The Oil Man: SDX Energy, Plexus Holdings, Columbus

WTI $65.88 +$1.58, Brent $70.45 +$1.54, Diff -$4.57 -4c, NG $2.59 -3c

Last week ended up being a very good week for oil price bulls, with WTI gaining $3.54 or 5.71% and Brent up $4.24 or 6.4%. Quite why and how this good news is not being reflected in the oil sector share prices I am at a total loss to understand.

Fair enough, companies with only E and no P don’t gain, but there is a list of stocks in the bucket list with significant production that will be making out like the proverbial bandits, especially after taking costs out by as much as 70% in the last three years. Perhaps they (investors) don’t believe it can last, but that’s not how it looks to me.

After all, last week’s rise was down to three main things, further draw in inventories against expectations (and taking them below five-year averages into the bargain), the Saudi Oil Minister pushing the agreement into 2019 and, of course, the geopolitical situation getting worse, with Iran hawks in the White House and MbS’ visit there adding to concerns about renewed sanctions on the Country.

None of these things constitute anything, but good news for oil companies and my interviews with Tony Durrant, CEO of Premier Oil and Nick Cooper CEO of Ophir Energy convinced me that, on a day-to-day basis, there is little to grumble about.

SDX Energy

SDX (SDX) has announced the spudding of the Ibn Yunus-1X well in Egypt and, whilst I don’t normally write up well spuds, this one could provide the launch pad for another big area for the company.

The well is targeting the same conventional natural gas bearing Abu Madi intervals discovered at the SD-1X well in April 2017, and is the first in a four well back to back programme at South Disouq. Any success here would de-risk a large portion of a potential 2 TCF of conventional gas.

Indeed, if the two appraisal wells which will follow Ibn Yunus are successful then they will be used as producers and could add up to 50 MMscf/d, should the exploration wells come in then you could double that. No wonder that CEO Paul Welch is “very excited to be back drilling in the South Disouq concession”.

Plexus Holdings

Following the disposal of the jack-up business the numbers released today are pretty meaningless, indeed the dividend is still suspended and there is no sign yet of any special payments following the sale of the business.

Low levels of offshore activity are cited, which is probably fair enough given the poor numbers from Wood last week, but there are still some things to get interested in in Plexus (POS) going forward, so I have requested a meeting with the company to tell me all about it.

The RNS talks about “moving on to the next stage of the growth strategy, ie development and roll out of POS GRIP enabled applications”‘ and, of course, the company has agreed what might be a highly lucrative collaboration with FMCT so business goes on at Plexus, if it looks interesting I will advise post my meeting.

Columbus Energy Resources

At long last it looks like Columbus Energy Resources (CERP) are closing the La lora Licences in Spain which will reduce costs substantially, having been paying €60,000 per month they will from now on be paying only €15,000 per month.

There must be something in there that has appeal as the announcement goes on to say that, following the imminent closure of the concession, they are expecting the Government re-tender exercise to commence in Q2/Q3 of this year, and it is the company’s intention to participate in such an offer ‘and is open to bidding jointly with a partner’. El Dorado indeed beckons for Leo Koot, the Golden Man of the sector….

And finally…

Who would have believed it eh? The Australian cricket team has vacated the high ground it has been inhabiting after being found cheating on live TV. Such a story down under means that the Prime Minister is hauled in, but most choice comments have come from former players who clearly have little love for Smith, Warner or even Lehmann.

The reverse swing achieved by the Aussies both in this series and in the Ashes was not achieved by either England or South Africa though, which is most interesting, just sayin……

In the meantime, mighty England have capitulated yet again this time in New Zealand proving that they can be awful and spineless against pretty much anyone. If however you had told them it was a one-dayer they would have scored many more and taken many more wickets.

The Grand Prix was interesting only in the fact that the imaginary safety car can produce results that could not happen in a real race. Accordingly, Vettel takes the honours in the first race of the season, but the following pack was proof that anyone might win a race this year, even McLaren, although Lewis looks likely to be hard to beat outwith special circumstances.

And I watched the Leicester v Wasps game yesterday and, not only was it a fantastic advert for club rugby, it also explains why so many players seem to get so many injuries.

Malcolm Graham-Wood is an independent oil industry expert and freelance contributor, not a direct employee of Interactive Investor.

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