WTI $36.34 -84c, Brent $38.74 -79c, Diff $2.40 +5c, NG $1.85 +3c
Not much around the oil patch which is good as it’s a busy day for company meetings. Oil drifted yesterday as the Opec report got around and where they showed that Iran was still increasing production in February. After the close the API inventory stats actually pleased the market, it was still a build, of 1.5m barrels but it was expected to be between 3 and 4m barrels, this morning crude is around 50 cents better in Asia.
I am heading for the Cape meeting so much more later but this is a very creditable set of numbers in this market. Revenue up 3% and profit marginally up is very good news but the best is the backlog. Order intake is up 13% and the order book itself is up 18%. More later.
I will write more tomorrow after a chat with the company but the cost cutting is impressive and deals are still being done, a la Ineos, more later.
Tullow appear to have had a good result on their Cheptuket-1 well in Northern Kenya, encountering good oil shows which will be be followed up by appraisal.
A number of people didnt get the blog in the last couple of days, it did go to Twitter and is on the website www.malcysblog.com but here are a few articles.
An operational update this morning from Sound where much is going on at the moment. At Badile it seems that the final approval meeting is scheduled for the 21st March after which final permission is expected. Plans are still to drill this year and an MOU for the rig has been signed. In the meantime farm-out discussions continue with a number of parties. At Nervesa the company has constrained the flow of gas as it appears that not all perforations are in production which will lead to some remedial work. Finally, The drill programme at Tendrara is expected to start in April, the first well is of course 80% funded as part of the deal with Schlumberger.
Good news from Range where the MD 51-1 well has spudded having had its approval granted. Over the next 4/5 weeks the well will endeavour to back up Morne Diablo numbers as well as testing the deeper horizons of the Middle and Upper Cruse sands. More tomorrow from Range with its interim numbers.
Trinity Exploration & Production
The worst kept secret in the oil industry was that the deal with Touchstone was off has been confirmed this morning. Trinity say that it was they that decided against it rather than t’other way round but with the deadline having passed if the money wasn’t there that is as good a reason as any. The Guapo sale is still proceeding and the board consider that having cut costs dramatically and with production of 2,500-3,000 boe/d things can still work. The announcement also says that the company is exploring a refinancing to put it back on an even keel but the appointment of more expensive consultants makes it look like the For Sale signs are up again.
Europa Oil & Gas
An update from EOG today only confirms stuff we knew already but always nice to have a shareholder notice to read. The company has been awarded a licence in the South Porcupine Basin in phase 1 of the licence round, this is adjacent to FEL 3/13 which should help in resource numbers and the farm-outs under way at the moment. Onshore UK looking promising as per previous announcements.
Results today from Cairn which showed a loss of $516m after a CIL impairment of $319m. All eyes were on the news from the SNE field, but even with a 20% increase in the resource estimate and a promise that more was to come when the SNE-3 results were fully assessed, the market found this to be old news. Catcher and Kraken are in line for first oil in 2017 and the Indian tax dispute continues. Financially the company has $603m of cash and the RBL is undrawn plus letters of credit available. Cairn’s share price is 53% up so far this year reflecting what is clearly a world class discovery in Senegal, I am still of the view that the market has not yet quite appreciated how big this could be, so there is still upside. For those investors still wanting exposure to Senegal directly I maintain my preference for Far where the upside is many times greater but obviously with concomitant risk.
The strategic review continues and the company are genuinely looking at all options. These include the sale of assets, a merger with another industry participant or a sale to one, an equity raise and maybe finding a strategic investor. The IFC are ‘supportive thus far’ but clearly not quite so happy with the oil sector, they are rumoured to be on of the banks that sold out on Petroceltic so nothing can be taken for granted. Mitch Flegg tells me that he is enjoying the process which may be a touch of exaggeration… Some of the assets are already being farmed out leaving Egypt and Morocco to be attended to. Whilst Egypt is ok it has been difficult getting the money out and they are owed plenty which leaves Morocco as the jewel in the crown, so to speak. If the company really are looking at all options, the sale of this part of the portfolio is likely to be the only place where realistically cash or a partner can be expected.
Not much more to add on Range but it is certainly getting back on its feet after years of turmoil. A 46% cut in revenues and a post tax loss of $25.2m is no worse than I had expected and going forward I see a number of exciting developments over the next year. With cash of $21.9m and SIBO having invested $30m at 8p the company looks to be in a strong position now, not something one thought one was going to say only months ago.
Not much to report on Aminex although the market has been a touch harsh on them this morning I think. Whilst to some people the Songo Songo Island gas plant, which will now come onstream in April, is delayed again I wasnt expected this to be much sooner. The KN-1 well appears to have been better than expected and all work required will shortly be complete. I am scheduled for a chat with Jay soon and will report back after that.
The Noisy Neighbours are through to the QF stage of the Champions League after a draw last night.
The World T20 sees England in action today starting off against the West Indies…