WTI $59.63 +$1.05, Brent $66.78 +94c, Diff $7.15 -11c, NG $2.75 +15c
Oil ended the month in a good place with WTI having risen by 25% and Brent by 21%. Reuters report that the first blush estimate of Opec production in April is of production of 31.04m b/d with Iran joining the Saudis in pushing up exports. Yesterdays rise was a mixture of things, the inventory data from Wednesday evening continued to filter through to the WTI market and Brent was buoyed by further activity in Yemen and that the US navy has started to escort American flagged ships through the Straits of Hormuz following Tuesday’s seizure of the Maersk Tigris.
Yesterday saw several more majors reporting results and the theme remains the same as upstream is very poor and downstream is more than compensating for it. Most upbeat if you can call it that was Exxon who reported the usual mix but are focusing on long term value ‘regardless of current market trends’ and bucked the trend by actually increasing the dividend by 6%. Conoco was bad as one can imagine but Phillips 66 unsurprisingly better and of course Gunvor dont mind what the oil price is as long as it’s moving and profits there were up 20%.
Chariot Oil & Gas
Following up from my read through for Chariot after the impressive discovery by Kosmos in Mauritania earlier in the week, the company has announced a licence extension for offshore block C-19 for one year. This will enable the company to carry out further studies and re-risk the prospects that they have identified. Effectively the extension gives Chariot and Cairn up to 18 months to do proper coring and to analyse for example the shared 3D data from Cairn’s success in Senegal. With a number of key wells being drilled by other operators in the next year or so third party activity will be very important particularly from Kosmos and Tullow in the region. The Tortue gas discovery is not only very substantial but is deeper than Chariots prospects which are more likely to be oily.
With NSAI affirming Chariot’s view of the potential in C-19 the size of the prospects are likely to be large, indeed they put PA-1 and MA-1 gross mean prospective resources of 431MMbbl and 588MMbbl respectively and on the KT-1 and BFT-1 prospects a potential of up to 434MMbbl. The company describe Mauritania as being potentially ‘transformational’ something with which I would agree especially after seeing how excited Kosmos are with regard to the area. Although progress sometimes appears to be painfully slow, I do feel that the company and its management that I rate very highly, should be given the benefit of the doubt and there must be a very good chance that the risk/reward in the investment is tilted firmly in favour of shareholders.
Results today from Hurricane and this is just proof that 2014 was actually a very good year despite the oil price putting something of a dampener on proceedings. The Lancaster well which was a 1 km horizontal appraisal well achieved a flow rate of 9,800 STB/d constrained by surface equipment and as the reservoir has good quality pressure is expected to be able to achieve 20,000 STB/d in the long run.
CEO Robert Trice says that the success of Lancaster is ‘a major step to de-risking Hurricane’s substantial oil resources’ and that the find is commercially viable even in a lower oil price environment. A farm-out process is underway with ‘considerable interest in the Lancaster field and the company’s other assets’ so this is no time to lose faith in Dr Trice and his fractured basement play which it should be borne in mind has achieved significant success all around the world.
Cape has announced another contract, this time from BP for six North Sea assets and the Forties pipeline system and is worth £100m. Readers will know that I am very positive about Cape under Joe Oatley’s management and continue to be very optimistic about the shares.
Ascent Resources has announced that it has raised £550,000 through Primarybid.com and hopes to secure further substantial funding in due course. That may take a little longer…
Nostra Terra announces a production update saying that at 11,000 barrels quarter on quarter production is up 79% and that revenue exceeds overheads. From the statement it looks like that Chisholm Trail is to a large extent shut in and with no drilling at White Buffalo there may be a pause until the oil price rallies some more.
Wednesday night saw the Spring reception held by the Oil and Gas Team at Harvey Nash, it was good to see so many oil and gas senior players attending such a prestigious event and most of them owned up to being blog readers into the bargain.
Its a big weekend across a number of sports so lets rattle through the best that can be viewed. The Mayweather v Pacquiao fight is the biggest in recent history although curmudgeonly old blokes like me still hark back to the heavyweight fights in the 60’s and 70’s. Mayweather is a big favourite but Pacquiao would be a very popular winner particularly in the Philippines where so much power is going to be used to watch the fight that fridges will have to be turned off to satisfy the demand. Its a 4am start on Sunday so be keen or watch the as live repeat later in the morning.
The football has a few decent games to go, Chelski should win the title with 3 points off the Eagles but at the bottom its still very tight. With Leicester playing the out of form Magpies, the Maccams v the Saints, Super Hoops going to Anfield, Burnley at the Hammers and the Baggies at the Theatre of Dreams there is much still to play for and that’s without Hull v the Gooners on Monday.
The 3rd test match starts in Barbados this afternoon and Ben Stokes is a doubtful starter so the volume will be turned down then…
In rugby its European finals weekend and despite no UK representation the Clermont/Toulon game should be good.
And its also the first classics of the flat racing season with the 2,000 guineas on Saturday and the fillies race on Sunday, can Aidan O’Brien be stopped?