Oil price, Genel, GKP, Coro, Egdon
Malcys Blog
Malcy's Blog - 3 min Read
11:53, 2nd April 2020

WTI $20.31 -17c, Brent $24.74 -$1.61, Diff -$4.43 -$1.44, NG $1.59 -5c

Oil price

Yesterday was fairly quiet, a bearish day with oil following markets down on further awful economic stats and rather as expected dreadful inventory numbers. Crude rose 13.8m barrels with gasoline up 7.5m but no surprise there. With no one around to take advantage of sub $2 gas demand, last week was 6.6m b/d down from nearly 10m last week…

Today the market is up, Putin has spoken of the need to ‘address challenging markets’ whilst President Trump is complaining that oil is cheaper than water forgetting that only last year he was round at Opec trying to get gasoline prices down ahead of the election…

Genel Energy Plc (GENL)

Genel has announced that it has received from the KRG October sales net proceeds of $5.6m from Taq Taq and from the Tawke RSA an override payment of $8.6m. Total payments including the payment announced yesterday come to $33.2m rubber-stamping the fact that meaningful amounts of cash are still being paid albeit slightly late.

Gulf Keystone Petroleum Ltd. (GKP)

In the same vein, GKP announce that $12.6m net, has been paid by the KRG for oil sales from the Shaikan field in October.

Coro Energy Plc (CORO)

All change at Coro this morning as the depressed global oil price situation has led to disposals, delays and senior management changes. Italy, where the disposal is awaiting Ministry approval will be cut back with temporarily suspension of production on its Sillaro, Bezzecca and Casa Tiberi fields.

At Duyung, at the Mako gas field GCA are reporting on an independent reserves audit in late April. The Board continue to estimate an upgrade in the Mako field resource size of an additional c.100 Bcf in the 2C category as a result of the 2019 drilling campaign (GCA previously ascribed 2C resources of 276 Bcf and 3C resources of 392 Bcf to the Mako field). The company still expect to sell gas through Indonesia or Singapore where a  HoA with a gas buyer is already in place but with ‘no further operations in the field expected in the near term it is being slowed prior to FID.

It has been decided that despite a decent cash balance of $4.5m it would be ‘prudent’ to reduce the cost base given it is not possible to predict how long current difficult market conditions will last. This will see a reduction of approximately $2.3 million of General and Administrative costs on an annualised basis, resulting in the Company having sufficient working capital to meet its requirements until April 2021, when the second annual coupon payment becomes due on Tranche A of the Company’s EUR 22.5m 2022 Eurobond.

On this basis it is easy to see that executive directors being offered NED roles or to walk the plank have made their decisions, accordingly CEO James Menzies is leaving with immediate effect whilst CFO Andrew Dennan becomes a NED with all NED’s taking a 25% drop in fees. So the board states ‘The ensuing commodity price volatility has only made the task tougher for E&P companies, but the Board continues to believe in Coro’s long term prospects and the now proven quality of its Mako asset, as well as its ability to add further opportunities to the portfolio when macro conditions improve’. 

Egdon Resources Plc (EDR)

After the sunshine of reporting on the Biscathorpe project last week comes the rain as the company warns about the company’s late life field production being unprofitable at current prices and this is  UK onshore E&P here. It’s relatively small beer but means an impairment charge of some 2.5-3m in the next interims. With Wressle being a ‘near term cash generative project’ for the time being that’s where the company will be spending its time and money and cutting costs wherever possible.

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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