WTI $46.08 +59c, Brent $48.42 +68c, Diff -$2.34 +9c, NG $2.96 -2c
The oil price is up another 25 cents or so this morning so one can confidently expect that it will be an up week to the extent of the best part of three dollars. The market has, for the time being, dismissed talk of increased production from the US, Libya and Nigeria and concentrated on much better news on the demand front, yesterday notably increased demand from China. I know I bang on about it, but that US demand is relentless, it may be the second biggest importer nowadays but there is no sign of any change in consumption any time soon.
SAVP announced yesterday that the mystery company that they have been looking to acquire is Seven Energy the Nigerian E&P company. As yet we have no details on the structure of the deal but it would be a transformational one for the company, quite likely value accretive and one which the SAVP team are clearly very excited about. I think that the deal, once announced and investors are able to get their heads around the assets, will prove to be a master stroke by Andrew Knott. Obviously as it is such a big deal it will be a RTO and take some time to put together so the shares will remain suspended for a little while yet. In the meantime the work in Niger goes on and the significant upside from this campaign remains and a potential farm-out is not changed by this potential deal. Exciting times for SAVP and proving that Andrew and his team seem to work flat out on adding value for shareholders.
Good news at long last for long suffering holders of PANR who are a few months from being investors in an exploration and production company. The company has signed a gas processing facility agreement with Kinder Morgan with operating and transport costs to be around $5 per boe, a number slightly different to previously advertised as it is now using real time prices. VOBM #1 and VOBM#3 will go straight into the facility and should the frac work ok then VOBM#2 will follow and this should fill the it.
The company say that VOBM#1 on its one would generate $635/- of fcf per month, enough to drill a Polk County vertical well within four months, fully loaded that number rises to $1,500,000. The company are still having problems finding quality equipment, the frac crew etc are all booked for VOBM#2 but the rig booked for VOBM#4 was not good enough so they are starting again and the well is delayed, again. With the nearby Permian Basin drawing a lot of the already decimated oilfield services people and kit away from East Texas this is not getting any easier. Nevertheless, having fallen a long way after a succession of missed promises, the shares have had a long overdue recovery this morning, if you believe the PANR story, and I happen to do so then in the longer term there is still plenty of upside.
Independent Oil and Gas
IOG has been awarded block 48/25a in the 2016 supplementary round which contains part of the company’s Vulcan NW gas discovery and an assortment of other possibilities. The licence adds 24 BCF of 2C resources and will be in the FDP and the CPR being drafted at the moment. IOG is building a very creditable portfolio of assets which one day should become very valuable, at present, as has been the case for some time, it is the financing of the company that leaves something to be desired.
Victoria Oil & Gas
Another share purchase by a director at VOG as CEO Ahmet Dik has bought 19,220 shares at around the 56p level. A number of directors have bought shares in recent days, a good sign as they clearly share my view that the stock is seriously undervalued at these levels.
Historically this is one of the showpiece weekends of British sport with plenty of choice available wherever you look.
At Silverstone the British GP is on Sunday and after recent goings on nobody can guess who might come away with the points, always a good sign. In first practice Bottas is ahead of Lewis…
The second test match between England and South Africa started this morning at Trent Bridge, winning the toss the Proteas are batting and as I write are 37-1.
Good racing too at Ascot, Newmarket, Chester and the Irish Oaks at The Curragh.
Oh and after Muzza and JoKo lost in the last couple of days there is still tennis at Wimbledon, good doubles and of course the wheelchair events.