Opinion

Oil Price, Frontera Resources, DGO, Echo Energy Link, and Finally…


WTI $68.76 +68c, Brent $72.90 +74c, Diff -$4.14 +6c, NG $2.72 -2c

Oil Price

Computers work fast and do not differentiate between news as proved yesterday when the EIA inventory stats came out. The initial build in crude stocks of 5.8m barrels sent the oil deck sprawling but soon enough the product stats came to the rescue with a draw of over 3.2m barrels in gasoline and a better than expected distillate number.

The causes were twofold, crude built because of a significant rise in imports, nullifying last week's number and showing a net build of 7.6m bbls, looking at Cushing, there was a draw of 860/- bbls. In the product market, total product demand was up 1.4m b/d on the week which is pretty impressive even in the driving season.

Frontera Resources

An update on Block 12 in Georgia from Frontera this morning where the T-39 well has been side-tracked into the Eldari B formation. The well delivered 132m of total net pay in zones 9, 14, 15 and 19 which is a good sign and one the EWT confirmed. The EWT delivered between 250-529 b/d of 41.5° API and 350-600,000 scf/d of wet gas demonstrating ‘excellent well deliverability' and that production rates from future development wells may be ‘significantly higher'. There is also much more potential as the Eldari B formation goes deeper as found at Niko-1 in the Miocene and of course the CPR has 3.2 TCF of recoverable gas in the Gareji formation below the Eldari.

News from Ud-2 is mixed, the well flowed dry natural gas but  poor casing cement (the well was drilled in 1981) prevented a frac job being done so only 150/- scf/d was flowed. The company are talking about ‘considering the option of a side-track' something that they surely must consider seriously. The EWT's on T-45 and Dino-2 continue and particularly in the former, where I visited early in the year, I am hoping for good news. I am confident that despite the relatively slow pace of activities that the outcome the very high CPR numbers and be good news for shareholders.

Diversified Gas & Oil

DGO has announced the completion of the EQT deal and has also closed a $1bn 5 year facility which increases three fold on its prior facility. With a well received $250m equity offer and a new war chest I don't think we have seen the last of DGO on the acquisition trail…

Link

Yesterday I was delighted to interview Fiona MacAulay, CEO of Echo Energy for Core Finance TV. The link to the full interview is below and it is a most interesting discussion about this fast growing company.

Core Finance CEO Interview – Fiona MacAulay of Echo Energy

And Finally...

One of the sporting greats starts today, The Open Golf Championship, this time to be held at Carnoustie in Scotland. With a long hot summer in the UK the course is brown and fast and will cause different challenges than normally offered by links courses.


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