The Oil Man: Xcite, Faroe, Chariot, Hurricane
16th June 2016 14:19
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WTI $48.01 -48c, Brent $48.97 -86c, Diff -$0.96 -38c, NG $2.60 -1c
With the Fed staying put on rates and reducing US growth rates again, there was unlikely to be any positive impetus to knock on to the oil price. After the API inventory stats the night before, all was predicted to be gloomy and so it was: crude drew only 933/- barrels against a forecast of something over 2 million.
The market had a frisson of excitement over the gasoline number, where the draw was bigger than expected, but that soon petered out and the market returned to drift downwards.
Faroe Petroleum
It's been a while since brought a well in and today's announcement from Brasse is welcome in that respect. The company announces an oil and gas discovery with 18 metres of gross gas bearing and 21 metres of oil bearing, a Jurassic reservoir analogous to the Brage field 13 kilometres away.
With good quality reservoir sandstones, the company will now drill a sidetrack to confirm hydrocarbon contacts; still a strong favourite in the bucket list.
Hurricane Energy
I have written a fair bit on lately, all of which was covered in depth at the capital markets day on Tuesday. Suffice to say that the team explained in some detail the nature of the imminent drilling programme, including taking a look at the Victory sandstone, which I hadn't expected.
The pilot well and the horizontal should provide enough data to take the programme to the next phase. The company detailed the EPS development, which should go to Final Investment Decision next year, and planning for lift etc. is very much underway.
Of course, at that stage, there will be a further need for funding, but the way they are going at present all options should remain open to them.
The meeting was well attended and those who stayed to the end got the most rewarding part of the presentation as Dr Trice explained the "Conceptual Impact to Resource Range of demonstrating that the 2C ODT is within a continuous Oil Column", thus making the potential of the discovery more substantial than even I had expected.
This would, of course, mean that the EPS could be treated as the first stage of a significant field development with all that entails.
SDX Energy
has announced that it has withdrawn from its offshore Cameroon concession, which is not a core asset, and they will no longer be investing in it.
This to me sounds extremely sensible; after the recent well which showed possible promise, the operator requested a one-year extension, which was not only refused by the authorities but they even asked the company to enter into another exploration period requiring another well commitment, something the company was reluctant to agree to.
SDX is a very interesting play and, with its recent listing on AIM and an interesting Egyptian development and exploration portfolio, should be very much on investors' radar screens.
Chariot Energy
has also announced that it is withdrawing from a licence, in its case the C-19 licence in Mauritania. This would have been done with a heavier heart than the above, but with no less commercial and financial reasons.
Chariot prides itself on its portfolio management and not having any more commitments than it can sensibly afford. After all the hard work on Mauritania, it would have been better if it could have found a partner but, without third-party corroboration of its potential, it has undoubtedly done the right thing.
It is not all bad news, though; the company has also announced that it has converted the Mohammedia permits into exploration ones and these have potentially substantial upside. In addition, the commitment here is the sole worldwide one in the whole portfolio.
Overall, this is good news for Chariot; at these times companies must remain hard-headed with regard to assets and their economic feasibility - there is no room for sentiment.
Xcite Energy
As I wrote the other day, the company's bonds are due to expire imminently and today it announces that it has received a summons to a bondholders' meeting on 30 June.
Unless something can be accommodated, it looks like equity investors will be, to a potentially large extent, wiped out. The long-awaited farm-out is still nowhere to be seen.
And finally…
It's Ladies Day at Royal Ascot and the Irish are confident that they will this year lift the Gold Cup.
A crucial day at Euro '16, as England play Wales and Northern Ireland take on the Ukraine. Wales are more confident; a draw probably ensures safety, anything better and they win the group.
France are through, though, and singing "Nous avons Payet, Dimitri Payet" as if they were Hammers…
To finish today, it's Poland v. Germany - always tasty, that one.
And it was sport, really, watching P Green in the soup yesterday at the House of Commons, although he did reprimand one of the fairies for looking at him in a nasty way.
He also sold out on the Vampire squids, which means he isn't all bad - especially as senior squid is trying to get out of testifying…
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.