WTI $65.45 -35c, Brent $68.58 -$1.07, Diff -$3.13 -72c, NG $2.85 -1c

Oil price

After the latest bullish forecast from the Vampire Squids last week traders should have taken the other side of the trade and taken a walk, innate forecasting inability like theirs is a gift for others. Less tongue in cheek was the market fall, brought on as it was by the economic data on jobs and wages which rallied bonds and with them the greenback as expectations of rate rises firmed. WTI ended the week down 69c and Brent was worse at -$1.07 with the differential down at $3.13 as low as it’s been for a while.

The rig count was a marginal minus as well, overall the count was down 1 to 946 but in oil it was up 6 at 765 units.

Rockhopper/Premier

RKH has announced this morning an LOI with Diamond Offshore Drilling for a ‘suitable drilling unit’ for the Sea Lion Phase 1 development. For those with short memories it was DOD with whom RKH worked with in the highly successful exploration phase of the campaign in the Falklands and that ‘teaming up with Diamond is a significant step in our continued progress towards sanction with our partner Premier Oil’.

Having already signed LOI’s with well services and logistical support the focus moves onto the subsea equipment suppliers where the JV are hoping to make progress during the 1st quarter. These important pieces of the jigsaw are highly encouraging as the partners continue the crucial discussions with regard to the senior debt element of the financing plan.

There must be little doubt that as they move closer to sanctioning the project,  such ‘material progress’ has been made on so many fronts, to be coming to this decision with three years of intensive industry cost cutting behind it and an oil price as it is now is surely the stuff dreams are made of.

Trinity Exploration & Production

A Q4 operational update from TRIN this morning where things seem to go from strength to strength or as the management state, ‘a clear upward trajectory’. The update shows profitable production and a strengthening balance sheet as the strategy of a low cost, high return  programme of recompletions, workovers, reactivations and swabbing comes into its own. An 11% increase in production to 2,777 b/d is doing pretty well in any language but to do this from inventory and with existing cash flow is even more encouraging.

Operationally TRIN is amongst the best in the business, a third workover rig has been subcontracted and there was a 19% increase in man hours from 1,741 to 2,067 in the period. During December the company report production of over 3,000 b/d on at least 14 occasions as recompleted wells flowed naturally before returning to more sustainable production rates. Whilst this was a temporary state of affairs it shows that TRIN does have critical mass and ‘evidences a clear upward trajectory being delivered’ towards its near term production targets and all this before the drilling of any more wells which can be expected this quarter. For the time being it is aiming for 3,000 b/d by ‘later in 2018’ before achieving a more material step change in production in the medium term. This is a genuinely significant move for the company and its shareholders as TRIN has worked the model so tight that it has an EBITDA margin the envy of any company in or out of the oil sector.

The sale of the West Coast assets is still ongoing with interested parties making representations all the time, such moves are not distracting to the management as these assets are continuing to produce free cash flow. With all this good news on so many fronts Trinity is clearly amongst the most profitable companies in the E&P sector, yet maybe due to the events of the past it is yet to be appreciated by the market. Accordingly the move into the imminent bucket list update is a formality.

Amerisur Resources

Monthly production, OBA throughput data and an operational update from AMER all pretty much in line with expectations. Average daily production was 6,837 b/d with a peak of 7,142 b/d subject to works being incurred at Platanillo. The OBA throughput averaged 5,622 b/d with a peak of 6,541 b/d, this was affected by planned maintenance and enhancement work at the Cuyabeno station which is now completed. At CPO-5, Mariposa-1 continues to produce at 3,250 b/d on long term test as analysed by AMER and ONGC Videsh.

Aminex

A significant resource upgrade today from RPS which is way better than had been expected. This and other data from io, confirms the feasibility of developing the Ntorya  gas field for commercial production. The Ntorya Pmean GIIP is increased to 1.87 TCF, an increase of 44% on managements latest estimates (1.3 TCF) and 12x the previous CPR. The 2C gross contingent resources number is up 11x from previous CPR at 762.8 BCF.

These numbers significantly exceed management’s expectations and without doubt put its acreage in Tanzania on the highest quality footing for the future. As a substantial player in country Aminex can expect to be able to proceed with limited upfront expenditure and use revenues ‘to enable cash-flow funded further development’, in what is a now realistic and achievable proposition. Aminex has now for once and for all become of significant strategic importance to the Tanzanian economy even if that means getting infrastructure funding for the pipeline.

With a highly supportive cornerstone shareholder encouraging the highly qualified and entrepreneurial management, shareholders can look forward to  an exciting run in Tanzania and now that executive time can be spared it would come as no surprise to see some geographical expansion for Aminex. Even after the 18% rise at time of writing I consider that the shares should at least head back to highs achieved only a year ago.

Faroe Petroleum

Faroe has announced that the Fogelberg appraisal well (and contingent sidetrack) has been spudded with the intention of narrowing the range which is at present 105-160 BCF. The range is so high as the initial discovery well was situated high on the structure and this well should provide additional information for development planning. Faroe remains in a strong position with a number of interesting wells either under way or scheduled for this year intended to add to the exciting number of projects in development.

And finally…

The 6 Nations rugby Championship started at the weekend with Wales beating Scotland 34-7 which at least surprised the Scots, Ireland left it to the last minute to beat France with an inspired drop goal and England won 15-46 in Rome.

In the Prem the Noisy Neighbours were held 1-1 at Burnley after the miss of the season might have won it… The Terriers visited the Theatre of Dreams and lost 2-0 and the game of the weekend was at Anfield where the HubCap Stealers drew 2-2 with the Spurs. Mr Klopp didnt like the penalty count but it was a mad last ten minutes.

And in the Superbowl the Philadelphia Eagles beat the New England Patriots 41-33 which was the highest number of points conceded by a winner and the first time that a player had both thrown and caught a touchdown pass in history. (US sport contributor still asleep)