WTI $65.21 -68c, Brent $74.35 -22c, Diff -$9.14 +46c, NG $2.51 +5c
The oil price was up when I wrote yesterday but drifted back after comments from Iraq that they could up production to 6m b/d if necessary, hearts of gold these guys. With the inventory position being revisited and still not looking any better both WTI and Brent are down another 78 cents as I write.
United Oil & Gas
UOG has announced this morning that an updated CPR on the Podere Gallina licence onshore Italy shows a ‘significant upgrade’ to the reported resources for the licence. In addition to the announcement of 7/2 where gross 2P reserves of 13.3 Bcf were reported, now a further 14.1 Bcf of gross 2C contingent resources and 91.5 Bcf of unrisked gross prospective have been included.
I’m overdue a meeting with CEO Brian Larkin so will update in more detail then but this is a very good addition to the Italian portfolio which obviously includes the Selva Field which is planned to begin production in 2020 at a rate of 150,000 cubic metres of gas a day. Readers know that any mention of the word Italy gives me the heebie jeebies so I leave that with the usual caveats until Brian puts me right. UOG continues to exhibit good portfolio characteristics and is definitely worth keeping on the radar screen.
Reabold Resources/Union Jack
I don’t normally mention individual well spuds but there has been plenty of hype around this one which Reabold and Union Jack have announced that drilling operations are under way at the West Newton A2 well in East Yorkshire. The well will first drill into the Kirkham Abbey Formation gas discovery which has a 72% COS and then the deeper Cadeby Formation which is an oil exploration target with a 24% COS.
Should the gas appraisal be successful then the companies are confident of swift monetisation of the gas assets due to the proximity of local pipelines and infrastructure which makes this a most interesting prospect. Investors can also play the well through either Reabold or Union Jack depending on their approach to beta, coming in with the oil as well would truly be a bonanza…
I met with Jeremy Asher, Chairman and CEO of Tower Resources earlier this week and at an interesting time for the company. We mainly discussed the final stages of planning that he is involved in for the NJOM-3 well offshore Cameroon which is intended to spud towards the end of this quarter. The well is an appraisal of the Thali Field where two wells were previously drilled by Total and upon success would be suspended as a producer before the likely mobilising and installing of a MOPU or possibly a FPSO. Costs would therefore be kept down and it is certainly possible to have production by the end of this year and after that potentially up to three exploration wells could be drilled.
Financing this process has been at the forefront of the markets’ mind as the spud dates gets ever closer, the plan has been to find a debt provider and discussions are under way, with short term production, debt is a perfectly viable source of funding but the company are clearly looking at a modest farm-out and even some equity in the package. To tide over this process which inevitably takes longer than first though Mr Asher has provided a bridging loan of $750,000 with some warrants attached. I understand the market’s concern about the funding but this is a rare beast, despite needing substantial capital it is indeed a production and development play and accordingly better suited to funding via debt. Interesting times for Tower and not long to wait for definitive news on all fronts, operationally and financially.
As we get to the final dash in the Prem Liverpool go first, playing the Terriers tonight at Anfield which should be about as straightforward as it gets, the Noisy Neighbours have a trickier task at Burnley. With Spurs hosting the Hammers at Fortress White Hart Lane the big match after that is Chelski’s visit to the Theatre of Dreams or should I say nightmares on Sunday. The Gooners need to click back into form at Leicester or they will also being playing Thursday night football again next season.
F1 heads to Baku in Azerbaijan, a circuit I recently visited and it will be interesting to see if the Ferrari’s go as fast as my local taxi driver, they promised a lot at the beginning of the season.
The final day of the jumping season proper tomorrow at Sandown, not many runners but rain forecast for tonight might be welcome and we shall see old favourites such as Altior on the course.
Rugby is getting to the v strokes as well and the Chiefs v the Quins and Wasps v Sarries are always great fixtures with much to play for…