Blue-chip results dominated the week’s headlines in the oil sector this week, with both Royal Dutch Shell Plc (LON:RDSB) and BP Plc (LON:BP. both delivering positive financials.
Shell on Thursday reported a big jump in income (attributable to shareholders) at US$4.08bn, compared to US$1.54bn in the preceding three month period and US$1.375bn in the same quarter of 2016.
Earnings in the third quarter were US$3.69bn, up from US$1.92bn in the second quarter and US$1.44bn in last year’s third quarter. Cash flow from operations amounted to US$7.6bn in the quarter, though excluding capital items the figure stood just above US$10bn.
Shell highlighted improvements in a number of its operating areas. Specifically, it pointed to higher contributions from its Downstream, Upstream and Integrated Gas businesses.
As seen elsewhere in the sector, Shell benefited from stronger performances in refining and chemicals divisions alongside higher crude oil prices. Shell also noted it had new fields coming online during the period, offsetting field decline and divestments.
BP results impress
Previously, on Tuesday, BP Plc (LON:BP. NYSE:BP) jumped to levels not seen since the beginning of the decade after the energy giant posted a 9% increase in third quarter profit.
Attributable profit in the three months to 30 September totalled US$1.76bn, compared to US$1.62bn in the year-ago period as BP adjusted to lower oil prices and as payments related to the Gulf of Mexico oil spill started to ease.
Underlying replacement cost profit, the company’s description for net income, rose to US$1.86bn from US$933mln last year when BP took a large writedown on exploration.
Chief financial officer, Brian Gilvary, said: "We have made strong progress this year in adjusting to the lower oil price environment and have now brought our finances, including the full dividend, back into organic balance at an oil price just below US$50 a barrel.”
He added: “Given the momentum we see across our businesses and our confidence in the outlook for the group's finances, we will be recommencing a share buyback programme this quarter. We intend to offset the ongoing dilution from the scrip dividend over time."
Echo Energy unveils Argentina deal
At the small-cap end of the market, meanwhile, Echo Energy Plc (LON:ECHO) on Wednesday unveiled the details of its latest transaction which sees it acquiring a 50% stake in Argentina.
The company is taking stakes in four licences (Fracción C, Fracción D, Laguna de los Capones and Tapi) spanning some 11,153 square kilometres within the prolific Santa Cruz province.
It delivers a production base (11.4mln cubic feet per day gross) hosted in the Fracción C & D licences, where production growth potential (up to 80mln cubic feet per day) is noted.
Echo detailed that the Tapi Aike licence offers access to a ‘multi TCF’ opportunity, whereas Fracción C and Fracción D are said to have ‘transformational’ exploration and appraisal potential.
It is anticipated that the first drilling, with Echo’s involvement, will come in the first quarter of 2018 and a “period of significant drilling and operational activity” will follow. "Echo was launched in March this year to secure multi Tcf potential onshore gas assets across South and Central America counter cyclically,” said Fiona MacAulay, Echo chief executive.
Providence details drill plans
Providence Resources PLC (LON:PVR) has given investors more details of its new drill plans for the Barryroe project. The company said in a statement that it plans to drill a new well and a side-track in either the second half of next year or the first half of 2019.
Barryroe 48/24-K, the new well, will be positioned some 5 kilometres away from the last Barry well, on the east flank of the field.
Phase 1 drilling is targeting some 436mln barrels of oil in place, and it is expected to cost a total of US$25mln, with Providence’s share at around US$20mln.
Eco advancing Osprey
Eco Atlantic Oil & Gas Ltd (LON: ECO, CVE: EOG) told investors it is advancing the Osprey lead, offshore Namibia, towards exploration drilling. The company said in a statement that it is filing for Environmental Clearance Certificate (ECC) for a proposed well which would provide the key clearance necessary for drilling, it added.
Osprey, in the Cooper block in Namibia’s Walvis basin is being reviewed by Eco’s exploration partner Tullow Oil plc (LON:TLW) , one of the key players in the breakthrough Jubilee oil field offshore Ghana.
The block has been estimated to host potential for some 882mln barrels of oil resources. Eco is project operator, it owns a 32.5% stake, and both Eco’s in-house team and Tullow’s exploration team are overseeing the seismic data processing and interpretation, and both have a positive outlook on the prospect.
The company added that “all concur that there is a "highly justifiable lead” and an exact well location is presently being decided.
Cabot Energy significantly better-than-expected well
Cabot Energy Plc (LON:CAB) has told investors that the side-track of the 16-05 well at the Rainbow project in Canada has seen significantly better-than-expected flow rates during well testing.
The side-track well is now in production, connected to the existing pipeline. It was tested for a 24-hour period during which it yielded some 573 barrels of oil. The exit rate of the test was around 680 bopd.
"The 16-05 side track result exceeded our expectations and strongly supports our technical view on the potential of the Canadian assets,” said Keith Bush, Cabot chief executive.
Cabot said the well is now producing under natural flow, though it is planned that the well will be restricted to a rate between 200 and 225 bopd in order to ‘best manage’ the reservoir’s long-term production potential.
The company added that the drill team and rig will now move on to the next planned side-track where drilling is anticipated to start in December and production could start before the end of the calendar year.