WTI $59.13 +$1.13, Brent $63.31 +$1.28, Diff $4.18 +15c, NG $2.59 -4c
So, the Opec meeting concluded as expected with a rollover of the existing 30m b/d quota and to add insult to injury the communique ‘urged members to adhere to it’ which adds fuel to the fire. The market had a relief rally after the announcement as some commentators had predicted that the cartel would abandon the number given it is so flagrantly breaching it. Having said that crude was down on the week, $1.17 for WTI and $2.25 for Brent which given the short term fundamentals is probably not enough. June still has many gifts to give the oil market and whilst most informed opinion coming from the Iran talks say that nothing will be agreed it would be foolish to assume no more Iranian crude on the market quite yet.
From the USA, the non-farm payrolls on Friday came in at 280/- which was way up from the consensus of around 225/- indicated that the economy may be hotter than previously expected and that more dollar strength is likely, again not good news for the oil price. Against that, US car sales are up again, now at a 14 year high giving credence to not only the economy bulls but to those predicting higher gasoline sales. Finally the rig count figure on Friday was mixed, the number was down by 7 rigs, 4 in oil, but remember that the number is a net one, I am led to believe that in some areas of high production rigs are now adding and it is surely only a matter of time before its a plus sign on the number. Comfortable at $60? US shale operators are now cutting costs so much that apparently they are making more money at this price than they were at $95 crude…..
Sound has made two announcements this morning regarding Morocco and Nervesa. They have signed off the recently announced farm-in to the Tendrara licence in the country which they describe as ‘ a transformational deal in the Mediterranean gas strategy’ and will lead to an exciting exploration phase with multiple TCF potential. Expect this to start with a well in the 4th quarter of this year and if successful at least a three well programme in the country.
Regarding Nervesa it looks like there is more time needed to clean up and stimulate the well where there was low permeability as expected after the first well. The company will let the rig go as the plan can now be put into place by the reservoir engineers and a plan to develop will be formulated. Although this is somewhat disappointing the team on the ground are confident that the compelling gas shows can be delivered one way or another.
Overall with the Morocco deal having been signed things continue apace at Sound and with Morocco acting as a natural hedge for Italy the portfolio is better balanced, wells in Tendrara and Badile will keep news-flow active over many months.
Victoria Oil & Gas
VOG goes from strength to strength with more good news today in the shape of 3 new industrial customers for its gas in Cameroon which will add 0.7 mmscf/d to sales. With May production of 12.4 mmscf/d things are going well and it shows that local industry is moving from heavy fuel oil to natural gas for its supply of energy. The target of 10.5 mmscf/d is now expected to be exceeded and whilst the shares have fallen back from the 84p recent peak, they have still doubled so far this year and I wouldnt be surprised to see further upward progress.
Range has returned with a bang and having been suspended for so long investors will be mighty relieved to even have a quote, something altogether no certainty in recent months. Sibo has subscribed £5.2m so 650m of new shares will be issued at £0.008 giving them 11.3% of the issued share capital. There will be another $12-27m invested by the end of August and the Lind facility will be repaid, the board have invested $300,000….
I intend to watch this space for a little while in Range and whilst not sitting on the fence all I should probably say is that holding Range is not for the feint-hearted…
I was invited to the Shore Capital oil and gas conference on Friday which was a very useful morning of presentations. Diverse in nature and geographically, the companies ranged from Bowleven in Cameroon which still looks very attractive, to FOGL in the Falklands where Humpback is about to spud and confidence is high. Andrew Knot presented Savannah and there was a sparkling and witty speech from Alastair Stobie of Zoltav Resources as ever.
With Giles Clarke opening the conference and Nick Harrison finishing it there was Amerisur presence all around and that story certainly feels good. Finally Tom Pickering of Ineos gave a most interesting speech setting out the parameters for finding and developing shale in the UK.
Another massive weekend of sport ruined only by 90 minutes of total pony football from England, after watching the Champions League final the night before you couldnt believe that both sets of footballers were playing the same game.
In Paris the easy side of the draw ended up on top with Stan the man finally ending Novak’s chances of a career Grand Slam, Muzza meanwhile can take great comfort in taking him to 5 sets, not a mean achievement on clay.
It seemed like a cruise but Lewis won easily enough in Canada and the battle for places further down the order was quite fun although Vettel didnt see it quite like that…
At Epsom the bookies made out on Friday with a 50-1 winner of the Oaks but must have given back much more in Saturday’s Derby as Frankie and Golden Horn for John Gosden came in as warm favourites.
Sir Bradley broke the world record yesterday with 54.526 km in an hour at the Olympic Velodrome whilst Mo pulled out of his competition heading back to the States to ask a few questions of Alberto Salazar, ie ‘Is there anything you should be telling me Alberto?’
And good to have our US sport correspondent back…
The last NBA blog update came in the 2014 off season after the Cleveland Cavaliers signed LeBron James from the Miami Heat. The return of ‘The King’ prompted bookmakers to cut the odds on a Cavs Championship victory from 100-1 to 3-1.
Last night, James put up 39 points to level the Championship series against the Golden State Warriors in California. Few would bet against LeBron picking up his 3rd ring within the next couple of weeks. Tomorrow, the Warriors travel to Cleveland aiming to take back home advantage.