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Today's Market View - Oil price steady although press reports Iranian production collapsing

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SP Angel – Oil & Gas View – Tuesday 25 06 19

Oil price steady although press reports Iranian production collapsing

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Eland Oil & Gas (LON:ELA): OML 40 Operational Update

Genel (LON:GENL): Shareholder Buyback

Exillon Energy (LON:EXI): May Production Report

Mosman Oil & Gas* (LON:MSMN): Operations Update

Cabot Energy* (LON:CAB): AGM Statement

Gulf Keystone (LON:GKP): Dividend Declaration

TOMCO (LON:TOM): Field Test Update

  

Oil price:

  • Crude prices declined slightly as US/Iran tensions continue with US increasing sanctions against Iran
  • Media reports that Iranian oil production has collapsed from 2.5 million bopd to 0.4 million bopd although denied by Iranian Oil Minister

 

Energy prices:           

Oil US$64.6/bbl vs US$63.6/bbl yesterday

Natural Gas US$2.409/mmbtu vs US$2.410/mmbtu yesterday

        

Company News

Eland Oil & Gas (LON:ELA): OML 40 Operational Update

  • Eland announces OML 40 (Niger Delta) net production in the first five months of the year of c9,900 bopd, a 32% year on year increase  
  • The early production facility (EPF) on the Gbetiokun field is expected to mobilise this week with the field coming onstream next month at initial net rates of 5,400 bopd from two wells, Gbetiokun-1 and 3
  • The refurbished OES Teamwork Rig will continue with Phase I of the Gbetiokun field with the back to back drilling of Gbetiokun-4 and 5, commencing next month, and boosting net production to an expected 9,000 bopd
  • The rig will then drill the 78 million barrel Amobe prospect (6 km north of the producing Opuama field) before drilling two further infill wells, Opuama-12 and 13
  • Currently Opuama-13 is likely to be drilled in 2020 although Eland is considering procuring a second rig which could accelerate this drilling programme as well as the appraisal of Amobe in the event of success
  • Delays to the rig refurbishment and also the Gbetiokun EPF mean that net 2019 production guidance has been lowered from 14-17,000 bopd to 12-13,500 bopd although the company believes it will exit the year at 17-19,000 bopd

Conclusion: Delays to developments and production growth are extremely frustrating nevertheless it is a common theme in the upstream industry. Ultimately Eland’s production targets look unaltered, and the big excitement this year remains the large and relatively low risk Amobe prospect which could virtually double the group’s reserves base   

 

Genel (LON:GENL): Shareholder Buyback

  • Genel announces a $10 million share buyback starting immediately and up to and including next Friday 5th July
  • Company believes that the current share price does not accurately reflect the value of its Kurdistan producing assets, and that utilising its balance sheet to repurchase shares represents a value accretive use of its cash resources

Conclusion: Can’t blame Genel for such action, share price has fallen over 20% in past couple months and seems efficient use of balance sheet

 

Exillon Energy (LON:EXI): May Production Report

  • Exillon produced c12,000 bopd from its Western Siberian asset base in May
  • Production slightly lower than April output although 4% higher than Q1-2019
  • Shares have been suspended since late April, delaying final results, because “certain transactions entered into by the Group companies have been identified where the status of the counterparties and the nature of the transactions require further review and analysis by the board of directors and the management of the Company and its auditors”

Conclusion: Production steady although bigger concerns remain around the two month delay to full year results and the reason for it

 

Mosman Oil & Gas* (LON:MSMN): Operations Update

  • Update on production from Stanley oilfield onshore US, Stanley-2 about to be recompleted followed by drilling of Stanley-3 (90-day well)
  • Company’s total Texas/Oklahoma asset base currently producing around 550 bopd gross (200 bopd net Mosman)

Conclusion: Production growing steadily from US asset base

*SP Angel acts as Nomad and broker to Mosman Oil & Gas

 

Cabot Energy* (LON:CAB): AGM Statement

  • Nothing much new in AM statement compared to last update early June, company is funded very short term (to mid-July) and continues to work with specialist financial advisory firm to source asset-level debt financing
  • Assuming successful financing, company can commence late summer work programme on Canadian asset base

Conclusion: All eyes on funding  

 

Gulf Keystone (LON:GKP): Dividend Declaration

  • Previously announced $50 million dividend has been approved at the AGM, with one-third to be paid on 5th July and the remainder on a date to be determined following the company’s half yearly results (early/mid September)

Conclusion: As expected

 

TOMCO (LON:TOMCO): Field Test Update

  • Preparation continues for previously announced field test programme on company’s three Utah wells
  • Slight delay to mid-July before testing starts, delays due to late delivery of bespoke ceramic parts for the well, testing to run for roughly 4 weeks 

Conclusion: Slight delay to testing programme, success of the three wells will be a key event for company

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