The Oil Man: Gulf Keystone, Jersey Oil and Gas, Empyrean
14th August 2017 12:38
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WTI $48.82 +23c, Brent $52.10 +20c, Diff -$3.28 -3c, NG $2.98 n/c
The oil price ended down on the week but not by much, WTI lost 76 cents and Brent 32 cents as various influences waxed and waned. Today, prices are off a little.
Both the main influences seemed to be about stocks. The inventories were down in crude and mixed in products as we draw nearer to the end of the driving season.
The EIA STEO was slightly more bullish on supply and demand, no real change in the first half of this year but a bigger draw in H2.
The IEA had a slightly different perspective (but then usually does) by revising demand down and thus suggesting that stocks would take longer to draw down.
OPEC in its report owned up to oversupply but by then we knew something wasn't right when Saudi Arabia cut back production and forward sales so sharply. With the overall rig count falling by five units to 949, the oil number was up three at 768. No great inference can be taken, but the heat is certainly out of the rig rises.
Jersey Oil and Gas
Much excitement round at , I imagine, as the news is confirmed that has spudded the Verbier prospect over the weekend, a well that would totally transform the company.
The well is expected to take between 30-70 days and may include a sidetrack. Statoil, (70%) are funding the first $25 million (£19 million) and JOG (18%) gets a further cash carry of 10% of the well costs from CIECO.
The well is targeting mean prospective resources of 162 million barrels of oil equivalent and is given a 29% chance of success by ERC in their competent persons report. Higher than the normal wildcat in the area this is probably due to the significance of the 20/5a-10Y well drilled by Talisman back in 2006.
At the analyst presentation some months ago much was made of this deviated well. It wasn't targeting these J64 sands but passed through them and tested oil and gas on the intersection. JOG clearly feel that intersection to be within the south eastern flank of the Verbier prospect and thus the reasons for being so optimistic.
JOG is not purely a play on this well but it is fair to say that a good result here would be a game changer for the company.
The highly experienced team at JOG have spent time building a portfolio and intend to continue with acquisitions of exploration and production assets.
Accordingly, it is worth noting that Azinor Catalyst are apparently about to spud on the Partridge prospect where JOG have an interest.
As a result of the farm-out, should a discovery be made then JOG would receive a $2 million payout with another $2 million should a formal FDP be approved.
Furthermore, success on Verbier would likely be good news for the Cortina prospect on the same licence which is targeting the same Upper Jurassic J64 sandstone.
JOG went into the bucket list in February and has performed very well, having started at 114p and traded as high as 317p and now settling at around 250p.
Investors will be aware that there is potential downside if this well doesn't come in, but JOG has plenty more to offer. If, however, it should be successful then the shares will justify a significantly higher price, well above 500p in my estimation.
Empyrean Energy
It looks like Mr Kelly has done it again. Early news from the Dempsey well in California looks very promising indeed. say that the well has "intersected multiple intervals of interpreted significant gas shows in sandstones at the producing gas field levels".
Now this is by no means a done deal, as testing is yet to take place, but to me it ticks a lot of boxes and, if it comes in the way it looks like it might, it should be the 1 TCF prospect they were after.
Remember that Dempsey is only yards away from infrastructure with a gas metering station almost adjacent, which makes this potential find deliverable very quickly indeed.
Premier Oil
It was interesting to read the article about in yesterday's press for a number of reasons.
Firstly, as I suggested last week, the appointment of Roy Franklin as chairman is exceptionally good news and the board changes will do Premier very well.
The article suggests that there could be a conflict of interest, however, as Mr Franklin is also on the board of and designated deputy chairman of on closure of the deal.
Normally this wouldn't be noteworthy but in this day and age of E&P companies raising money from sources that include oilfield services companies (note Schlumberger recent activities) it could indeed be a conflict.
The other interesting point is similar: the market is expecting news from PMO soon about the financing of the Tolmount gas field in the SNS, which is widely believed to be being funded by an infrastructure partner in return for a tariff payment.
The article suggests that PMO expects the same to happen to the Sea Lion project - now that really would sort things out once and for all.
Sundry
An interesting article in the FT who report that is looking again at developing the Rosebank field north west of the Shetlands. With costs already reduced by 30% or more that takes over $3 billion off the bill and that apparently is making Chevron put it back on the front burner.
The article also points out that the area is pretty hot at the moment with several majors, not to mention , progressing decent finds in the region.
The worst kept secret in the oil industry was the offtake deal done by with . Today the details of a $10 million revolving prepayment facility and offtake are confirmed.
announce that payment of $15 million from the KRG has been authorised. That should mean a net $12 million over to GKP before long. They also say that the Shaikan reservoir is still producing strongly, recently averaging 36,671 barrels per day.
And have an operational update almost all of which I seem to have seen before.
The next date for Wressle appears to be November of this year but I'm not standing on one foot waiting for a result.
Some sensible portfolio rationalisation is under way with production from Fiskerton Airfield and further carry from on PEDL 209. With the Holmwood well due to be drilled but with no date excitement from Egdon, should it come is likely to be in the fourth quarter of this year.
And finally…
The Premier League returned with indecent haste but did provide some excitement in the process with plenty of goals and a number of red cards to liven proceeds.
Champions Chelski contributed two of the red cards and two goals but conceded three to Burnley; the Noisy Neighbours saw off any threat from the Seagulls 0-2.
Also conceding three were the HubCap Stealers, who were held 3-3 by the Hornets; the Gooners, who beat the Foxes 4-3; and the Eagles, who lost to Prem debutants the Terriers 0-3.
Spurs won 0-2 at the Magpies, Rooney scored the winner for the Toffees and the Red Devils beat the Hammers 4-0 at the Theatre of Dreams. The Baggies scraped the usual 1-0 and the Saints and the Swans drew 0-0. I won't do every result every week, I promise.
The Austrian MotoGP produced the closest race of the season so far when Andrea Dovizioso held off the Championship leader, Marc Marquez, to secure his third victory this season.
Marquez tried a desperate move at the last bend nearly taking them both out but Dovizioso held on to win, saying he was "more angry than happy" after the Marquez move, whereas Marquez said: "If I hadn't tried it, I wouldn't have slept well!"
Honda's Dani Pedrosa was third and Lorenzo fourth, his best race this year. The British contingent had a difficult weekend, although Scott Redding and Cal Crutchlow both managed to get into the points.
In Moto3 Joan Mir ran away with the race putting him into a 64 point lead in the Championship. Scotsman John McPhee, running in the front group, was rammed from behind by an overeager Bendsneyder taking them both out of the race. Hopefully, at the next race at Silverstone, the crowd support will boost the home riders.
Justin Thomas won the US PGA at Quail Hollow which looks very nice and Rory is considering taking the rest of the year off, how pleasing.
The athletics ended yesterday and for the two departures it didn't quite go as planned. However huge shout outs to the men's and women's 100m relay teams as they brought home gold and silver respectively.
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.