Malcy’s Blog – Oil price, Rockhopper/UOG, IOG, BPC & finally

WTI $47.09 -$1.64, Brent $52.18 -$1.25, Diff -$5.09 +39c, NG $1.75 -9c

By Malcolm Graham-Wood

Oil price

Nothing much further to utter really as the panic about Coronavirus continues to rise, given that this disease is flu-like I wonder how many people would have died anyway? Even equity markets have not yet had a bounce of any type, this must be due, so far investors are playing dare by seeing how far down prices can come before they buy, anytime soon I would guess.

As for oil one should assume that supply and demand, whilst at a seasonal sloppy level, will sort itself out but technically buyers of Brent will probably wait for the upcoming contract rollover. Either way it has all been well overdone.

Rockhopper/United Oil & Gas

The companies have announced that the disposal by RKH to UOG of its Egyptian assets has completed. The deal is worth $11.5m in cash and the issue of 114,503,817 Consideration Shares (at an issue price of 3 pence) representing approximately 18.5% of United’s enlarged ordinary share capital.

Independent Oil & Gas

IOG has announced that the option held by partner CER to acquire 50% of the Harvey and Redwell licences has now expired although discussions continue with regard to continued participation in the licences. It also says that  it continues to progress sub-surface re-mapping and modelling of the Harvey-Redwell area to further define its commercial potential.

Bahamas Petroleum Company

I have followed BPC for what seems like about 10 years now, over that time I have remained cautious as I have been unable to tick all the boxes required to suggest that the risks had materially moved in favour of the investor. As of yesterday’s announcement with regard to the environmental authority I have come to the conclusion that at least in one way or another all those boxes have been ticked to a greater or lesser degree.

Those boxes are, appropriate licencing etc from the Government including Environmental authority, getting funding via a farm-out or similar, getting a rig and drilling a well. The farm-out has not yet happened but I still believe that it is possible particularly if one of those remaining in the data room realise that this ship is going to sail  with or without it, indeed that the time has come to or get off the pot, so to speak. That the company has now raised enough money, one way or another, to drill the well, means that all those hurdles I have envisaged have effectively gone away. The company has a drill date in April, the bills have been paid and the rig contract is signed, all they need now is to strike oil……….

Investors will know that this is still very much a long-shot, a big old wildcat that whilst some have it as slightly reduced risk is nevertheless probably a one in twelve shot but aiming at a big structure. Many investors in BPC came to this party a long time ago, the wait has been a very long time but now the waiting is coming to an end, the drill bit is about to make a few dreams or shatter a few illusions, at todays price of 3.6p it is all or nothing but an oil find in April would undoubtedly make it a ten-bagger or more, the choice is now yours….

And finally…

A quiet weekend for sports fans with a gap in the 6 Nations and not much racing until Cheltenham.  Even the virus is starting to eat into sport with the Ireland Italy match gone.

Last night the Gooners did the unthinkable and lost at home to Olympiakos thus crashing out of the Boropa Cup..

Not many smart fixtures in the Prem either with the Foxes at the Canaries tonight, Liverpool at the Hornets tomorrow and on Sunday the Red Devils at the Toffees and Spurs v Wolves.

By 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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