The Oil Man: Oil price, Sound Energy, Faroe Petroleum
24th November 2016 11:50
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WTI $47.96 -7c, Brent $48.95 -17c, Diff -$0.99 -10c, NG $3.03 +4c
A very Happy Thanksgiving to the many readers over the pond.
If I had written a blog yesterday the oil price piece might have said that the OPEC technical committee had proposed that a 4-4.5% cut excluding Nigeria and Libya might do the trick. Not knowing what Iraq might do makes life more interesting but that would certainly take a tad under 1.5 million barrels per day (b/d) off OPEC supply bringing the total down to around 32.25 million b/d, certainly enough to bring some confidence back to the market.
Today it seems there is both good and bad news: for the former it looks like Iraq might just be on board to participate, but regarding the latter I suspect Iran won't. This just leaves Russia, who will be in Vienna for the pre-meetings and are likely freezers, which is probably about as good as one might hope for.
Finally, because of Thanksgiving, a lot of the data is out early this week, the EIA inventory stats showed a draw of 1.3 million barrels when analysts were predicting a rise of 290/- and with refinery utilisation up 1.6% at 90.8% there was no surprise to see gasoline inventories up by 2.3 million barrels.
Natural gas saw its first draw of the season as the price crept above $3 again and in the rig count oil units were up 3 at 474 units.
Sound Energy
has announced the latest flow rates from the TE-7 well at Tendrara and a raise of £24 million+. The flow rate was 32 million standard cubic feet per day (mmscf/d), significantly above the company's pre-drill estimates and they estimate that it has the potential of 40 mmscf/d with a 50% draw-down. The well now goes to the EWT for planning purposes.
As for the raise, the company is fully underwritten for £24.1 million at 81p so no discount and under the Primarybid.com platform retail as well as other investors can participate if they do it today. The proceeds are for the development of Tendrara and it makes eminent sense to raise money at this price if it is being offered.
There is no surprise that CEO James Parsons has used this novel, apparently a first for AIM, way of enabling its substantial retail investor base to participate alongside institutions and it will be interesting to see how the process goes. Sound has with this discovery in Morocco and the enthusiastic backing of a large band of retail shareholders got to a market cap recently at £500 million and with the outpost well scheduled for the new year there is plenty to look forward to.
Providence Resources
is not letting the grass grow under its feet either, it has secured a rig by signing up with Stena for the well on Druid/Drombeg which is scheduled for June of next year. The rate is $185/- a day which is about a third of the rate once achieved and comes with a one well extension. Obviously some way off but this will be a key well next summer on many levels.
And finally…
Both the Noisy Neighbours and the Gooners will be joining the Foxes in the next round of the Champions League but i'm afraid that the party is over for Celtic this year.
Tonight it's the Boropa Cup and the Saints are at Sparta Prague whilst Feyenoord are due at the Theatre of Dreams.
And there may be a few sore heads in the sector today after the Brindex Dinner last night, although a mole tells me that it was a rather muted affair, probably as the blog wasnt represented owing to a lack of an invitation!
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.