Malcy’s Blog – Oil price, Far, Genel, IGas, Reabold, SOCO – And finally

WTI $58.05 +$1.18, Brent $64.72 +$1.01, Diff -$6.67 -17c, NG $2.14 +2c

By Malcolm Graham-Wood

Oil price

Oil prices are rising again with the temptation of a Fed rate cut later today and after-hours last night on pleasing API inventory stats. Indeed they showed a draw of 6m barrels, well over twice the market’s expectations. With gasoline drawing by 3.1m b’s if the EIA numbers reflect this later today then even with some residual Barry effect then stocks should be better.

The rate cut, should it happen will also be welcomed although to be fair figures from the oily parts of the economy aren’t causing much grief at the moment with fuels demand at extremely high levels. Finally, after further enemy action, the Sharara field in Libya has closed again taking its 290/- b/d off the market.

Far Ltd

The end June quarterly report from Far is out and makes good reading pretty much across the board. They went into the 2H stronger financially after a raise of $31.5m at 5.5c, a discount of only 1.8% and showing continued support from major shareholders. This gave the company $35.8m of cash at the quarter-end. Right now the fast and furious work on the Senegal FEED is happening and the FID for the development is expected in Q4.

Planning and purchasing of long-lead items for drilling in The Gambia and Guinea Bissau are being undertaken with plans for drilling in 2020 and the company are finalising the seismic operations on the NW Shelf permit. Arbitration hearings took place in July and post-hearing submissions and responses should be in by the end of September with a ruling currently expected by late September.

With Senegal pushing ahead nicely and FID expected this year along with a massive two rig development drilling programme scheduled to start, Far are in a strong position. With at least three other targets as mentioned above for exploration prospectivity there is plenty of upsides and once the bits and pieces of news from Senegal are tidied up there can be a newly structured financing plan for the SNE development. At 6.5c the shares have significant prospective appeal and provide an attractive entry point for what is still a very ‘hot’ area in worldwide oil and gas, viz West Africa.

Genel Energy

A Tawke PSC update from Genel this morning, 1H production of 71,700 bopd with three new wells brought onstream and a fourth, Viking-11 being added to support a 13 well programme in H2 including a deep well to test Jurassic potential at Tawke. Progress is being made on the Peshkabir-to-Tawke gas project ‘the first-ever EOR project in Kurdistan’. After Tawke, Peshkabir is now the second-largest IOC-operated field in the KRI where production averaged 55/- bopd in H1 2019 with two new production wells being brought onstream and four additional wells are currently drilling or scheduled to spud in H2.

IGas Energy

Another interim trading update to end June 2019, IGas report net production of 2,360 boepd with FY guidance still remaining at 2,200-2,400 boepd. Opex is on budget at $32.50/boe and capex will be £9m for the full year. With cash of £14.4m and net debt of £5.9m, there are plenty of opportunities for IGas coming up.

Operationally the waterflood at Scampton should aim for a short half a million incremental 2P barrels and with a new site in PEDL 235 in the Weald Basin where c300m barrels are estimated to be in place. Having said all that it was the striking success of the SR-01 well in North Lincolnshire where ‘The well-encountered 429m of hydrocarbon-bearing Bowland Shale, throughout which significant gas indications were recorded’ and where analysis is still ongoing and further data is expected in Q3. More to follow after a meeting with company imminent.

Reabold Resources

Corallian has completed a fundraise of £1,225,000 at £2.20, a meaningful increase on the last price of £1.50. Reabold had already effectively put money up for the raise subscribing for £750/- and £300/- in February ’19 and December ’18 respectively in advance subscriptions and for their trouble they were allotted at a 30% discount making their price 154p. Reabold now has 34.9% of Corallian up from 32.9% previously. Putting money into these companies is very much part of Reabold’s strategy and yet again this is proving to be a highly efficient model.

Soco International

A trading operations update from Soco for H1 2019, Vietnam production is a net 7,279 boepd with guidance still in place of 6,500-7,500 for the year. This translates into H1 revenues in Vietnam of around $80m with an average realised price of just under $70 being a $4pb premium to Brent.

In Egypt, the acquisition of Merlon Petroleum El Fayum completed on 2nd April and a second rig was contracted and spudded on 16th July. Production for Egypt is forecast to end the year at a rate of 6,500 bopd with it currently averaging 5,262 bopd. Finally, the company had cash of $66m at the end of June having paid out $27m in dividend payouts.

And finally…

Glorious Goodwood continues on the downs, yesterday was wet ad windy and needed serious perseverance but we made it out ok thanks to Frankie and Stradivarius…

And Celtic finished the job in Estonia and now travel to Romania where Cluj await.

By Malcolm Graham-Wood

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