Posted by Malcolm Graham-Wood - Malcy's Blog
The blog comes to you this week from Africa Oil Week in Cape Town, the plan is to watch the presentations and hopefully chat with the speakers and report back what's fit to print.
The oil price rallied a bit on Friday, it was a bit of a lacklustre week, WTI was up a measly 39c and Brent 58c although news was generally positive. Kurdistan remains a problem, oil exports through the Turkish pipeline are down to around 200/- b/d from a more usual 600/- whilst Venezuela is tottering on the brink of bankruptcy. Although it is only a $1bn repayment, PDVSA is thought to be going to miss this on Friday and that might just be enough to push the country off the tightrope. It is ironic that over in Argentina President Macri won a midterm vote deemed to be a vote of confidence on his agenda of pro-market economic reform.
Steve Jenkins, Chairman of SAVP gave a keynote speech this afternoon which reminded the audience that the company's acreage in Niger is looking better every time the 3D seismic is analysed. SAVP is robust at very low prices and there are three wells waiting to be drilled in the country with options to make that six wells. Those wells will be drilled as soon as the shares return from suspension. I took the chance to have a quiet chat with Mr Jenkins who was confident without giving anything away.
Thereby hangs the crucial part of the tale, the shares are suspended whilst the paperwork is being done for the potential Seven Energy acquisition,about which the company can genuinely say nothing. I don't think that the market, and that includes myself, thought that would take quite so long but having watched this process and a couple of others it is a grinding, mind blowingly turgid process. We shall find out just as soon as it is possible but I do detect longer term optimism from the company and for that reason i'm still happy to remain positive.
Cairn Energy/Far Limited
Eric Hathon, exploration director of Cairn Energy, gave a very positive speech to the conference this morning and I was able to have a one to one meeting with him afterwards. Whilst Cairn havent changed their numbers at all, and readers will know that I think that the numbers will book a lot higher in due course, it is the language that is being spoken that to me is more positive than before. It is clear now that the appraisal process is now complete with the results from all the wells coming in way better than expected. There is no doubt whatsoever that as the partners go into the development process, all options remain on the agenda, these are what will determine the timings to first oil but it is a massively profitable, substantial and to quote Woodmack ‘a world class asset by any standards'.
The question that most would want to ask and of course I did without expecting an answer, is whether or not Cairn will sell all or part of the Senegal asset. The answer is again, what I had been expecting, the field is fully financed at current oil prices, and lower I suspect and there is no pressure whatsoever to sell up. The second part of the answer is equally predictable, ie if we were to receive a bid that was simply too good to be true, the board would have to consider it for understandable reasons of financial rectitude. It is worth noting that Cairn have a record of giving money back to shareholders so would be comfortable if that scenario played out.
All this makes the valuation of Far Limited to be not just difficult to understand but impossible to justify, whatever happens with all the possibilities open to the partners old and new, at A7c the shares are a steal, tomorrow I am interviewing Cath Norman so expect another update soon.
Premier Oil has announced that the Catcher FPSO has arrived and been hooked up, with a bit of twiddling it remains on target for first oil this year, my spies tell me that a bet on first oil on Christmas Day would be a canny one…
The presentation from Genel today was, as one might expect at an African one and Mike Adams, Head of Exploration talked about Somaliland, a difficult task given the political backdrop. Indeed whilst the geological presentation goes almost as to have to black stuff coming out of the ground already refined and virtually for free, the political unrest makes the country almost toxic in its complexity. The jury is out, there is no doubt about the size of the prize, just quite how to get one's hands on it…
Gil Holzman, Chairman and CEO of Eco Atlantic Oil & Gas spoke about both of his exciting prospects in Namibia and in Guyana both of which came through the company's policy of taking large stakes and de-risking by his scientific team. With Exxon finding oil every time they drill nearby Guyana does indeed look exciting whilst in Namibia the ever present Walvis Basin does have attractions. More after I have a one to one with Gil, hopefully tomorrow.
The footy at the weekend made one believe that one was in a terrible dream especially if you support either Merseyside clubs or the red side of Manchester. As a result of that drubbing by the Gooners, Toffees manager Ronald Koeman has lost his job while for Spurs Wembley has lost its fear factor having stuffed the HubCap Stealers.
Lewis Hamilton won the US GP but with Vettel behind him in second place the fight goes on albeit getting more difficult for the Scuderi…
No full baseball report today but I have to mention that the Astros came from behind to make it through to the World Series where the Dodgers lie in wait…
At the Australian MotoGP the anticipated battle for the Championship between Marquez and Dovizioso failed before the off when a qualifying crash put Dovizioso at the rear of the grid from which he never recovered. However an 8 bike battle ensued with Aussie Jack Miller gaining a good lead despite fracturing his leg 3 weeks ago. He was eventually swallowed up by the factory bikes with the hard charging satellite bike of Zarco making a nuisance of himself and leaving tyre marks on Rossi's leathers and Marquez's bike in near misses ..whatever happened to Queensberry rules?. The sheer class of Marquez and the Honda eventually gave him the lead which he held until the flag from the Yamaha's of Rossi and Vinales. Cal Crutchlow came a solid 5th and Bradley Smith and Scott Redding were 10th and 11th. This means Marquez has a 33 point lead going into Malaysia next week. Surely he won't give it away now?
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