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The Pay Zone - Oil price, Sound Energy, Zenith Energy, Wentworth Resources, Columbus E R And finally...

The Pay Zone - Oil price, Sound Energy, Zenith Energy, Wentworth Resources, Columbus E R And finally...

WTI $74.15 +70c, Brent $79.44 +$1.59, Diff -$5.29 +89c, NG $2.92 -2c

Oil price

A good week for oil with WTI up $5.57 and Brent up $3.89 for all the reasons written about at the time. As we head into July some supply shortages remain, Venezuela of course but Libya is increasingly worrying with export terminals remaining blocked. Longer term buyers will have to decide whether or not to buy Iranian crude with the strongest of all sanctions if they do..

There is no doubt that, following the Opec+ meeting that some reasonable production increases will be made although quite how much and how soon are up for debate. President Trump Tweeted that he had spoken to his ‘good friend’ King Salman of Saudi Arabia who had promised an increase of 2m b/d to get the price of oil down. Mutual distrust of Iran aside, 2m b/d of extra production, especially during the summer is just not possible at short notice and it transpired that the President actually asked for an increase in capacity, not production.

I suspect that 1m b/d is doable quite soon, 1.5m by the 3rd quarter and 2m a bit further down the line, either way, with or without Mr Trump’s intervention, the KSA is fully able to manage the oil price on the upside or the downside on their own…

If the President really wants to get world oil production up he should facilitate more and faster pipeline expansion in the US onshore. Baker Hughes reported on Friday that oil wells actually decreased last week probably as a result of shortage of capacity, ‘the price of oil is too high’ as they say in the best Washington circles…

Sound Energy

Sound has announced that it has raised $15m at 37p (a 7.5% discount) to ‘strengthen the company’s cash position before initiation of the high impact 3 well exploration programme in Eastern Morocco’. This is contingency money so to speak which puts Sound in a strong position at the negotiating table at a later date as they have enough cash at this stage anyway and therefore a smart move I suspect.

Zenith Energy

Zenith has announced that its results have been posted and brings an update on their proposed acquisition in Indonesia. The due diligence has evidential negative discrepancies ‘exceeding 5% of the book values’ and ‘therefore Zenith intends to renegotiate the total consideration of $6.6m. I am aware that a number of companies are attempting to do asset deals in the country at the moment and this story is familiar to many of them.

It is also worth noting that there have been some interesting share purchases announced lately with Brian Clark, Mirabeau and most recently Miton adding to holdings…

Wentworth Resources

Wentworth has announced that June payments for Mnazi Bay in Tanzania total $3.1m net to the company. Payments from both TPDC and Tanesco were received for one months gas sales. The company also announces that June gross production was 87 MMscfd which is in line with expectations.

Columbus Energy Resources

Columbus has announced that it is rolling over the practice of paying Directors and senior management partially in shares which will now be done at 5.1p. I think that there is little doubt that CERP are doing the correct thing here although the market has trimmed the shares this morning. Later this month I am on a panel with Leo Koot amongst others, the link is here and the evening should  be most interesting…

https://www.eventbrite.co.uk/e/oil-gas-investor-evening-with-malcolm-graham-wood-malcy-and-aim-listed-ceos-tickets-46763627268

And finally…

At the Austrian GP at the Red Bull circuit Max Verstappen cruised home unaware of the carnage behind him. With tyres blistering and engines failing the Ferrari’s came in behind him and unusually both Mercs DNF’d.

The MotoGP at Assen became one of the best motorcycle Grand Prix races ever with six riders taking it in turn to lead.The resurgent Lorenzo stormed off the line from 10th place to 2nd and quickly took the lead from Marquez leading a train of eight riders all within a second.The close racing caused Vinales to collide with Marquez which temporarily upset his rhythm and Rossi to ram Lorenzo but all stayed onboard. Marquez’s Honda finally escaped the bunch to take the chequered flag followed by Alex Rins on the improving Suzuki and Vinales’ Yamaha took 3rd. meaning Spain dominated the podium, small compensation for events in Russia later on. Cal Crutchlow struggled with tyre wear at the end but managed to hold 6th place and be the top independent rider again.

Apologies, tiredness at the end of a  long blog promoted Poland and Senegal beyond their station! At the weekend France ko’d Argentina, Uruguay beat Portugal, Croatia got past Denmark on pens but most surprisingly Russia held Spain to a draw and went on to win also on pens.

Today sees Brazil play Mexico and Belgium take on Japan in what might have been England’s side of the draw…

Wimbledon starts today, usually the signal for torrential rain which particularly in the North West would be grateful for at the moment with many moors in the area burning and out of control.

Finally I notice that having gone out of contract, LeBron James has signed a massive contract with the LA Lakers, I wonder if that consecutive number of finals will be added to next year?

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