Opinion

Oil Price, Echo Energy, Range Resources, Chariot and Finally…


WTI $63.54 +17c, Brent $68.33 +31c, Diff -$4.79 +14c, NG $2.67 -4c

Oil Price

The oil price is more volatile than usual at the moment and whilst fundamentals look pretty positive and news yesterday from say, Saudi Arabia on pricing, was positive the US/Sino trade wars are influencing more than most factors.

So yesterday Saudi Aramco raised the price of May Arab light to its Asian customers signalling higher demand and lower supplies, accordingly the oil price rose especially as it looked like peace was breaking out between the USA and China. Overnight that peace has been dashed by the Donald and today we are around 40 cents down again. With Lula looking like he will be going to prison after yesterday's verdict the electoral situation in Brazil may, only may, be calming down a touch.

Echo Energy

Echo has announced that a rig has been mobilised for the three well workover programme at their Fracción D asset onshore Argentina. The rig will take three days to mobilise and then is expected to take up to ten days to complete the discovered but uncompleted gas zones. After that it is expected to be put on EWT to obtain further data on the existing gas volumes before any sanction for commercial development which would require a 28 km pipeline to be built. Testing on each well is expected to be a maximum of 30 days and each well has an all-in cost of $0.55m. Elsewhere there is also continued progress with the company saying that at Fracción C a drilling rig is expected to be on site in early May.

Range Resources

Range has announced that in Indonesia projected production is expected to be 200 b/d gross at the Perlak field, I suspect that this news, already announced must have some ASX connotation…

Chariot Oil & Gas

Last week I visited Chariot Oil & Gas and met with Larry Bottomley to talk about the current drilling programme and we discussed a number of general industry factors. Clearly with CHAR all eyes are on the Rabat Deep well where they are carried by ENI and by now will be nearly 20 days into what is a potentially 50 day well. My guess is that it will probably be day 30 or so when indications of success or otherwise are starting to be visible so only maybe a dozen sleeps before they find out if RD-1 is the transformational well they have been waiting for. Whilst the well obviously needs to come in on its own there is also the de-risking of JP-2 which I understand will be drilled ‘regardless' of the result of the first well.

Chariot are also keen to escape the monica of being called a ‘one trick pony' which is fair but one can understand after such a long wait shareholders are hoping for success at Rabat Deep. I went through in some detail the targets in Namibia where prospect S is the imminent target and would be another huge result for the company on success as I was reminded that it too is in the WoodMack list of top 20 wells to be drilled this year. With a number of further prospects here there is a another well on the W prospect early next year and of course back in Morocco there maybe a well at Kenitra then as well.

With industry costs at a low Chariot are drilling with relatively cheap dollars but they are expecting the low cost window to close as they see the first signs of increasing drilling activity in West Africa which I have written about a number of times in recent months.

There is no doubt that however the company try to paint a broader picture, any failure with RD-1 will be a seriously disappointing blow to Chariot but in my view should not be treated as the end of the game. Chariot does have an interesting portfolio of drill ready assets at long last and as has always been the case masses of upside if success comes with the drill bit. They are also clearly looking at other potentially exciting new venture opportunities to invest in whatever happens in the here and now, these should give long term backing to the shares.

And Finally...

At the top of the Prem the Noisy Neighbours can win the league if they beat the Red Devils on saturday evening, which they should even after their performance at Anfield midweek. Likewise it is the Scouse derby with the HubCap Stealers going to the Toffees who themselves were seen off by City last week but sometimes derbies can be difficult to call…Spurs are at the Potters which should be easy and Chelski host the happy Hammers in which anything could happen. At the bottom the Cherries entertain the Eagles and the Seagulls host the Terriers who need a win.

At the Masters Jordan Spieth heads the leader board as if he lived there but you have to feel for Sergio who heartened every Sunday morning player by putting five balls in the water at the 15th…

And it's MotoGP time again, this weekend the circus heads to Argentina for the second race in the calendar.



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