Oil price, Sound, Rose, Ophir, Hurricane, Savannah And finally…
WTI $47.96 +87c, Brent $57.06 +$1.11, Diff -$9.10 +24c, NG $3.04 +10c
Oil continues its upward run, last week WTI was up $2.63 and Brent rose $3.85, this morning both have gained over a dollar. Markets seem sprightlier which always help and today and tomorrow the US/Sino trade talks restart which gives people hope. Also on the upside there are a couple of geopolitical worries, an attempted Coup in Gabon and a militant uprising in Nigeria having been reported.
The inventory numbers were a mixed bag, after the API stats the EIA reported crude numbers flat, which after the previous night’s draw was slightly disappointing but the product numbers were not good with gasoline and distillates rising. These are not ‘genuine’ numbers due to the year end tax breaks as shown by the utilisation rate which rose to 97.2%.
Sound has released a further TE-10 update from the Greater Tendrara Licence Area, onshore Morocco. In it they confirm identification of gas bearing sands ‘within and below’ the mapped TAGI closure which ‘potentially materially de-risks’ the stratigraphic upside at North East Lakbir. Given that this trap had a pre-drill mid-case potential of a gross 2.7 TCF of gas originally in place (GOIP) and the smaller closure had 128 BCF GOIP on a similar basis then there are serious grounds for optimism.
The company also identified, with the use of FMI equipment, (high definition formation micro-imager log) the presence of additional thin bedded net pay within the previously identified potential gross reservoir interval between 1,899m MD to 2,009m MD. ‘Quantification of the overall net pay is underway and will require substantiation from side-wall core analysis and further wireline log evaluation’.
Another optimistic sign is that a gas sample was successfully recovered from one of the pay intervals at approximately 1,937m using a MDT, (modular formation dynamics tester system) which confirms the presence of movable hydrocarbons in the reservoir. More importantly this is the first successful MDT test from the TAGI at Tendrara where testing has historically been hampered by the tight nature of the sandstone.
The rig is now to be moved away and the well will be extensively tested for several weeks after demobilisation. Quantification of net pay will be determined by side-wall core analysis and further wire-log evaluation as well as seismic and other modelling. There is little doubt that this is an important step for Sound and validates their high risk and audacious exploration strategy; it seems that the Greater Tendrara Area is very much alive and well.
Rose engaged Schlumberger to complete a fracture Characterisation Study and a detailed analysis of the GVU22-1 proposed well location and trajectory, the models of the combined fracture sets, faults and folds, in the study show that the well is situated optimally to capture the fractures. validating managements choice of location for the first well.
In addition, the study shows the seismic attributes are likely to to reflect fracture networks and they can be combined with geomechanical modelling to select areas with a higher probability of stronger fracture intensity to assist with well selection in the future. Encouraging for well location selection going forward.
This study is the final technical validation of the play which Rose has been working on for so long. A combination of GCA doing the hydrocarbons with the Continent Resources and Schlumberger has followed this with the fracture characterisation study, both of which validate the play and the basin. If they are right and the hydrocarbons are present and able to be released through fractures then oil will flow, now they only have to drill it…
So both the forecasts have come in with regard to Ophir, firstly they are assessing a bid for the company and secondly they have heard from the Equatorial Guinea Government that the ‘R’ licence, containing the Fortuna gas discovery is not to be extended following its expiry at the end of December 2018. This comes as no surprise, after the inability to finance the project which was unfortunately open for all to see, the longer the process was drawn out it became inevitable and the result is a $300m impairment.
After Alan Booth took over as interim CEO the strategy changed, as if to acknowledge the loss of African gas and Ophir is now a South East Asian company with a fine portfolio of assets including the recently acquired Santos package. Shareholders will now wonder what they should do, unsurprisingly the options are at present mainly unknown to them. Regarding the CEO there is good news and bad news, the latter is that Nick Cooper ‘stepped down’ in May last year and still hasn’t been replaced which is an extraordinary length of time even with the Fortuna situation overhanging. Given that the new strategy has been known for some considerable time surely a replacement might have been found by now…The good news is that the ‘interim’ CEO is Alan Booth who is one of the most highly rated oil industry executives and if I was an Ophir shareholder someone I would like to be running the show.
The board of Ophir has now a number of difficult decisions, the primary one is to ensure that when the bid comes it is assessed fairly as I’m sure it will be. Alan Booth has significant experience in this respect and I am confident that investors will be treated right by him. Having said that I still believe that the assets within the company are of excellent quality and that anything but a knockout bid should be treated with caution. Ophir still has an exciting future ahead even if its recent past leaves something to be desired…
Some keen eyed Hurricane followers have noticed that the Aoka Mizu, FPSO for the Lancaster EPS is sitting in the Cromarty Forth and not tying up to the moorings, buoys and wells yet. I have spoken to the good Dr Trice who gets weather reports twice daily and he is ‘as chilled as’ and is just waiting for a storm to pass. All is still on time and budget and the next weather window is on the way.
It is worth noting that Andrew Knott, CEO of Savannah Petroleum is hosting a conference call for retail shareholders at 10am (GMT) on Thursday 10 January 2019. The call will focus on the recent amendments to the Seven Energy Transaction, as announced in the Company’s RNS of 21 December 2018.
If you would like to participate in the event, please contact Ollie Mills at Celicourt Communications via email at firstname.lastname@example.org
I havent got room for all the results and it’s already getting dark! Well done to Oldham, Newport, Bristol City,Gillingham and Accrington Stanley (who dey?) for giant killings.
Wolves take on Liverpool tonight but you can’t see it, can you?
And well done to India who have won a test series in Australia despite rain washing out the last day of this match.