WTI $33.16 -11c, Brent $33.55 -20c, Diff $39c -9c, NG $2.47 +9c
Another down week, WTI lost $3.88 and Brent $3.73 and this morning the former is down 51 cents and the latter 96c. The net short positions in crude registered another record high and at the moment I see no reason to suddenly become a bull. There are a frightening number of technical support levels around here and every moment looks like being a Bollinger moment.
The stats on Friday should have helped, the non-farm-payroll came in at an impressive 292/- which should have pleased the Street but didnt and the rig count was also supportive. With the overall number recording a fall of 34 units to 664 and oil down 20 to 516 the oil market might have celebrated but now is no time for cheering. There will be a fall in US production but as with many things operators will want to run the shop for cash for as long as possible, only when we see rug pulling or bankruptcy will capitulation be visible.
Good news this morning from Premier and Rockhopper as the Isobel 2 re-drill is a discovery significantly better than the pre-drill expectations. The well encountered five oil bearing fan packages of the F3 system with net pay of 27m in the Isobel Deep, Isobel and Emily reservoirs. The well also discovered sands with oil shows in the Elaine South and Irene fans, as these were drilled at the edges of the fans and exhibited moderate reservoir quality it can be fairly anticipated that better results will be achieved in the main part of the reservoir. The size of the oil column is substantial with results indicating a total of in excess of 480m, a massive result by any standards. There was no oil water contact nor any gas in the reservoir that was 350m downdip from the original discovery. Accordingly, Isobel and Elaine are highly likely to have a ‘commercially viable quantity of recoverable oil’, and opens up the opportunities for an appraisal campaign probably when doing development drilling.
From here, after abandoning the Jayne East and Isobel wells, the partnership will drill Chatham which is intended to assess the west flank of Sea Lion before assessing the prospects. This is truly a very exciting result and adds significant value to the asset in more ways than one. Firstly, Rockhopper have cannily through the FOGL acquisition, increased their stake in this licence to 64% and at very low cost, it will go down as a smart piece of timing at the very least. Secondly the size and economics of this area should be encouraging to potential future partners something that was also made easier by the change of Government in Argentina.
Whilst nothing can be certain until appraisal but this discovery should make real the third phase of development in the North Falkland Basin and get closer to proving the ‘billion barrel basin’ that the partners have always believed it would be. The next phases will take time and involve much hard work but this discovery should mean that the NFB is very much here to stay for the long term.
Savannah Petroleum has been suspended this morning ahead of a potential transaction, this is apparently a reverse takeover and shareholders are advised that the shares will likely be suspended until April.
Gulf Keystone has announced that MOL have relinquished the Akri-Bijeel block in Kurdistan so finally putting to bed a long-running saga. GKP will now concentrate on Shaikan which is pretty much what has been happening anyway as far as I can understand.
The FA Cup produced modest returns for giant killers but Oxford beat Swansea and Eastleigh nearly beat Bolton but are still in tonight’s draw. Elsewhere the HubCap Stealers have another fixture to enjoy after drawing with Exeter and Villa couldnt manage to beat Wycombe Wanderers. The Gooners, Chelski, Noisy Neighbours and the Happy Hammers are all in the next round with the Toffees and the Red Devils who cruised through…..
In the rugby, Bath lost at Toulon in the European Champions Cup whilst the Quins ended the Sarries 15 match unbeaten run in the Premiership.