Oil price, Sound Energy, IOG, Europa Oil & Gas And finally...

Tuesday, 5th June 2018 10:19 - by Malcy

The run in to the Opec meeting on June 22nd has, as I mentioned recently started remarkably early but with 24 seats around the table now and ‘pre-meetings’ needed ’twas ever going to be so. The usual five dollar boiling over has happened again and will serve a useful reminder to the enlarged group of what might happen if discipline is lost although the fundamentals still show the market to be short if one assumes that Venezuela, Angola and ultimately Iran to be unable to deliver.

WTI $64.75 -$1.06, Brent $75.29 -$1.50, Diff -$10.54 -44c, NG $2.93 -3c

It looks like the mention yesterday by Sound of ‘a period of intense newsflow’ was no joking matter as today the company announce Ministry approval for Sidi Moktar and following ‘significant inbound third party interest’ a potential farm-out of part of its 75% operated stake. The objective of any farm-out would be to achieve funding for the 2018 programme and Sound expects to retain operatorship.

The company has completed its remaining subsurface evaluation and is close to finalising the mapped portfolio and comprehensive Petroleum System Model over the entire area and in its study has mapped 28 Liassic, Triassic and Paleozoic leads and has a best case of 8.9 Tcf of gross unrisked gas originally in place. Also, Sidi Moktar has an existing gas discovery in the Lower Liassic at Kechoula which is close to local infrastructure and the gas hungry OCP phosphate plant.

By the nature of its time consuming work in the area it has been an unusually quiet time for Sound in Morocco but the mothership of the Holy Trinity rarely stays quiet for long and the news already this week gives grounds for optimism. Expect more news from these two announcements, and perhaps a hashtag, as this period of intense newsflow has surely not come to an end…

An update on ‘intelligent pigging’ and offshore surveys programmes from IOG this morning as they progress on the Thames pipeline. Initial work shows that the pipeline is in good condition and two pipeline pressure tests have confirmed its integrity. Unfortunately the intelligent pigging run gathered ‘insufficient data’ so clearly wasn’t quite as intelligent as it was made out to be and will need a second run which might take another 6 weeks to complete.

This will have delayed the process but assuming the second run achieves its data satisfactorily all will continue with IOG’s plan to move ahead with the FDP plans for the Bythe and Vulcan hubs that I wrote about recently. Finalising the pipeline should ultimately connect Bacton to the company’s 303 BCF of 2P gas reserves with all the upside in the area.

Much better news this morning from EOG as they announce a 93% increase in estimated combined gross mean un-risked prospective resources on FEL 3/13 to 2.9bn boe. This marked improvement comes following PSDM reprocessing of the 3D seismic acquired in 2013 and fully justifies its investment at the time. Next stop for EOG is to farm-out FEL 3/13 but not until work on licences FEL 2/13 and 1/17 have been brought up to the same level of evaluation as this one. Investing in EOG has always been for the long haul and today has moved that a small step in the right direction, there is still a long way to go but I assume that having got this far the management still see the sunlit uplands  in the distance.

Link

After the Bank Holiday break I was back with Vox Markets for my weekly Podcast yesterday. Here is the link and the slightly longer list of companies covered.

VOX Markets podcast: Malcy on Range Resources, Empyrean Energy, Coro Energy, Hurricane Energy, Ophir Energy, Sound Energy, Pantheon Resources, Victoria Oil & Gas, Echo Energy

And finally… Very little to report this morning as the pre World Cup friendlies continue but Germany are already frightening as they can leave Sane out of the squad….

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.