Malcy’s Blog – Oil price, DGO, President, Genel & Rockhopper

WTI $37.26 -7c, Brent $39.61 -22c, Diff -$2.35 -15c, NG $2.31 +4c

By Malcolm Graham-Wood

Oil price

Oil continues to drift, news however is mixed with some optimism coming from the restart of one of the leading vaccine trials, better news from economic data in China today and of course not forgetting TS Sally now strengthening and approaching all those refineries by the coast.

Retail gasoline has risen again, at $2.183 per gallon it is up 2.8c on the week and up 1.7c m/m but still down 36.9c y/y.

Diversified Gas & Oil

DGO has announced that the 1Q dividend, announced on 4/5/20 of 3.5c will pay on 25/9/20 and for those who opted for the sterling equivalent will see them get 2.69p on that date.

President Energy

President announces that operational testing of EVx-1 has concluded with production rates of between 25,000m³/d up to 150,000m³/d of gas with a small amount of condensate and ‘for good reservoir management, subject to the definitive data results, it is expected that the well will be put on stream initially producing approximately 80,000m³/d of gas’.

The water disposal well, slightly unexpected, was completed successfully as has the fitting of the ESP at PFE-1001. Finally, as previously announced with regards to the upcoming drilling programme, the first well will be the Las Bases 1001 development well targeting attic gas in the Las Bases structure, a P50 well rate of 100,000m³/day (588 boepd) of gas and 6 Bcf of recoverable gas with a target depth of 1,700 metres and a high chance of success.

President is looking in great form at the moment and whilst it has yet to be reflected in a deserved rise in the share price I sense a decent swell of momentum upwards and this would be fully justified by all this operational success.

Genel Energy

Genel announced yesterday the publication of its first comprehensive sustainability report. Given the increased focus on ESG amongst institutions, making yourself as investable as possible is a smart move.

The report focuses on key areas of economic development, education and health as well as meeting ‘head on’ the challenges associated with the energy transition. The company has included its ESG metrics such as corporate KPI’s and remuneration evaluations in the report.

Genel is a genuinely low carbon company and this has been complemented by the recent enhanced oil recovery project at the Tawke PSC where the partners have materially reduced flaring thus reducing the carbon intensity of their portfolio. This is now some 7kg CO2e/bbl of scope 1 & 2 emissions.

Genel also ticks many boxes in terms of local investment in social projects where they have invested some c.$60m since 2006 as well as funding local projects and providing free medical care, something I have seen at close quarters.

Finally they also directly employ c.250 local people at TTOPCO and indirectly another 350 through contracts from 23 local community centred companies who provide services to Genel across the KRI.

Rockhopper Exploration

Not much to add from RKH as they continue to wait for the next move with regard to Sea Lion. Given the price deck assumptions being made by Premier in my recent CEO interview I would suggest that RKH is a geared option on Sea Lion and also its arbitration and with enough funding for a good couple of years as well as the farm-out still progressing.

(The opinions expressed here are those of the author, a columnist for Share Talk.)

Malcolm Graham-Wood

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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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