WTI $56.52 +22c, Brent $61.54 +59c, Diff -$5.02 +37c, NG $2.50 +6c
By Malcolm Graham-Wood
After a jittery start oil ended up on the week, Brent by $2.29 and WTI $1.42 and both are a little better this morning. Trade talks chatter came and went, demand figures were talked down a bit and the NFP numbers were a little short of consensus forcing the Fed boss to say that they would act ‘as appropriate’ and with whatever tools they needed.
In Saudi Arabia Energy Minister Khalid al-Falih has stepped down making way for Prince Abdulaziz bin Salman but as he is a seasoned Aramco expert policy will not change. In the US the rig count fell by 6 overall to 898 and by 4 in oil to 738.
A ‘Lincoln Crestal’ well update this morning from Hurricane after the company noted speculation regarding the flare on the Transocean Leader drilling rig. The Company confirms that a DST has produced oil to surface resulting in a flare. At 13:10 on the 8th of September the well was shut in to enable a planned pressure build-up test and the company will update the market on initial results of the well, including flow rates and oil type, following completion of the ongoing testing phase.
The company announces that at Heron-1 TD of 2,60m has been reached with gross reservoir intervals appearing to be very similar to the productive reservoirs found immediately to the north in block XIX. Casing is now underway and discussions have taken place with the testing contractor to determine how quickly kit can be mobilised to the location. The timescale should be within one month and hopefully a great deal less, as the company are keen to get a flow rate and to get stimulation of the well underway.
The primary target was encountered at 2,803m some five metres shallower than expected which I am told is a good sign as was the predominantly sandstone interbedded with shales and siltstones found slightly deeper. The company are ‘encouraged and the well is better than expected’ and in my call with CEO Mike Buck this morning he was clearly delighted, particularly with the porosity and permeability in the formation a pleasant surprise.
Petro Matad is only up 5% today which is a touch parsimonious but to be fair puts it up at or near recent peaks and the market knows that they are also drilling the Red Deer well at the moment. Recent speculation about that well is just that, after some slight delays due to kit on site the bit is only ‘close to objective depth’ but should reach TD in mid September before logging.
The rig will shortly move off this site and move to drill the Gazelle-1 well which it should spud in late September which means that there is still plenty of excitement due for the company. Should Heron go on and be the success that it seems they will be able to kick on with plans to make the next steps of the operation to start producing commercial hydrocarbons from Mongolia, which they thoroughly deserve, after all some of us have been waiting a long time for this moment…
Independent Oil & Gas
IOG has announced a successful EUR 100m 5 year senior secured bond issuance this morning which takes the company a long way down the route to finalising the funding for their substantial gas project in the SNS. Callable after three years, which is tactically sensible it being 6-12 months after first gas, this fulfills the major condition for the completion of the farm-out process and should lead to its completion and phase 1 FID imminently.
Speaking to the company this morning they are clearly delighted after what has been ‘a monumental year’ and there is now proper sunlight at the end of the tunnel. They are strategically aligned with a blue-chip partner, have drilling underway and can see the project going to phases 1 and 2 without further need for further funding.
Whilst gas prices this year have been rather on the low side the longer term strip is still very positive and have clearly not worried the investors in the bond. My other worry about the high equity stake held by the London Group administrator also looks to be overdone as with an orderly market arrangement in place and conversion tightly controlled it should be a stable relationship.
Confirmation today that the Parta licence well Iecea-1 has resulted in hydrocarbon discoveries in multiple zones with volumes ‘substantially exceeding pre-drill estimates and now the company is preparing for production testing.
The COHO-1 exploration well results show four zones with natural gas accumulations at the Ortoire block in Trinidad. It is now being cased for further evaluation of the Herrera sands where well logs indicate significant prospective natural gas pay in four unique sand packages.
This is a significant find for Touchstone coming as it does at the smallest of the prospects in the Ortoire block inventory. The discovery shows that their geological model is correct and the drilling of this well was completed according to plan. The rig now moves onto the Cascadura location where they will test a separate structure targeting significant oil prospects.
Range has announced a subscription agreement with new investor Sramek BioDynamics Holdings Limited to raise £750,000 at 0.049p. The money is for working capital as the company work to complete the transformational debt restructure and RRTL sale recently announced.
The weekend provided no real surprises as England lost the test match after putting up another fight but this time not with quite enough to defy the excellent Aussie bowlers. The side remains unchanged after Roy kept his place with 31 over two hours and Denley getting a slow 50. With Bairstow not getting the runs his constant claiming that he can keep wicket as well carries no water and a specialist wicket keeper has to be thought about after this series.
The Grand Prix was again a lot of fun with Ferrari’s Charles LeClerc winning at their home track at Monza whilst Sebastian Vettel again came off the track and caused immense grief by not looking as he came back on again. Situation roughly the same in the drivers race as Lewis and Valteri took positions 2 and 3.
Back the the Euro qualifiers tonight and Northern Ireland at home to Germany and Scotland hosting Belgium is about as hard as it gets.
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