WTI $48.51 +$1.42, Brent $52.72 +$1.69, Diff -$4.21 +27c, NG $2.89 -4c

Oil price

The most noticeable change at the moment in the oil setup is that Brent is now trading at a $4.21 premium to WTI which is a recent high, with last week’s inventory stats adding to recent draws the US crude may become more attractive to US refiners. Indeed with Baker Hughes announcing a 5 rig fall to 763 rigs last week there was little surprise that crude bounced on Friday. Even then it was Brent that took the plaudits and on the week increased by 62 cents whilst WTI fell by 31 cents. Brent is now in backwardation and that usually makers traders if not delirious, then moderately happy and being able to rollover their bets at little cost.

Gulfsands Petroleum 

I was fortunate to meet up with John Bell last week as I have been trying to catch up with him for a while and to see how things are progressing at GPX. Readers will know that historically I have had my issues with the company but with some light appearing at the end of the Syrian tunnel and a strong management style for Mr Bell it is worth reappraising. GPX is strongly supported by three major shareholders who have backed him to focus on capital efficiency whilst managing down the remaining non-core assets and protecting and preserving its core asset, block 26 in North East Syria.

Morocco is a non-core asset and the company are looking for a partner on Moulay Bouchta and are in regular contact with ONHYM, should no progress be made expect to see the company exiting the country. Tunisia is already in the exit process, the branch office has closed and all will be done and dusted there in short order. GPX has two licences in Colombia, Llanos 50 and Putumayo 14, the former has been extended by 18 months to May 2018 and work has commenced on the seismic MMA and the exploration drilling EIA environmental work. In the latter, the company has commenced on the Consulta Previa for the social and community engagement in the area. GPX is clearly a MENA centric company and assets in Latin America are not a strategic fit, however the company is prepared to fund early stage operations in preparation for bringing in a partner which it is actively seeking.

Having assessed the non-core assets it is worth looking at the original jewel in the crown, block 26 in North East Syria, at present under force majeure as a result of EU sanctions but where the assets are in good order and materially undamaged. Obviously GPX remains committed to full compliance with the sanctions but is ‘focused and maintains its readiness to resume operational activities once sanctions are lifted’. Production carries on at block 26 without GPX participation and apparently can still do 15- 20,000 b/d which does appear to demonstrate good reservoir quality and operational integrity. I understand that the area is safe and has had few disruptions and without ISIS or other extremists in the area.

Financially, costs at the company have come down significantly and the balance sheet tidied up. Burn fell from $8.7m in 2015 to less than $5m in 2016 and continues to be a key focus for management as it is expected to be shown by further reductions in the next results, interims due in September.

There is little doubt, if ever there was any that Gulfsands should be considered the purest of Syrian plays for investors when the current conflict ends. With sizeable backing and good quality management dedicated to managing down non-core assets the company should be able to return to what is undoubtedly a world class asset as soon as the security situation permits. It is worth remembering that GPX has group working interest of 2C contingent resources of 86.4 MMboe (downgraded from 2P reserves due to it being in force majeure) and once it is back up and running should command a significant premium to its current market cap. Clearly that prospect is not imminent but Gulfsands has made it perfectly clear where its future lies.


Kosmos lists today on the London Stock Exchange with a standard listing on the Main Market. Kosmos is very much a favourite of mine, participating as it does on the highly exciting west coast of Africa.

Total has agreed to buy Maersk Oil and Gas in a deal worth $7.45bn comprising of $4.95bn worth of shares and assuming $2.5bn of debt.

Wood Group has announced a five year maintenance contract for the Phillips 66 refinery worth ‘multi millions’.

Empyrean has updated the market on the Dempsey well which continues to deliver the goods. It looks like there is enough gas in the shallow zones to pay for the well, now they are ’embarking on the exciting drilling of significantly larger deeper drilling prospects.

Phoenix Global Resources say that the operator of the CH and PPC blocks in Argentina have relinquished the latter and are offering a new programme on the former. It is not clear yet how this affects PGR apart from a modest fall in production.

Ophir has announced that the Fortuna FLNG offtake contract has been awarded to Gunvor, just the small matter of completing the financing and debt package…

And finally…

The jury may be out for day/night test matches with a pink ball but there was little sign of the it behaving in a peculiar way or turning round corners as previously advertised. Watching brummies wrapped up in the August air made you think that it might be a game played in warmer climes though… As to the cricket there isnt much to add, a mismatch indeed.

As always one of the promoted clubs has a few weeks in the sunny uplands of the Premiership, few would have had the Terriers of Huddersfield down for that honour but as of this morning they are joint top of the league with a perfect 2/2 of a record. That they share with the Red Devils who have come out of the traps fast, as have the Baggies with two 1-0 demolitions of the Cherries and Burnley…Either the Noisy Neighbours or the Toffees could join those three tonight as they both put their 1 and 1 record to the test.

And finally, those who watched only the first half of the Aussies v the All Blacks on Saturday morning will have realised just how good the British and Irish Lions were to getting anywhere close to them…