WTI $57.68 +17c, Brent $62.58 +52c, Diff $4.90 +35c, NG $2.71 -14c
With the dollar running out of steam and the stock data providing a welcome pick-me-up, the oil price rallied after a down, if short week. Having been well over a buck down mid-session the rally left both crudes up on the day although notice the differential is still below $5. Those EIA stats showed a stock draw of 2.8m barrels against consensus expectations of 0.9 but inventories are still way higher than this time last year so no room for complacency. On the product side things continue to look very strong, with gasoline stocks down 3.3m barrels and refinery runs up to 93.6% as I said earlier in the week, refiners will be making out like bandits…
This time next week will witness the start of the Opec meeting so stand by for all the usual positioning and bandstanding as the various sides try to affect the outcome. Unless there is a genuine concert party of cutters expect a rollover of the 30m b/d which wont be adhered to…
Afren- litany of disaster continues…
In today’s statement Afren say that the recapitalisation will now be completed by the end of July…Remind me, when was it meant to be? 2105 provisional production guidance is now lower and high wide and handsome at 23/- to 32/- b/d sharply down from last years 36/- for a number of reasons. Nigeria is looking grim as is Kurdistan, we dont like to see statements like ‘a material reduction to previously published estimates of reserves and resources’ which refers to the latter but there it is. This stock remains uninvestable for the foreseeable future I suspect.
For a long time now I have been receiving requests to follow Rose so I met up with CEO Matthew Idiens earlier this week to try and learn about the company. I certainly cannot be accused of starting coverage at the top, they have just raised money at the low, a senior director has just left and they have just drilled a duster with a high impact well. To be fair they needed the money, they had a disagreement with the individual and the well was a brave attempt at a high risk prospect which would have been a game changer. This is an initial look at Rose which looks an interesting project about which I will learn more in due course.
Rose operates in Colorado and Utah, in the Paradox basin adjacent to Fidelity who have the Cone Creek field to the south-east, in the Uinta Basin targeting the Mancos shale formations and production from the Cisco Dome Project which targets conventional gas. Resource estimates from the former are 1.1bn barrels of oil and 2.19 TCF of gas and the latter 709m barrels of oil and 4.26 TCF of gas. The Cisco Dome Project provides production and infrastructure through the Williams pipeline, the company are now gaining drilling permits for 6 new wells in the field including the offset to 15-5, to be 15-5HZ. This will apparently lead to a 4 well drilling programme. Finally the company still has its mining operation in Mexico which has high-grade gold-silver production as well as exploration but I am assured needs no further investment, indeed it may throw off some cash.
I shall watch Rose and comment more after the results which are due soon but there are undoubtedly attractions and some pitfalls to be aware of. I like the upside potential that may be provided from the impending Ryder Scott reserve report and the company would clearly like to see a move from prospective recoverable to contingent which would add to the valuation somewhat. The process of permitting and potential drilling is under way at Cisco Dome and the longer term but more exciting prospect at Paradox provides a good deal of appeal. The value uplift of any success on any of the company’s assets is substantial as the in-place infrastructure keeps the costs down and makes money even at oil prices below those currently being obtained locally. On the downside the recent raise of £3.1m will not keep the wolf from the door, after permitting the company say that each well will cost around $3m so there is an inevitable requirement for cash which can keep the lid on the share price until cleared up. Also, whilst not taking anything away from the long term potential, the market was clearly disturbed by recent management change, I have it on good authority that it had nothing to do with the failed attempt at the conventional which as I said the company had to try.
Overall, provided funding does not become an issue, Rose offers the potential of access to a substantial resource base in proven basins with the opportunity to upgrade quickly should they be successful. News-flow should be in their favour over the medium to longer term and so it will be worth keeping Rose on the watch list at the very least.
Mixed news from Sefton this morning as they announce that their CEO appointment is ‘imminent’. The trouble is that they mention in the same breath that potential litigation may delay the appointment. The litigation concerns former Chairman and founder Jim Ellerton, those readers with a long memory will know exactly what I think about Mr Ellerton. I hope that this litigation doesnt delay the appointment too long, I was just getting interested in Sefton for the first time in a long while. I am still waiting for a meeting with the CFO, it got very close a few weeks ago and then vanished!
Like London buses, news from Falcon Oil & Gas just keeps on coming as they today announce that drilling operations have commenced in Australia. With a spud target of the end of June and wells taking between 35-50 days each news-flow from the Beetaloo is likely to get more and more interesting. Interview with Philip O’Quigley below.
Reading the trade press this morning I see that Premier has decided to call it a day in block 2-B in Kenya, after the dry hole at Badada-1 back in February, this comes as no surprise although I cant find any official statement from the company yet.
A changing of the guard in the E&P sector as Mitch Flegg leaves his position as COO at Serica to become the new CEO at Circle Oil. This means that another former Enterprise Oil graduate steps up to the plate in running an oil company, the only one not doing so is running the Church of England…
While I was at IGTV the other day talking about the oil price, (link in yesterdays blog and on www.malcysblog.com) I stayed to have a chat about three companies I find interesting for different reasons at the moment. Views on Shell, Genel Energy and Sound Oil at this link.
It’s FA Cup final weekend and I know that I have plenty of supporters of both the Gooners and the Lions amongst blog readers. Indeed Villa fans have been amongst the most vociferous complainants whenever I have put a foot wrong this season especially when I put a blog out after the game had happened!
In Scotland might Rangers remain in the Championship for another year? Last night in the first leg of the play-off final they lost 1-3 at home to Motherwell and it could have been worse they were three nil down with ten minutes to go. Back to Fir Park on Sunday where we will find out if that away goal gets them out of jail.
It’s election day today over at THIFA but unlike in most elections the candidate already knows the results. $epp Blatter will win and life will go on until someone pulls the rug. That is unlikely to be any of the sponsors who appear to be totally spineless, would you do business with any of them if you didn’t have to…..
A big night tomorrow for boxing fans where big fights are coming up all the time. The big bout is obviously Kell Brook against Frankie Gavin where the former is the favourite but I will be looking out for the marvelous Anthony Joshua.
And it’s also finals day in rugby union as Bath take on Sarries tomorrow afternoon at Twickenham. In a delightfully ironic move it seems that Dylan Hartley, following yesterdays ban has been withdrawn from the World Cup squad and replaced by Jamie George who is of course the bloke he head-butted in the first place, instant karma eh…?
And while the rain pours down in Leeds the second test is due to start at Headingly this morning. After last weekend we can surely not expect another blockbuster and the wet and dull conditions may mean that rain will play its part but going there dormy is better than I had expected at 30-4….