The Oil Man: Sound Energy, Independent Oil & Gas, Trinity

WTI $45.55 -34c, Brent $48.71 -10c, Diff $3.16 -44c, NG $2.48 +3c

 A mixed day in the oil market which ended with WTI and Brent going in different directions. This was mainly as the November WTI contract expired immediately followed after the close by the API inventory stats which were worse than the market expected. A build of 7.1 barrels beat the whisper, analysts had predicted a rise of only 3.9 million barrels.

This afternoon sees the OPEC "technical" meeting and then the EIA stats so we will know mores after that.

Sound Energy

Sound has today announced that it has signed a Memorandum of Understanding with Schlumberger in respect of a strategic relationship between the two companies across Europe and Africa. It has also announced the signing of a term sheet with Schlumberger Production Management (SPM) regarding the Tendrara licence, onshore Morocco.

The non-binding term sheet is the first agreement under the MOU and it is expected that SPM will collaborate with Sound on the Tendrara licence in Morocco. I expect that according to the agreement SPM will provide integrated technical services on a risked basis which will accordingly have upside linked to production performance. Although Tendrara is the first agreement to be signed I suspect that multiple assets in the portfolio are being discussed with the intention of rolling out the partnership across the board.

This is undoubtedly a coup for Sound, SLB don't do these things lightly and I understand that this deal has been in negotiation for some time. For Sound, having the world's largest oilfield services company providing strategic funds and the ability to technically de-risk assets in the portfolio is a strong endorsement of the assets, team and overall gas strategy.

Sound is ambitious, it has a cornerstone investor in Continental, has had a recent funding and this will be another partner to participate in its expansion in the European and African gas markets. At the moment, as one of the best performers in the E&P space, it will not be long before institutions realise that the company is punching well above its weight in the sector.

Independent Oil & Gas

IOG has announced that it has raised £150,000 at 7p and is now funded through to Feb 2016. Whilst not ideal it is according to the company "a small but important step for the company". The company will need to do more on the funding front but this will give them breathing space, I will speak to Mark Routh later and if there is much to add will do so tomorrow.

Trinity Exploration

Trinity has sold its onshore assets to Touchstone for $20.8 million which "relieves balance sheet pressure and provides financial flexibility". It will now "high grade" its offshore portfolio and like IOG I will try and touch base with the company later.

And finally…

A good night in the Champions League for the Gooners who beat Bayern 2-0, now all they have to do is win the return fixture… Chelski drew 0-0 at Kiev which was probably as good as expected.

Tonight the Noisy Neighbours host Seville and the Red Devils go to CSKA which wont be easy…

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.

Malcolm is a Founding Partner of HydroCarbon Capital, which provides independent advisory services to the Oil and Gas sector. He is a Director of the Maven Income and Growth VCT 4 PLC, a venture capital trust listed on the Premium segment of the main market of the London Stock Exchange.