WTI $80.52 -$1.97, Brent $84.71 -$1.51, Diff $4.19 +78c, NG $3.66 -5c
Ok, so we whispered it a little too loudly and the oil price came off again last night after a poor set of inventory stats. These came in from the EIA as a 7.1m build which was a little more than double the consensus and much higher than the API number which is what spooked the market. US domestic production was marginally up whilst demand faltered, US refineries are still not back from seasonal maintenance but will be soon. With only a week to go in October, November will change things so inventory data will be important, as will the weather. This may seem rather spurious but make a difference, particularly this year. A cold winter will not only rev up demand for space heating etc but can seriously disrupt domestic supplies so we need to be mindful on both counts.
Theres nothing the market likes more than giving Tullow a good kicking when it produces a batch of well results which it has done today, on both counts. The Kodos-1 wildcat in block 10BB has hydrocarbon shows indicating a petroleum system but of mixed quality alluvial sands,now on to Epir-1 25km to the north. After that there will be further drilling in the Kerio Basin next year, at Ekosowan-1 in the South Lokichar Basin there were 900m of oil shows with near continuous but tight faulted sands. Ngamia and Twiga appear to be as expected. In this market there is no room for any disappointment but i feel that it is early days in Kenya and the jury must still be out here.
Talking of the market being unforgiving, Chariot has fallen this morning after announcing that it has exited the Northern blocks in Namibia but to be fair, after last nights oil price fall it would probably have been marked down anyway. Chariot has said that it will not reapply for the licence as the work it has done has ‘not significantly de-risked the prospect’. I have to say that i agree with Chariot on this one, the cost in management time as much as money would have been high and after recent dusters on and around the licence farminees were few and far between. The other thing is that the company has a lot of other things on its plate and can hardly afford to make expensive mistakes at this stage of the game. I have been very supportive of Chariot lately, rather to my cost and am hoping the the ‘fast follower’ mantra will deliver the goods before long, patience is in limited supply at the moment…
I took the opportunity to drop in and see Tim Bushell, CEO of FOGL a few days ago and the company is clearly gearing up for an exciting drilling campaign next year. The company is fully funded for its five well programme and the semi-submersible Eirik Raude has been hired and expects to be mobilised in Q1 2015. The programme will consist of three wells in the North with Premier, probably Zebedee, Isobel and Jayne East with two wells in the South with Noble which will be Humpback and one yet to be decided on. This is because the South basin is more like three sub-basins, where the northerly part is hotter and more gassy whereas the South is likely to be oil prone but much more difficult with Darwin on the oily side. In the middle area, which is probably the most interesting, the source rock is in an oil corridor with big fans in the Diomedea complex and the subject of a major 3D seismic programme which is why the siting of the second well is yet to be confirmed.
Whilst i know that exploration in the Falklands divides investors like almost no other subject i remain an enthusiast albeit i understand a rather jaded one! Whatever you think however, next year is going to be extremely important, not make or break but certainly will deliver proof to one side or another of the regions viability. There are a number of transformational wells to drill, none less than for FOGL and being fully funded with enough cash to see it through and high quality partners i think that it will be a share to watch very carefully next year.
Results last night from Weatherford and Core Labs, an old favourite. The former missed the whisper by one cent recording 32c and Core put in another record shift as usual.
Total has announced that its new CEO will be Patrick Pouyanné who is a strong replacement and also like rugby and speaks English well, whats not to like? Total have also, on a temporary basis, brought back Thierry Desmarest as Chairman to give Patrick every opportunity to fulfill those tasks.
The oil and gas press is full of a central North Sea discovery for GDF and BP, i can see nothing formal at BP but the journos are normally right…
Range Resources has completed the IP deal and received $500,000 and 148m IOP shares…
Northern Petroleum are hosting a high level investor presentation tonight for their Senior Reservoir Engineer on the Virgo project in North West Alberta. This region, which had a really excellent well result only this week, is the future for Northern and it looks very bright.
Jupiter has announced that it has had an extension to its Kazakh block 31 until December 2016 and it will spud a production well in December of this year. The company says that it ‘remains focused on completing a financing package to enable it to go ahead with the company’s 2015 drilling programme’. With so many good things for investors to fund i would give this ‘fundraising’ a wide berth if i was you.
Tangiers has announced quarterly’s with a litany of reasons of how not to run an oil company. I’m not sure if the costs of the well, exceeded their expectations or, well exceeded but the recent funding was surely a classic case of putting good money after bad…Taxi?
Last nights footy saw the HubCap Stealers lose painfully 0-3 to Real Madrid, it also included what is now trending as Swapshirtgate as Balotelli gave his shirt away at half time. The Liverpool faithful in the Sky boxes were correctly apoplectic as was manager Brendon Rogers and Mr B was subbed during the break. The Gooners came back from the dead and 1-0 down with 89 minutes gone won the match 1-2. I have to also mention Chelski from the night before which i genuinely forgot but Brian Gallagher and others reminded me of the 6-0 thrashing of Maribor, sorry Peter!
Tonight is the Boropa Cup with Spurs hosting Asteras Tripolis and Everton at Lille.
The World Series is tied 1-1 after the Royals beat the Giants in Kansas. Game three takes place in San Francisco on Friday.