Posted by Malcolm Graham-Wood - Malcy's Blog
WTI $60.19 -48c, Brent $70.18 -47c, Diff -$9.99 +1c, NG $3.72 +18c
Another poor week for oil, after what was intended to be a good start with sanctions coming into place on Monday there were more waivers than expected from the US who weren't as brutal as they had threatened to be. WTI lost $3.31 and Brent $2.65 on the week leaving WTI technically in a bear market having fallen 20% from the recent peak.
Opec+ senior Ministers met at the weekend to consider what had been written in the blog… But actually they have realised that even in this tightest of quarters, supply is still adequate and barring unforeseen circumstances will only get worse into next year. Saudi Arabia has cut back by 500,000 barrels starting next month and has said that supply needs to be down by a million barrels to manage the call on Opec crude. There is no obvious sign that Russian Minister Novak agrees but then he has a slightly more difficult audience to please at home.
Being realistic though, $60 and $70 is not a bad level given that only recently worries about emerging markets, a strong dollar and lowered GDP forecasts were expected to sap oil demand. The Baker Hughes rig count from Friday doesnt show any lack of confidence with overall rigs up by 14 at 1081 and oil units up 12 at 886. Finally the gas price is out on a league of its own at $3.72 having touched $3.824 during the session.
An Egypt update from Rockhopper this morning where all appears to be going very well. Current production from the Abu Sennan concession is 3,800 b/d gross making 840 net to RKH. Star of the show has been the Al Jahraa-6 well which has been very successful, not only with the Abu Roach-C infill oil producer but also encountered good shows in the D,E and G as well as a discovery in the deeper Bahariya, the first commercial find from this section. This is now producing in excess of 550 b/d and the company are confident that this find de-risks further exploration targets. In addition to this the Al Jahraa-10 well is being tested in both the C and D levels and the well will be brought into production on the most productive horizon.
With receivables improving, having had a number of payments from the EGPC, the company's balance was approximately $1.9m. As CEO Sam Moody says in today's announcement the company has made real progress in Egypt and specifically in the Bahariya formation. With an exploration programme ahead and some decent momentum going, the country is proving to be a good asset for RKH.
Jersey Oil & Gas
Equinor as Operator has announced that the Verbier appraisal well will now be drilled in 1Q 2019, the West Phoenix rig is currently drilling the first of a four well programme. Initial estimates of gross recoverable resources at Verbier are between 25-130 MMboe with a mean of 69 MMboe. The confirmation of early next year for this well should have no impact at all on valuation or targets for JOG shareholders, my view remains that with appraisal aiming to determine the potential volume range in the discovery substantial upside is still extremely likely. My confidence is franked by the extensive seismic campaign that may well upgrade the block next year, 2019 may be quite a year for JOG.
Zenith has noted that following admission to the Merkur Market on the Oslo Børs it has, following increased demand raised another £91,700 in the process. Whilst the aim of the admission was not to dilute existing equity holders adding another modest tranche seems perfectly sensible under the circumstances.
The gap at the top of the Premiership widens, the Noisy Neighbours beat the Red Devils and Liverpool beat Fulham whilst Chelski drew with the Toffees. The Gooners drew with Wolves and Spurs won at the Eagles.
The Brazilian Grand Prix turned into Verstappen + Ocon = Hamilton as the Dutch driver called Ocon ‘an idiot, always has been' a bit pot calling the kettle black but I have to admit it was poor driving even if he was ‘unlapping' himself at the time. As a result Mercedes walk away with the constructors title.
Bellew lost to Usyk but not after putting up a good fight against one of the best pound for pound fighters around at the moment.
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