The Oil Man: Rockhopper, Lamprell, Wood Group
15th August 2017 12:29
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The bulls turned tail in a hurry Monday afternoon. Maybe it was the report from China of the refinery output falling, indicating lower crude demand, or perhaps lifting its force majeure on Bonny Light, who knows.
Certainly, traders report some hefty bulls closing out positions and took to the shelters with hard hats on.
The only other piece of news was from the EIA who stated US shale production in September to be up 120,000 barrels per day, in line with previous expectations.
Rockhopper Exploration
has announced an update from the Abu Sennan drilling campaign where production "remains stable" at 3,300 barrels per day in the last six months.
The Al Jahraa-9 well penetrated 5 million of pay in the AR-C reservoir but the sand was water wet, however the reservoir pressure was in line with the Al Jahraa and Al Jahraa SE fields.
They also encountered the deepest known oil shows in the AR-C reservoirs giving hope for further potential elsewhere.
The Al Jahraa SE-2X sidetrack had oil pay confirmed in the AR-C and AR-E reservoirs with the latter now producing 250 barrels of oil equivalent per day.
Finally, the company confirmed that its outstanding receivables balance for Egypt continues to reduce with further payments received in July.
The rationale behind the Greater Mediterranean strategy for RKH has been to buy producing assets with some upside and to get paid for the production and they are certainly ticking all the boxes in that respect.
I get the impression that this drilling campaign may have been quite testing and obviously a touch disappointing, but there is some potential upside if the operator can be persuaded to start a waterflood programme which should significantly increase recovery.
Also, as previously mentioned the deeper horizons could easily yield more potential and further increase production.
These wells are relatively cheap and, with 22%, RKH has limited expenditure and can recoup swiftly when production comes onstream. Overall it is a minor negative but of a modest nature, the GM strategy remains on course and the major league prize is still within their grasp.
Lamprell
On the basis that it is rarely wise to upset your customers, Lamps has today announced an "amicable" settlement with Cameron after the famous ENSCO disaster of 2016 which led to taking a $25 million (£19 million) hit.
The settlement, whilst not made public, appears to wash the cash element through the accounts (which have already been closed off) and Lamps gets a couple of land rig orders to ameliorate the pain.
In the end no one has been hurt and Lamps have not lost an important relationship with Cameron, which we mustn't forget is a subsidiary of .
Wood Group/AMFW
A bit more box-ticking today as the takeover of continues apace.
No one expected the Spanish inquisition and the Competition and Markets Authority (CMA) has rolled over and agreed to the sale of AMFW's upstream oil and gas business as expected.
There are several dates in the announcement but clearly neither Wood nor the CMA are worried about this deal being completed and one gets the impression that the deal will go through irrespective of the asset sale.
With the SFO already looking into matters at both companies, the WG compliance/legal departments will be busy. But, given how easily AMFW rolled over, the deal should complete in the final quarter of this year.
Thalassa Holdings
There are fewer people in the industry that I would like to play cards with than Duncan Soukup, chairman of who have announced today a preliminary agreement on the sale of WGP and an investment in .
If I remember correctly, the earlier offer was deemed unsatisfactory and Mr Soukup walked away. Today he announces a $30 million deal for WGP ($20 million down and $10 million earn out) and the interested third party will pay $2 million for 20% of ARL with an option to buy another 20% at the same price valid for two years.
I'm not sure how many of you out there have any interest in THAL but it's worth it just for the chairman's statements, which generally read like something from the Federal Reserve.
When you can make comments about a deal like this then you are halfway to lexicon heaven: "The interested party brings substantial node manufacturing and deployment and recovery experience to the table, which are core components of ARL's flying node system project".
Thalassa may be niche but is technically top level and never forgets that the shareholder comes first.
And finally…
Tonight sees the HubCap Stealers' return to the Champions League fray with the away leg of the tie which if they win will put them into the Group stages of the Cup.
They travel to the WIRSOL Rhein-Necker stadium to play 1899 Hoffenheim which sound like a bear that sells lager. Without Mr Coutinho, who Klopp still thinks he can, keep they should win easily enough.
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