energy supplies, it is prudent for the region to secure its own oil and gas stocks. Not only will this reduce the dangers of supply shortages and unpredictable prices, but it will also enhance the region's independence and control over its energy resources.

Growth in Global LNG Demand

As an aside, global demand for liquified natural gas (LNG) is set to skyrocket, almost doubling to a staggering 700 million tons by 20408. LNG is natural gas that has been cooled to extremely low temperatures, so it’s suitable for transporting over long distances and storage. In an era where the energy landscape is rapidly evolving, LNG has emerged as a critical player thanks to its eco-friendly attributes and potential to satiate the world’s ever-growing hunger for energy.

Ultimately, Russia has leveraged its gas supplies against its former allies, and the situation has led to unforeseen challenges for the Western continent. A rare opportunity lies in turning this situation around to contribute positively to Europe’s energy security which is exactly what spurred MCF Energy into action in taking on this much-needed project.

And that’s why MCF could present an exciting investment opportunity for those looking to tap into the growing demand for European gas.

Europe’s heavy reliance on energy imports from Russia has led it to neglect its own valuable resources. So, for decades, many promising projects and energy sources within European borders have been overlooked due to the convenience of Russian imports.

But with heightened geopolitical tensions, the continent now has a pressing desire to strengthen its energy security by tapping into its local reserves.

These resources have been neglected in the past due to limited funding and a lack of enthusiasm from a Europe that has become increasingly focused on renewable energy.

However, the recent shockwaves from the Ukraine conflict have drastically shifted the landscape, making it critical for Europe to re-evaluate its energy sources.

One key factor in aiding Europe in unlocking its underexploited resources is the modern technology employed by MCF Energy.

The business is aided in staying right at the cutting edge by Deborah Sacrey, an Advisor to MCF Energy, who is a leader in the field of artificial intelligence in oil and gas exploration with over nine discoveries under her belt using multi-attribute neural analysis.

Additionally, the company’s use of remote sensing data enables the creation of a three-dimensional subsurface picture, which can help identify and assess potential energy sources more accurately. This technological innovation has significantly increased success rates, reducing the financial and operational risks associated with unsuccessful exploration and drilling efforts.

Also, advancements in computing power have greatly improved data readability, allowing for the identification of prospects that may have previously been missed by the naked eye.

Key to instilling confidence in the company’s ability to achieve its goals is its highly accomplished management team. Collectively they have an exceptional record of success in the European energy markets, providing powerful financial backing to their projects. Their in-depth industry knowledge, resilient leadership skills, and extensive experience provide a solid foundation for MCF Energy.

Past successes with companies such as InterOil, Bankers Petroleum, Lithium X, BNK Petroleum, K92 Mining, Goldcorp, and Hive Blockchain are a testament to their expertise and ability to achieve results. This impressive list of accomplishments is sure to ignite confidence in shareholders who are familiar with the sector, as it highlights the strength and experience of the MCF Energy team.

MCF Energy is making substantial moves in Germany. Here, by acquiring Genexco Gmbh, MCF obtained a considerable portfolio of exploration and development assets.

It extended this in August 2023 with the acquisition of the 100 km² Lech East natural gas exploration concession in Southwest Bavaria. This acquisition complements another concession, Lech, where a well previously exhibited a gas flow rate exceeding 20 million cubic feet per day.

Through Genexco, MCF holds a 20% interest in Lech and plans to drill a development well there. MCF Energy's exploration strategy involves a EUR 4.6 million program at Lech East, aiming for drilling within the three-year term granted by the Bavarian State Ministry.

These Lech concessions are advantageously located near Munich, offering excellent accessibility and infrastructure, including proximity to pipelines. The company views both Lech and Lech East as crucial for enhancing Germany's energy security.

In all its development efforts, MCF plans to use modern 3D seismic technology, enhanced by machine learning and AI, to identify promising gas prospects. These efforts build upon historical discoveries, such as the remarkable flow rate at the Kinsau #1 well drilled at Lech in 1983.

MCF’s German acquisition spree continued with the Erlenwiese exploration concession in September 2023. This target covers 87 km² in Western Germany and is earmarked for oil and natural gas development with an initial two-year award granted by The Hessen Ministry of Environment, Climate, and Energy. Erlenwiese is located near Frankfurt and close to essential refining and processing infrastructure.

MCF Energy is now positioned as a powerful player in natural gas exploration in Germany.

The Genexco Deal

Germany is Europe’s largest gas importer, so MCF’s strategic Genexco acquisition has also helped position the company as a unique and credible player in the region.

The Genexco deal came about when MCF identified the sheer proficiency of the technical team that Genexco boasts. They have over four decades of experience in exploring Germany and Eastern Europe. Yet, Genexco was significantly underfunded, presenting MCF with a chance to capitalize. Now, if anyone can spot an appealing hydrocarbon opportunity, it’s the impressive team of seasoned professionals running MCF Energy.

Through Genexco, MCF plans to develop the Rotliegend Reudnitz gas field, a large and confirmed deposit of natural gas. The gas presence is evidenced by three previously drilled wells. Additionally, a fourth well drilled below the gas-water interface provides added proof that the size and structure of the gas accumulation are notably significant. 

Energy business experts GaffneyCline backed this view up when it reported to MCF Energy an estimated 118.7 billion cubic feet of natural gas for extraction.

These reserves are non-calorific, potentially diluting the hydrocarbons’ concentration, with nitrogen also present. This is common throughout the region. Nevertheless, the reserve report also shows gas content with 0.2% helium. This will potentially enhance the overall value of the natural gas reserve because helium is another highly valuable and scarce commodity. Given that the technology to extract nitrogen and helium from the gas field is well established, the experts involved have done their sums and believe the forecasted economics of this project to be very appealing. GaffneyCline estimates over 1 billion cubic feet of helium in the reservoir.  

Genexco found 19 meters of oil-stained Zechstein carbonate during the initial drilling activity. This is another positive sign for the project. The Zechstein geological period occurred approximately 250 million years ago during the Late Permian period. Indeed, the oil-staining is significant as the Zechstein is also a highly productive expanse of oil production right next door in Poland. And here at Genexco’s prospect, the GaffneyCline report shows the potential for highly lucrative oil reserves of around 4.4 million barrels that can be added to the reserves already documented at Reudnitz.

The combination of existing wells, test data confirming gas flow, designs for separation plans, nearby pipeline infrastructure, and a very strong market with favorable prices, all contribute to MCF Energy forging ahead with the Rotliegend Reudnitz gas field.

The company believes this project will see it begin to fill the large void in Europe’s energy security at a time of greatest need. But it’s not the only major project the exceptional team of energy leaders at MCF Energy have going on…

Austria’s Vienna Basin is renowned for its bountiful oil and gas fields, but for decades Austrian oil and gas projects were starved of investment as cheap Russian gas flooded the market. MCF Energy is ready to change this with funds readily available and the technical expertise to cherry-pick projects with the greatest potential for success.

In Austria, the company teamed up with ADX Energy (ASX: ADX), a Europe-focused energy producer, to stake their claim on a massive geological structure – an anticline.

Way back in the 1900s, anticlines were the go-to drill area for oil and gas prospectors, as they held precious resources. Fast forward to the 1980s, and prospectors struck a gas-rich patch in Austria’s giant Welchau anticline. Here, they tested the Molln-1 well, which unveiled a gas column of at least 400m thick and tested condensate-rich, pipeline-quality gas at a maximum flow rate of 3.5 million cubic feet per day (mmcfpd).

And now MCF Energy is in the early stages of exploring for natural gas at its Giant Welchau prospect near the Austrian Alps.

What excites MCF Energy is that the Molln-1 well serves as undeniable proof that there’s gas in the area. Better still, the well test pinpointed a trap, a reservoir and a seal, these three are considered by experts to be the holy trinity for oil and gas production. 

Pressure transient analysis and additional data reveal an enormous structure, potentially 100 square km in size. Indeed, potential reserves back from a study carried out by energy business experts Gaffney, Cline & Associates (GaffneyCline) point to 644.6 billion cubic feet of natural gas equivalent in the ADX-MCF prospect vicinity. Furthermore, the Giant Welchau prospect is only 18km from a pipeline.

Construction for the Welchau-1 well site commenced in December 2023, following the acquisition of necessary environmental clearance and drilling permits. The well site is now fully prepared, and drilling has begun at the Welchau-1 gas exploration well in Upper Austria. Drilling is expected to last around 39 days and expected to complete by end of March 2024. The drilling is being carried out using the RED E200 drill rig within the ADX-AT-II exploration license.

Early stages of drilling have been successful, with the completion of the first protection string of casing at a depth of 125 meters, marking a key milestone in the approved drilling program.

The Welchau-1 gas exploration well is targeting the mid-Triassic age Steinalm formation in which gas was discovered at the nearby Molln-1 well.

MCF’s giant Welchau prospect is up-dip from Molln-1. The up-dip location is important in an anticline because it often serves as a trap for oil and gas accumulations.

Anticipation is mounting for the potential yield of the giant Welchau project, with 25% belonging to MCF.

MCF’s prospect in Austria presents a unique and exciting opportunity with the potential, if the exploration is as successful as anticipated, to unlock a significant volume of natural gas that, once extracted, can help to meet the growing demand for energy in the region and beyond.

With its strategic location and vast potential, Welchau has the potential to become a major player in the energy sector, attracting interest and investment worldwide. The prospect’s abundant natural gas resources, combined with the latest exploration techniques and a skilled technical team, make it an attractive investment opportunity.

Indeed, the main draw for the current stakeholders in this Austrian project is the potential returns. For what they consider to be a conservative outlay, they’re hopeful for significant value on their investment as the production rate is attractive and economic in today’s market.

Furthermore, the government favors natural gas, surface permits are already there, landowners’ surface access is being negotiated, and ultimately, the team is very excited about this project.

In February 2024, MCF announced another exciting move with its acquisition of oil and gas production and exploration licenses in the Czech Republic.

This extends the company’s European reach with valuable reserves, and these Czech targets offer immediate production opportunities with the potential for further exploration.

The three production licenses spanning over 6,880 acres (27.8 square kilometers) include NT Ridge, Krasna NP-823, and LM. While the three exploration licenses cover a vast 42,551.5 acres (172.2 square kilometers) comprising Skalice-Ropice in the North, Moravka in the South, and Trinec in the North-East.

An Independent Reserve report by Boury Global Energy Consultants revealed significant potential for MCF Energy at the NT Ridge area, situated approximately 28 km southeast of Ostrava, the third largest city in the Czech Republic. 

It confirms 13 Proven Undeveloped and 2 Probable Undeveloped sites with an impressive 11.9 billion cubic feet of confirmed reserves. The financial outlook is also promising, with an estimated net present value of $53.55 million before tax, applying a 10% discount rate.

This discovery, along with other production concessions, indicates a strong increase in shareholder value for MCF. The company is also reviewing Krasna NP-823 and LM Production licenses, which include wells that could be economically reactivated.

Meanwhile, MCF’s exploration licenses, ordered by size from smallest to largest, are Skalice-Ropice, Moravka, and Trinec. The plan involves drilling in Skalice-Ropice first, scheduling four wells in 2025, five in 2026, and one in 2027. Among these, nine locations have Proved Undeveloped plus Probable plus Possible reserves, and one is assigned Probable plus Possible reserves.

What’s more, MCF has several other large German targets under application or evaluation. And it’s not confining its exploration activity to Austria, Germany or the Czech Republic. The company is also employing experts to search for potentially lucrative M&A targets all over Europe.

By prioritizing the development of a robust domestic infrastructure and leveraging the latest technology and exploration techniques, MCF Energy is well-situated to respond to the growing demand for energy security in Europe.

The company’s exploration efforts present a mutually beneficial relationship between the company’s financial objectives and Europe’s long-term energy goals, thereby providing potential catalysts for investors. There are no guarantees, but these catalysts could include growth potential, market demand, diversification, reputational benefits, government incentives, and ESG investing, which could positively impact the company’s valuation, share price and overall attractiveness to investors, potentially driving increased investment interest and capital inflow.

Hydrocarbon accumulation at these exceptional sites is how MCF Energy differentiates itself from competitors in the European market. Its vision is bold, as the company plans to become a competitive force in the continent and the go-to business for quality domestic gas.

James Hill, P. Geo Incoming CEO, former VP Exploration, Bankers Petroleum and BNK Petroleum, commented:

The European Union is one of the world’s biggest users of oil and gas, and the monthly average value of imports to the region ramped up significantly in 2022.

The average monthly cost of energy imports rose significantly in 2022 compared to 20212.

In recent years, the EU has come to rely ever more on imports for energy, with much coming from Russia. This stopped after Russia invaded Ukraine, causing Europe to increase its imports from Norway, the United States and Qatar, which cost far more to import. This approach is not just costly, it generates higher carbon emissions compared to the domestic supply that could be provided by MCF Energy’s projects in Austria, Germany, and the Czech Republic, once they become operational.

By reducing the amount of oil and gas it imports, the EU can save money, lessen its carbon footprint, and increase domestic security.

In fact, leveraging MCF Energy’s projects presents an outstanding economic opportunity for the European Union, given the stark price differential in natural gas between Europe and North America. There’s no doubt the financial incentives for localizing LNG production are compelling.

According to the IEA global natural gas trade is expected to return to growth in 2024.

Meanwhile, current domestic gas supplies are much lower than imports via LNG and pipelines.

According to Eurostat, the European Union’s official statistical agency, in 2021, the EU energy profile looked like this:

Deloitte’s 2024 oil and gas industry outlook report5 tells us that the oil and gas industry has faced multiple challenges, including supply disruptions, price volatility, and underinvestment. A combination of economic, geopolitical, trade, policy, and financial factors has created an energy trilemma, putting pressure on energy security, supply diversification, and low-carbon transition.

[Key Oil and Gas Trends in 2024]

As we look ahead through 2024 and beyond, the global upstream oil and gas industry finds itself in a unique position. After years of underinvestment, demand recovery, and geopolitical developments, the sector generated record-breaking free cash flows in 2022 and continued to generate robust free cash flow in 2023.

In the energy sector, private exploration and production companies drive growth. US-headquartered majors prioritize shareholder payouts and production growth, and European-headquartered majors balance energy security with the green transition.

MCF Energy aims to do it all by achieving production growth and shareholder value while emphasizing efficiency and sustainability in its operations.