The Oil Man: Hurricane, Echo, Sound, Range Resources

WTI $49.30 +$1.07, Brent $55.16 +89c, Diff -$5.86 -18c, NG $3.06 +6c

Another healthy day for the oil price, although, to be fair, on the ground life has not yet fully got back to normal. Accordingly, the inventory stats are going to be at best an indication of what is happening in both crude and products.

Last night, the EIA numbers showed a 5.9 million build which was higher than the 4.4 million estimates, but refinery capacity is now 77.7% having fallen again. Gasoline however drew by 8.4 million barrels, which is the largest weekly fall since records began in 1990 and distillates drew 3.2 million barrels.

It was the IEA that sealed a good day, coming out with its monthly the day after the other two with a headline of crude supplies falling on ‘robust’ demand and the production deal holding.

Indeed, since then the Saudis have cut back more and so for choice it may have got a bit better. This is only a temporary rally, but WTI at nearly 50 bucks and Brent at over 55 is worth cheering about and it may not bring on too much more US production….yet.

Hurricane Energy

In an operational update this morning Hurricane (HUR) have announced that they have made the Final Investment Decision for the Lancaster EPS, and that it is still on schedule for first oil in the first half of 2019.

The FPSO Aoka Mizu is now on tow to Dubai where its upgrades will take place by Bluewater Energy Services.

A rig contract has been signed with Transocean to complete the EPS production wells and fabrication orders have been signed with Technic FMC for SURF and SPS.

This news is most welcome and comes after the funding that means that the company is fully funded to first oil, and has taken all the steps to ensure that the next 18 months will be incredibly busy.

For Hurricane and the UKCS, the visibility of, in my view, of well north of 1 billion barrels of oil coming on stream is transformational and very welcome indeed. The shares have languished before and since the raise in the summer, but once that indigestion has cleared up I can see a realistic long term target price of in excess of 100p.

Echo Energy

Echo Energy (ECHO) has announced the appointment of a country representative for Bolivia, Andres Brockmann has had 15 years with Petrobras and is a director of the Bolivian Chamber of Hydrocarbons and Energy where he will represent Echo’s interests.

Echo is getting its team together and in country structure, now being led by a highly respected, well known industry figure and shows further progress at this stage.

Sound Energy

Interims from Sound (SOU) today but, as always, are somewhat historic and don’t convey the reality of the company going forward.

Highlights were the Anoual farm-out to Schlumberger for the $27.5 million (£20 million) carried exploration programme and the TE-8 well which opened up the Palaeozoic play.

In all these areas, Anoual, Tendrara and Matarka, Sound are building an exploration focussed onshore Moroccan gas business with markets both domestically and internationally.

Following the Badile result the board are considering all their options in the country and keeping all options open, but with the recent completion of the OGIF deal the focus is for all to see.

Range Resources

Range (RRL) have had their AIM listing cancelled this morning as they have been suspended for six months following the RRDSL RTO for which they have been preparing documentation.

These listing documents have been complicated by further acquisitions of assets in Indonesia and the West Coast of Trinidad, and inclusion of these was not possible given the strict deadline.

Range are making it very clear that they are still very much committed to maintaining a listing in London and “will work on completing the required documentation to seek admission to AIM at the earliest opportunity”.

They are also proceeding with the three announced acquisitions (Range Resources Drilling Services Limited; West Coast, Trinidad; and Perlak, Indonesia) and the cancellation of trading on AIM will not impact on these processes.

Shareholders in Range have been very patient over the years and another hopefully short period of suspension should see the company return to the lists a much changed animal.

Pantheon Resources

A post-hurricane update from Pantheon Resources (PANR) this morning who have had some disruption to their operations in Texas.

In Tyler County things are getting back to normal and the VOBM#4 sidetrack rig is expected on location around the second week of October, where drilling operations are expected to take around 30 days plus testing if needed.

This appears to be about a month behind the original schedule, but it could have been worse.

In Polk County they have had plenty of rain and work needs to be done on some local roads before work recommences, but they are back laying the gas pipeline from VOBM#3 to the Gulf South trunk line.

The Kinder Morgan gas facility will be on the VOBM#3 pad and is scheduled for installation in October.

The VOBM#2H well flow-testing has been delayed and will commence as soon as the roads are fixed. Whilst this means yet further delays to their programme it was definitely outwith their control…if gas starts to be transmitted in November as currently envisaged then that will be a major step in the right direction.

Ophir Energy

Half-year statement this morning from Ophir (OPHR) where the company are concentrating on getting the next stages ready for the FID on Fortuna, expected to be by the end of this year.

Production is down but guidance is not reduced, something will have to give but they are continuing to invest in Bualuang and Kerendan despite rigorous cost cutting in the business.

I wasn’t invited to the analysts meeting, but watched the presentation this morning on the webcast and it was slick enough, playing on the strong balance sheet and “material discovered resources”.

Certainly monetising these resources is important. I don’t share quite such enthusiasm on the financials nor their exploration prospects. Indeed, on the latter it seems neither do they, having reduced from seven-eight exploration plays down to two-three right now.

Ophir needs to get the project financing on Fortuna sorted and then get the FID and final approvals through after that it will be much more plain sailing and the “unlocking of value” can begin.

Touchstone Exploration

Touchstone Exploration (TXP) announces an operational and production update this morning that shows that progress is being made by increasing production by spinning the drill bit.

Funny that, especially in an onshore province such as Trinidad where new wells are coming good.

In July and August they averaged 1,470 barrels per day and the two wells on the Coora-1 block and on Grand Ravine WD-4 block, combined with the recompletions mean that the 1,500 barrels per day mark is being hit.

The statement talks about a possible four more wells before the end of the year, which would certainly put TXP into stronger territory and maybe make them wish that they could have raised a bit more moolar when they came over here for a quote.

And finally…

Champions League again last night and very solid performances by the Noisy Neighbours and Spurs who may have finally shaken off the Wembley jinx, up until last night Anthony Joshua had won there more often than Spurs in big matches. The HubCap Stealers in the end got a 2-2 draw, but again defence was iffy and they had another player sent off.

Tonight sees the Gooners and the Toffees getting used to Thursday night football in the Boropa Cup which we now know can prove to be fruitful…

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.