Posted by Malcolm Graham-Wood - Malcy's Blog
WTI $73.45 +69c, Brent $77.85 +23c, Diff -$4.40 -46c, NG $2.94 -4c
Oil appreciated yesterday but I can add little, all is going as expected with a few twists. Supply is under pressure from all sides, WTI is being squeezed as Canadian imports fall as do inventories with refinery capacity stretched. Libya is a mess as is Venezuela and other hotspots remain risky, meanwhile the Opec promise of more oil to market can't be delivered in the click of a finger, or a spigot for that matter. Brent expires tonight and I would expect to see continued demand for September crude.
Sound has announced their new basin model for Eastern Morocco which suggests an Anoual oil play. Key highlights are that, the hydrocarbon charge across the Eastern Morocco portfolio is of Devonian age, there is a significant gas charge available to fill the TAGI leads and prospects and there is a potentially significant oil play with the Palaeozoic on the Anoual permit area. This means that the third well in the upcoming drilling programme, TE-11 may well be to check out this play.
There is no doubt that things are now moving along fast and furious at Sound after an unusually quiet spell, from what we are seeing there is now much activity in Morocco and we should watch this space with some interest. #dreamsarebackinbusiness
FPM has announced that Fogelberg is now commercial post the side-track and a successful DST. 58m of gross hydrocarbon bearing Garn sand-rich reservoir was penetrated as well as 87m of Ile reservoir hydrocarbons. With preliminary analysis showing a resource range of 40-90 mmboe gross, development planning studies will be under way shortly.
Final results from Frontera which as usual are pretty meaningless although they do show a significant clean up in the company's financial state of affairs. Operationally T-39 has completed and the liner has been set. 29.5m of pay has been found in zone 19 which is highly encouraging and they have observed ‘multiple and significant oil and associated gas shows' indicating a highly charged hydrocarbon formation. This success in zone 19 bodes very well for the future and FRR is looking stronger with every piece of work they do at Taribani.
Diversified Gas & Oil
The drip feed of information from DGO regarding the acquisition continues, today confirmation is received that the EQT deal is to be funded by debt and $250m from the recent equity raise. The issue was significantly oversubscribed and gives a good guide as to demand for this company which has a model it sticks to and of course is paying a dividend…
United Oil & Gas
In a busy week I also met with Brian Larkin, CEO of United Oil & Gas to chat about one of the newer companies in the oil space. It is an interesting portfolio with low-risk European appraisal and development assets as well as a high-impact exploration project in Jamaica.
In the UK it has the 30th round acquisition of the Crown discovery with a proposed seismic reprocessing programme and in the SNS it has an option on the Acle project which is expected to drill in 2019. In the Wessex Basin it has a 10% stake in Corallian's Colter well expected to be drilled later this year and various other licences in the Wessex basin.
In Italy the company has a 20% WI in the Podere Gallina Licence where gas has been discovered in commercial volumes in the Selva field and there is exploration upside in East Selva where 3D seismic is being planned. Finally the S&V is in Jamaica where the company has a 20% WI in the Walton-Morant licence with Tullow. This is a huge area and with few wells having been drilled is genuine frontier acreage with concomitant risk.
UOG has plans to build a portfolio of multistage projects with near term low risk opportunities plus ‘super wildcat' high impact, low capex projects interspersed. Although Jamaica is the obvious big wildcat any significant success at Colter for example, would also yield significant rewards. Definitely one for the watch list.
I attended the Echo analysts meeting this week which was of considerable interest and justifies the continuing increase in the share price. Today they announce that Martin Hull is to join as CFO from Rothschild where he has been MD in the Latam department and will give significant strength to the executive team. With Julian Bessa aboard and Geoff Probert who was very impressive at the meeting, recently joined, the company has a very strong group of people at the top.
I wanted to mention RockRose as its AGM statement on Wednesday should not go unnoticed. The business that Andrew Austen is building up here is progressing fast and with each deal more good news seems to arrive. The Dyas acquisition has not yet completed but guidance is for on or around 1st September and it will be even more interesting than before.
With a positive working capital adjustment of $58-70m and substantial cash in the package this looks to be a steal, also following completion, RRE will have 11,335 b/d of production and I would wager there is more to come. To this one can add the fact that 80% of Group assets have had abandonment timetables extended by at least a year with concomitant increase in NPV. Rock on Tommy you might say…
Eco (Atlantic) Oil & Gas
I met with Gil Holzman this week as there is much going on and they are watching with interest the drill bit spinning near their post codes. In Namibia both Tullow and Chariot are soon to be drilling adjacent acreage which will give Eco a free look at the area in which they have several exciting licences. Eco has itself started the process of public hearings in country and a lot of work has gone on here.
Of course in Guyana, Exxon continue to make discoveries, the most recent being Longtail-1 which is adjacent to Eco's Orinduik licence. Here the 3D seismic is close to being finished after which the clock starts ticking for Total to decide whether the farm-in, my bet is they will….
The Eco share price has not moved yet and given the excitement on the periphery of their assets let alone when they spin the drill bit themselves there must be massive upside here before long.
Yesterday I was delighted to interview Dr Robert Trice, CEO of Hurricane Energy. With so much excitement in the market about the Lancaster EPS development there was much to discuss in which he didn't disappoint. The link is here for those who would like to watch it.
Yesterday both Colombia and Japan reached the knockout stage of the World Cup as did England and Belgium although as they knew that the match was slightly 'embarrassing' with neither side wanting to win.
No footy today but tomorrow it is France v Argentina and Uruguay v Portugal and on Sunday Spain v Russia and Croatia v Denmark.
The MotoGP moves to Assen in Holland this weekend. Lorenzo's back to back wins have shown that it's not just Marquez versus the rest whilst Brit Cal Crutchlow looks to ensure that it isn't only Harry Kane who can score consistently.
And it is also unusually Formula 1 GP time with the Austrian GP on Sunday, As I write Lewis is fastest in early practice.
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