Oil price, Amerisur, RockRose/IOG, VOG, Jadestone, Soco, JOG And finally…
WTI $56.56 -3c, Brent $65.86 +19c, Diff -$9.30 +22c, NG $2,88 +3c
News from China that 6-6.5% was the new growth range didn’t really worry markets, after all recent oil demand has remained strong. Also news that Libya is slowly getting back up and running didn’t affect Brent as it might of.
It is worth looking at the retail gasoline prices which I always reckon is more important particularly in this usually quiet time of year and they are firming quite nicely, $2.42 as an average US price is up 3.2c on the week but quite a bounce from the January low.
After hours the API stats were disappointing with a build in stocks of 7.3m bbls vs a forecast of +1.2m, gasoline was a modest draw but unsurprisingly at this time of year distillates drew 3.1m bbls, with extreme cold weather forecast it may draw more this week, EIA tonight will as usual be more reliable.
More good news from AMER this morning which has rewarded shareholders with a rise of a measly 0.4% in the share price. In a reserves update 1P reserves are up by 27.83% and 2P up by 23.62% in reports from Petrotech in Platanillo and the Mecaya fields and McDaniel at CPO-5. That gives a total 1P of 17.82 MMBO and 2P of 25.59 MMBO and that is after production last year of 1.61 MMBO from Platanillo and 1.15 MMBO from CPO-5.
RockRose Energy/Independent Oil & Gas
Yesterday RockRose announced that it had on 1st March, made a ‘formal approach to the board of IOG’ with a proposal to make a 20p all cash takeover valuing IOG at £26.6m. This was a 50% premium to the share price and significant by any yardstick. I will discuss the various points of both bid and defence in due course as it unravels but immediately IOG said that they had ‘promptly rejected’ the ‘opportunistic bid which materially undervalues the company and does not attribute fair value to IOG’s assets nor future upside’. (Now where have I heard that recently…)
As for RRE they said that it ‘offered IOG shareholders an immediate cash upside premium’ and that it would be ‘significantly challenging’ for IOG to independently fund the field development capex of £450m. With a protracted or worse, unsuccessful farm-out process to go through IOG might be significantly diluted or have to give up the operatorship, according to RRE.
This is going to turn into an interesting tussle, recent records show that realistic cash offers have tended to succeed but there are some differing factors here, not the least the position of London Oil and Gas with its debt position to the company and the administration of London Capital and Finance limited. Whilst they may be supportive, as one might expect from other large IOG shareholders for LO&G or its parent a tweak to the equity bid, should it be made, might prove rather tempting. More in due course…
Victoria Oil & Gas
Raising money today and what is looking like quite a shake-up at VOG who are raising £12.6m of which £6.5m comes from YF Finance Ltd and there is a proposed placing of up to £6.1m at 13p. After the book build and raise is complete Kevin Foo, executive Chairman is retiring from the board as a director and Executive Chairman to be replaced by Roger Kennedy currently Senior Non Executive Director.
Ahmet Dik remains as CEO but it is noticeable that this shake-up comes with significant cost reductions including executive salaries and company wide ‘savage’ cost cutting. Some major league international investors are said to be behind this action and the Government in Cameroon are supportive, indeed if actions were louder than words commitment to Logbaba gas in the last quarter has been immense.
VOG has been a very difficult call of late and I have many people, perhaps justifiably, questioning my faith in the company that remains friendless in the Bucket List. I do feel that this is exactly what needed to be done and with the huge gas demand in Douala giving opportunities now as well as in the future as the company develop Matanda gives me significant optimism. Again more later…
Jadestone has given the market some guidance this morning and expect 13,500-15,500 b/d this year with a longer term forecast of 30,000 b/d by 2023. Average unit production costs are $21-24 and the company expects capex this year to be in the range $116-131m. With operatorship of Montara expected in Q2 2019 the company is progressing faster than I had imagined although management is impressive and highly experienced.
They say that they are making ‘good progress’ in Vietnam and expect sanction of the project this year. So much has changed with this company in the last year it is hard to keep up but the acquisition was an absolute peach and already paying out in spades, this company is without doubt going places.
Results today from Soco which as always are primarily historical in nature and most announced today has made the news already. What surprised the market one could guess was that they owned up to having had a bit of a crush on Ophir, so much of a crush that they did indeed table a formal proposal for an all-shares merger with them, such co-mingling was rejected out of hand (one wonders why?) by the Ophir board and so Soco packed their tents without so much as a cash element being talked of.
Anyway, the numbers were fine $80.1m of PBT ($22.7) and a final dividend of 5p, up 5%. Merlon is where the excitement is and with which I concur and will double production along with the divestment the West African position. If you need to be reminded of the excitement in Merlon watch this interview I did with Ed Story when the deal was announced.
Jersey Oil & Gas
Yesterday I was most fortunate to be able to interview Andrew Benitz, CEO of Jersey Oil & Gas who has just spudded the Verbier appraisal well with operator Equinor in the North Sea. All about that and much more about JOG in the link below.
And of course how could I forget a Podcast I did recently with Doc Holliday of Total Market Solutions having a friendly run through a few oil companies of his selection. Such as PANR, JOG, ECO, GENL,RBD, IOG & BPC.
It’s been a long blog and time runs short but Spurs had a great result last night beating Borussia Dortmund over both legs 4-0 on aggregate. Not sure that the Red Devils will overcome 0-2 in Paris tonight but Real Madrid were knocked out by Ajax last night.
And in the first T20 last night England beat the Windies ‘reasonably comfortably’.