Oil price, Genel, IGas, Block, Zenith, Petro Matad And finally…

WTI $52.57 -$1.23, Brent $61.50 -$1.20, Diff -$8.93 +3c, NG $3.04 -44c

Oil price

After the Monday holiday yesterday was a bit mixed but definitely weaker for choice. In a feeble attempt to justify their own flagrant abuse of company money and a desire to mix with British royalty and Will i am, delegates at Dav-oh have been endeavouring to see who could get most bearish about global GDP. The IMF, always ready to take centre stage reduced their numbers although belief in forecasts from that lot is a touch wobbly. Having said that, there is no doubt that with recent Chinese data showing some signs of weakness there will be some sharpening of pencils for oil demand I suspect.

Alexander Novak, being a wise man didn’t turn up at Dav-oh so his meeting with al-Falih hasn’t happened yet, he is probably avoiding the Saudi until his production figures are down a bit…Finally with no sign of any agreement between the US and China over trade, and with time running out, perhaps the two countries might put together a deal whereby the US supplies China with oil as exports from America continue to rise, just a thought…

Genel Energy

I had the opportunity to sit down with the COO, CFO and IR Chief of Genel yesterday to chat about the recent Chevron deal. There is no doubt that this is a very important piece of business and may turn out to be a fair bit bigger and better than analysts have so far credited the company with. The capital profile fits extremely well as does the cash flow which will see the medium and longer term balance well matched. Expect more information as the deal closes etc and I understand that a longer presentation on the deal is planned around results time in March.

IGas Energy

IGas has spudded the Springs Road -1 exploration well (IGas 32%, Egdon Resources 14.5%) in North Notts. Targeting the Bowland Shale it will reach a depth of c. 3,500 and complete in around 110 days.

Block Energy

Block Energy is slowly coming onto the radar screens with an increasing flow of information and some quite interesting potential. When I met the company last year I was impressed with the management and their plans, and whilst the extremely modest production didn’t blow the doors off, the outlook was credible.

Today the company announce that the side-tracking on the West Rustavi field in the Republic of Georgia has commenced, thus propelling that potential from the future into the present. 16a is the first of a two well horizontal side-track programme targeting combined gross production of 650 b/d of oil from the Middle Eocene formation by the end of 2019. Following these wells, as part of the earn-in agreement Block will go from 25% to a 75% WI and and an estimated 38 MMbbls of gross contingent resources and there are four other wells at West Rustavi with similar opportunities for re-entry and sidetracking.

Clearly this is still early days for Block but I have been most impressed by their progress so far, indeed from times of very modest production things are clearly looking interesting, definitely one to keep on the radar screens and with plenty of upside.

Zenith Energy

Zenith has announced that the BD-260 drilling rig is now ready to be shipped to Azerbaijan and will depart Italy on 28th January 2019. This is a key element that Zenith is putting together and with a new team of people things really should start to deliver now, the rest of the RNS appeared to show a shopping list that the new head of exploration left in the B Robotics shop.

Petro Matad

I met up with Mike Buck, CEO of Petro Matad last week whilst he was in London and it seems that preparations for the summer drilling campaign are very much up and running. Despite the misfortune of last year’s drilling programme there appears to be perhaps more confidence about this year and this time with a potential four well programme.

Fully funded by the $35m capital raise last year, drilling will start in Q2 this year targeting 277 MMbo mean prospective recoverable resources with a likely three wells in block XX and a fourth well in block V. Going into block XX first is common sense, the Chinese data from their discovery on block 19 indicates that it is very close to the block boundary and enters MATD acreage to the south and thus makes their Heron well to be effectively an appraisal prospect. Opening up the campaign in this manner gives the company pretty much every option and assuming success it can not only bring forward work to ensure early production but to make the rest of the programme more de-risked.

Should this be the case then one can imagine that a well might next be drilled on the Gazelle prospect which is adjacent, before contemplating further options. Staying on block XX gives the company a short (by Mongolia standards) move to the Red Deer prospect, assuming that Antelope doesnt shout loudly to be drilled.

The company have made it quite clear that however prospective the block XX seems, they are definitely going to drill one well on block V this season and following post Snow Leopard studies will drill either Fox or Raptor  as the last well in the campaign and the weather window runs well into Q4.

So in conclusion I am surprisingly happy to see MATD pursuing the plan of action that it has staked out for this year. It is fully funded for the remaining four wells and has adopted a sensible approach of going to block XX first and then finishing with block V. There is no magic to this selection but it is one with which I concur, getting under way with a potential development at Heron early in the season makes plenty of sense and block V can go ahead after evaluation of the ‘encouraging results of Snow Leopard’. The balance in the summer’s programme is clear and shareholders need not worry about further capital raising, in the case of success nearby infrastructure has adequate spare capacity giving straight forward early test production and ‘rapid commercial development’.

And finally…

Tonight Burton Albion welcome the Noisy Neighbours back to their place for the second leg of the Haribo sweeties  Cup. Trailing 0-9 from the first leg it is important that they score early to make sure they stay in the game.

Today is the first day of the three test series against the West Indies, always a magical fixture and the Kensington Oval in Barbados has been a historically hard fixture for England. With a 2 Pm start to ensure plenty of UK supporters who are watching back at home it will be a proper challenge. No invitations from any of the UK quoted West Indies oil and gas stocks, at least for me, mean that a first class chance has gone begging…

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One comment on “Oil price, Genel, IGas, Block, Zenith, Petro Matad And finally…
  1. ROGER B. says:

    Hi Malcy. Do you have any views on JSE Jadestone where hedge fund Tyrus has taken a 25% stake?

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