WTI $43.41 -$1.25, Brent $44.75 -$1.09, Diff -$1.34 +16c, NG $2.62 -1c
Last week WTI fell 66 cents and Brent 83 cents, to be honest it felt worse than that. With the agencies predicting a continued or ‘relentless’ rise in production and the Opec machine unusually silent coupled with stock increases, a Trump victory and an albeit modest rise in the rig count we should probably say that we ‘got away’ with it.
In Colombia there is a new peace pact between the President and the FARC, with enough modest changes to apparently to appeal to all sides. Further good news for Amerisur I suspect who have been building an exciting portfolio of assets in the South of the country.
Another very positive announcement this morning from SDX who have updated the market with further news from South Disouq. In its earlier report SDX suggested that after initial assessment of the 3D data it had proved positive and identified both oil and gas prospects. Today the company say that further interpretation has indicated several Abu Madi and Kafr El Sheikh prospects displaying strong class 111 AVO responses. Testing of similar responses in offset area has resulted in numerous discoveries at these stratigraphic levels and these really bode well for SDX. Indeed the findings have allowed SDX to high grade several prospects for drilling in the near term in addition to the already agreed site of the carried well and subject to permitting etc should spud ‘by early 1Q 2017’.
The previous announcement was so positive that a number of operators made contact about potentially farming into this licence for which SDX is already fully carried for remaining obligations. Whilst the company is ‘unlikely’ to farm-down any additional equity it has ‘agreed to let selected companies submit proposals to acquire an interest in the concession’ which seems like common sense to me. Although they would be reluctant to reduce its 55% equity here and have absolutely no need to, should there be a substantial offer that franked a much higher value on the licence it may be wise to let a little go. Most importantly these findings have further de-risked the prospectivity in the area and justified the SDX team in their approach.
The company also mention Meseda in the release where it has completed the final design work on the ESP programme which will, when fully installed, double the treating capacity of the CPF and enable it to significantly raise net production from the concession. Overall things go from strength to strength for SDX, the announcements today have put 10% on the share price to 25p, there is little doubt in my mind that the shares would have to double from here before they were anything other than very cheap.
Results today from Ithaca and a conference call at noon, after which I will publish the blog. Ithaca is up there amongst the very best in the sector and has fully justified its place in the bucket list having risen 400% so far this year. Production is ahead of the 9/- guidance at 9,585 boe/d and opex is also better than expectations at $23 pb against thoughts of $25. The company continue to hedge, now out until the end of 2017 with 7,800 barrels hedged at an average floor of $52 and some exposure up to $60.
With Stella due onstream very soon, thus providing total production of 20-25/- b/d and with it a reduction of opex to below $20, revenues are set to rise sharply thus bringing down debt at the same time. Next year costs will fall again as IAE switches from tanker loading to the pipeline and with acquisitions being made in the Greater Stella hub and satellite portfolio. The management of Ithaca is concentrating on all the right things at the moment, the hedging enables it to concentrate on growing production and deleveraging the business and the costs are falling across the board.
Jersey Oil & Gas
I have recently added JOG to the list of stocks that readers should be looking at and given how exciting the Verbier prospect is to ensure that it is on the radar screen for next year. Statoil has today announced that as operator for the project it has communicated to the OGA that it will drill a well on P.2170 next summer and this is very good news for JOG. Now that the timetable is beginning to take shape and that Statoil are to pay for the first $25m of the well, visibility is well and truly clear, with 18% of this JOG are truly in the pound seats. I have had a number of questions about liquidity and JOG’s small market cap and whilst I understand the risks involved I am coming round to thinking that it is a risk worth taking. Given the restrictions on capex at the moment and the choice of prospects that Statoil have in their portfolio the fact that this has been elevated so fast is educational and makes JOG a serious candidate for the 2017 bucket list, you have been warned….
Although I wasnt in attendance at the Shares awards dinner last thursday news spread quickly that Sound Energy picked up the big gong and had been awarded the Aim Company of the year 2016. Many congratulations to James Parsons and all the team for a fully deserved win and I know that they will have, after appropriate celebration, got straight back to making the most of Tendrara and developing the rest of the exciting portfolio. #Dreams in the desert….
England have a sniff of a chance in the cricket and played very well to get that far. In the second innings an opening stand of 180 was very creditable and I was most impressed with young Haseeb Hameed on debut.
At Cheltenham it was good to meet a blog reader on the gate, I should have stayed and got some tips as I couldnt pick a winner to save my life, a great day however.
Watching the GP from Brazil was quite frightening, amusing as half the drivers wanted to pack it in and the rest wanted to race. Accordingly next year Vettel will be driving for team Uber…..
In the football the sweaties looked very pretty in pink, why dont they just wear a normal plain, dark blue shirt like they always have, apparently one of the pretty stripes clashed…They might have been a bit closer but on genuine chances I think it should have been 5-2… N Ireland beat Azerbaijan 4-0 whilst the Welsh drew 1-1 with Serbia.
And the rugby was also interesting, with fast Eddie rating England as 6/10 what might it have been like with the first team out?