Oil price, VOG, Ophir, Jadestone, Angus And finally…
WTI $51.99 -$1.70, Brent $59.93 -$1.71, Diff -$7.94 -1c, NG $2.91 -27c
Oil suffered yesterday as a combination of weaker Chinese corporate data and commodity stock weakness following the Vale disaster in Brasil hit markets. The other side of the coin is obviously the situation in Venezuela where despite US intervention it is not obvious how things are going to unfold. With big loans from Russia unlikely to be repaid any time soon and oil production still falling, (and possibly further with increased sanctions) even before you add China into the equation you have the makings of a basket case.
This week’s inventory stats are not expected to show much in the way of help for markets although it appears from TV pictures last night that the US is getting some ‘chilly’ weather at the moment. Expect stock builds in both crude and products but much more in gasoline may be taken badly by the market.
Victoria Oil & Gas
A production update from the Logbaba project in Cameroon from VOG today, hot on the heels of the last update you might think. Indeed if the figures are as good as this then why not keep the market informed especially after what was a pretty grim year in 2018. Production January to date is 9.56 MMscfd (10 MMscfd if you add condensates) and the week of 19-25 January was 12 MMscfd which gives net monthly revenue of $2m.
The company also notes recent market and press speculation regarding potential fundraising by the company and whilst it says that it ‘has been assessing various potential funding options’ it has nothing to announce at the moment and with such strong cash flow may have pushed back the need for such a raise. After the trauma of the last year, investors are clearly recalcitrant about piling into VOG and who could blame them, but it is worth looking at the potential upside not just from Logbaba but from Matanda and of course the opportunities in CNG and the ‘Energy well’ concept which were developed last year. I have given VOG way more time than I normally would, one of my many faults, but from here it is probably worth another look, the upside is still considerable.
Ophir has announced that Medco has been given until Thursday afternoon to either make a formal offer or to walk away. The fact that Ophir announced that it requested the extension and that ‘the parties are in advanced negotiations with a view to agreeing a recommended transaction at 55 pence per Ophir ordinary share in cash’ rather gives away that this train has already left the station.
Whilst this bid is by no means a knockout, the DNO bid for Faroe recently showed that shareholders have little fight in them at the moment and that no one is safe in the sector. As I have said many times, when a fall in the oil price knocks oil share prices it becomes cheaper for oil-short, cash-rich oil companies to drill for oil in the stock exchange than go drill themselves. Unfortunately for Ophir shareholders, who should be seeing off this bid with confidence, they have been left high and dry, but for Medco you might say that Fortuna favours the brave.
I ran out of time yesterday but wanted a very quick word on Jadestone after two recent announcements. Yesterday they announced that Montara production is likely to stabilise at around 10,000 b/d (2018 7,615 b/d) and with maintenance fully up to date ‘an increase in uptime and average production rates is expected in 2019’. With no further maintenance required before the end of 2020 things are set up nicely for JSE for the foreseeable future.
I have had a number of questions about the increasing holding of Tyrus Capital on the shareholder register at Jadestone which recently went above the 25% level. I am told on good authority that not only are Tyrus friendly and supportive but have held a large position in the company for many years, indeed the recent addition was an ‘opportunistic’ one as they cleared a line of stock up in the Toronto market. With a lock up in place since the admission over here I don’t see them bidding for Jadestone any time soon.
It is difficult to write anything sensible about the recent shenanigans over at Angus with board changes, advisors leaving and being replaced so I will not say much. I wrote recently that the shares were ‘uninvestable’ and right now there is much to do by the new management team to restore confidence and plausibility to the company, watch this space…
Yesterday I talked to Justin Waite about a few oil stocks, here is the link.
The 5th round draw for the FA Cup was held last night and it paired Chelski with the Red Devils at Stamford Bridge. Elsewhere if Newport can beat ‘Boro in the replay they get to play the Noisy Neighbours whilst Doncaster Rovers get Premiership Eagles. For their sins AFC Wimbledon have got Milwall in the next round, shame the fans are just round the corner.