Interactive Investor

The Oil Man: Oil price, Hurricane, Range, President

20th October 2016 16:49

Malcolm Graham-Wood from interactive investor

WTI $51.60 +$1.31, Brent $52.67 +99c, Diff -$1.07 -32c, NG $3.17 -9c

I return from Norway, where little seems to phase them, to find a modest rise in the oil price that looks as if it is going to stay, at least for the time being. There are still plenty of bears around, but the people that count appear to think that they can influence on the upside.

This was perfectly described by the Saudi oil minister when speaking at the oil and money conference in London, when he said that he had the distinct impression that the market was clearly balancing - or did he say nearly balancing?

Must have been the former, as he went on to say that "the oil market is on the brink of a turnaround" and thanks for the $17.5 billion (£14.3 billion) from the bond raise...

The other change has been that the inventory stats keep defying the wit of the analysts paid vast sums to guess the number each week; this time they got the sign wrong again, expecting a build of 2.7 million barrels when in fact the Energy Information Administration reported a draw of 5.2 million, which also rallied the market.

Watch out for WTI expiry tonight, after which we are in the December contract.

Hurricane Energy - stop press…

Hurricane has just announced a £70 million placing and up to £4.4 million open offer to shareholders. This will be by issuing of 205.9 million shares at 34p, an 11% discount to VWAP.

Kerogen and Crystal Amber are holding their corner by the looks of it, taking 93 million shares, but Kerogen won't subscribe for open offer shares.

This looks like a proper raise for a company with a big discovery, well oversubscribed with a number of new institutions on board, aiming to kick in with the Lancaster EPS and other drilling.

That looks like being on Lincoln and maybe Warwick or similar and will take advantage of low industry costs. I note that the current rig, the Transocean Spitsbergen, will continue to be used, which mustn't be underestimated.

The farm-out can be restarted at some stage, with HUR in a very strong position as the final investment decision on Lancaster should be first-half 2017 with first oil first-half 2019.

Much more to follow after a chat with the company but, yet again, Dr Trice and his team have delivered the goods for the shareholders.

President Energy

Another Argentina update from President today, where it seems to be having more than its fair share of downtime.

The first well in the latest coiled tubing programme suffered from a leak in the tubing ironically and "provided valuable information", as it does, but only a limited amount of oil to surface.

On the DP 1002 S/T, drilling remains suspended whilst investigations continue, but the company points out that it was mechanical failures, which won't affect the long-term drilling potential.

Catch-up

Aminex has announced that, on Ntorya-2 appraisal well, the rig is being mobilised and will spud in the last quarter.

And Range Resources quarterly report confirmed all the activities that had been announced already. Key here is that the company is concentrating on focusing on the waterflood projects and that Morne Diablo will achieve production in fourth-quarter 2016 and Beach Marcelle in first-quarter 2017.

The last remaining two development wells will drill in fourth-quarter of this year.

And, as if it needed any more hassle, Circle Oil has received news from Circle Link that it is calling in its $20 million loan by 15 November, as it believes that a default has occurred in the CLA. "Join the queue" is probably the best advice…

And finally…

The Noisy Neighbours went to Barcelona in the Champions League last night but it wasn't pretty - unless you are a Barca fan that is. Four-nil on the night with all sorts of action on the pitch. The Gooners won as easy as could be, it might be their year…Tonight the Saints are at Inter while Fenerbahçe travel to the Theatre of Dreams.

And the first test match of the series has started in Bangladesh where England played three spinners and Joe Root. Batting first England didnt find it easy and at the close were 258-7 almost a good day.

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.