The Oil Man: Pantheon, Cape, Providence
20th July 2016 12:24
Share on
WTI $44.65 -59c, Brent $46.66 -30c, Diff -$2.01 +29c, NG $2.73 +1c
WTI expires at the close tonight, so there may be unusual movements and the Brent differential usually widens then narrows with the new contract. Weakness yesterday was put down to the oversupply situation, but that was a bit tame, as Libya lost 100/- barrels per day with a facility out for strike action.
A new word for my dictionary, at least, is from an American analyst, who called the oil price yesterday "trepidative"; not much I can add, really…
The American Petroleum Institute stats, which came out after the close, didn't add much either; crude drew 2.3 million barrels whilst gasoline built 805/- and distillates surprised by drawing 484/- against the whisper.
Cape
A litigation update this morning from regarding an industrial disease case being brought by , in which CIU appeared to "win some and lose some" findings in a judgement made yesterday.
Accordingly, and whilst the company is seeking leave to appeal the judgement, the board believe it prudent to increase the provision by £9.7 million to take account of this judgement.
The nature of these cases, and the liability that they still inflict on Cape, going back to 1956, indeed mean that it is an unwelcome but necessary call on cash of an unknown quantity, for an unknown amount of time.
Pantheon Resources
announced yesterday that it had increased its interest in Polk County following an internal reconfiguration within Vision that led to an opportunity not to be missed.
The cost of the deal is $6.5 million (£4.9 million) in cash, which will be paid for through its share of cash flows, plus 20% of the costs of drilling the VOBM#2H and -3H wells at $1-1.25 million each.
The deal means that PANR is buying P50 prospective resources at around $1.10 per barrel of oil equivalent and includes an 8% stake in VOBM#1, which IMHO would pay it out in no time.
There were a number of questions yesterday regarding the reasons for sale and why it was not an open market transaction.
Having spoken to senior management yesterday, I am confident that it was a genuine internal reconfiguration, and that the advantage of the deal staying within the family - so to speak - is mainly down to Pantheon, word has it that senior management would have gladly participated in the deal had they been allowed.
Finally, on operational matters, I understand that all is going well; VOBM#2H is going according to plan, as is VOS#1 in Tyler County (not part of the deal) where fraccing is imminent.
Sundry
Watch out for figures later; the market is expecting a fall in revenue, losses of 19 cents a share and a much lower cash position due to the $3.5 billion break fee associated with the deal, apart from that the market love it.
The shares are only a dollar off the year's high, 54% above the lows and the chart looks like the north face of the Eiger; whaddya know, eh?
has repaid its Melody loan ($20 million plus 10 million shares) and discharged the Transocean balance ($5 million, $4 million net) following Extraordinary General Meeting approval.
Having completed a successful $65 million raise, the company is debt-free, with a strong balance sheet and in a position to drill in the Porcupine Basin next year, not something I thought I would be writing only recently and the assets are genuinely worth looking at.
And finally…
Who would have thought that Brendan Rodgers' first game at home would be trying to overturn a one-nil defeat at the hands of Lincoln red imps of Gibraltar, eh? Not that there will be any nerves at Celtic Park, but knowing the eyes of the footballing world will be on them does just stimulate the juices…
And Russia waits for a decision about its participation in the Olympics; do you get a feeling that Brazil 2016 may just not be the great games it sounded like when it came out of the envelope? With no President to hand, Petrobras in the Ilie Nastase and a killer disease on the rampage, who knows what to expect come 5 August.
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.