WTI $49.20 +$3.98, Brent $54.15 +$4.10, Diff $4.95 +12c, NG $2.69 -3c
With WTI rising by 8.8% and Brent by 8.2% yesterday, the rise from last Wednesdays $39 and $43 plus change has been nearly 30% in less than a week. Such volatility was helped by a solid blast of short covering and a belief that something was going on behind the scenes involving Opec and ‘other helpful parties’ strongly thought to be the Russians. This morning some of the froth has been blown off with the Chinese manufacturing PMI numbers being just as bad as expected and markets have fallen accordingly.
The Opec monthly bulletin was out yesterday and the statement within it also helped to fan the flames saying that ; “Needless to say, OPEC, as always, will continue to do all in its power to create the right enabling environment for the oil market to achieve equilibrium with fair and reasonable prices. As the Organization has stressed on numerous occasions, it stands ready to talk to all other producers. But this has to be on a level playing field. OPEC will protect its own interests.” For other producers read Russia….
The EIA also had a report of its own and actually revised down US production to 9.3m b/d in June after expectations of a bit higher, also the average for first half production was only 9.4m b/d, again slightly less than expectations. Fridays rig count showed a fall overall of 8 units but in oil it was actually up one to 675 maintaining the recent base. With stocks of product rising as the driving season nears its conclusion at the forthcoming Labor Day weekend, retail gasoline prices have fallen again, at $2.51 a gallon juice is off another 13 cents on the week or a whopping 95 cents on the year which has to be helping the economy.
This week will again be very important on the inventory front, the API stats tonight are forecast to show a draw of 1.5m barrels, anything better than that will probably keep the market happy, a build would deflate the recent optimism.
It is rare for an oil company to make a find that might change the economy of the country in which it operates, but the announcement by Eni that its Zohr find may contain 30 TCF of gas and maybe some oil is truly significant for Egypt. The company estimate that Egypt would not need to import gas for ‘at least ten years’ which sounds like underestimation to me.
Faroe has announced this morning that it has acquired Roc GB which brings with it a 12.5006% stake in the Blane unit in the UK North Sea and a 12% stake in the Enoch Unit also in the UKNS, for a consideration of $17m plus a deferred payment of another possible $3m. The money comes from Faroe’s cash and debt facilities and looks to be a good add-on of production as well as boosting the company’s UK tax losses.
Falcon Oil & Gas
The results of the Kalala S-1 well in the Beetaloo appear to be very encouraging for Falcon, Origin and Sasol. The first well in a larger carried programme for the company is ‘very encouraging’, with a thick middle Velkerri source rock sequence falling in a highly prospective gas mature depth window. A 500m + gross interval of shale gas with 150m + of net pay and the presence of moveable hydrocarbons in the form of elevated gas shows is indeed very exciting. In addition the company say that there are a number of good reservoir sections with potential for horizontal drilling and targets for ‘material volumetric upside’ giving serious potential. Falcon has the potential to significantly punch above its weight with this development and partnered by two of the best international players could reward shareholders substantially if the initial promise is confirmed.
The announcement from Tethys on Friday dropped into my inbox at 1637 hrs, hardly likely to help before a Bank Holiday weekend but not so bad if you are trying to keep below the parapet. The whole process has been fraught, with the AGR funding preferred and then dismissed as the ‘bid’ by Nostrum looked too good to be true. Well, the trouble with things that look too good to be true is that sometimes the clue is in the title and that’s what it looks like for Tethys today, as the bid that never was is now a much lower bid that still isnt material. C$ 0.2185 has become maybe C$0.147 and the company appear to have walked away in the hope of another party appearing as a white knight. Rocks and hard places comes to mind and it looks like my piece after meeting the company was too optimistic after all…
Rockhopper has announced that operations to drill a sidetrack well at the Guendalina gas field have started. Work should take around 80 days and CEO Sam Moody says that they expect ‘ a significant increase in revenue following completion of the sidetrack. Rockhopper recently announced further up-sizing of its Greater Mediterranean business with its purchase in Egypt, a positive move for the company.
Trinity has announced this morning that it has sold Oilbelt assets for $2.8m in two tranches starting with $1.5m. The asset is 100% of Gaupo-1 and has been bought by New Horizon.
Petroceltic have risen sharply this morning as they have acreage directly adjacent to the Eni discovery at Zohr announced at the weekend. The acreage has scheduled seismic in early 2016 and is planned to be farmed out, this discovery will have helped this process somewhat…
And Range Resources has announced that the Sibo investment has completed and that they will invest $30m in total. Whether or not shareholders will gain much from this is uncertain but at least there should be further developments,
The US Open tennis is under way and Muzza takes on Nick Kyrgios tonight at midnight UK time, not an easy start nor an easy draw in what might be his best chance of another major.
The T20 yesterday was a great contest and could have gone either way, if Smith had only stayed just a little longer….Next stop the one dayers.
Much interesting footy at the weekend as Chelski, Man Who and the HubCap Stealers all lost against opponents they might have expected to beat, the Gooners beat the Magpies and the Noisy Neighbours kept up their blistering start to the season. The Baggies and the Saints won and the rest were draws. Today is transfer deadline day so might have some team news tomorrow…