Posted by Malcolm Graham-Wood - Malcy's Blog
Last week oil prices started off in the weak manner of previous form but ended rallying a little and both WTI and Brent were marginally up by the close on Friday. It's not an easy call at the moment, the dollar is under a bit of pressure, inventory numbers look a little more helpful, except at Cushing, and overall the Opec quotas are being adhered to. On the other hand the rig count rises inexorably and US production follows, money managers are closing down their long positions and the chart still looks dodgy. you pays your money…
SDX has announced this morning that the SD-1X well at South Disouq in the Nile Delta has spudded looking for gas in the Upper Abu Madi section and oil in the Lower AEB and Abu Roash sections. The well will take 30-45 days depending on what they find, expectations are high and if either gas or oil, or both, are discovered then it will be transformational to the company. It looks pretty optimistic on both fronts, the 3D seismic showed an AVO response which significantly de-risks the gas play and the oil play is ‘pervasive' in the block, indeed the company already have another oil target drill ready. SD Deep-1X has significantly higher potential in the oil bearing sections and I imagine that they will drill that next.
The numbers are also appealing to SDX, the well cost is $3.7m of which $3m is carried, following the recent raise they have $18.3m of cash and no debt and of course expect $30m of free cash flow this year and $42m next. Infrastructure nearby means that any discovery at South Disouq would be extremely convenient, three major trunk lines run through the concession giving transport options for gas, oil or condensate only 5km from SD Deep-1X or 11km from SD-1X.
Even if the South Disouq well doesnt come in there is plenty to like about SDX at the moment, the Circle deal is bedding in well, the company has a break even price of $21 Brent and a strong balance sheet in preparation for maybe more accretive acquisitions which the management are confident about. I think that the shares are extraordinarily cheap at the moment, I know that they carry the risk of an exploration well drilling at the moment but there is a good deal more upside than down, compare the £85m market cap with those cash flow numbers and you can see why.
Much has happened in the last week for BLVN, COC won all their votes with the exception of removing Chairman Billy Allan which has put a spanner in the works, now they need another meeting and another vote as he has the casting vote on the new, smaller board. Weekend press reports suggest that the Chairman has ‘put up the for sale sign' over BLVN and is keeping on Kevin Hart and Kerry Crawford despite them no longer being directors of the company which wasnt in COC's plans I imagine. My spies tell me that COC have a buyer lined up for Etinde and of course the Bomono deal with VOG is still on the table doing both of those deals would effectively finish the sad tale.
It was fairly inevitable that England would find the banana skin in Dublin but a shame that it was a catalogue of mistakes and schoolboy errors that handed the game to the deserving Irish. It was more fun watching the antics of France and Wales in 20 minutes of overtime, admirably refereed by Wayne Barnes, waiting for something to blow. Add the comedic attempts at franglais when checking the subs, ‘numero trois, rouge' louder and louder and then asking ‘are you injured?' to a frenchman who didnt understand the question was hilarious. Quite how a penalty try was awarded during the process was probably as tactical as it was good for the entente cordiale.
It ended 1-1 at the Etihad between the Noisy Neighbours and the HubCap Stealers whilst Spurs had won against the Saints and the Red Devils had beaten Boro, the Gooners slipped over at the Baggies pushing them down to 6th. Word is that Arsene has signed a year's extension to his contract which will irritate the fans who have just started to get restless, it will be worse if there is no Champions League next year, next weekend they host the Noisy Neighbours which might just be tough.
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