WTI $62.99 -11c, Brent $72.18 +21c, Diff -$9.19 +32c, NG $2.61 -6c
A quiet day yesterday as GDP forecasts from the OECD worries coupled with the WTO berating all who would listen (mercifully few) inched WTI down, Brent was stronger due to supply worries from Nigeria and Libya. The API stats, after the bell, have led to a modest fall overnight but the EIA stats which are expected to show a draw will be important.
Sound Energy- Liquidity event closer than expected…
Following Sound’s update yesterday that the TE-10 well, having flowed hydrocarbon gas to surface, has not achieved commercial flow rates following a stimulated well test today sees a strategic and operational update. The well result at TE-10 was no doubt very disappointing even though getting commercial gas to surface was always going to be challenging.
In today’s announcement with regard to Eastern Morocco the company says that it believes that its assessment of the acreage, following five wells and the interpretation of new seismic data all operated by the company contains a number of high impact plays. This includes the Tendrara Production concession and the TE-5 Horst discovery it contains, which is a candidate for a 66 million standard cubic feet per day mid case FID. The opportunity for additional exploration potential in the TAGI and Paleozoic across multiple leads and prospects also exists with internal estimates of up to 20 TCF (mid case) of unrisked gas originally in place.
Given that the company’s original plan was to drill up to three wells and then sell it should be said that they are now at the final stage of this process. Accordingly, today’s announcement also says that it is ‘exploring’ the monetisation options for this portfolio and will market it with a view to assessing a sale prior to FID. The company state that any sale at the right price would see the return of the proceeds to shareholders.
The company has said that with two of the current three well programme completed it has implemented a structural cost reduction programme aimed at materially reducing the company’s ongoing operating expenditure and this is expected to reduce G&A costs of over 50%.
The news today that Sierra Leone has re-opened its offshore waters to tender is excellent news for Getech who are the Government’s partner and they hope to achieve a successful outcome and are actively engaged with prospective investors. Getech has a long history of assisting Governments and NOC’s with such processes so it is not a surprise to see that they are so closely engaged here.
I suspect that it will be a profitable operation for the company as they have just completed a six month process of industry consultation and also have a revenue sharing agreement with the Government for the high-value geophysical and well data. the next few months will be busy for the company as the licence round has now formally reopened with deadlines in September and November.
Its rarely been a quieter day for sports fans but with the announcement of squads for the cricket World Cup, the tournament which starts next week is bringing excitement. England announced yesterday and of course Jofra Archer got a place which is a shame for David Willey but he may yet make an appearance.