WTI $46.04 +$1.11, Brent $48.77 +$1.14, Diff -$2.73 +24c, NG $3.04 -1c
Last week saw a rise in the oil price, just over 3% but important nevertheless, although I have to say that it may have been a bit more technical than fundamental as period end window dressing probably accounted for a fair bit. What wasnt was unusually US inspired, as a combination of a weak dollar, falling US production, albeit mainly for Alaskan maintenance and a falling rig count albeit by only two units were straws worthy of clutching at.
After what seemed like ages since the Badile dream was first planned SOU has announced that the well is probably sub commercial. Despite further ‘significant gas shows’ in the reservoir, unfortunately water influx and mud losses into what are believed to be fractures in the formation appear to have put paid to the commerciality. Although I have carried a potential value of 50p in case of success for over three years now, I dont think that any of that was really in the price and so today’s fall is probably overdone, this result back then would have been little short of disastrous.
In fact Sound shareholders have Morocco to turn to and this is much more serious in many respects. Eastern Morocco is showing signs of great prospectivity, strongly financed with good partners, backed by local funds and with exciting prospects that are quick, relatively easy and cheap to develop, certainly by Italian standards. Today’s 20% odd fall in the shares probably reflects sky high ambitions, but with Sidi Moktar still drilling may represent a buying opportunity for the wise.
Jersey Oil and Gas
Statoil has announced that they have mobilised the semi-submersible ‘Transocean Spitsbergen’ rig to drill its three well programme in the UKCS this summer. The rig, which has had extensive success West of Shetlands is one of the best around and pound for pound is way more economically friendly than it might have been some time ago. JOG announce that it will drill the Verbier prospect (18% JOG) in August and should take around 30-70 days depending on results and a possible sidetrack. Statoil are funding costs up to $25m and JOG are carried for 10% by partners CIECO. JOG shares had a good run early in the year, drifted until recently and have since the low of 199.5p on 23rd of June rallied another 30 odd percent. I will update more after a meeting with CEO Andrew Benitz later in the week.
Faroe has announced the results of the Brasse appraisal well DST which are extremely positive. A constrained flow rate of 6,178 bopd from a highly prolific reservoir in excellent quality sands (with multi-Darcy permeability) is excellent and the 36.2° API crude is very similar to Brage. Next comes a sidetrack after which we should get an update of recoverable resources which at present are 43-80 mmboe and if all goes well I could expect something that starts with an 80…This find ‘significantly re-risks the reservoir and the licence as a whole’ and with possible tie-backs to Brage or Oseberg which are both 15km away looks like being a great success. I’m not sure if the market fully respects FPM for its sector leading exploration hit rate, made possible by a first rate exploration and drilling team which has been proved up time and again, as CEO Graham Stewart says ‘offering significant value upside to shareholders’, I agree.
Fairly old news in the industry I think but PMO has announced that they and Perenco have exercised their pre-emption rights and Premier has taken up another 3.71% of Wytch Farm. The deal which came about after RockRose Energy had agreed to buy the stake from Maersk, adds cheap, value added reserves making the £11.7m price tag a no-brainer, a shame for RockRose though….
Wimbledon fortnight starts today with Muzza defending his title although his run up to the tournament has been far from perfect. The top four seeds have rarely looked so mixed and yet despite all having sound claims to the title must all be layable…
In front of a home crowd at Sachsenring, Rookie Jonas Folger on a Tech3 Yamaha very nearly became the first German rider to win a MotoGP. He pushed The eventual winner Marc Marquez (Repsol Honda) until the final couple of laps when his deteriorating tyres slowed his challenge but he was delighted with his well deserved 2nd place ahead of the other Repsol Honda of Dani Pedrosa. British riders Scott Redding and Cal Crutchlow also suffered with tyres, with Crutchlow managing 10th but Redding must now be worried about a ride for next year with his Pramac seat rumoured to have been offered to Tito Rabat.
There is now a summer break until August 6th. Going back to the previous race at Barcelona in Moto2 Pasini was this weekend disqualified from 2nd place for “wrong oil” …A problem not exclusive to Exploration Companies then !
Aussie teacher Jeff Horn beat Manny Pacquiao in what was reportedly a ‘hometown’ unanimous points decision, one judge had an impossible margin according to the pros watching.
And this Confederation Cup, what exactly is its purpose…?
Finally the best sporting occasion today is likely to be at Westminster Magistrates Court where according to the FT messrs Varley, Jenkins, Boath, Kalaris and Lucas appear in what is becoming called the Qatargate fraud trial…