WTI $49.81 -63c, Brent $51.93 -58c, Diff -$2.12 +5c, NG $3.19 +14c
The oil price ended the week up, WTI by $1.57 and Brent $1.76 but the star of the show was natural gas which rose 28 cents on the week, a 10% move that may not be the last. The dollar rallied a bit which didnt help on Friday but Hurricane Matthew, whilst avoiding the Gulf, put pressure on product prices. The rig count was modest, overall up by 2 at 524 and in oil up by 3 at 428. This week sees the informal meeting of oil producing states in Istanbul which may blow some warm wind onto the market.
SDX is a most interesting stock that is yet to fully come to the notice of the market place, it should do so as since it came to London it has done nothing wrong and quite a lot right. Primarily an Egypt play, and North Africa has significant attributes in many ways, SDX has two producing assets plus exploration which is where today’s announcement comes in. The company is updating the market on the initial findings of the interpretation of 300km² of 3D seismic recently completed on South Disouq in the Nile Delta. The work ‘surpassed’ pre-acquisition expectations as it showed very good oil potential in addition to the anticipated gas potential, indeed no oil was expected and was in the older horizons found in the western desert which is a significant bonus. The company is hoping to drill a fully carried well here right at the end of 2016 or very early next year which should significantly add to the value of this concession.
Elsewhere SDX has cash on the balance sheet and no debt and with its producing assets is cash flow positive and being onshore has costs of sub $10 a barrel with netbacks in excess of $15. Gas prices are strong in-country which is why the company has such high growth potential, definitely one for the watch list.
The clue is in the name at Thalassa and that is ‘holdings’ as Chairman Duncan Soukup has made clear in recent months by investing in a variety of companies such as Papua Mining in which he announces an increased stake today. Probably more interesting is the news that WGP Survey, a wholly owned subsidiary of the group has made further sales of multi client data acquired with the TGS-NOPEC geophysical company in 2014. These will generate around $2m of gross revenue prior to allocating to the multi client partners. Thalassa is a very interesting company and whilst operating in a difficult environment has a Chairman with a desire to make money for shareholders whatever it takes. I have a feeling that the shares are significantly undervalued and should be at least on a few radar screens at least for the longer term.
Two new board announcements this morning as Michael Kroupeev and Richard Milne join the board as non-executive directors. Now, Mr Kroupeev is perfectly understandable as he owns 37.2% of the company but why Mr Milne? Well of course he is the former head of legal affairs at Petrofac and who better to be on the board to represent the interests of PFC CEO Ayman Asfari if, as rumoured, he has a significant interest?
The international break has seen all of the home countries in action with mainly positive results. England probably should have scored more than 2 against Malta who strang nine men in front of the keeper to repel boarders. Wales probably feel that a 1-1 against Georgia is a bit disappointing after their summer glory days whilst NI won against San Marion 4-0.
What has Lewis to do to catch up with Nico? In Japan this weekend he was left in a pool of water to start in after which his starting programme failed to work properly apparently. Funny that Nico seems to have no such problems….
The cricket in Bangladesh has gone ahead with few problems, indeed nothing but admiration for the boys performing in such conditions. 1-1 with one to play in the one dayers and I will probably miss the final as I am travelling later this week.
And Muzza has won the China Open and nudges Djoko for world No 1, note that neither Rafa or Roger are now in the top 4 in the world. Jo Konta just failed in her final but makes the world top 10 for the first time.