Opinion

Oil Price, SDX Energy, IGas, Ophir, DGO, And Finally…


WTI $65.80 +$1.07, Brent $69.65 +76c, Diff -$3.85 -31c, NG $2.86

Oil Price

The monthly numbers for crude oil were good, WTI rose 7.1% and Brent was up by 4.35%, a decent performance under the circumstances. If there had been a blog yesterday it would have noted that poor API inventory stats were not continued in the EIA numbers which showed a draw of just over a million barrels in line with estimates.

Today almost all the news remains positive, the Reuters survey says that looking at Opec production data for January adhesion remains high at 138% and of course the Fed upped their growth targets at this weeks meeting. Brent has expired remaining in positive territory but notice the differential back down at $3.85.

I said almost because it seems like the Vampire Squids are doing their best to ruin the party for everybody. Having only just raised their oil price targets (Jan 17th) then Mr Currie suggesting prices were a bit ‘too high' (Jan 18th) I notice that they have upped their targets again to $75 (3m) and $80 (year end) in an attempt to catch up with the market. We are all doomed.

SDX Energy

An update from SDX this morning in which they announce that the KSS-2 development well has spudded in the Sebou Permit onshore Morocco. The duration of the well should be 10-15 days and if successful will be connected to local infrastructure. The ONZ-7 well is scheduled to complete today and commence test production early next week. On Tuesday I did a CEO interview with Paul Welch and the link is below.

Core Finance interview: Paul Welch, CEO of SDX Energy

IGas Energy

An operational and trading update from IGas this morning and two things are different from recent announcements. Firstly, with production of 2,335 /d and guidance of 2,300-2,400 b/d IGas's conventional production is now generating free cash flow and therefore all the shale is effectively upside. Secondly there are actual signs of activity with the drill bit in North Nottinghamshire as they are planning to go ahead and drill Springs Road mid year and then Tucker Lane.

The company, as with other onshore players, have had trouble with local council planning committees, in their case at Ellesmere Port which I thought was nailed on but I am sure that another winter of electricity supply uncertainty might prod the most Luddite of councils. Despite these upsets I'm still confident that IGas which still has a huge carried work programme and highly competitive costs is in a strong position in the industry.

Ophir Energy

When I last wrote about Ophir on 17th January after their trading update I was, for the first time in a long time starting to become more positive about the company and its short term prospects, it appears that the market did not share my optimism. With no recent announcement about funding for Fortuna I can only imagine that it is this what is spooking the market and that all the good things that I mentioned at that time are peripheral at the moment.

Anyway, todays announcement that the company has been awarded a 20% stake in blocks 10 and 12 in the Mexico offshore bid round 2.4 is good news and adds to their existing block 5 in the area.

Diversified Fas & Oil

DGO announced yesterday that they had made two acquisitions totalling $180m and done an oversubscribed placing  raising the same amount, and the same as the market cap, no mean feat in any market. This increases production by 173% and PDP MMboe by 217%.

I have met DGO when they first came to the market but have failed on recent visit to catch up, by the looks of it the acquisition of US onshore acreage and paying dividends has attracted to UK market and the 28/- b/d puts them right up there at least in size terms, more when I can meet them.

Link

In case you didnt catch my Podcast this week the link is below.

VOX Markets podcast: Malcy on Jersey Oil & Gas, Serica Energy, SDX Energy and Rockrose Energy

And Finally...

And what a weekend of sport it is looking like….

The start of the 6 Nations Rugby is always a magnificent time and this one should go down to the wire. Tournament favourites appear to be Ireland but I suspect England will be hard to beat and dark horses must be Scotland after the autumn internationals… Tomorrow its Wales v Scotland and France v Ireland and on Sunday England travel to Rome to play Italy.

Football almost becomes irrelevant but the big game at the weekend is the HubCap Stealers v Spurs while Burnley host the Noisy Neighbours and the Terriers visit the Theatre of Dreams. The Gooners are all over the shop and host the Toffees which could be interesting and Chelski dont play until Monday.

If you want some racing at the weekend you have to go to Leopardstown where there is amazing racing and can see Faugheen and Footpad amongst others to give invaluable Cheltenham pointers…

The New England Patriots face the Philadelphia Eagles on Sunday night at Super Bowl LII in Minneapolis. These teams have met in a Super Bowl before and the Eagles will be hoping to avenge the loss they suffered in 2005 when Tom Brady led the Patriots to a 24-21 victory.



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