WTI $57.43 +36c, Brent $65.20 +75c, Diff -$7.77 +39c, NG $2.19 u/c

Oil price

If you look at the oil price this morning compared with when I last wrote on Thursday it is up 7% for WTI and nearly 6% for Brent and shows how quickly things can turn. It wasnt many days ago that money mangers were scaling back their exposure to crude oil as the bears had made them think that the only way is down. Looking at trade on Thursday specifically, they had to quickly do a volte face and close those bearish positions or in the vernacular of the traders, ‘chuck out a Rupert’. (Closing a bear position…)

They werent to know, poor things, that only two things have changed in the last few days, politics and economics and for the time being, short positions can be costly. Economics first, you can hear the sound of handbrake turns as the Fed said last week that it was increasingly likely that rates would come down at the July meeting, this is not long after the expected gradual rising of the cost of money. Those who worried most about global GDP might do so less now.

As for politics, the activity in the Gulf rather speaks for itself and the fact that late last week President Trump approved military activity against Iran then pulled it, shows just how close we are to meltdown. The arrival of Secretary of State Pompeo today, along with increased sanctions is probably the last chance saloon for Iran.

Pantheon Resources

Pantheon has announced this morning a partnership with eSeis, a leading high-tech geophysics specialist who will also partner with Pantheon to manage the farm-out process in Alaska and where the data room is expected to open next month.

eSeis is apparently reducing its cash rates and instead taking a 1% overriding royalty interest which saves cash for Pantheon but also modestly limits future upside in the event of success.  Given that Alaskan leases are State Government leases which carry a significantly lower royalty burden that the Lower 48 it seems worthwhile.

Gulf Keystone Petroleum

On Friday GKP announced an AGM operational update, given I was away on a course I thought that I would  mention it today as it is pertinent. The company announced that production from SH-1 is up by 105% to 7,800 b/d and SH-3 by 40% to 6,200 b/d after workovers. SH-12 has spudded as the start of the potentially exciting drilling programme gets under way which will be followed by SH-9 which will now be a feasibility study for gas re-injection into the Jurassic and not a producer. Elsewhere ESP’s will be installed in 4Q 2019 and the work on the pipeline for PF-1 continues and is expected to be completed in Q3 2019.

Production for the ytd averaged 29,993 b/d with a high of 38,100 b/d pre the PF-1 shutdown, guidance remains at 32-38/- b/d but will now be at the lower end due to changes in the drilling programme… In the announcement the company announce that the target of 55,000 b/d has been delayed but only from Q1 to Q2 2020. GKP has cash of $290m which is plenty to fully fund the entire Shaikan drilling programme as well as pay the $50m divvi and a newly announced share buyback scheme. Overall, despite the disappointing news on production, things are going well at GKP and although I was particularly sad to see that the company are losing the excellent Sami Zouari as CFO there will be a lot of good to be shown at the analysts’ visit later this year.

And finally…

Lewis Hamilton wins the French GP and in some style, with Bottas behind him and LeClerc in third, off to Austria for next week.

Also in France England’s women got through to the Quarter Finals of the Womens World Cup although they had to contend with a team from Cameroon who brought a whole new meaning to bad behaviour, grim tackling and a refusal to accept the refs decision.

Muzza is back-official as he wins the doubles at Queens with Feliciano Lopez.

And in the cricket World Cup England look shabby as they lose to Sri Lanka and are now no certainties to get through to the last four and South Africa are definitely out after losing to Pakistan.