Oil price, Sound, Eco Atlantic, Plexus, Pantheon, AAOG, AAA And finally…
WTI $55.59 +$1.18, Brent $66.25 +$1.68, Diff -$10.66 +50c, NG $2.62 +5c
There are plenty of people in the oil market who have been caught out by this rally but if you look at the Opec+ numbers and bear in mind that Russia will come late to the production cuts party then it was only the lag that should have caught people out here. This is why investment banks changing their forecasts usually ring the bell, just when analysts have lost their patience they move the goalposts and hey presto the price goes the other way. The best traders are there for a good reason……………….
Right now they are seeing significant oil coming off the market, mainly from Saudi Arabia but also from other Gulf states and of course those who are unable for any reason (sanctions mainly) to sell their oil. Ironically this has also meant that different grades of crude are swinging around, the WTI/Brent differential is over $10 and whilst Brent rose a full $4.15 last week WTI was only up $2.87. As for Venezuelan, Iranian and some other Middle East grades of crudes markers, and prices and markets are wildly different as markets dictate.
Sound has announced this morning that the TE-10 discovery has been confirmed and that independent consultants ERCE has undertaken a petrophysical analysis upon which the company has acted. Accordingly the company has made an upward revision of net pay estimates of 47% at the top end of a 9.5m to 13.1m (mid) to 15.4m range.
Following the latest seismic mapping, modelling and net pay analysis the company has estimated the gas reserves found at TE-10 to be across both structural and stratigraphic trapping geometries. All this gives mid case potential on a gross basis of 1430 bcf GOIP with a 3408 bcf GOIP high case and a 584 bcf GOIP low case. It seems the bold exploration strategy is paying off. Clearly as is always the case with large discoveries, there will be the need for further appraisal drilling.
Accordingly a well test at TE-10 is expected to commence ‘within four weeks’ when specialist equipment has been brought to site and at which unstimulated and stimulated production flow tests are expected to take ‘at least 30 days’. With the material upgrading of the net pay in the well, the prize of a multi tcf potential gets closer and with it the dream of unlocking the Tendrara Basin becomes nearer to reality.
Eco Atlantic Oil & Gas
Last week I met up with Gil Holzman, President and CEO and Colin Kinley, COO of Eco Atlantic Oil & Gas. There remains much excitement at the company and as it was only the day after the Tullow update at which, if possible, even more palpable board level enthusiasm and eagerness was displayed.
With Tullow confirming two, likely three wells in its spring and summer drilling campaign at Orinduik, which I think should start at the end of May or beginning of June, investors can expect action on rig selection and firmed up dates before too long. With Exxon having made two more substantial discoveries only a few miles away, Eco are incredibly well placed with their 15% of Orinduik to gain and at 63p I consider the shares still outstandingly cheap on pretty much any metric.
A profit warning from Plexus this morning who have announced that whilst revenues are in line, lower gross margins and higher overheads mean that EBITDA and LBT will be below market expectations for the year to June 2019. Having said that the statement and comments don’t appear to have got any shorter so brevity and profitability are out of sync.
Pantheon has announced that the Winx-1 well spudded in Alaska on the 15th of February. This will be a 50 day well and comes as a part of the merger of Pantheon with Great Bear in which Pantheon shareholders were severely diluted in the process. Having said that it means that shareholders will be able to participate in a number of most exciting wells being drilled world wide at the moment. As part of the deal the Great Bear management team were parachuted into Pantheon and hope to be able to rescue the wells in Texas which have been so disappointing operationally.
Anglo African Oil & Gas
Sort of good news bad news from AAOG this morning as they revealed that partners SNPC, the Congolese state oil company had paid back $663/- of the $10m that they owe them. Obviously good news in that it is a payment and that the SNPC have said that they will pay back the rest but there is a twist, AAOG had wanted a substantial increase in its 44% holding in the licence instead. I’m sure that the repayments would still be being made had the well been a duster…Its a bit like your mother-in-law driving off a cliff in your new Ferrari I suppose.
Anglo African Agriculture
Spookily, another Anglo African company this morning and not one that I have written about before as, as its name suggests it has historically been primarily engaged in agriculture but it is beginning to change its spots somewhat. The movement into oil is via a tie-up with Comarco Ports in Mombasa, a company that has signed up a long term deal with a multinational trading and transport group to establish an LPG import and distribution facility. Should this become established in the African oil space it may be worth keeping just one eye on.
The FA Cup had no surprises this weekend although Newport County fared better than some lately, being done only 1-4 by the Noisy Neighbours. The fare was pretty thin, Bristol City lost to Wolves although did come back well in the second half whilst Donny lost to the Eagles and there were wins for the Swans, the Seagulls and Milwall who all go into the draw tonight with either Chelski or the Red Devils who play later at Stamford Bridge.
There was so much racing I couldnt do it justice but it was a good Saturday for Paul Nicholls and in particular good to see City legend Jon Gregory and wife Debbie leading in Grand Sancy at Wincanton, next stop the Supreme at Chelters.
As we get slightly warmer it can be seen that F1 testing has started ahead of the new season with new cars and some team changes.
And Tyson Fury has signed with ESPN in the US for £80m …….