The Oil Man: Oil price, Chariot, Providence Resources
17th December 2015 10:02
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WTI $35.52 -$1.83, Brent $37.19 -$1.26, Diff $1.67 +57c, NG $1.79 -3c
There is no respite and that's official, as bad news for the oil price comes from every corner. Despite it being the worst kept secret since god was a boy the Fed raised rates and ensured a strong greenback and more misery for the crude price. Then the EIA stats came out and yet again the teenage scribblers got the sign wrong, a forecast of a draw of 1.4 million barrels turned out to be a build of 4.8 million, far worse than expected, you wonder why these guys get paid…
Chariot Oil & Gas
A pre-close operational update from this morning and I had Larry on the phone bright and early giving me the run-down.
I would say that the watch words are capital discipline and costs, with farm-outs being key as well, with a number of licences across the portfolio being evaluated. The company has cash of $39 million (£26.1 million) and commitments of only $12 million and is actively managing the asset base, for example the Loukos licence in Morocco has been allowed to lapse, despite being a good play it only has one prospect, probably not enough to tempt in a partner.
The collapse in seismic costs has been noted here a number of times recently and it is a big plus for Chariot who have work ongoing in Brazil and Namibia. The cost of the seismic in Brazil has fallen from $23 million to 13 to 9 and is now $7.6 million truly a collapse in the company's favour. They have gained a nine month extension on Rabat Deep to enable further determination of the site of the JP-1 well and in Mauritania they have secured a one year extension to do more work on the C-19 licence.
Although it has been fairly quiet from Chariot lately there are a number of things going on and the management have at least had the discipline to cut back on projects and preserve cash. Whilst Larry is seeing a number of high quality opportunities come through the door he is also aware that survival is the name of the game at the moment and there are no prizes for being over aggressive at the moment.
Discoveries from the likes of Kosmos in Mauritania without being identikit have boosted footfall in the data rooms where there are fewer tyre-kickers but more quality players albeit playing slightly harder ball at the moment which is not surprising. Longer term and in better times Chariot has some big positions in high risk, high reward plays and the upside is substantial, the management are doing a good job in ensuring that the company is still there when that time comes.
Providence Resources
A trading statement from this morning and given what's been going on in the last couple of years it's pretty upbeat. Barryroe is still awaiting farm-out but ever was thus, apparently it might be "in the new year" but don't stand on one leg waiting for it to happen.
In recent months the company, for a number of reasons, has increased its participation in a number of offshore licences and formed a strategic alliance with Schlumberger as well as participating in the Atlantic Margin licencing round. There is also substantial farm-out activity with Spanish Point, Hook Head and the Atlantic Margin assets all having data rooms open. A bit like Europa there is much going on but in some cases various pieces of the jigsaw have to slot into place before it's your turn, the announcement of the winners in phase one of the licencing process is a case in point.
Finally the company has secured an extension to its loan agreement with Melody Finance through to May 2018 if required which should take the heat off things somewhat. Given the traumas of recent years things do look to be steadying up a bit at Provvies and whilst much is dependent on appetite from the big boys around the Emerald Isle you can't write it off yet…
Sundry
has announced a rig contract for Brasse which will spud in mid 2016, the prospect is adjacent to the Braga field and if successful would presumably tie back to that. The company also announce that the Enoch field is back onstream.
And finally…
So as Mr Jones rebuilds the England rugby coaching staff it looks like he is turning to Dylan Hartley to be his captain as he apparently wants a "more confrontational" player in the role. We can assume that in the other 50% of games where Hartley is suspended that Joe Launchbury will skipper the side…
A spirited attempt by Whitehawk last night to get into the third round of the FA Cup was ultimately unsuccessful as the Dag and Reds eventually took them in extra time…
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.