Oil price, SDX, Echo Energy, Zenith, Amerisur, Rockhopper, Ophir, Petrofac And finally…
WTI $71.49 n/c, Brent $79.30 +2c, Diff -$7.81 +2c, NG $2.86 +4c
At one stage yesterday it looked like WTI would stay above $72 and Brent above $80 but the strength of the Greenback killed that one off. Other news is still more positive for the oil price, the EIA inventories kicked sand in the API face with stock draws in crude, gasoline and distillates while Total prepares to abandon Iran. With the Venezuelan elections this weekend results are already known as Maduro will clearly win but what happens afterwards?
Further good news from SDX today in the shape of test results from the Ibn Yunus-1X well in Egypt. The company confirms a ‘significant natural gas discovery’ in which the flow rate exceeded initial expectations and was limited by surface facilities. The well will be shut-in for pressure build up before the well goes into commercial production towards the end of this year.
Echo Energy announced a gas discovery at its ELM-1004 well on Fracción C asset onshore Argentina. The well was drilled to TD of 1760m in the Lower Tobifera formation and encountered 40m of gas shows in the Upper Tobifera with gas peaks of over 195/- ppm and a full distribution of C1 to C5 hydrocarbons as measured against referenced background gas levels of less than 10/- ppm outside of the zone.
The data is highly complicated but initial interpretation computes around 14.5m of net pay with the section being ‘towards the upper end of the range and encouraging from a volumetric and value perspective’. Next stop is a completion rig here which should arrive in June, in the meantime the rig moves to Los Alamos x-1 (ELA-1) which should spud shortly. Echo shareholders should be delighted that the Fracción C programme has started so well especially after initial success at Fracción D and this is a great result for the company.
Zenith has announced record oil production revenue in April of $505/- and an operational update from the Zardab field in Azerbaijan. The Z-21 workover is going to require a bigger rig owing to a change in the tubing diameter. The advantage of the bigger rig will be that it will be able to drill deeper and into the Eocene formation although should the Maykop formation be commercial one suspects it will stop there.
In the meantime the ESP installation upgrade work continues in the Muradkhanli and Jafarli oilfields and following this work 12 pumps will have been installed. Operationally, despite expected pitfalls, work in country is continuing to exceed expectations and there is significant basis for optimism.
I met with John Wardle and the rest of the management team earlier this week and whilst there was nothing specific to add to the AGM statement there was a significant degree of optimism ahead of the upcoming work programme. With 14 wells targeting the Platanillo ‘N’ sands, CPO-5, PUT-8, 9 and 12 there is a huge degree of optimism for this summer and autumn.
I had a number of people who wanted me to ask JW about the political situation in country especially ahead of the elections on 27th May. The FT had run an article suggesting further ‘war’ in country but John appears to be much more circumspect and feels that support for FARC is dwindling and there is more likelihood of a positive outcome as per the outcome in Ecuador.
The AMER share price is significantly below what one might expect given the production and revenues at @$80 oil as well as what might be a summer of success with the drill bit. If any or all of these wells were to come in then the share price is more like option money with plenty of upside.
An upbeat AGM statement from RKH today , continued progress on the financing of Sea Lion – very much in line with the messaging from PMO earlier this week. A Lead bank for the senior debt is expected to be appointed shortly and contractors are key to the process. The Ombrina Mare arbitration is progressing with a hearing in Feb 2019 and outcome expected mid 2019 – seeking significant monetary damages.
A 4 well drilling campaign in Egypt to kick off mid year so lots to look out for on that front with the Greater Med area providing balance sheet protection and funding for the G&A. The current oil price, twinned with the Sea Lion development being costed at or around industry low levels makes the outlook for Rockhopper extremely exciting.
Ophir has announced that CEO Nick Cooper is to step down ‘with immediate effect’. This will come as disappointing news to shareholders as he had been leading the Fortuna funding process which has caused some grief in recent months. Having spent some time with Nick recently I had just started to get a more positive feeling about Ophir and thought the recent acquisition to be a good one. Having said that the board clearly has concerns which the shareholders should worry about.
The good news is that taking over in the short term is Alan Booth who has an exemplary record in the industry and should have been active for much longer in my view, and he is an explorer…
A positive AGM statement from PFC who announce that they have received $1.7bn of new orders in this year to date and of course sold the deepwater vessel after a somewhat troubled history. Following my recent visit to the Middle East with the company I am much happier about the state of the business and will write up accordingly.
It’s the FA Cup final this weekend, formally the last day of the season but no longer, the Champions League final and the play-offs still beckon as does of course the small matter of the World Cup. Tomorrow sees not only the Royal Wedding but the Red Devils taking on Chelski at Wembley.
Also dont forget there is fantastic back to back rugby tomorrow with the Sarries v Wasps and then the Exeter Chiefs v resurgent Newcastle…
This weekend the MotoGP circus moves to Le Mans. The Yamahas of Rossi and Vinales look like the ones to beat but who would discount the on-form Marquez or even independent rider Cal Crutchlow ?. Throw into the mix Frenchman Zarco, looking to impress his home fans, and Sunday could be the closest race this season.
Even more and finally I have to apologise that all readers of the blog are being asked to adhere to this ludicrous GDPR legislation by agreeing to sign up again. Unfortunately there is no alternative so after 25th of May I have to go onto a new mailing list, please do click on the link at the top, it takes no time and guarantees the blog after that date, many thanks.