WTI $42.62 +28c, Brent $45.13 +78c, Diff -$2.51 +50c, NG $2.51 +7c

Oil price

The weather took over at the weekend, two storms were named and despite it being the first identified, Laura was overtaken by Marco as it headed for the coast yesterday. It has since weakened a bit and is now only a tropical depression whilst Laura is more of a challenge and is expected to be classified as a category 3 hurricane today with landfall expected Thursday 1am. This landfall is currently expected at Galveston and hence close to Houston…

This has meant that the usual knock-on effects for the energy industry come into play. Most players took non-essential workers ashore and  as of this morning I understand that around 1.5m b/d is now shut-in, that up half a million b/d on yesterday. Perhaps more importantly is that refiners are seemingly shutting-in as well (around Lake Charles is 40% of the nations refining) which has knock-on effects for gasoline prices but of course there aren’t many vehicles on the road..

Markets however have continued to drive on with better than expected US business activity the highest since early 2019 with flash comp PMI at 54.7. Stats-wise the rig count had its first meaningful pick-up on Friday adding 10 units overall to 254 and up 11 in oil to 183. The retail gasoline price last week rose 1.6c w/w, was u/c m/m and down 39.2c y/y.

Finally, in a ‘you couldn’t make it up moment’ Exxon is leaving the Dow having been in the index since 1928 when it went from 20 to 30 members….It gets worse, it’s being replaced by Salesforce, Salesforce who????

Savannah Energy

A meaningful announcement this morning from SAVE where a number of directors have bought stock. CEO Andrew Knot has led the way buying 9,239,454 shares at 7.5p and three non-exec directors and one spouse have also added to their holdings. It is also worth noting that there is a new corporate presentation out today on http://www.savannah-energy.com/

Egdon Resources

Egdon confirms today that the farm-in agreement with Shell UK re the offshore licences P1929 and P2304 containing the Resolution and Endeavour gas discoveries. The OGA has approved the transfer of a 70% interest and operatorship in both licences and the associated documentation including Joint Operating Agreements in respect of both licences has now been executed.

Commenting on the news, Mark Abbott, Managing Director of Egdon Resources plc, said:

“We are delighted to have completed the transfer of interest and operatorship to Shell in respect of these important, and potentially valuable, licences for Egdon.  The focus will now be on progressing appraisal activity on the Resolution and Endeavour gas discoveries. 

Touchstone Exploration

Briefly, as I commented on last week the news from Touchstone gets better and better and yesterday I was lucky enough to spend some time on the phone with TXP President and CEO, Paul Baay.

The value that I see in TXP is already stamped big time by the gas discoveries at Coho-1 and at Cascadura-1ST1 with significant liquids into the bargain and the fiscal advantage of gas in-country making it a double whammy.

The company has already spudded Chinook-1, another serious gas prospect with added prospects of also being liquids rich. The company, whilst being aware that 2 from 2 is a pretty good start in the Ortoire block remain very confident and have an extensive medium term drilling programme.

This includes up to 21 locations, they might include a second well at Chinook if successful, and a deeper well at Cascadura. The company is also considering hiring another rig for 2021 where it has exciting plans to drill two potential wells at Royston should opportunities permit.

Ortoire might have 1 TCF of gas and even if there is an inevitable disappointment with the drill bit, the gas and the associated liquids will make incoming funds flow very substantial indeed. Given that TXP has over 200 locations in both Ortoire and its existing conventional oil plays (currently being  negotiated for permit extensions) the upside for the company is huge.