Oil price, Rose, President, IGas, Faroe, Petro Matad, Lamprell And finally…
WTI $51.63 +$1.21, Brent $60.48 +$1.68, Diff -$8.85 +47c, NG $4.25 -6c
Seems like a long blog but some comments are just well spuds and a couple that didn’t get in yesterday due to time constraints.
The oil price rallied yesterday for the usual host of reasons. It was rumoured that oil production is already being cut ahead of the Dec 6th meeting, there will be more of a bounce if Opec+ and I mean +, (they can’t do the necessary on their own) come to a deal roughly like the October ’16 levels. If between them they think that Brent at $60 is not acceptable they know what they have to do, the ball is very much in Putin’s court so we might get an advance inkling at the G20 meeting in Buenos Aires at the weekend.
Rose has signed a database agreement with Encore with respect to the company’s USA uranium exploration project which nets, when Encore shares are sold, around $300,000. Rose, through VANE will keep an option to participate in the project at development stage subject to various price points. The deal also gives Encore rights to participate in certain other uranium projects VANE owns under the same terms.
With the exciting hydrocarbon projects that Rose has in the Paradox Basin these mining assets are clearly non-core but still have considerable potential (The company’s Vanadium project is rapidly increasing in value in line with the price which has risen from $5lb to $29lb, giving a per ton value of $515/ton, a significant improvement for the company). This puts Rose is in a strong position, being able to take some money off this particular table in order to pursue what look like significantly larger prizes.
President has announced that the PFO 1005 development well has spudded, this is the third and last in the current sequence of drilling which has been remarkably successful so far. Initial results should be known in around 21 days and of course we still have the news from the second well which also looks very promising.
Another spud to report, this time IGas announce that they have spudded the TL-1 well at Tinker Lane in North Nottinghamshire. The well is planned as a vertical multi-core well primarily targeting the Bowland shale formation but also a number of other formations. I have to say that at some stages over the last few years I never thought that I would be able to write that this well had been spudded, let’s hope that it repays the trust…
Faroe gave an initial defence response to the DNO bid late yesterday suggesting that the offer was ‘opportunistic’ and ‘substantially’ undervalues the shares with which I concur. The valuation suggested by the bid is clearly well below serious industry valuations and the 1% premium to the 3 month VWAP confirms the predatory nature of the approach.
Having said that, it is now up to FPM to get out and prove to their shareholders that all the hard work they have done over many years deserves to be recognised, and by keeping the company independent would result in clear, long term benefits to those investors. With the excellent exploration track record, a portfolio of exploration, developments and increasing production giving strong cash flow and a well funded balance sheet Faroe are well placed to fight off this unwanted bid.
Petro Matad announced yesterday that the Wild Horse 1 well on block IV was dry, the structure ‘had to be drilled’ but unfortunately has led to another failure with the drill bit. All is not lost for the company who still have funds for more drilling and there are still a number of prospects that might come up trumps and the management is impressive.
Lamprell announced yesterday that they had been selected as a contractor on Saudi Arabia’s Long Term Agreement for offshore facilities programme. The programme has the scope to exceed $3bn pa of investments over six years with optionality to extend by a further 3 + 3 years. As the company say, this is indeed ‘ a very important milestone’ and increases its status in the international EPCI sector which can only help the company. After years of reaching the top and bottom of many cycles this could be a decent new start for Lamps and its high quality management.
England duly won the test match and the series against Sri Lanka, 3-0 an impressive result.
Last night the Magpies pulled off their third win on the bounce beating Burnley 2-1.
Tonight we are back to Champions League action, the Young Boys visit the Theatre of Dreams but it has been more a Theatre of dramas lately particularly on European nights. The Noisy Neighbours are in Lyon where they can win their group tonight.