The Oil Man: Oil price, Range Resources, Chariot
22nd February 2016 12:09
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WTI $29.64 -$1.13, Brent $33.01 -$1.27, Diff $3.37 -14c, NG $1.80 -5c
To be honest, there is not much to mention about the oil price after last week. Losing over a buck a barrel on Friday meant that prices were almost exactly unchanged on the week, which is probably a fair reflection of what happened.
What did we learn? Well, there is a desire, from a number of sources, to secure an agreement between OPEC and non-OPEC producers to get the price up with some coordinated action - no surprise there, then.
There is also precious little that can be done about it for the foreseeable future; indeed, getting a freeze on production, whilst being very laudable, ain't going to change the market.
The bottom line is that there is still a glut, which will be made worse next month when refiners do their usual maintenance ahead of the driving season and cut back purchases in the market. Add to that continuing misery on the world economic front and you can see that it will take a bit more than a bit of shuttle diplomacy by the Venezuelans to fix the problem.
Further out there, a storm of considerable proportions is shaping up on the supply side but, at the moment, no one is building an ark…
Two other things: the rig count fell again on Friday; overall it was down 27 at 514, in oil it was down 26 at 413. And it's worth a quick visit to Houston tomorrow, as the Saudi oil minister is in town to make a speech, I hear…
Range Resources
Whisper it very quietly, but things seem to be looking better over at , which only recently looked like a basket case. Today's announcement of a strategy and work programme indicates that a number of plans are slipping into place and that hopes of meaningful production may be justified.
The highest priority is being extended to the two waterflood programmes at Beach Marcelle and Morne Diablo, where injection on one of the projects is already underway and first production as a result of waterflooding is expected to commence in second-half 2016.
The company has identified $26.5 million (£18.7 million) to spend and five new wells will be drilled this year; overall production will pick up sharply and the company is guiding to 2,500 barrels per day by the end of 2017.
Range is now fully funded with $22 million of cash, also has the LandOcean facility to draw upon and even manages to talk in the statement about possible acquisitions - is this what the market has been waiting for?
One swallow, as they say, does not a summer make and I look forward to meeting the company again soon, but this does seem like genuine progress, given today's news.
Chariot Oil & Gas
has released a bunch of stats ahead of today's analyst meeting, which I had hoped to be at; maybe I will get a chance to pop round for a chat about things.
Overall, Chariot is doing all the things it has promised in the last 18 months by maintaining its interests in Morocco, Brazil, Mauritania and Namibia, whilst spending as little as possible.
With 2015 year end cash of $39.7 million - of which $11 million is held as security against commitments and will fall with the Brazilian seismic completion - Chariot looks sound enough.
The 2015 spend was $13.8 million and this year it is forecast to be around $18.8 million. The company has managed to hunker down, yet keep its acreage and options open, whilst also taking advantage of current low costs, particularly in areas such as seismic, to be prepared for the upturn.
Sundry
has announced a contract with for work on Prelude Floating Liquefied Natural Gas project; no amount disclosed but nevertheless useful, I imagine.
and have tidied up their Kraken exposure by taking First Oil's 15% stake between them. EnQuest now has 70.5% and Cairn 29.5%.
has done what looks like quite a smart deal in acquiring Permian Basin assets, whereby it adds P1 reserves of 1.6 million barrels, of which less than 20% are in production - which gives a decent bit of upside.
The cost is $3 million, which is covered by a debt facility serviced by current production revenues. I'm not quite sure whether Matt is focusing on the USA or Africa at the moment, but seems to be holding up both ends OK.
has announced that John Hogan is stepping down as Chairman, to be replaced by Rob Arnott, another equally well known and highly respected industry face.
Argos has signed a participation deal with and , after their Rhea well went West with the rig episode recently.
And has two announcements out: their debt has another two-week extension and their first development well at Ain Tsila has been spudded.
Be warned that the blog may be sporadic this week, as the results season gets underway with its associated meetings…
And finally, here is my recent discussion with Interactive Investor about my bucket list.
And finally…
England's cricketers should not be stopped from playing their attacking game; given how the South Africans played yesterday, it's probably worth just taking a leaf out of their book…
In the FA Cup it was most interesting; the Gooners could only draw with the Hull City Tigers and relish another game, Reading beat the Baggies and the Eagles flew high over White Hart Lane.
The Noisy Neighbours rested most of their squad ahead of chicken Kiev on Wednesday and got done five-one by Chelski.
The same score at Blackburn, where the amazing Hammers ran away with it and it might have been many more, as they say. Their reward may be a trip to Shrewsbury, who have every chance against the dullards of the Premiership, the Red Devils…
Ronnie O'Sullivan - legend.
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.