Malcy’s Blog – Oil price, Ascent, Deltic, GKP & finally

WTI $38.72 +71c, Brent $41.05 +74c, Diff -$2.33 +3c, NG $1.48 -12c

By Malcolm Graham-Wood

Oil price

The oil price this morning is marginally up on this time last week despite Wednesday’s tantrum and Opec+ Secretary General Barkindo, speaking at a conference yesterday expressed confidence in the oil market. To be honest whilst we are having an up-tick in virus cases, particularly in the US, the market will be capped but probably on a temporary basis.

Also note that due to lower exports of LNG and high storage levels natural gas is at a low not seen since December 1998, this I expect to change later in the year partly as associated gas numbers fall sharply.

Watching the ECB boss on CNBC this morning made me think that they and the IMF are competing for the ability to talk absolute, total guff about economies especially as they are using data which is currently so unreliable as being guesswork and I can do that.

It is worth bearing in mind that as I reminded earlier in the week that we are only two months from black Monday when WTI melted down on contract expiry day. That nadir in the market will have been when all that seaborne capacity was at its peak, only now, some 8 weeks later is the ending of crude from the Gulf being on the high seas…..

Also next Tuesday sees the last day of the month, quarter and half of the year and whether you believe in window dressing or book leveling or whatever this has been the most momentous quarter and half for a long time and I expect hedgies and other suchlike ‘investors’ to crystallise some positions as they head into H2….

Ascent Resources

Finals for Ascent but it’s all about Special Situations, sorting out Slovenia and finding out where the new board is going to take the company. Clearly they are focusing on unlocking the value and so a strategic review of Slovenian interests which resulted in a restructuring proposal being submitted to Joint Venture partners and decision to submit a Notice of Dispute to the Republic of Slovenia, expected shortly.  A potential 50M claim isn’t a bad upside for shareholders !  The company has also engaged a new technical team to prepare the required environmental impact assessment and design the longer term field development plan for the Petišovci gas field.

The company has been active in the ‘broadening’ the portfolio of assets and has already entered the Cuban oil and gas market with the acquisition of Energetical Limited, securing exclusive rights to negotiate the production sharing contract for Cuba onshore producing block 9B. They have also expanded interests in Cuba with three further MOU’s direct with Cuban national oil and gas company (“CUPET”) over onshore Blocks 9A, 12 and 15, in total covering over 7,000 km2.

Deltic Energy- Formerly Cluff Natural Resources 

I managed to get an extensive interview earlier this week with Graham Swindells, CEO of what is now Deltic Energy and it remains an interesting story. With last year’s company changing farm-out to Shell the immediate future is busy and I expect announcements from the company to come thick and fast in the next few months.

The two farm-outs are progressing well although the well publicised delay in the Selene drilling date appears to be due to the current investment environment, it is anticipated the Selene well will now be drilled in 2022. Expect Pensacola to be first to spin the drill bit in 2021 but first we may get some seismic news to give us an idea of what they are looking for. The well is budgeted at £4.1m to Deltic, well within the company’s strong financial position and the target is a P50 309 Bcf.

As previously mentioned, the Selene well is now expected in 2022 but again the company has been busy working it up and I expect a technical update before long, the target here is 291 Bcf. Elsewhere the Dewar prospect, a drill-ready oil opportunity is in the live farm-out process but due to current conditions may be to a certain extent on hold.

Cortez and Cupertino are both, with the exception of OGA licence fees and levies, still live but on the back burner at the moment. As for other expenditure, spend on both licences will be restricted to the costs of the Company’s in-house technical team for seismic interpretation and prospect maturation.

It seems from our conversation that Deltic has applied for a number of licences in the current 32nd Round where applications closed in November and is expected to be running around 3 months behind, expect news ‘in the summer’. Deltic have applied for 5 licences over 20 blocks, one with a ‘global operator’ and may get a portion of those applied for.

Swindells is keen to grow and diversify Deltic on the eggs in basket theory, they might make acquisitions probably in gas and of course like everybody else are looking for some production in order to pay for the drilling programme going forward. The company is well financed and has £13m in cash which more than covers their shares of the Pensacola and Selene wells and with modest G&A the company is trading at a discount to cash with an exciting programme to come.

Gulf Keystone

GKP has announced today that CEO Jón Ferrier is retiring from the company upon appointment of a successor and a period of handover. Whilst I’m sure that the company will find an appropriate candidate for this job it is hard to overestimate quite how much Jón has done for GKP and how over the last five years his presence has been hugely beneficial to shareholders.

Jón Ferrier will indeed be missed and will be much sought after as a CEO (unlikely as he is wished best for his retirement) or even Non-Executive director for his wise council and legendary leadership capacity, I wish him the very best for whatever life brings him in the coming years, he brought intelligence and a good deal of humour to the sector.

Nigeria

There has been significant interest in Nigeria in recent days on the blog, I introduced Redcliff Energy Advisors and Michael Humphries with his excellent report on the Nigerian Marginal Field Round. I reproduce this report below along with my interview with Oisin Fanning from yesterday in which he also mentions the Bid Round which a number of UK companies are believed to be looking at.

Redcliff Advisors

With so much interest in the area recently I have found it most interesting working with African experts Michael Humphries and Gina Lopez at Redcliff Energy Advisors. Michael has had a varied but highly respected career in the industry having, rather unbelievably started over 30 years ago at Britoil. He has worked for N M Rothschild in the US and then as CFO of Amber Petroleum in Nigeria, after which he founded Redcliff Energy Advisors.

He has also franked his African experience with a spell as Head of Oil & Gas Advisory at Rand Merchant Bank working advising international and indigenous companies in Sub-Saharan Africa. Nowadays Michael is back running Redcliff and in particular at the moment looking at the upcoming Nigerian Marginal Field Bid Round.

As part of my introducing industry experts to readers of the blog I am delighted that Michael has agreed to share with us his article written as a guide to this round which will be important to a number of UK quoted and interested companies, I hope that if you are interested you will click on this link to read it. https://redcliffenergy.com/insights/

And finally…

Congratulations to Liverpool who are Premiership Champions after Chelski beat the Noisy Neighbours last night. However, this season goes down it will be remembered for the way that they smashed all the records and could close with 107 points.

In the Prem Villa play Wolves tomorrow and the Hornets host the Saints on Sunday. It is also FA Cup Quarterfinals day, all prem clubs as the Canaries host the Red Devils, the Gooners visit the Blades, the Foxes host Chelski and the Magpies welcome the Noisy Neighbours.

Malcolm Graham Wood 300x225 - Malcy’s Blog – Oil price, Ascent, Deltic, GKP & finally

Malcolm Graham-Wood

Source Link https://www.malcysblog.com/2020/06/oil-price-ascent-deltic-gkp-and-finally/

Website Link www.malcysblog.com

Disclaimer: Malcy’s Blog is provided for general information about the international oil and gas industry and the companies that operate within it. It does not constitute investment advice and Malcy does not buy or sell shares, warrants or bonds in any company written about within the blog. Information is taken from publicly available sources and any comment is that of the author who does not take any third party comment in the publication.


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