WTI $53.08 +84c, Brent $55.98 +74c, Diff -$2.90 -10c, NG $3.24-2c

Oil price

As I commented some days ago the oil price is a one way street at the moment and so far no amount of inventory worries can overturn that feeling. Yesterday saw Libya shutting in its Shahara field after a terrorist attack on the pipeline but anyone who cites Libya producing more anytime soon needs a trip to the funny farm. The Kuwaiti Oil Minister said yesterday that Opec adherence to the agreement was actually ‘higher’ than quota in March and a rollover is increasingly in the price., again as I said a few days ago the risk in the oil price has been being short, a problem that might get worse before it gets better…

Rockhopper

FY results from RKH this morning but as always on these occasions there is little or no news in the numbers or Chairman’s comments. Probably of most import is the continued growth of the Greater Mediterranean portfolio and the focus on reducing costs, now down to$14pb.

Cost savings at Sea Lion continue with life of field costs down to $35 and break even to $45 which at current oil prices gives some headroom. Cynics will remain of course but surely the sight of a debt agreement at Premier must accelerate the situation one way or another. Comparisons are futile as I have noted before, but costs of a development here are attractive if you were to compare with roughly similar sized finds in, say, Senegal but with Sea Lion being several years ahead on points…

RKH has $81m in a strong, debt free balance sheet and is fully funded for current commitments, but cost savings continue to be made across the board. The action against the Italian Government continues and is at an early stage but advisors remain confident, investors should keep an open mind.

 

Savannah Petroleum

SAVP has announced an update of its drilling campaign scheduled to start this quarter in Niger. Unsurprisingly they have opted to focus the initial three well drilling campaign on the R3 PSC which appears to be ideally located in the ‘sweet spot’ of the basin. With large discoveries both to the north and south and producing fields and infrastructure nearby this is ideal, as is the decision to keep this phase of the exploration programme within R3 in order to minimise expensive rig movements.

The R3 East seismic survey is still being evaluated and I understand more data will be released before long but they must be pleased with the initial indications on this block, declaring as they have that they ‘confirm the existence of multiple fault blocks’.

The company also announce that they are using the GW 215 rig instead of the GW 89 unit, this has to be good news, the new rig is ‘warm’ and coming off another contract and has an experienced crew which must help matters. In addition the camp construction has commenced and drilling is on target to commence in 1H of this year.

Savannah is strongly financed and has been supported by its blue chip shareholder base which includes CEO Andrew Knott with significant skin in the game. Now that things are starting to happen at SAVP I expect much more news from the company as they get closer to giving more news on seismic and of course when the drill bit turns. This ‘slow burner’ is about to get a whole lot more exciting, when a space in the bucket list appears it might just be the perfect time to be a ‘super-sub’.

And finally…

It’s all about Arsene this morning after the Gooners went down 3-0 to the Eagles last night, what appears to be most irritating to the fans is the uncertainty, a new contract appears to have been offered and signed but still no comment which is odd….