Oil price, Columbus, AAOG, Infrastrata, Gulfsands – And finally
WTI $56.25 -$2.84, Brent $62.40 -$2.66, Diff -$6.15 +18c, NG $2.24 -3c
A bath was taken by the oil price yesterday even as the final communique was being sent by Opec+. With the heavy lifting being done in Osaka at the weekend, pointless arguing on Monday and rubber stamping yesterday the deal was finally presented to the market.
The trouble was that the news was cold, digested, gone and the markets had fresh meat to get their teeth into, indeed moving on to global growth numbers with the attendant worries for oil demand knocked the oil recovery on the head. After the close the API stats were again quite good, crude drew by 5m barrels and whilst gasoline only by 837/- which was smaller than expected distillates drew by 1.7m wowing the crowd. This morning WTI is up by 16 cents and Brent by 6c, a lot of gong but no dinner…
Columbus Energy Resources
I noticed that CERP put up a detailed presentation last week at its AGM and with an exciting second half to come thought it was worth saying a few words. There is little doubt that the last two years have been a hard exercise in clearing the decks and it looks now as if the company is in much better shape. CEO Leo Koot concentrated on the South West Peninsula with its attractive economics backed up by appealing numbers from EPI.
Two exploration wells are to be drilled in the SWP starting in late September and those numbers I mentioned, EPI has given a 45% COS on the deeper Saffron well and a 66% COS on the shallower Clove well. Indeed EPI give a 100% COS of the presence of both reservoir and charge on Saffron, and bear in mind these are exploration wells we are talking about.
So, the indicative economics are ‘compelling’ for the deeper well and they show, conservatively I’m told, a 10m barrel recovery case of $80m NPV 10 at $60 oil giving an unlevered IRR of 118%. With any oil likely to come onto production ‘almost immediately’ one can see why the prospects look so attractive. Indeed it gets potentially even better as apart from Saffron there are apparently 11 additional prospects which the company plan to go to work on, starting with the biggest, in 2020.
CERP has also mentioned a number of times that it plans to make a new country entry and the CEO mentioned it in his AGM video. It is clearly imminent as he said that at one stage he had hoped to announce it on AGM day but due to signing formalities it would be coming up ‘this month or next’. All in all whilst it has been a longer than expected warm-up for the team, CERP look as if they are moving towards an interesting phase in their development.
Anglo African Oil & Gas
AAOG has announced a fund raise this morning of up to £8.25m at 5.2p a share which one has to assume is already done as the shares are currently 4.9p. The use of the proceeds is simple, to re-enter the TLP-103c well at the Tilapia field in the Republic of Congo with a view to producing oil from the Djeno formation.
Nothing is ever simple though and the raise is in two parts, existing investors will provide £2.7m and an equity sharing agreement with the European High Growth Opportunities Securitization Fund should pay £5.5m before expenses. I say should as the actual number depends on the AAOG share price, every month for 12 months they will get a sum subject to a formula derived from the share price. This is an interesting and innovatively structured raise but the bottom line is that until meaningful production is being sold at the wellhead the jury will remain out.
The Infrastrata RNS this morning wins the competition for verbosity at least, just wait until Ben van Bilderbeek gets to know that someone is challenging his supremacy. Anyway boiled down the announcement says that the company is is equity and debt discussions for funding the construction and pre-construction of the project. Indeed they say that this is a ‘key priority’, no joke Batman…The company expects FID by the end of 2019, first injection of gas in 2022 and first commercial gas storage operations in 2023.
For those who are considering the potential of starting to build a position in Gulfsands Petroleum they should be aware that the quarterly Asset Match auction closes today. With a current glance at the book of an indicated price of 5p, anyone who thinks that Syria will one day be back in business might be considering dipping their toes in the water.
The Lioness’s World Cup came to an end last night but had that penalty……
England are playing a ‘must win’ game against New Zealand today in the CWC. Just under way England won the toss and elected to bat.