Oil price, Echo, JOG, Rose, Reabold And finally…
WTI $62.76 -11c, Brent $72.21 -41c, Diff -$9.45 -30c, NG $2.63 -1c
Whilst oil prices fell modestly on Friday due to jousting between China and the US about trade terms, on the week prices rose, Brent up by $1.59 and WTI $1.10. The upside is where the action is at the moment with a combination of geopolitical concerns and supply issues keeping the market tight.
The former include the Iranians seemingly using the Houthi rebels to poke the Saudi bear, leading to reprisals on Yemen whilst also calling the USA names in the playground which may be unwise as the reply, should that ever come will be ‘the official end’ of Iran as we know it.
The latter was discussed at the Opec+ monitoring committee which met in Saudi at the weekend, who said these guys don’t keep in touch? With a proud boast of adherence to supply quotas, the likelihood of them continuing was enhanced and the Saudi Oil Minister said that the ‘consensus’ was to maintain supply constraints into the second half of the year. With another fall in the rig count, down 1 overall to 987 and 3 in oil to 802 the market looks like staying tight for the time being…
A canny deal from Echo this morning as they restructure their deal with CGC resulting in a consolidation at Tapi Aike. The new relationship with CGC will lead to additional funding for Tapi Aike and a ‘material reduction in the company’s near term capital requirements’ whilst at the same time reducing commitments to Fraccións C, D and CDL. This will release $2.06m from that budget that Echo can use at Tapi Aike and also frees up a potential seismic commitment of $11m from the second phase of the work at CDL.
Echo will now have 19% of Tapi Aike and have a commensurate percentage of the costs which will accelerate the exploration programme and bring forward the timing of the first well into 4Q 2019. With the company already processing the seismic data from the Eastern cube and acquiring data on the Western cube, which is scheduled to be completed by the end of H1 2019, early results ‘ reinforce the exciting prospectivity previously identified on 2D data’.
All this is excellent news from Echo, and new CEO Martin Hull is clearly delighted with the opportunity to concentrate on Tapi Aike. ‘The restructuring retains a potentially highly material stake in Tapi Aike, offering significant potential upside for equity investors, whilst substantially reducing our capital requirement and accelerating drilling’. Echo shareholders can look forward to the seismic results and selection of drilling locations following this bold move by the company.
Jersey Oil & Gas
Results this morning from JOG which are as usual meaningless, it was after the year end that JOG had the disappointment of the Verbier appraisal well. Despite this news the resources are thought to be commercial even at the lower end of the 25-130m barrel range.
With a number of additional prospects at Verbier and elsewhere on the licence such as Cortina, being assessed by the JV and reviewed with the help of the new seismic data shot last year there are genuine grounds for optimism. In addition, the 31st Supplementary Offshore Licence Round has the opportunity to create a new area hub that would create value across the area. The company remains well funded with y/end cash of £19.8m less around £5m to contribute to the Verbier well so with a number of potential ‘catalysts’ the worst looks to be behind the company, directors buying shares also helps.
Rose has changed the recent fundraising and Robert Bensh has not invested in the company, instead they have raised £300,000 at 1.2p, a premium to the last raise from Origin Creek Energy. Colin Harrington, the CEO of OCE is also joining the Board of Rose as Executive Chairman. With OCE being a key investor in just the areas that Rose is familiar with in the US and having significant regional and operational expertise Rose can only benefit from the new arrangements.
An update this morning from Reabold which is very positive but which still leaves a few numbers missing. The Burnett 2B and 2A wells have been completed and multiple zones have been perforated and swabbed. Commercial flow rates have been declared although investors will have to wait another two weeks for the crucial numbers…
Pantheon announce today that the Alkaid well data shows the reservoir is ‘greatly superior’ to pre-drill estimates and that the Brookian zone has the potential to improve reserve and production potential both there and at the adjoining Phecda structure. The company are freeze protecting the well and permitting the pad area which probably means that the well is commercial but so far this news has not been forthcoming.
True to form the Noisy Neighbours won the FA Cup beating the Hornets 6-0. That means they have the domestic treble which some commentators seemed to think on Saturday equals winning the treble that includes the Champions League, surely shome mistake…
England wrapped up the ODI series against Pakistan winning 4-0 and head to next week’s world cup with confidence but a selection dilemma, the squad is announced tomorrow…