Malcy’s Blog – Oil price, Rockhopper, Chariot, SDX, Europa & finally

WTI $59.34 -$3.56, Brent $64.55 -$4.47, Diff -$5.12 -91c, NG $2.67 -1c

Oil price

With ABS announcing yesterday that the damage to the Abqaiq processing plant would be repaired by the end of September the market duly fell back even though customers are still being told there will some gaps in their deliveries. I am assured that there is plenty of crude on the high seas so no one will go without but I still think that there is a very high chance of substantial retaliation and who knows that the Houthi/Iranians won’t do it again?

It’s Fed decision day and a 25bp cut in rates looks like it is on the cards, the softer dollar helped oil yesterday in advance of the meeting. The API reported a rise of 592/- in crude but gasoline, with a build of 1.6m and distillates +2m were worse than expected. These figures are at their trickiest to read between the driving season and the space heating time so watch for discrepancies…

Rockhopper Exploration

Interims from RKH this morning as they describe them ‘strong H1 operating and financial performance with a continued focus on costs’. Net production was 1.2 kboepd with revenue of $4.8m and operating costs of $2.2m, with G&A down by 35% in the last three years and cash of $27m and no debt the numbers are just fine.

Much more importantly, the work on Sea Lion is going on ‘full steam ahead’ with the Phase 1 development substantially de-risked from a technical, cost and schedule perspective and resources number for phase 1 has increased from 220 to 250m bbls (gross) with a capex of $1.8bn. With Premier launching the sale of its Zama licence in Mexico indicating that their commitment to Sea Lion is undiminished, the partners are now focusing on securing the senior debt funding ahead of FID.

With the sale of the Egyptian assets in process the other key ongoing development is the Ombrina Mare arbitration which could be material and a result is expected in the next six months. Rockhopper is now putting together all the building blocks to finally be rewarded for all the hard work at Sea Lion as well.

Chariot Oil & Gas

Excellent news from Chariot this morning as the independent CPR over the additional prospects in the Lixus offshore licence offshore Morocco gives ‘material running room in five additional prospects that offers upside in excess of 1.2 TCF of audited 2U prospective resources’. These prospects are added to the Anchois discovery and the satellites and now give in excess of 2 TCF comprising 2C contingent resources and 2U prospective resources.

CEO Larry Bottomley says, ‘the combination of the Anchois Discovery, the Anchois Satellite prospects and these five Additional Prospects defines a strategically significant resource adjacent to a fast-growing energy market with high gas prices and a need for increased supply’. I would add that the RNS also suggests that the partnering process appears to be going well ‘with a wide range of potential partners’ from whom Chariot should be able to select from across the energy value train as we had originally thought. The acquisition of Lixus is turning out to look better every time it brings something more to the party, this CPR update does just that and more.

SDX Energy

The MSD-19 development well in the West Gharib concession in Egypt has encountered a commercial oil accumulation and has been brought online at 315 bbl/d gross and has been connected to the Central Processing Facility at Meseda. 2019 production guidance for this asset is 4,000-4,200 bbl/d which looks achievable.

Europa Oil & Gas

EOG has joined the caravan of love to Morocco and has been awarded a large exploration licence offshore the country in the Agadir Basin. The initial inevitable necessary low cost work programme on the 250 MMBO plus prospects already identified on 3D seismic to drillable status ahead of farm-out also inevitably planned.

EOG will start a two year work programme will mature the prospects to drillable status in this time. Although this is another slightly distant reward it is likely to show potentially exciting and high upside in this unexplored basin and EOG has done well to expand its portfolio in this popular international post code.

And finally…

Not a good night in the Champions League for British clubs last night as Liverpool lost 2-0 at Napoli and Chelski lost 0-1 at home to Valencia including missing a late penalty. Tonight Olympiakos host Spurs and the Noisy Neighbours are at Shakhtar Donetsk. I would blame you if you watched PSG v Real Madrid or even Athletico Madrid v Juve.


By Malcolm Graham-Wood

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