Posted by Malcolm Graham-Wood - Malcy's Blog
WTI $68.38+9c, Brent $74.06+28c, Diff -$5.68 +19c, NG $2.74 +8c
After an exuberant ride crude ended the week in further positive territory but of a modest nature. WTI was up 99c and Brent $1.48 keeping the momentum going and making new upward breakouts. As is often the case the Donald had a view, in this case he tweeted last week that there were ‘record amounts of oil all over the place' and that Opec is keeping prices ‘artificially high'. Interestingly his comments on stocks were made just after the EIA, his own Energy Department, had released inventories showing a further draw and that the OECD levels were also back down to their 5 year average, a key Opec milestone. After the Tweet Opec announced that there was not such a thing as an ‘artificial price'.
Excellent news from SAVP as they announce an encouraging start to their multi-well drilling campaign in Niger. Bushiya-1 which is on the R3 portion of the R3/R4 PSC area in the Agadem Rift Basin in South East Niger is an oil discovery of some note.
Preliminary results show that the well has encountered an estimated 10m of net oil bearing reservoir sandstones across two intervals (3m and 7m) in the primary Eocene Sokor Alternances objective. Wireline logs indicate reservoir properties to be of excellent quality in both sections and data shows light oil in both sections consistent with offset wells along trend and the depth/API trend observed across the basin. This is a significant discovery and franks the model as described by CEO Andrew Knott from the very start. Indeed the well has also come in under budget as the well took only 16 days to get to TD and 25 days to complete, 10 days before the 35 days anticipated.
The Niger drilling campaign has been anticipated for a long time and delayed for a short time whilst the acquisition of the Seven Energy assets was finalised and the shares were suspended. With this first, excellent result particularly with the discovery over two intervals it has repaid investor patience and the rig moves to Amdigh-1 in 10-15 days with a great deal of excitement.
Things are moving fast in Argentina for Echo as they announce oil to surface at the second workover in Fracción D. The well CSo-80 is a former oil producer and located in the central area of the now predominantly shut-in Canandon Salto field, it will be suspended in order to fit an ESP after which it is expected to produce at around 60 bopd. This oil and the gas pipeline currently being considered should enable rehabilitation of the field and the company has already started to look at the candidate wells for recompletion if this happens.
In the meantime the rig is moving to CSo-50 for the third and final workover of the campaign and the company has confirmed that the testing equipment needed on CSo-85 has arrived on site. All this news surprisingly left the shares slightly down but presumably consolidating after the recent 25% rerating upwards.
With its results last week RKH reported continued progress on Sea Lion which must look very attractive indeed at over $70 oil, being so geared to oil prices. Interestingly I hear that a lead bank is shortly to be appointed which should help hugely with putting the senior debt piece together and due diligence looks like it will kick off shortly. Also worth noting the big 50% reduction in G&A over the past 4 years which is now running at less than $0.5m per month and with oil where it is, I estimate they're probably more than covering that from production now.
HUR has announced that its new Non-executive Chairman is to be Steven McTiernan who has extensive board experience including 11 years at Tullow Oil.
A short word on Infrastrata which I have been keeping an eye on since the new management team arrived and have done some excellent work in the restructuring and not least cost reductions. Under new Chairman Graham Lyon and CEO Adrian Pocock, Infrastrata is now beginning to do what it says on the tin.
Those with longer memories will know that they are hoping to finally get after the Islandmagee gas storage project in Northern Ireland which, given the winter we have just had, should be a no-brainer. They announced last week a raise of £900/- and today announce that they have entered into a contract with Costain for the surface element of the FEED for the project. A contract for the subsurface work for the project is due imminently I understand.
Due to being in the Middle East last week I understand that some readers missed seeing this Podcast. I am putting it in now before today's is released….
I would like to thank all of you who sponsored Netty in her marathon yesterday, she has made her target and she and the Lords Taverners are extremely grateful. It was the hottest ever marathon and in her words ‘brutal, every step was agony' but she finished. Thank you all.
This blog is so late that it might just get the Toffees v Magpies score in it… Elsewhere in the Prem the Noisy Neighbours put 5 on the Swans and the Baggies came back from 0-2 to get a 2-2 with the HubCap Stealers, why leave it so late in so many ways? At the bottom of the table the Eagles got a 0-0 at the Hornets and the Potters a 1-1 with Burnley, with the Saints on FA Cup duty its looking pretty grim down there. As for the Cup, the Red Devils beat Spurs 2-1 at their home whilst Chelski will now meet them in the final after seeing off the Saints.
In Austin, Texas the MotoGP produced another perfect race from Marc Marquez who led almost from the off despite yet another grid penalty relegating him to 4th. This is his 6th successive win in Texas. Vinales finally got his Yamaha to work for him to get 2nd place and Iannone gave Suzuki their first podium this year. Cal Crutchlow crashed whilst fighting for a top 3. He remounted to finish 18th losing him the Championship lead but he's still in the hunt being one of 5 riders within 8 points moving to Europe in 2 weeks.
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