WTI $49.09 -7c, Brent $54.49 +29c, Diff -$5.40 +36c, NG $2.98 -2c

Oil price

Vacillating was what the oil price was doing yesterday as news sources contained mixed signals which oil traders viewed from differing angles. It was mainly meteorological though, cleaning up after Harvey is still going on, some refineries are still out, as with some production. Accordingly inventory stats are going to be all over the place for a while but the EIA reported a big draw in crude of 5.4m barrels which foxed the analysts (yeah) and of 3.2m in gasoline. Hurricane Irma is now sweeping through the Caribbean which including Puerto Rico contains a surprisingly large amount of refining capacity particularly when it meets Florida whose Governor has ordered a takeaway of extra gasoline by tanker.  And after that it’s not stopping, Jose is on the way…


Being out yesterday meant that today’s blog is mainly catching up, in this case with results from RKH which one can gloss over in search of the real message. That real message is primarily about the progress of Sea Lion, recently seemingly back-burnered with PMO concentrating on its debt renegotiations but now back in the picture. In various announcements from both companies recently and including the speech made by Sam Moody on Tuesday as reported here on Wednesday, the mood appears more buoyant than hitherto. The financing of Sea Lion, which is to be developed in at least two phases, is now looking less opaque and with costs coming down and the up-front cheque getting smaller there is starting to be some optimism around the partners. In discussions with UK Export Finance in the hope of around $800m  of senior debt financing, and also receiving encouraging signals from potential contractors, albeit in non-binding proposals, that might lead to circa $400m things are looking up. Phase 1 capex has fallen from $1.8bn to $1.5bn and life of field costs are now down to $35/b which helps.

I have recently talked about the Greater Med where production is material and operational cash flows are covering 1H G&A costs, with ‘multiple’ material new ventures being progressed. Rockhopper has always been a bit of a slow burner in terms of recommendation as repeatedly mentioned in justifying bucket list inclusion, but now I do think that things are on the move and if the current discussions on financing prove successful then maybe we are closer to pressing the go button. After all, the last couple of years have not been wasted and much work in terms of FEED and other development economics are well under way if not completed. Rockhopper appears to be in a much better place and 2018 may well be a year of significant progress.


Rule number 1 in the book of share price movements is to manage expectations and ENQ are learning fast but not entirely fluently. Yesterday they saw the share price rise when telling the market that the consortium of banks were likely to waive the September covenant test, offering limited and short term relief. The rise in the share price was because all the bad news about Kraken and a huge cut in production guidance that went with it was issued last month. Someone said to me yesterday that they thought that ENQ was rather more ‘issue prone’ than others but is surviving with ‘unwavering support’, shareholders must hope that this support continues until the can see the sunlit uplands as WC would have said. In the meantime one waiver doesnt a summer make and the debt will have to be paid, hopefully with higher production next year.

Empyrean Energy 

I am glad that I caught up with Tom Kelly a few weeks ago when I had the chance otherwise I might have missed the excitement of the last few days as success in both China and California is pushing the share price justifiably upwards. Yesterday they announced that in China they have identified 591 MMbbls over three prospects called Jade, Topaz and Pearl and while these are early days it is already looking most interesting.

What seems to be an almost daily update from Dempsey this morning suggest that yesterday the operator intersected a potential sandstone reservoir with ‘high gas shows’ in what is believed to be the primary target zone in the well. Plenty of time to go yet and much to prove but this seems to me to be a significant discovery and reinforces my view that Mr Kelly has another hit on his hands with EME mark 2.


The Altrad offer for Cape has now gone unconditional so that’s game over and a bit of a shame. Interestingly in a long list of board level resignations I didnt see the names Oatley or Speakman appear, have the new owners seen sense? Anyway I look forward to the party invitation…

And finally…

The cricket is interesting at Lords in the final and deciding test vs the Windies. Yesterday 14 wickets fell as they were bowled out for 123 but England were 46-4 odd at the close. In awful conditions again today England have already lost another wicket!

Sunday sees the MotoGP at Misano in Italy. Although it’s in Valentino Rossi’s ‘back yard’ he won’t be present as a broken leg in an off road crash has put him out for at least the next 2 GPs ruining his hopes for a 10th Championship. However the Italian flag and firework salesmen must have already ordered their new Ferraris as it is the first time since Agostini in the 1970’s that an Italian rider on an Italian bike has been leading the World Championship at the Italian Grand Prix …that rider is Ducati No. 2, Andrea Dovizioso. He won’t have it all his own way however, as the precociously quick Marc Marquez will be looking to make up points after his DNF at Silverstone whilst Vinales cannot be discounted and Dovi’s team mate Lorenzo looks to be finally mastering the Ducati Britain’s Cal Crutchlow has consistently led the satellite riders and could upset the Factory riders …again.

The American football season kicked off last night and the Kansas City Chiefs beat the Patriots 42-27, in Boston…

Premiership football is back tomorrow with the big game being the Noisy Neighbours entertaining the HubCap Stealers at lunchtime, Klopp hasn’t lost to Pep’s boys since he joined….Elsewhere the Toffees host Spurs, Chelski go to the Foxes, the Gooners host the Cherries the Seagulls entertain the Baggies and the Red Devils go to the Potters. Sunday sees the Eagles at Burnley and the Swans host the Magpies. The Hammers have their first game at the London Stadium on Monday against the Terriers.