Interactive Investor

The Oil Man: Oil price, Bowleven, Range Resources

22nd December 2015 11:14

Malcolm Graham-Wood from interactive investor

WTI $34.74 +1c, Brent $36.35 -53c, Diff $1.61 -54c, NG $1.91 +14c

With no stabilisers, stocks growing and little sign of any restraint from producers, the oil price can only go one way at the moment, sure there may be up days in quiet markets but that's about it. The mild winter in the Northern hemisphere continues, so stocks are building in product markets as well, what we really need is the once in a lifetime appearance of someone who can change the world…

WTI outperformed Brent as it heads towards expiry which will mean that now on the same month the differential will narrow, added to by the export ban being lifted. Brent went through its 11 year low but I'm sure we can find a stat every day breaking some sort of record.

Ironically, despite the warm weather, natural gas had a rally of sorts and today is higher again but also probably transitional, at least it didnt close below the old low which is really scraping the barrel…

Bowleven

Bowleven has announced that the Zingana well on the Bomono permit in Cameroon has commenced flowing hydrocarbons and will go on an EWT. Now obviously that is good news but BLVN has got into the habit of not releasing any flow rates which is inconvenient to say the least.

I remain happy with the company at the moment but will be keen to see Kevin early in the new year if that is possible…

Cape

Cape has announced that SOCAR, its JV in Azerbaijan has won a two year contract extension from LSE:BP.:BP worth over $90 million (£60.4 million). It is worth noting that over the weekend that the Azerbaijan Central Bank abandoned its dollar peg and accordingly the currency fell by around a third.

Range Resources

I met with senior management of Range recently, I was keen to catch up with events so here are a few snippets. Recent announcements have varied in hope, time taken to land kit was an issue but now seems resolved.

Indeed things seem to be on the move in country and there are now three wells in action, with four new rigs a twenty well program is planned so 2016 should bring better news. The company has received approval for the Morne Diablo waterflood expansion and they are optimistic on that front. The production target at Range has been the ultimate of moveable feasts and now is no exception, the 1/- b/d goal is now set for the end of 2Q 2016.

Costs have been reined in significantly what with the sale of the drilling business and regarding downsizing in Texas, Puntland and with the sale of the Citation stake only Georgia and Guatemala are on the blocks (Colombia still a question?).

In theory the company is well funded now and LandOcean provides 12 months credit on all drilling services. The equity finance of $30 million is completed and trade finance is in progress for LandOcean and Sinosure to provide a facility of up to $50 million for the waterflood programme.

Overall it does look healthy enough but there are still many questions to answer next year. Operationally things appear a bit flimsy so one will need proof that things are actually happening.

I still dont quite know who runs the company, there is a CEO in country which is a clue, an 'Executive' non-executive Chairman and obviously LandOcean have an input. With such large cornerstone investors and directors invested personally, in addition to the legion of retail shareholders, quite what the free float is is difficult to call one way and another 2016 will be an 'interesting' year for all concerned.

Sundry

Might this be the last IOG announcement for a while, I will miss the daily missives until February when drilling on Skipper gets under way. Anyway, the alpha deal has completed and Skipper is acquired, enjoy your Christmas boys, you have earned it!

Bahamas Petroleum announce that the Petroleum legislation has all been passed so all is ready to go. All they need now is partnering, finance, a rig and a slot to drill, exciting times…

And Nostra Terra has announced a three year extension to its credit facility, no mean feat in this market. Bank of Texas are clearly comforted with the assets and the management's approach to the current situation to continue to back the company.

Before I go I would like to mention a charity being helped this Christmas by Simon Hawkins of this parish who says…

"Every day 17,000 children under five die of totally preventable diseases and eight year old Barty Hawkins is trying to help!"

Click here to listen to his song and donate…

And finally…

So the Gooners saw off the Noisy Neighbours and will head into the new year full of confidence, this title is theirs to lose…

It must have been the FIFA Christmas party on Sunday night as I saw the president on the telly yesterday in a right state. Unshaven with hair all over the place and a plaster on his boat race, the words 'pulled through' and 'hedge backwards' came to mind. BTW eight years, not enough…

And the BBC have given up F1 to C4 saying that they can't afford it. They could cut costs, whenever I do an interview there I would conservatively say that they are four times overmanned and that is comparing with CNBC and Sky News…

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.