Oil price, Shell, Amerisur, Bowleven, Ithaca, Rockhopper,President, And finally…
WTI $45.70 +79c, Brent $48.60 +43c, Diff $2.90 -36c, NG $2.56 -3c
With a small rise on Friday both WTI and Brent were able to show gains on the week albeit fairly sparse, 68 cents for the former and $1.13 for the latter. Despite stock markets being under pressure and a sort of back track from Ms Yellen on rates,oil held up reasonably well under the circumstances. Stocks were down again and even at Cushing but they are still incredibly high, in products the situation is worse so fundamentally things aren’t that clever. On the theme of ‘modest’ numbers the rig count came in minus four overall and the same number in oil, another fall but by not very much, even so its another week of decline.
Shell has announced that Burger J is dry, at least commercially and so ends exploration activity offshore Alaska for the ‘foreseeable’ future. This is probably a blessed relief as it means that whilst having tried and found it dry, it is no longer on the hook for a long, expensive and environmentally draining campaign although it is not going to be exactly cheap to shut this one down.
Interims from Amerisur were as is always the case entirely predictable, much more interesting was the accompanying release about progress on the OBA interconnector, complete with pictures. Revenue was down and whilst operating cash flow was also down it was not out at $8.1m giving a strong cash position of $55.6m. So, the interconnector is still on track for first oil transport by the end of this year. Make no mistake this is some considerable achievement, a combination of a significant reduction in costs and increase in production will be transformational and when it goes ahead it will mark a shift in dimension for the company. It is therefore not a surprise that ‘the board looks to the future with confidence’, shareholders have good reason to be pleased as well and with the year end not far away real progress appears to be just around the corner, at change from 24p the shares look like outstanding value.
News today from the Bomono permit in Cameroon where the Moambe well has reached TD and wireline logging is complete. Hydrocarbons were encountered and detailed log evaluation is continuing, preparations for an EWT are underway before moving back to Zingana. The company is talking to Actis and ENEO to deliver gas a gas-to-power development scheme in the event of a successful outcome to testing. It is ironic that BLVN is trading at a discount to cash, even while it continues to do well operationally and value is still being created. There is real upside here although the market has significant concern about what it is going to do with the cash. I still believe that a cash and shares offer for VOG would make for a genuinely value added proposal for both sides and would create a full cycle Cameroon energy company with strength from exploration to power station…
I think it would be fair to say that the market isnt 100% sure of what to read into the Ithaca statement this morning. On the one hand it is confident that the FPF-1 will sail away by the end of Q1 2016 whilst on the other it has proffered a $34m wallet warmer to Petrofac, sorry ‘enhanced incentivisation for the timely delivery of the vessel’, which tapers down from March to July. This amount, as well as the $13.7m of variation payments will only be made in 3 1/2 years time and the fact that Ithaca feel the need to make it shows just how value enhancing the project is going to be.
Two announcements from Rockhopper this morning as the company report that the sidetrack well on Guendalina has confirmed that ‘all the target levels are gas bearing and have been encountered slightly higher to prognosis in an up-dip position with good reservoir characteristics and with an additional deeper gas level.’ The well is now being completed as a producer with gas production anticipated to commence in late October at which time the company will update the market. The other announcement was slightly disappointing as it appears that its recent acquisition in Egypt is unlikely to go ahead after one of the Beach JV partners in Abu Sennan has exercised pre-emption rights. Rockhopper will be happy that it was vindicated in its bid and will continue to look at opportunities in the Mediterranean and North Africa.
Last Friday President announced that its updated reserves report from Gaffney Cline and associates had significantly increased its reserves estimate for the Puesto Guardian area. 1P is up 21% to 11 MMBbls, 2P is up 28% at 18.1 MMBbls and 3P up 32% at 23.1 MMBbls, the NPV10 of 2P oil reserves is up by 10% to $329m. On MDT and associated prospects the company’s own assessment is an unrisked recoverable best estimate prospective resources of 6.6 TCF of gas and 166 MMBbls of condensate which the company describe as being ‘tantalising’ given the strong gas market in-country. I’m still very happy with President and having had a chat recently with Peter Levine feel that whilst at the higher end of the sectors risk plays the company still has attractions and potentially substantial upside.
It is with monumental sadness that I have to report that Chris died suddenly last week at the early age of 53. A lot of people remember Chris from his work over 25 years in the city but more recently he has been a tireless charity fundraiser,in particular for the Demelza Children’s Hospice in Kent. Chris was a fine man and readily gave his time to friends and business colleagues which was much appreciated, myself included. Our heartfelt wishes go out to his family at this tragic time and i’m sure in due course there will be an opportunity to say all our farewells.
Nothing in sport can ever follow something like that but at the weekend much action happened in the RWC where England pressed the self-destruct button in no uncertain terms. Leading against an injury hit Welsh side the English gave away penalties and then not only went for glory at the end but added to their troubles by throwing to the front of the line-out. Saturday v Australia now 80 mins to stay in the cup.
Golf fans will say that Jordan Spieth is the new kid on the block and yesterday he won the Tour Championship in Atlanta and cleaned up on the FedEx Cup into the bargain. It could have been better, I reckon he was only 3 shots away from a potential two more majors…
Mercedes got back to form quickly enough and Lewis continued to dominate even against his own team mate winning easy as he liked in Japan.
In the footy the most interesting result was Spurs thrashing the Noisy Neighbours 4-1 at the Lane. The HubCap Stealers were very grateful for the return of Sturridge in beating Villa while Chelski had to score 2 late goals just to draw against the Magpies. Man Who cruised past the Maccams (sorry David…) and go top of the table, the Gooners had a good win and the Hammers took a home draw against the Canaries. Also wins for the Saints, the Potters and the Eagles who beat the Hornets.