Posted by Malcolm Graham-Wood - Malcy's Blog
WTI $62.06 -$1.48, Brent $67.11 -$1.22, Diff -$5.05 +26c, NG $2.70 +3c
At the moment oil is behaving like a number of commodities, ie the continued tariff war between the USA and China as well as the spat between Russia and most of the Western world is playing a more important part than fundamentals. With markets jittery and in risk-off mode this may stay like this for a while and accordingly Brent fell by $2.23 and WTI by $2.88 last week.
It should have been better, following comments from various Ministers latterly Alexander Novak, that suggested that the production agreement should be ‘indefinite' and also that Opec production was low and finally with the KSA increasing prices at the end of the week. The only fly in that ointment was that the rig count was up, by 11 oil units to 808.
Today is the first day of dealings in Coro Energy as Saffron + Sound Italy + £14m of raised money = an exciting venture made even more attractive by the addition of one James Menzies joining the Holy Trinity. At time of writing the shares have opened up slightly better at 4.3p giving it a market cap of around £31m. Much is expected of this vibrant and experienced management team, everything is set fair for a deal or two I would suggest….
Columbus Energy Resources
CERP has announced a Q1 update, most things appear to be going according to plan which is why the share price fall is somewhat difficult to understand. The re-negotiation of the SWP deal on ‘materially improved terms' is a success as this will play an important part in the company's future with its many prospects, a number of which are substantial. Maybe the reason for the weakness is to do with the production numbers from the Goudron field which for the time being is the producer of cash flow for the company. The production numbers were; January 427 bopd, February 541 bopd and March 542 bopd which one way or another were deemed to be ‘ a solid production base within 2018 guidance and despite technical challenges'.
I suspect that this is where the misunderstanding lies, it is not obvious to know quite what the 2018 guidance actually is amongst phrases such as ‘peak production' and ‘high case targets' which also confuse the February peak and Q1 numbers. Nevertheless the cashflow is positive to the tune of $700,000 in the period and there is cash of $4.1m which enables the management to look at a number of ‘accretive' acquisitions in the Caribbean of in South America. Management of CERP is of a very high quality and if they say that they are focused on achieving at least one material acquisition in 2018 I wouldnt bet against it.
The news from PANR this morning is of another operational problem with the frac job on VOBM#5 bringing back gas and water but no oil. This is genuinely puzzling as the logs showed 60 feet of net pay in the Eagle Ford sandstone and ‘superior' to the 1 well and comparable to the Double A Wells field wells which have very good flow rates.With freezing up hindering work on the well heaters have been ordered and should be on site this week, in the meantime a very experienced crew is on site trying to work out what has gone wrong.
Jay Cheatham is in town meeting with shareholders, I will add more after I have spoken to him myself.
The farm-out transaction at Ruvuma continues and ‘advanced discussions' are still underway with an affiliate of Zubair Corporation. The Ntorya-3 well has been renamed Chikumbi-1 and subject to rig availability should be drilled later this year subject to rig availability.
The Premiership continued to throw up surprises none less than the Noisy Neighbours losing to the Red Devils after being 2-0 up at half time, It might have been four if Sterling hadnt thought he was playing for England. With the HubCap Stealers getting a draw at the toffees and Chelski also held 1-1 by the Hammers it was left for Spurs and the Gooners to log wins albeit a touch scratchy. The bottom of the table will go down to the wire and will be where the best matches are to be seen in coming weeks.
In Bahrain Vettel made in 2/2 after Lewis had a five place grid penalty but nearly got it all back, how many people thought that if it had been Hamilton or Alonso chasing Seb down and not Bottas then it might have been different…..?
At the MotoGP race in Argentina Cal Crutchlow on the satellite Honda LCR showed his talent when he just pipped Johann Zarco to win followed by the improving combination of Suzuki and Alex Rins. This makes Crutchlow the first Brit to lead the Championship since Barry Sheene in 1979 ! It started with chaos on the starting grid when everyone apart from Aussie Jack Miller rushed to change to slicks due to the changing weather. The World Champion Marc Marquez stalled, bump started, and rode the wrong way into his grid position earning him a ‘Drive through' penalty. In his charge to regain position Marquez aggressively pushed passed numerous riders culminating in one where he caused Valentino Rossi to crash. This earned him a 30 second post race penalty for ‘irresponsible riding' putting him out of the points and a rebuke from Rossi saying “he destroyed our sport”. This feud has a long way to run!
And the Masters was won by Patrick Reed who got a quiet round of applause, might have been different if Speith, Fowler or McIlroy had caught him.
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