Posted by Malcolm Graham-Wood - Malcy's Blog
WTI $70.25 +74c, Brent $77.77 +63c, Diff -$7.52 -11c, NG $2.87 +1c
With flash blogs in the last two days oil price comment has been absent but this week should show a healthy rise in the oil price for a number of reasons. Firstly it seems that buyers are backing off Iranian crude faster than almost they need to, Reuters suggested yesterday that exports are currently down to 2.06m b/d which is almost 1m b/d off recent highs.
Wednesday's EIA inventory stats showed a bigger draw than the API number had indicated both in crude oil and gasoline and distillates. This was despite refinery utilisation falling from the peak of 98.1% to 96.3% as the refiners prepare for both the upcoming Labor Day Holiday weekend and after that the formal end to the driving season. For those of you like me who love a good statistic last week the Americans consumed 22.137m b/d of oil products…..
Finally the Opec + monitoring committee has been sitting and finds the oil market in good shape. They are happy with the fundamentals and say that conformity was 109% in July having been 121% in June, I still think that especially given these figures that the market is likely to be quite tight in the coming months.
Sound has announced that it has signed a new 8 year petroleum agreement uniting areas previously covered by the Tendrara pa and Matarka reconnaissance licence in addition to the existing Anoual pa and the production concession application relating to Tendrara gas discoveries in Eastern Morocco.
CEO James Parsons commented that he is delighted to secure rights on this ‘potentially transformational' acreage until 2026 and he looks forward to approval of the production concession and commencement of the drilling programme in the near future. After a quiet time as the Sound Exploration team worked up its numbers, it looks as if activity in Morocco is about to get going again. #theVeyronzone
AMER has announced that it yesterday spudded the Pintadillo-1 well in the central part of the Platanillo block. The well is targeting the N sand anomaly with P50 resources of 11.44 mmbo and is the first of three fully funded wells on the way. With two other high impact wells on the way on other blocks I would like to think that the market might wake up to the fact that AMER is significantly undervalued at this level.
Echo has announced that it has signed an LOI to sign a new one year TEA with YPFB over the Rio Salado licence area onshore Bolivia.This gives Echo the exclusive agreement to continue technical evaluation of the block for the coming year. The work programme will include the interpretation and integration of three 2D seismic lines, acquired in 2015 / 2016, which transect part of the block and will be invaluable in defining the multi-tcf structure mapped across the Rio Salado and Huayco blocks.
The company also announce that it has agreed with CGC its partner in Argentina, to receive US $ for all gas sales and not pesos. (Oil sales for export are designated in $, for domestic sales they are in pesos) In gas sales Echo continue to sell what it doesnt use for its own fuel and power into the local market and so far this year has averaged above $4.20/mmbtu. As for oil, an export cargo of 9,450 barrels net to Echo is waiting to be loaded whilst a sale of 6,400 barrels was sold into the domestic market in August, receipts for these barrels are expected to be in the order of $1m.
Eco (Atlantic) Oil & Gas
Eco has commented on Exxon's 9th major discovery at Hammerhead-1 on the Stabroek block which found 60m of net pay of high-quality, oil bearing sandstone reservoir in the well. This discovery is only 7km from Eco's Orinduik licence boundary where Eco (40%) and Tullow (60%) are partners and obviously has very positive implications for their acreage. The Hammerhead-1 was drilled to a Total Depth of 4,225 metres and discovered material quantities of oil in turbidite channel systems. The Orinduik partnership has done extensive work and its 3D Survey includes the Hammerhead-1 well location and shows that these channel systems do extend up dip onto the Orinduik license.
‘The Partners agree that the Hammerhead-1 discovery has now materially de-risked one of the many similar channel systems in our Orinduik Block, positively mitigating both reservoir and migration principal risks. The Partners confirm that this area has of today been de-risked, and will shortly be in a position to pick the well location for our first well on this licence. We remain on track for drilling mid 2019'.
The Exxon discovery is clearly ‘ a major milestone for the company and in my mind will almost immediately lead to more news on Orinduik. I am expecting the CPR imminently which should show even more potential for the block and of course the now certain prospect of Total farming in.
Eco shares are up 11.9% as I write, this is of such quality and quantity that in my view it should and will be materially higher when the full implications of all this are taken on board by the market and todays market cap of £60m could be dwarfed when the dust settles…
H1 trading update from Getech this morning where strategy targets growth in high-margin recurring-revenue product opportunities and the company are clearly having some success already. Sales are up 39% to £4.3m of which £2.9m will be booked in H1 and the balance in H2 and 2019 for revenue recognition purposes. Costs are down 4% and net cash plus receivables (£3.9m) was flat across the period and with the change of year end we should expect more like a 40:60 revenue split. Getech appear to be doing things right with recurring revenue added to by new multi-year sales as recorded in this half.
I had a chat with Andrew Scott at Proactive Investors this week and talked about Echo Energy, SDX Energy, Far Ltd and Faroe Petroleum.
England were nearly blown away by India in the 4th test yesterday but saved by the 20 year old Sam Curran along with other parts of the tail. England batsmen were a shambles led by four ball Jennings who added a duck to his summer's bag.
F1 moves to Italy for this weekend's GP at Monza where it's raining in today's practice.
The Premiership continues with the HubCap Stealers at the Foxes, Chelski entertain the Cherries and who would have guessed that the Hornets v Spurs would be the top of the table clash? The Gooners go to Cardiff and the Noisy neighbours host the currently hapless Magpies. Talking of hapless the Red Devils go to Burnley where anything might happen.
Charity Mud Run
As in previous years I am delighted to publicise the annual Charity Mud Run organised by industry legend Rob Shepherd, if you would like to take part or just support in any way please follow instructions below.
It's going to be on Friday 21 Sep (ie in three weeks) at a new location around 30 mins by train from Liverpool Street and we're hoping for around 30 teams of 4 from brokers, advisors and corporates. It's in aid of The Hunger Project (www.thehungerproject.org.uk) and is Kindly being supported by Camarco, RBC, Baker & Mackenzie and Bedlam Brewery 🙂 if people are interested to find out more, they can visit www.cityagainsthunger.org or else email me directly via firstname.lastname@example.org
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