WTI $47.29 +6c, Brent $52.75 -11c, Diff -$5.46 -17c, NG $3.07 +3c
Although crude and most product markets seemed to settle down on Friday, the after effects of Harvey will remain for many months. True, some refineries are already gently getting back to normal but for most there will be much restoration work to be done. Expect retail gasoline to stay high for a little while, at present it is around $2.61, today is Labor Day when people take to their cars, allegedly signalling the last day of the driving season.
As for crude, both offshore production and onshore shale production closed in last week will return quite soon, on Friday the Government released another 4.5m barrels from the strategic reserve but there shouldnt be a need for much more. Indeed with so much refinery capacity off the market, demand for feedstock will be down, creating an odd market for a while. The rig count on Friday showed an increase of three units overall to 943 but in oil there was no change w/w and stayed at 759. On the international markets Libya remained in trouble with nearly 400/- b/d shut in after further terrorist related problems remained and no sign of coming back imminently.
An update from Eastern Morocco development funding this morning from Sound who have received an indicative, non-binding commercial proposal from AFG who are fund managers to OGIF. The proposal comes from a range of institutions including OGIF shareholders. The indicative proposal which is subject to agreement of terms and contract is for provision of funding for the construction of the TGEP which connects Tendrara to the GME pipeline. The range of costs is $60m-100m the low end being for a 12″ pipeline and the high end for a 20″ one.
The TGEP is critical to access the infrastructure of the Moroccan and Southern gas markets in order to commercialise the gas discoveries recently made in Tendrara. Once this is done and connection is made into the GME pipeline Sound will be able to access the growing domestic and international markets that will become available to them. Finally the indicative proposal from AFG also confirms that it has been advised that a ‘subset of the institutions may also be willing to fund the planned Tendrara upstream processing facilities’. All good news for Sound after a -relatively- quiet summer.
AMER has reported its monthly production and OBA report for August and the numbers look very good indeed. Average production was 5,834 b/d and a peak of 6,460 b/d whilst exported crude through the OBA averaged 5,888 b/d with a peak of 10,127 b/d. The negotiations with Petroamazonas to increase OBA volumes are ‘progressing well’. The company cover themselves with the usual caveats such as the operational factors in the Putumayo but CEO John Wardle strikes a confident note about the future. With Pope Francisco visiting Colombia from tomorrow, even he might be persuaded to check out the facilities and bless the OBA…either way I’m sure he would realise quite how cheap the shares are….
News today from AEX tells us that at Ntorya there has been a further ‘material resource upgrade’ as the unrisked resource estimates have increased from 466 BCF Pmean GIIP to 1.3 TCF of Pmean GIIP and this is for the Ntorya area only. The company is still preparing the gas commercialisation plan which with the Ntorya FDP will be submitted to the TPDC ‘in early September’. Aminex has a significant find here and like a number of other stocks in the sector is seriously undervalued, I am however sure that Jay has plans to monetise his exploration success here and in the adjacent exploration acreage.
Yet another update from the Dempsey-1 well in California, ‘additional significant gas shows’ have been identified by mud logs which have been increased in weight to control background gas for safe drilling. They are now drilling ahead below 2,615m to evaluate multiple conventional sandstone reservoir targets in a slow and steady manner. EME has now earned its 30% WI in this well and the Dempsey well lease which includes some minor production, from now on EME pay their 30% of costs in the normal way. It may be this that is holding the shares back as they aren’t behaving like a company with a big, cheap find onshore the USA. It looks like the market are expecting another raise, if that is the case then it is holding the price down, i’m sure shareholders will be happy to stump up to remain in what has been another good call by Mr Kelly.
The international break continues which is a pain especially when England play like a bunch of amateurs against a world class side that Malta is….Wales will be happy to get a win in a tight group as were Scotland, Northern Ireland could get second with a bit of luck. Tonight they host the Czech Republic, England entertain Slovakia and Malta are in Scotland.
The pressure of Monza and the Tifosi got the the Ferraris as they were much slower that the Mercs but quite fun to have the kids on the front of the grid.
And Kieron Pollard playing in a domestic match was bowling to a batsman on 97 with only 1 run needed to win. So he deliberately bowled a huge no ball which gave the oppo the match but meant that the batsman couldnt get his century, is that the sportsmanship that cricket is so proud of?