The Oil Man: Echo Energy, Chariot Oil & Gas, Premier Oil

WTI $68.10 -9c, Brent $74.64 -10c, Diff -$6.54 -1c, NG $2.77 -7c

Last week was actually relatively flat, oil consolidated at the higher levels as the market took on board the likelihood of US sanctions on Iran and WTI fell 30 cents and Brent gained 58c.

With deadline day of May 12th it seems that there will be fewer shippers prepared to take the risk of having a cargo of Iranian crude on the high seas, and so volumes will fall and prices are likely to remain firm.

Having said that, this morning crude has lost around a dollar with the about to expire Brent June contract down $1.14 and the July contract down only 82c.

The rig count firmed up, overall rigs were up eight to 1021 and oil units rose by five to 825.

Echo Energy

An operational update on its operations in Argentina from Echo this morning, where activity at Fracción D is continuing apace.

Full well testing equipment at the CSo-85 well is on site and testing is underway at this gas discovery.

Given the large prospective gas resources in the CPR, (between a low of 8.6 billion cubic feet of natural gas and a high of 82 billion cubic feet of natural gas on a gross field basis) in the Eastern flank of the Cañadon Salto field for the C1 and C3 horizons, the indicated commerciality level of between 7-10 billion cubic feet of natural gas for commercial viability looks highly encouraging.

And that is before the potential for the deeper Tobifera gas target, also in the Cañadon Salto field and which also carries high numbers in the CPR, which may be considered for a contingent exploration well later this year.

In addition to that, the four well exploration programme is about to commence on Fracción C, with the rig being mobilised 'imminently' and likely to be on location at the ELM 1004 pad in early May.

Finally, the company along with its JV partner have now received a number of 'highly competitive quotes' for the upcoming 2,000 square kilometres of 3D seismic across Fracción C, D and Tapi Aike expected to commence in Q3/Q4 this year.

Chariot Oil & Gas

News this morning from Chariot that the Rabat Deep 1 well is a duster. It did encounter tight fractured carbonates in the primary Jurassic target where they lost significant amounts of drilling fluids but encountered limited hydrocarbons.

The company, as is usual in these cases, have said that the information discovered will be "invaluable in calibrating existing data sets" but to be fair there is not much hope to cling to.

The company will do more work on Kenitra and Mohammedia where they own 75% and are operator and have a similar play to the thin sands encountered here but it may be too optimistic.

More likely is going to be off to Namibia where Chariot is 'on track and fully funded' to drill prospect S where they are targeting a gross mean prospective resource of 469 million barrels.

With data rooms open for a number of different prospects in varying countries Chariot is keeping busy and will put this disappointment behind them, after all if you are going to drill a dry hole make sure you are not paying for it, such as RD-1.

Premier Oil

Premier has sold its interests in the Babbage Area to Verus Petroleum, the interests include a 47% interest in the Babbage gas field, a 50% interest in the Cobra discovery and certain outstanding exploration commitments.

Premier will receive £62.9 million less £17 million of exploration commitments making £45.9 million to go towards debt reduction. There will be further payment to Premier of up to £5.5 million if the Cobra discovery is developed.

This is another good piece of asset decluttering by Prems who have been able to sell $300 million worth of assets and cash flow from the E.ON portfolio so far having paid $120 million for it in 2016, nice work.

Diversified Gas & Oil

Final results from DGO, but as is often the case it is fairly old news, this particularly so as the company has changed significantly even since the year end.

This Appalachian Basin play has made a virtue out of acquiring production and building up cash flow and done it so well that it has plenty of scope to pay a meaningful dividend.

The fact that this company has changed since this results period is down to two acquisitions made earlier this year, Alliance Petroleum for $95 million (£69 million) and the conventional assets of CNX Resources for $85 million paid for by a successful equity raise of $189 million after which the company refinanced its debt into the bargain.

The company has also successfully reduced both corporate and operating costs in this period and I expect more of the same.

Expect more of the same from DGO, it has a successful formula and says that it has many further opportunities in the pipeline.

It already claims to be the largest producer on AIM with 28,000 barrels per day, and coupled with EBITDA margins of over 40%, a strong balance sheet should be able to both do more deals, plus still pay out dividends which are an attraction for some oil sector investors unused to the experience.

And finally…

The top of the Premiership is sorting itself out, the Noisy Neighbours helped themselves again against the Hammers and Arsene went back to the Theatre of Dreams for his last time as Gooners Manager.

Despite receiving a fine reception and a gift from the club his youngsters found out what Fergie time was, losing 2-1 in the 91st minute. The HubCap Stealers drew 0-0 with the Potters and with Chelski just beating the Swans it's up to Spurs tonight against the Hornets to keep that top 4 pressure on.

Another incredibly exciting GP in Baku, as the Red Bull drivers played self destruct and Seb overbraked and let three past right at the end. Bottas should have won but a puncture right at the death let Prince Lewis in for an unlikely victory.

Malcolm Graham-Wood is an independent oil industry expert and freelance contributor, not a direct employee of Interactive Investor.

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