The Oil Man: Petrofac, Sound, Ithaca, Faroe
11th July 2016 13:59
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WTI $45.41 +27c, Brent $46.76 +36c, Diff -$1.35 +9c, NG $2.80 +2c
The oil price rallied modestly on Friday, but it was still down around three bucks on the week.
The rise was primarily down the the non-farm payroll number of +287/- jobs easily beating the whisper of +180/-, but the rig count showed a rise of nine to 440 and plus 10 in oil units to 351, which counterbalanced the news-flow.
With more strife in Nigeria and a confident statement by the Saudi oil minister last night adding to the upwards pressure, one might have expected a bright start this morning but economic worries have left both crudes around 60 cents off as I write.
Petrofac
has announced an agreement with Petronas for the cessation of the Berantai Risk Service Contract, which will become effective on 30 September, this year.
This has always been in the offing and should result in some reimbursements from Petronas although PFC will make a slight impairment charge for the closure.
PFC has rallied very slightly off the recent low but still looks tempting to me at these levels. Although the order flow was poor in the first half, the company have a number of bids at the late stage of process and I expect positive news to come through before long - I therefore would be adding at the moment.
Sound Energy
An excellent announcement from this morning, which brings more good news from its Tendrara well onshore Morocco. Results so far are "significantly" above expectations and a significant stable flow has already been achieved, despite having accessed only 18% of the reservoir and using no stimulation.
After initial perforation of only 5 metres of the 28 metres of net pay the well has flowed at a stable flow rate of 1.36 million standard cubic feet per day using a 16/64″ choke.
Accordingly, and even at such an early stage in the process, the well has exceeded forecasts and, with further testing still to come, should be declared commercial before long.
CEO James Parsons stated that this "appears to be an early and potentially very material success at the first of our three strategic plays" and I would suggest that, with canny accumulation of acreage nearby and a strong partner, the outlook looks very exciting.
Ithaca Energy
A small update from this morning which adds a little to our current sum knowledge but confirms its gilt-edged credentials in the sector.
First half production was 9,400 barrels of oil equivalent per day on average and, of course, Stella will contribute substantially in the second half.
A very slight fly in the ointment appears to be another small delay in FPF-1, which is now slated to be on the move in late July and producing in early fourth-quarter 2016.
However this is semantics in the overall nature of things; by the end of the year Ithaca will have a serious increase in revenue, be paying down debt with little upcoming capital expenditure and continues to tick all the right boxes.
Faroe Petroleum
has announced the findings of the side-track to the recently announced Brasse oil and gas discovery.
The well has been highly successful and very similar in pressure etc. to the first part of the well, current estimates are for 28-54 million barrels of oil and 89-158 billion cubic feet of gas.
As the find is close to any number of infrastructure points, is cheap, efficient and meaningful to Faroe, 50% being in their core area of the Norwegian North Sea, what's not to like about this discovery?
Aminex
Somewhat mysteriously, announced on Friday afternoon that it was raising up to £19.5 million via a placing and open offer at 1.3p.
The new cornerstone investor is Zubair Corp from Oman, who are taking the bulk of the potential issue. Given that the current market cap of Aminex is only £27 million, this is indeed a very decent raise, at a premium to the recent price, and will leave Zubair in a strong position.
The money raised will be used to drill the appraisal well on Ntorya-2 and the exploration well on Ntorya-3 and should open up the potential within Aminex that I believe is there.
More when I have spoken with Jay, as I suspect there is an interesting story…
And finally…
It was indeed a marvellous sporting weekend led by Andy Murray who won the men's singles at Wimbledon yesterday afternoon.
Over at Silverstone, Lewis led from start to finish and it was another second place for Max Verstappen after Nico was dropped a place after a visit to the stewards' room and ended up third.
Over in Paris it looked like curtains for Portugal as Ronaldo left the field early with a sore knee but les bleus were unable to overrun them and the reds of Portugal nicked one in extra time to win one-nil.
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.