Malcy’s Blog – Oil price, Rose, IGas, Falcon & finally

WTI $54.70 +$1.15, Brent $60.51 +$1.41, Diff -$5.81 +26c, NG $2.21 n/c

By Malcolm Graham-Wood

Oil price

Last week WTI rose $1.89 and Brent was up $2.14, today the week has started off with a dollar down-tick this morning. Hopes of a trade deal have just stuttered while demand forecasts have been down graded by around 100,000 b/d.

Elsewhere the events in North Syria involving Turkey and the Kurds  have not yet been deemed to be serious by the market so we remain becalmed. The rig count on Friday showed a fall of one overall rig to 856 and by two in oil to 712.

Rose Petroleum

New CEO Colin Harrington has not wasted his time getting to grips with the portfolio and today announces a restructuring of the Paradox project with RSOC its joint venture  partner post a review of the project by the new management team. This includes industrial activity on the project, the ongoing farm-in process as well as the time-frame for spudding the first project well, in line with the expectations of the BLM.

The ‘clear conclusion’ of the review is that the scale and the potential of the project are of sufficient magnitude to justify staying in the project. As a result they will 1) focus on the most attractive acreage, 2) release non-prospective acreage and 3) acquire further contiguous acreage with potential.

The new deal sees Rose take 75% WI with operatorship in key areas and not the previous earn-in, gives a reduction in lease costs as well as further time to develop and market the project. The company will focus on the high quality, 12,920 acres with varying leases almost entirely covered by the 3D seismic and with 21 drilling targets with an EUR of 0.85 mmboe.

CEO Colin Harrington said ‘ by focusing on highest potential acreage the company maintains a project of real scale and value whilst reducing costs and extending project term. Most importantly, the Company will also gain immediate ownership of core acreage and will become Operator across the project.  I believe this restructuring will make the project more attractive to potential investors as we continue with our farm-in process’. In his final comment he goes on to say ‘In the Board’s view, the high-grading of the project will create a long-term future for the project, one which meets the Board’s selection criteria and which will positively complement the Company’s future balanced asset portfolio.’ I think that by starting with, and keeping the Paradox acreage, albeit slimmed down, the new management are paying respect to the previous management team who build the portfolio. Clearly with other deals in mind Rose shareholders are potentially in for an exciting ride and it looks to me like it should be on all investors’ watch list…

IGas Energy

IGas has announced a conventional project update, moving to execution phase of a waterflood project at the existing producing field in Welton, East Midlands. In the process they will convert an existing suspended production well to a water injector which increases field recovery by c. 340Mbbls (2C resource) with a peak incremental production of 120 bopd. With estimated mid-case project economics have an IRR of over 100%and NPV 10 of c.£7.0m. This is a neat and tidy way of adding something to the valuation of the company and should make a modest difference to the upside.

An unusually (?) poor article in yesterdays Sunday’s Times with regard to shale and fraccing, it is certainly not Government policy the last time I checked and it was not very well informed.

Falcon Oil & Gas

I sat down with Philip O’Quigley last week after hearing long awaited news of the spudding of the Kyalla 117 N2-1 appraisal well in the Beetaloo basin in the Northern Territories. Having made a discovery with the last well at Amungee this one is sited in the liquids rich Kyalla hybrid shale where it will start vertically as normal before going for up to 1,500m horizontally.

With a plethora of data they are obliged to disclose there should be regular updates starting from the time they hit TD. Indeed with the chance of stacked liquids rich targets in the Velkerri gas play due to be drilled next in the south east of the block there is significant upside for Falcon but as before shareholders will have to be patient for the end of the rainbow…


On Friday I sat down with Doc Holiday to have a chat about the oil sector stocks. I am just back from Kurdistan so obviously I cover GENL and GKP but we also talked about JOG, UJO, RBD, CORO, HUR, EME, SOLO, NUOG, BPC, ECO amongst other general chat. Here is the link.

Total Market Solutions interview: Malcy Talks Oil & Gas XV

And finally…

In the RWC it was the last match for Scotland after they lost to Japan and did not get out of the group. In that group Japan will play South Africa and Ireland will play the All Blacks in the next round. England did not play due to the weather and play the Wallabies on Saturday and France will play Wales.

In the Euro qualifiers England lost in the Czech Republic but can still get through by beating Bulgaria tonight. Wales drew with Croatia and Scotland put 6 on … San Marino.


By Malcolm Graham-Wood

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