WTI $52.65 -53c, Brent $55.36 -53c, Diff -$2.71 n/c, NG $3.16 -6c
As predicted, the oil market was very quiet on thursday with few positions being taken ahead of the weekend especially with events in North Korea warming up. New oil rigs were up 11 units which was in line and the IEA are becoming more positive about the world supply and demand position. The EIA has slightly put a spanner in the works by predicting a big May for US shale but to be frank, not much more than expected.
When it was first thought of, South Disouq was just a gas prospect but fresh mapping meant that the seismic showed the potential of a deeper target that might contain oil. Today’s result therefore has effectively delivered everything that was expected from the well and the company can drill on for oil as an added bonus.
Having reached 7,777 ft the well has found conventional natural gas bearing horizons in the Abu Madi with 65′ of net pay with a porosity of 25%. This was in line with pre-drill estimates and proved with remarkable accuracy the company’s mapping ability which bodes well for future targets here and elsewhere. Next here the well will continue to the deeper Abu Roash and AEB sections, targeting oil and in the meantime shareholders can stand by for some recoverable volume estimates which should make very pleasant reading indeed. The statement rightly points out that this is only part of the bigger plan, although this has been an excellent start it looks like there is much more to come…
Sound has mobilised its Saipem rig from TE-8 and it is now on its way to drill Sidi Moktar which those with a long memory will remember Longreach for. Initially the rig will re-enter and test the two Kechoula discoveries and may side-track if it looks interesting. With the farm-out having been left behind Sound feels that it can use its strong financial position to retain its 75% WI and participate in any upside from the well. This strategy appears, well, sound as the Sidi Moktar licences expire on 28 August this year and with any luck the results should enable the company to renew for another eight year period.
IRG has announced that following its earlier news regarding ownership etc it will proceed with a strategy based on a regional gas focus in South and Central America. They are planning an exploration and production campaign based on a ‘multi TCF, low cost onshore gas programme’ piping to high value markets on the continent. Initially they are to concentrate on Bolivia, Colombia and Brazil where the management have many years of experience.
Funding is to start with £10m of equity from Spartan Fund and €15m of debt from Greenberry both which will have warrants attached. These funds are intended to be used to evaluate, drill and develop assets acquired by the company and it is planned that, with approval, the shares will be consolidated by 25:1. Existing assets in Italy and Egypt are for sale and in Tunisia are under review.
I will write more tomorrow as I am heading now to the GM and strategy launch for what will become Echo Energy, however with such a strong team of backers, regional knowledge and significant potential this may become very much one to watch…
Briefly, I suppose the news from the Prem is that with Chelski losing at the Theatre of Dreams Spurs may feel that they have a chance to mug them on the way to the party but looking at the run-in’s it may be easier said than done. Aftera miserable run the Gooners won away from home but at ‘Boro it’s not much to shout about…