Oil price, President, Coro, IGas, Genel, And finally…
WTI $54.41 +51c, Brent $64.57 +96c, Diff -$10.16 +45c, NG $2.57 -1c
Oil price
Oil looks like it is going to show a good gain on the week, particularly Brent which is tapping on $65 as I write. Some months ago I wrote that ahead of the Nigerian elections that there would likely be terrorist activity, to be honest I wasn’t expecting it to happen only days before the contest but right now threats to oil installations in-country are being taken seriously. Combine that with Opec+cutbacks, led by Saudi but also even Russia are stepping up to the plate, and of course robust Chinese demand and crude is back in favour. The demand for Brent and its similar blends has taken the differential to over 10 bucks which is probably enough for the time being unless Nigeria melts down.
An independent reserves report shows that in the Neuquén Basin reserves rose substantially last year, 1P was up 82% to 8.1 MMboe and 2P was up by 41% to 11.4 MMboe fully justifying management investing in the area. Overall Argentina was up 6% to 15.4 MMboe whilst overall 2P fell as the company concentrated its capex on the Rio Negro fields rather than the lower valued Salta Province.
These numbers justify the activity in Neuquén and the recent acquisitions and we can expect increases at the Las Bases and Puesto Prado acquisitions as well as significant increases in gas production. Overall this puts NPV 10 numbers up substantially and management estimates the Group’s net 2P reserves value on an NPV 10 basis of nearly $300m. (including Louisiana but ignoring any exploration resources) ‘This represents an approximate 200% premium to the Company’s total enterprise value taking into account its current market capitalisation and total gross debt of approximately US$30 million’.
The work that was put in last year is being franked by independent reports that prove the strategy at President to be working well. If this years’ extensive activity with the drill bit is anything like as good as last years then the President rerating still has a long way to go.
A brief regulatory update from Coro this morning with regard to their Italian assets, whilst their may be some very modest fee increases amounting to ‘increase group annual operating costs by €0.1m’ there are no other material changes to the portfolio. With recent deals all in Asia, Coro has a very exciting future as detailed in an interview I did with CEO James Menzies yesterday, the link is below.
Core Finance CEO interview: James Menzies of Coro Energy
- Gas leak…
IGas has announced this morning that following a leak to super soar-away Sun, preliminary tests at Tinker Lane are ‘encouraging’ for the potential of gas resources in the Gainsborough Trough Basin but that these are still subject to further testing and validation. At Springs Road drilling is progressing more quickly than expected and the company has encountered shales at @2,200m including finding the Bowland Shale Horizon which is further good news.
After a long wait it seems that the onshore companies are having some genuinely good results that could end up in meaningful, safe and relatively simple gas production onshore UK. It now only leaves the Government to realise that heating and powering UK towns and cities from the inexpensive gas under our own soil is not only financially attractive to all but saves buying from Russia, Norway, Qatar or even the USA, the words No and Brainer come to mind…
Earlier this week I sat down with Bill Higgs, COO of Genel Energy and caught up with what has been a very busy few months. With continuing good news from Peshkabir, more wells in Taq Taq and the acquisition of the Chevron assets much has been happening at Genel and with developments like Bina Bawi still to come the outlook for Genel is very exciting, here is the link.
Core Finance CEO interview: Bill Higgs of Genel Energy
Link
Back on Monday I did the Podcast, seems like a long time ago now, I covered a number of stocks that were busy whilst I was away.
And finally…
The FA Cup is back and the big fixture pulled from the hat was Chelski v The Red Devils who play on Monday night, what a bore…Elsewhere there are exciting fixtures although Newport will hope to do better against the Noisy Neighbours than Chelski did last week… Wimbledon take on Milwall, that will be a crowd puller, Doncaster host the Eagles and even Andy is heading west for Bristol City v Wolves.
With racing off last week and a lot of horses needing a run before Cheltenham there is good racing over the weekend, particularly at Ascot and Haydock Park.
Now I have had terrible stick for not mentioning the rugby on Monday morning, it was a bad day for logistics that’s all I can say… With Ireland getting back to form to beat Scotland and Wales seeing off Italy on the Saturday it left England to demolish France at Twickenham. Sets up Wales v England pretty well wouldnt you say?
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