WTI $63.63 -$1.06, Brent $58.94 -87c, Diff -$5.31 +19c, NG $2.11 +4c
Oil fell again yesterday as concerns that the US/Sino trade arguments would have an effect on global GDP and a de-risking overall, certain markets don’t like it. Also, there are continued murmurings that if China so decides it could stop buying US crude and up its Iranian purchases which would be an irritating double whammy which I’m sure the President would rise to.
The API drew by 3.4m barrels after hours which is higher than forecast but even that hasn’t pushed prices up this morning, let’s see what the EIA inventory stats say this afternoon.
RKH has announced in an Egypt update that the Al Jahraa-7 development well has found the pay in both the Abu Roash C&F intervals and in the Upper Bahariya and Lower Bahariya _1 and _2 intervals and that testing is ongoing. The Al Jahraa-12 spudded on August 4th and will take approximately 55 days to complete. Probably of more interest to United Oil & Gas in the long-run.
Independent Oil & Gas
IOG has announced that the Harvey appraisal well spudded yesterday and is expected to take around 60 days to complete. It has a 63% COS looking for 85/129/199 BCF of prospective resources and also to demonstrate reservoir deliverability.
More importantly, post the recent farm-out of IOG’s core project Cal Energy has the right to farm-in to 50% of the Harvey licences within three months of completion. If this option is exercised, CER will pay an additional £20 million to IOG and a £0.95/MCF royalty on all of CER’s life-of-field net gas production from Harvey (equivalent to £61.3 million if Harvey produces IOG’s 129 BCF Best Estimate Prospective Resources). This would maintain full alignment between IOG and CER across IOG’s entire SNS Assets.
Harvey has always been crucial to the IOG plans in the SNS and with this farm-out potentially adding this well to the process the result just got that bit more interesting.
Europa Oil & Gas
EOG has received Government approval for the conversion LO 16/20 in the Slyne Basin into a 15 year FEL 4/19. It contains 1.5 TCF of gross mean un-risked prospective gas resources in Europa’s flagship Inishkea prospect. The less good news is that the farm-out to a ‘major’ has still not gone through and EOG has continued to market the licences to other potential partners including more ‘majors’.
I have asked some time ago for the IR company to fix me a long-overdue meeting with the CEO and should that be forthcoming then I will report back pronto.
Reabold has spudded its Iecea Mica-1 well in Parta, Romania which should take around 27 days to drill. RBD has a 37.5% interest in Danube Petroleum who have 50% of the Parta exploration licence and 100% of the 19.4km² Sole Risk Area which includes the Iecea Mare Production licence.
I was running between meetings yesterday with limited access to the internet so here is what I’m catching up on.
Far reported that CNOOC has acquired 55.55% of Svenska’s interest in the highly prospective acreage offshore Guinea Bissau where Far retains a 21.42% participation interest in each licence. There is a proven hydrocarbon system with two oil discoveries on the licences and drilling to test the Greater Atum Prospect (with 471mmbbls, 100% basis, best estimate prospective resource) is expected in Q1 2020.
Greater Atum is a shelf-edge combined structural-stratigraphic play analogous to the giant SNE oil discovery offshore Senegal where Far is credited with a significant role in its discovery. As a result, CNOOC’s arrival into these permits shows ‘significant new interest’ in the MSGBC Basin shelf margin fairway and supports Far’s exploration offshore Guinea-Bissau.
Far MD Cath Norman said that ‘we look forward to progressing the Guinea-Bissau acreage now that CNOOC have farmed into the project’ and that ‘attracting a NOC such as CNOOC shows the confidence that another major company has in Far’s Guinea-Bissau acreage’. For Far shareholders, I see this as being a most significant step, with a lot happening in Senegal which will cement the company’s valuation it is now progressing on a number of other fronts and with premier league partners. The portfolio may have taken some time to build up but it was done with foresight and the possibility of significant upside potential is clear for all to see.
H1 2019 un-audited highlights from President yesterday where sales were up 7% despite average prices being down and adjusted EBITDA of c. $8m. Bank debt is down from $10.15m to $4.82 today after a typically savvy recent deal on oil offtake. Average net group production c. 2,500 b/d was up 8% despite shut-ins and sundry outages.
The second half is looking ‘increasingly better’ and we can expect FY EBITDA of c.$20m based on significantly better operational performance which we will hear about in September. Chairman Peter Levine comments ‘ a period of transformational progress with the integration of 4 valuable acquisitions, a new pipeline, increasing production, generating positive cash flow and attaining good margins’. Unable to resist he also noted that ‘despite this, the share price has uncoupled from such progress and dropped 35% in that time’. I have some sympathy with such comments as PPC and a number of other companies are suffering from investor push back at the moment so it is good to see that he is ‘examining initiatives to deliver value for shareholders’.
Cairn announced yesterday that it had sold a 10% stake in Nova to ONE-Dyas for $59.5m before working capital adjustments. Cairn keeps a 10% interest but saves capex of $110m in the process which looks eminently sensible to me. Still waiting for the bigger sale which I am led to believe is ‘imminent’.
Jadestone announced that the safety case for the offshore Montara field has been approved by NOPSEMA. Despite this never being in doubt the final stage has now I understand been passed and we should expect another announcement sometime soon. This was an uber-smart deal with a very smart team and I think we will hear much more from them and I’m looking forward to catching up again next time they are over.
The cricket, unusually words fail me but if pushed they would include such like pathetic, spineless, embarrassing and arrogant. The selectors who gambled on an unfit bowler just because it was Anderson are also to blame, they have much to do before Lords. After replacing Anderson they have to take the gloves off Bairstow and if he is to keep his place he has to score some runs, and fast, he has had his own way too much lately. And stop changing 5/6 around and if necessary put Root back to 4. I could go on
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