The Oil Man: Premier Oil, Sound Energy, Velocys
21st July 2017 11:37
WTI $46.79 -33c, Brent $49.30 -40c, Diff -$2.51 -7c, NG $3.04 -2c
Brent did actually break through $50 yesterday, but it was a short-lived experience as ahead of the big pow-wow in St Petersburg on Monday the bears came through, betting that a new, better agreement was unlikely. Price moves next week will be determined by news from the meeting and unless it is positive this recent rally may be tested on the downside.
If the Baker Hughes rig count numbers go up again today it's worth thinking about the beneficiaries. I notice that upgraded earnings guidance the other day which prompted a rise in the and share price, although the latter was likely a wrong call.
Other areas worth considering are things like frac sands which, according to a report out by Credit Suisse, is seeing demand 'breaking all records' and I imagine making a few suppliers very happy.
As the schools break up in the UK, today is the biggest day of the year for flight activity in our skies, whilst motoring organisations report long queues on the way to domestic holiday destinations.
In the US driving miles are up again with records being set on Memorial weekend and on the Independence holiday, and the gasoline market is seeing stock draws not seen for a while. We may be going greener, but just for the time being fossil fuels do appear to be here to stay, at least for the short term.
Sound Energy
has released an Eastern Morocco update this morning, it confirms that the OGIF acquisition will be completed later this quarter and that, subject to various regulatory agreements, will extend the Tendrara licence by a further eight year period in 2018. The company is pursuing a geophysical programme including an FTG survey and 2D seismic which is funded by Schlumberger under their agreement.
The company is 'progressing well' with their acquisition of licence interests, or increases in interests in various prospects in Eastern Morocco. These include Meridja, now renamed Anoual, and Matarka which is a previously relinquished area.
Sound expects that this new hydrocarbon province in Eastern Morocco to be 'transformational' for both the company and, indeed, Morocco itself and that it is in a very busy period operationally.
Velocys
Not much of a fuss has been made, but have a couple of important announcements out this morning. They are 'actively transitioning' (I think that means moving) from its previous focus on technology development to its commercialisation in 'selected high value markets'.
This means the end of R&D and they will close down their UK operation at Milton Park and related activities in Plain City Ohio. The company will retain an office in the UK and grow its operational base in Houston, Texas where it will ' build the capabilities required to take forward its new biorefinery delivery business model'.
With the closure of the UK base the CEO, Susan Robertson has decided to part company with Velocys, which takes away significant experience from the board, but is inevitable as the company severs almost all its roots with the UK.
An interim CFO has been appointed, which is not a board position at the moment, one would fervently hope that a permanent appointment is made very soon and carries with it a board position. This is not a company that can afford not to have the CFO on the board. If all this is to be believed, those of us who have believed the Velocys story over the years will see this as a most interesting turning point in its history, time will tell.
Sundry
CEO Tony Durrant has an interview with Upstream Online this morning and whilst this is only something that can be read by those wealthy enough to subscribe to its full service, the headline is quite interesting.
It seems that they are about to announce an innovative deal on Tolmount whereby an Infrastructure Fund will finance Tolmount capex in return for a tariff on the field. It's not the first time this has been mentioned and until it is made general knowledge still not in the public domain, but if true it would open up a number of similar assets…
, whilst I don't cover the company, partly as I have never met the management, I have to say that the news from Broadford Bridge looks increasingly positive. The Kimmeridge limestone appears to be pretty substantial and if the flow tests are good then it may be a properly commercial discovery, worth watching and meeting I hope…
And finally…
Not quite such a busy sporting weekend as last, but plenty going on nonetheless. The Open golf continues and with Americans dominating the leaderboard it looks good for them at the moment, but the weather may just even things out a bit.
I'm often asked why I dont comment on the bike race in France, that is historical from the times when it was an extension of a laboratory experiment. It looks like Froome might win, but surprisingly it is still quite open, I hear…
Nearly 70,000 were in the stadium in Houston last night to see the Red Devils see off the Noisy Neighbours 2-0, I hope that at least some of my readers out there went along.
The women's cricket World Cup Final is on Sunday with England taking on India who beat them in the first match of the tournament.
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.
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