WTI $51.42 +25c, Brent $56.34 +55c, Diff -$4.92 +30c, NG $1.83 -2c
Oil will probably end up on the week which has presented a number of mixed challenges. Mid-week saw what looked like the signs of a lessening of the reach of the inscrutable coronavirus until yesterday when, working on new numbers the daily increase suddenly hit 15,000 cases. It is perfectly possible that if you are a cynic like me that the number could be anything at all, the chances of the numbers have of being accurate are pretty remote.
On the supply side Opec+ have already cut back but will need to do more, Russia will fall in line. The imbalance in 1H will remain whatever happens but ironically 2H may end up being a bit stronger if Chinese market engineering works. The EIA, always worth watching, have trimmed demand numbers but not by hair-raising proportions whereas the IEA, always wanting to make headlines are more bearish.
Diversified Gas & Oil
DGO has announced that it has so far in its buy-back programme purchased 45,997,110 shares under authority from its AGM last April. With the limit of 54m it still has a few bullets left in the chamber but the company must be astonished that it can buy stock in on an 11% yield, investors should do the same…
Far Limited-St Valentines Day Massacre
After waiting, as usual, a very long time Far has had the results from the deliberations by the International Court of Arbitration of the International Chamber of Commerce. The tribunal determined that the Senegal JOA does not grant a preemption right over a sale of shares in a JOA party.
Consequently the the Tribunal has determined that FAR did not have a preemption right over the 2016 sale of shares of RSSD 35% interest holder, Woodside Energy Senegal BV (formerly known as ConocoPhillips Senegal BV), to Woodside Energy Holdings (Senegal) Limited.
This seems to blow the idea of preemption out of the water and certainly Far had leading counsel that said otherwise to the eventual outcome. Nevertheless Far will bounce back from this and although the shares fell some 8.8% on the news it would be easy to forget the size of the asset that the company has built up as well as further growth in Senegal as well as exploration assets elsewhere in West Africa such as The Gambia. It has recently completed a substantial round of funding ensuring existing development plans in Senegal are all fully funded and received equity support from its biggest shareholder amongst others. Just the wrong time then to fall off the bike, indeed expect more investment from the founders, a wise call.
Shareholders have been asking for a shake-up at Ascent for some time and today the company announces a raft of changes including at board level, a fund-raise, debt restructuring and share consolidation through subdivision. A number of these are conditional on shareholder approval at a General Meeting of the company.
Highlights include James Parsons proposed to join as Executive Chairman with Louis Castro and Colin Hutchinson Chairman and FD to step down. It is proposed to immediately cancel the ESA with Riverfort Global Opps and conversion of the outstanding loan into a 2 year zero-coupon bullet payment loan convertible at 0.075 pence per share when share price exceeds 0.1 pence per share for more than 5 days.
The share consolidation will effectively reduce the number of shares by a factor of 100, something that the directors feel is in the best interests of the company. The raise is expected to be £800,000 at 5p (o.o5p pre consolidation) and will be to pursue important company redevelopment, as James Parsons said ‘when quality opportunities present themselves’ with the very best ‘pre-identified near-term upstream opportunities and special situations’. This will be in tandem with underpinning the Slovenian potential which ‘makes an ideal platform for growth’.
Ewen Ainsworth and Leonardo Salvadori will join the board as NED’s both with significant experience in the sector. The shares have been marked down this morning however remain at a strong premium to the proposed level of placing, shareholders as I suggested have been keenly waiting for a shake-up, this seems to me to tick pretty much every box I would want if I was a shareholder in Ascent, exciting times ahead…
The company has announced that the SD-6X (Salah) well in South Disouq (55%) has spudded targeting P50 unrisked prospective resources of c. 71 bcfe. After that the rig moves 6km west to drill the SD-12X (Sobhi) well targeting c.33 bcfe.
Upon success both would only require easy and inexpensive tie-ins to the South Disouq Central Processing Facility and whilst significantly increase SD reserves would probably add marginally to earnings. With exciting wells in Morocco things are looking better for SDX but there are still few signs of the appetite for inorganic growth which would add substantially to the party.
As always plenty of sport this weekend despite a rest from the 6 Nations Rugby. The mid season break in footy means that not all play, Liverpool at the Canaries, Spurs at Villa and the Gooners host the Magpies. Best game is Chelski v the Red Devils on Monday night.
After the first T20 v South Africa this week proved a lamentable, schoolboy chase which resulted in losing, this afternoon the second game is on at 1600 hrs.
Masses of horse-racing with Cyrname at Ascot, Haydock and Wincanton into the bargain as Cheltenham plans are finalised, I’m watching Sir Psycho at Haydock…..