Gulf Keystone, Ophir Energy, Caza Oil & Gas, and Enteq Upstream

WTI $98.42 +65c; Brent $105.77 +16c, Natural Gas $3.91 +3c

Good morning

A very quiet day, is everybody at Ascot,or maybe the Oval? Conflicting stories abound over the US economy and what the Fed will say, housing starts were very strong and it looks like Bernanke is going to try and walk the tightrope between growth and tightening, taper for sale or rent, rooms to let 50 cents………..

Oil Price

The oil price has continued to strengthen on the back of geopolitical worries and the above stories of bullishness at the Fed.

Gulf Keystone

Gulf Keystone has spudded its first deep exploration well at the Shaikan field, 1km east of the Shaikan-1 discovery well. The Shaikan-7 well is being drilled to a total depth below 4,500m and is targeting light oil in the lower Triassic and, potentially, the Permian horizons.

GKP have procured a much bigger rig than for other wells so the total drilling time is expected to be about nine months. We recently visited this site and others in the area including Shaikan-10 which will be the first ‘proper’ development well and has space for a number of other development wells including laterals to enhance recovery from this area.

Gulf Keystone has its first production facility ready to go on-stream any time now with a capacity of at least 20,000 b/d and its second facility should be up and running by the 4th quarter of this year.

Our model does not factor any deeper targets at Shaikan and so a successful discovery could provide decent additional upside to our current 475p target price, results tomorrow.

Ophir Energy

Ophir has announced that it has spudded Starfish-1 in Ghana with a target depth of 3,850m and carries a 20% COS in this play finding well extending the transform margin eastwards. We have a 5p per share risked and 28p unrisked in our model for this well.

Caza Oil & Gas

Caza has agreed to an advance of £450,000 from its £6m Standby Equity Distribution Agreement with Yorkville Advisors Global. The funds will be used to complete remedial work designed to enhance production on wells in Wharton County Texas not included in the recent Apollo deal.

Enteq Upstream

We have followed Enteq from the start and rate the management very highly so it is a huge disappointment to see fewer acquisitions than expected which is at odds with the profitability. The company cites ‘difficult market conditions’ which I understand but I would have thought that such conditions might have thrown up opportunities for acquisitions. In the meantime the company has continued to invest organically adding to the footprint in California, Texas and the UK.

Enteq has cash of $24m and an unutilised bank lending line of $15m so I hope this will be spent soon, that was after all the plan, also the Chairman expects ‘improved trading’ in the current financial year, let’s hope that this doesn’t push acquisition targets out of the company’s reach…

There was no sign of a meeting or a conference call although I may not have been invited, it’s getting more and more difficult to catch up with them although at 60p I still think it’s worth watching albeit so far, unrewarding!

And finally…

The fixture lists are out for the new football season, always something to look forward to! My theory that big games are kept out of early season has been shot away as Man U have in their first five matches Chelsea at home and Liverpool and Man City away!

The antics at comedy club Newcastle United continue, after they appointed Roy Kinnear as the Director of football the existing Director of football decided he should resign! What will Alan Pardew do, what with his 9 year contract and all that?

In the cricket, England win the toss and put South Africa into bat, England are without Swann and Bresnan injured, Tredwell and Finn come in, for South Africa Kleinveldt replaces injured Steyn. At time of going to press South Africa are 70-6……..

Welsh Lions a total shambles yesterday, none worse than the throw ins……………………Shane Williams has gone home, North and Bowe are fit for Saturday

Royal Ascot provides a rematch between Camelot, last year’s Derby winner and Al Kazeem who recently beat him. Camelot would have won the Triple Crown but got beaten by Encke in the St Leger, later to be how you say ‘a hollow defeat’ nudge nudge.

And what excitement in the basketball (not often you can say that!) as the Heat and the Spurs go into overtime with Miami winning 103-100 to take the match and square the series 3-3.One match left and all to play for, Spurs ruing their missed chances and were well ahead as well………….

Off to see Lord Clegg of Holborn, should be a most intriguing meeting…………………………..

Kind regards

Malcolm