Posted by Malcolm Graham-Wood - Malcy's Blog
WTI $73.94 -21c, Brent $77.30 -$2.14, Diff -$3.36 -$1.93, NG $2.86 -6c
There was little change in the market fundamentals although the differential closed up with August Brent expiring making all look worse than it was, both crudes are up this morning. The market could have been forgiven for being worse, Reuters suggested that the Saudis were already up to 10.7m b/d and Russia to 11.7m b/d which shouldn't come as a surprise except to those bears with very little brains.
SAVP has updated the market today which is very wise as there are people out there who worry about the Seven Energy Transaction not completing. The company are completing formalities and whilst these cannot be taken for granted are expected to complete in the 3rd quarter of 2018. As a reminder the company has previously received a letter of authorisation to proceed from the authorities in Nigeria, and I note the quotes from both the Accugas banks and private equity partner AIIM in the release giving their support.
On the production front, average daily numbers from Jan-May were 18.8 kboepd of gross gas with sales down Q2/Q1 due to power plant maintenance which should be back to normal in H2. With the Accugas GSAs are subject to take or pay provisions higher than anticipated 2018 production volumes, and it's reassuring to see Andrew Knott talking about the impact the World Bank payment guarantee is having on cash flows. Also they have applied to extend the Accugas pipeline network, which is part of the growth story to generate more, higher paying customers. Finally, the company are cancelling the share premium account which will provide the directors the flexibility to pay dividends and buy back shares.
SAVP might have been held back by length of time the completion has taken but with such success in Niger once these technicals have been seen to I consider that the shares should move materially higher.
Echo has announced that drilling has started on CSo-2001(d) in Fracción D in Argentina. It is targeting a Tobifera high identified by 2D data and looking for 19 bcf of gross best case contingent resources plus a further 18.7 bcf gross best case of prospective resources all identified by Gaffney Cline in their CPR.
Last night saw yet more exciting footy in this years World Cup as after Brazil despatched Mexico Belgium left it late to finally beat Japan 3-2 with 15 seconds left on the clock. This afternoon it is Sweden v Switzerland and this evening Colombia take on England….
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