Oil price, Hurricane, Echo, iog and Premier...

Monday, 2nd December 2019 14:31 - by Malcy

WTI $55.17 -$2.94, Brent $60.49 -$2.78, Diff -$5.32 +16c, NG $2.28 -22c

Oil price

A number of factors conspired to give the oil price a hefty knock downwards on Friday but the month still ended up by around a dollar. With trade expectedly quiet, movements were magnified so the US passing the Hong Kong Human Rights Act certainly didn’t help and with the usual pre-Opec+ positioning taking place jitters abounded. This morning there is a rally of something over a dollar going on so it only took a small shakeout on thin volume to get the buyers back in.

Opec+ starts on Thursday and it should be relatively easy to construct a solid platform, dont forget that the default position is to roll-over the current deal until March by which time a better idea of 2020 supply and demand will be available and a long and protracted meeting will be avoided. Also with the start of trading of Aramco next week any knock-on effect on that will be avoided by the early completion of a harmonic meeting completed by Friday. The best laid schemes as they say gang aft a-gley…….Robert Burns.

Hurricane Energy

A Warwick West well result and Lancaster EPS operational update from Hurricane this morning where the well is confirmed as an oil discovery of light 43º oil which flowed at 1,300 bopd on natural flow whilst work continued to clean the well and evaluate reservoir performance. For practical reasons the ESP flow could not be reliably measured and the company are more than happy with a stable natural flow with virtually no water.

This is a positive result and whilst much work still has to be done in the next few months I don’t see why the basics of the 935m  bbls of P50 should be affected, sure things will change as a result of the three wells in the campaign but I don’t believe that any of these write off the Warwick structure.

At the Lancaster EPS over 2.5m barrels has been produced since first oil in June with remaining production for the rest of the year will be in-line with guidance of 11/- bopd constrained by system availability and data gathering requirements. Some of these exercises consist of carrying out periods of production from the two wells separately to assess fluid dynamics and measure reservoir performance without the impact of interference from another well.

We can expect further updates from the company over the next few weeks and of course at the next Capital Markets Day in the spring. Hurricane are clearly excited about finding another discovery of light oil like that of Lincoln,having brought oil to the surface, now is the time to evaluate the structure and continue working on this positive update from the Lancaster EPS.

Echo Energy

Echo has briefed the market today with a Santa Cruz Sur (SCS) update, integration is progressing positively with ‘detailed’ meetings with the operator with specific focus on the work programme for the near term though 2020 including budgets.

Net production from the assets so far is already 16,431 bbls of oil and 335 mmcf of gas which is already showing the advantage of having a diversified portfolio of ‘significant base production, lower risk near term production enhancement opportunities as well as exploration potential in both Tapi Aike and SCS’.

As if to prove this after the CLM x-1 well completes at Tapi Aike the rig will head to SCS to spud the Campo Limite exploration well (CLix-1001) targeting the conventional Springhill reservoir expected to be encountered at between 2150m and TD of 2,600m. As detailed before Echo’s share of the costs of this well are being paid by the vendor and reimbursed later in cash and shares. This well is expected to spud before the year end giving shareholders an exciting period of potential from both the SCS and Tapi Aike prospects.

iog

A statement by the joint administrators to the LCF bondholders on Friday restates that they are taking expert advice and that at present the iog share price is ‘at a significant discount’ to its estimated net asset value. With iog progressing ahead speedily with the Core Project it has already repaid almost half the original borrowing from LOG and that a further £12.5m has been converted into equity. Accordingly the administrators should be pretty pleased with the speed with which iog has perhaps over-delivered its side of the bargain.

Premier Oil

Premier has announced that it has achieved first gas from its BIG-P project in the Natuna Sea offshore Indonesia on schedule and ‘significantly’ below budget. CEO Tony Durrant commented ‘This is further evidence of Premier’s ability to execute full cycle projects from exploration through to production.  BIG-P increases the deliverability from our operated Natuna Sea Block A enabling us to meet a growing market share within our existing gas contracts.’

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.