Oil price, Echo Energy, Frontera Resources, Zenith Energy, President Energy And finally…

WTI $70.71 -$1.13, Brent $78.79 -$1.01, Diff -$8.08 +12c, NG $2.94 +3c

Oil price

The big question now is, have we reached a level at which most industry participants find acceptable? At $80 it seems that talks between producers are scheduled to see if they shouldn’t release a bit of crude into the market to avoid any panic from consumers, as evidenced by the Indian pleas last week. Certainly it seems that the KSA and Russia are talking with an idea of scaling back the cuts from the joint producers. Khalid Al-Falih said this morning that these were ‘on the table’ and that whilst no decision had been made yet ‘we will not overcorrect’ and that the two countries would meet at least twice before the full Opec/Non-Opec meeting next month.

It is a good time to be thinking about the effect $80 oil will have on the consumer particularly in the US where the Memorial Day Holiday on Monday signals the start of the driving season. For what it’s worth my guess is that if it does turn out to be that $80 is a level to be defended then it pretty much works for both sides, let’s see.

Geopolitics heated up a bit overnight with the news that the Trump/Kim summit is off, at least for the time being, no reason why it can’t be reinstated another time though although tensions are still high.

Echo Energy

Echo has announced that it has raised £8.5m through a placing and subscription at 12p with funds raised to accelerate their full seismic commitment over Tapi Aike at a really competitive price saving the company some $7-8m. It seems that the company needed to strike whilst the iron was hot, so to speak, and with the current offer for the seismic work being some 30% less than expected and about to expire this is a no-brainer. When you are looking at 2,000km² and that Tapi Aike is the blue chip asset waiting to be assessed this concentrates the mind and shareholders should rejoice.

As to the raise it also seems eminently sensible to me, getting institutions on board at a reasonable discount is very wise and that an open offer was impossible given the time needed to produce documentation. With the rate of progress on the Fracción C drilling programme, where the next well spud is imminent, finding the necessary ten clear days would be at best counter productive. As I understand it the quality of institutions is first class and balances the shareholder list well.

The share price has fallen 15% at time of writing which is technically understandable given the discount offered but definitely provides an opportunity for those who believe that this shows all the hallmarks of a really good play with significant upside.

Frontera Resources

Morr good news from Taribani today from Frontera where results have continued to please since I reported back from T-45 in February. News is that the T-39 sidetrack well has reached TD and the combined pay from zones 9, 14 and 15 is 102.5m with 14.2% porosity and some 12.3m of pay in zone 13. One certainly can’t accuse these wells of creating a surprise, all zones are performing at the highest of expectations.

The company has also announced that it has received a drilling permit for the Niko-1 well which is scheduled for November of this year, unsurprisingly the zones expected are as per previous successes. The company has been offered a $3m investment by an institutional investor to finance this well which makes life significantly easier. These drilling successes will before long feed through to a ‘strong revenue stream’ and the company are promising details shortly of the drilling campaign for 2019. FRR looks to be in increasingly good nick and with what I hear is promising news from Block the Azerbaijan is going to be increasingly in the news for all the right reasons.

Zenith Energy

Zenith has announced that it has signed a $2m non-convertible loan facility, it will be used to provide additional funding ‘for the Company’s operations when required’. It will be drawn down intranches when required and has no warrants attached. Zenith is quite rightly concentrating its fire power on current operations in Azerbaijan where recent investment is beginning to pay off, this will enable it to continue with this strategy.

President Energy

A brief mention of a reception held by President earlier in the week at which the Argentinian Ambassador to St James and the Energy Minister made presentations. Whilst there is a concern about short term economic conditions, acknowledged by the Ambassador, longer term advantages of investing in this country remain and i’m sure that the President share price will in due course rise accordingly.

And finally…

As we close in on the end of the winter sporting season it is a weekend where spring and summer collide. Football sees the Champions League final in Kiev with the HubCap Stealers taking on Real Madrid. If previous rounds are to be believed anyone could win and there could be many goals scored.

Earlier on in the afternoon the Championship play-off has Fulham taking in the Villa in what is being labelled the £100m game….That is followed on Sunday by Rotheram v Shrewsbury and on Monday Coventry v Exeter.

Rugby’s season closes with the Premiership final between the Exeter Chiefs  and Sarries, again if scores in the semis are any reflection it too could be a cricket score.

Talking of cricket England were wishing that the no toss rule was in place as it was a bad toss to win, as it was they batted and on day one of the series reminded us of the phrase England middle order batting collapse’…..

Last year I was in Monaco for the GP, this year i’m here wishing I was back but the early pace is being made by the Red Bulls with Mercedes saying that this is just not their track.

Finally thank you for helping with so many people obeying the GDPR and today is the first day of the new mailing list.

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