WTI $49.13 -72c, Brent $49.88 -74c, Diff -$0.75c -2c, NG $2.68 -9c
After the 5.2m barrel draw in stocks from the API, which come out after the previous close, the market was waiting for something special from the EIA and when that didnt happen the market fell away quite sharply. A draw of only 917/- barrels was below the 1.3m whisper and well below the API and whilst there were some mitigating circumstances they were relatively trivial. The weak dollar helped, as did the Saudi statement that the oil glut was over, although that seemed slightly incongruous, I have even seen an analyst of high repute suggest it could help the Aramco IPO…
Lazarus like in its nature, the rise from the Transocean debris was completed yesterday when the company raised $68.4m plus proceeds of the open offer at 12p a share, a discount of a modest 13%. Enough to pay the court for Transocean, discharge all the debt to Melody, pay for some working capital, drill a well on Druid next year and still be able to provide a solid background to farm-out Barryroe and Spanish Point. Yes, Barryroe is still waiting for farm-out although I am reliably informed that it really is now closer than ever before.
The placing is quite an achievement in these markets although there is a definite air of confidence around that I hadnt smelt much recently, apparently existing holders as well as a blue chip list of new institutions are now on the register. With today’s announcement of another licence in the Porcupine Basin adding to the portfolio, PVR finds itself in a very strong position and having discharged its liabilities now works from a clean sheet of paper, worth a close eye on nowadays…
A trading update from Ithaca yesterday, importantly a GSA freshen-up as all eyes are on Gdansk where the FPF-1 is nearing completion and sail-away. Now scheduled for the next week or two it should be producing first hydrocarbons within three months of anchoring. With the news that the company have a deal on access to the Norpipe oil pipeline system earlier than expected costs will fall, the $20m capex will be mostly next year and over the longer term the value increases markedly along with uptime benefits. IAE remains a top pick in the bucket list and this news confirms that call.
The good news just keeps on coming for Range who yesterday announced that approval for the MD 51-2 development well had been given and will spud imminently. With more drilling this year in both the Morne Diablo and the Beach Marcelle as well as at least one exploration well the company are getting good bang for their bucks. Those buck facilities are getting better too and production targets should be achieved. the shares ran very hard at the beginning of the year, tripling in three months, since then they have taken a breather but look most interesting at these levels.
Falcon Oil & Gas
Falcon is another stock that is on the verge of something big but the share price has drifted, it is nearly 40% off the April peak of 9p just when the Beetaloo programme is getting underway. I hope to see Philip O’Quigley again before long and now that the AGM is out of the way and the real business is going live down under there should be much to tell. With first up a frac of Amungee NW-1H well already under way and next the testing programme, after which the vertical Beetaloo W-1 well will be spudded using the same rig followed by another, possibly two wells. As I have said before, FOG is fully carried by Origin and SASOL and I am convinced that this drilling programme will significantly de-risk what the operators feel is one of the finest unconventional basins around. Accordingly that under-performance in recent weeks should be reversed.
Weir Group has announced two disposals as part of its asset reduction programme, these will raise between £34.4m and £36.7m and create a small loss. Trading at present is in line with expectations and profits for the first half are ahead of market consensus.
Genel has announced that payments for May from Taq Taq and Tawke have been made and are in line with invoiced figures.
Victoria Oil & Gas have announced that Ahmet Dik has been appointed Group CEO which is no surprise as it had already been flagged, indeed I met him recently and was most impressed. Haven fallen from a year’s peak of 53p back down to 32.75p today there appears to be some lack of confidence in the market place, with a market cap of just £35m I would be quite worried as it is a good business that nobody seems to know well enough…
Finally, congratulations to the Oil & Gas Council who ran a very impressive Africa Assembly earlier this week which I attended. Anyone in the industry on the continent was pretty much there from the international majors to the smaller quoted and unquoted players. From our universe we saw Tullow, Kosmos and Ophir as well as Far where Cath Norman justifiably won the award at the dinner for ‘Breakthrough company of the year’. Also there were impressive performances from a number of others including James Parsons of Sound Energy talking all things Moroccan. I was lucky enough to chair the Fund Manager Roundtable and a full house heard from Charles Whall of Investec, Angelos Damaskos of Sector Investments, Tim Guinness of Guinness Asset Management and Per Lekander of Lansdowne Partners. With such a senior bunch of energy investors it was easy to get a thoroughly informative and entertaining hour which went very quickly. As might be expected views ranged substantially but I was surprised that on oil and natural gas the team were mainly bullish, some quite strongly so, viz $81 oil and $5 natural gas, next year. My thanks to all involved.
It was getting late in the game but Ireland scored and beat Italy keeping them in the last 16 or Euro 2016, all four home countries who qualified are still in with a chance…
And the night before in the first one-dayer Liam Plunkett scored a six off the last ball to get a tie with Sri Lanka…