Opinion

Oil price, Jersey Oil and Gas, SDX Energy, Empyrean Energy And finally…


 

Oil Price

The week ended quietly but performance was impressive with WTI up $2.41 and Brent trailing behind up only $1.84. This morning the trend continues and both are up another 30 odd cents with no sign of the positive trend coming to and end, at least for now. Last week saw the agencies reporting and all were to different degrees positive about demand, supply and stock levels. With 18/20 refineries either fully or partially back up things are getting back to normal, even Motiva's Port Arthur unit, the largest in the US is on its way to capacity. The rig count, unsurprisingly was down, overall -8 at 936 with oil down 7 at 749.

Jersey Oil and Gas

An update on Verbier this morning as it seems that the wireline log data which has been evaluated by Statoil showed that  ‘indications of the potential for hydrocarbons to be present in a smaller accumulation up dip of the well cannot be ruled out'. Accordingly the partners have decided to drill a sidetrack exploration well which will take 25-35 days to complete. Net cost to JOG is around £0.7m which they can fund from cash and receipts. This is a most interesting move, as whilst the statement doesnt over egg the pudding as it were, if there wasnt some genuine reason for optimism I can't see Statoil putting the money down. It may just be that JOG shareholders have been offered another bite at the cherry…

SDX Energy

SDX has announced that they have spudded the KSR-14 development well on the Sebou permit onshore Morocco. This is the first in a nine well programme following extensive technical work for optimum identification of drilling sites. The company are targeting a 50% increase in local gas sales and an increase in reserves of 100%. These results should be out in mid-October afterwhich the well will be completed, flow tested and connected to existing infrastructure within 30 days. Progress is also being made in Egypt where two exploration wells at South Disouq are targeting 150 Bscf of resources in conjunction with two development wells in 1H 2018. With so much low risk, high reward activity  in both Morocco and Egypt and funded through to the end of next year, the investment case for SDX at this level is compelling. More after I meet with the company tomorrow….

Empyrean Energy

An update from the Dempsey well this morning  and I detect a touch of ‘after the Lord Mayor's show' about the share price. I assume it is because after a flurry of announcements, each one more exciting than the last, today they have announced that they are ‘only' to flow test multiple zones.

The wireline logs data supports the previous reports of significant gas shows and testing will begin with a more economical workover rig which should be able to mobilise in 2-3 weeks after the drill rig has left. They will test in the ‘sequential way' with lowest gas zones first and I imagine that they are hoping to tap into the deeper zone, which if my memory serves me correctly should contain 100-300 BCF of gas first. Whichever zone is capable of flowing ‘pipeline quality gas at commercial rates' will then be placed into production for immediate cash flow.

I see no reason why this well will not be a significant, profitable producer with the added advantage of bringing in revenue within weeks of testing  so payback should be within months, a very solid achievement. In addition, as I mentioned last week the partners should move the rig to one of the three Dempsey lookalikes or even test the casing at Alvarez, exciting times indeed.

And finally...

The Cleveland Indians finally lost on Friday after a 22 game winning streak. It has been blog policy not to mention the streak but congratulations to Terry Francona and the Indians on a new American League record and also winning the AL Central this weekend.

The Golovkin Alvarez fight was indeed a sensational event with both fighters displaying their unique abilities and it may well have justified being called a draw. However that result was rather tainted as judge Adalaide Byrd scored the bout 18-10 in favour of Alvarez which was ludicrous, Ray Charles would have seen it better…

Carnage at the first corner of the Singapore GP as both Vettel and Raikkonen honed in on Verstappen hoping to ensure that his well known wet weather skills were negated. As it was, Kimi took out Max and in a rather quaint expression Seb ‘spun on his own coolant' and crashed out as well. That left Hamilton in front and Ricciardo, without the pace he had in testing, followed him home.

In the weekend's football the Hornets, unbeaten in the league and looking to potentially go top lost 0-6 to the Noisy Neighbours. At the Theatre of Dreams the Red Devils beat luckless Toffees 4-0 which even I admit was a bit flattering. With the Cherries beating the Seagulls 2-1, getting their season off with a first win, it left all eyes on the Eagles who lost 0-1  at home to the Saints so no points or goals for them yet this season, no worries as next week they are away at the Noisy Neighbours…Elsewhere Spurs failed to win at ‘fortress' Wembley drawing 0-0 with the Swans and that was the same score at Stamford Bridge between Chelski and the Gooners. In the bugle derby neither side claimed victory as the Terriers drew first blood but the Foxes hit back and snuck away to fight another day.

Finally the rugby season is getting under way with some fairly surprising results. Wasps lost their home record yesterday losing to the Quins who havent looked that special so far this season, I hear that it was quite tasty between Marler and Haskell. Sarries won easily at Newcastle, the Tigers beat the Cherries and top of the table Chiefs cruised past Worcester.


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