WTI $43.87 -79c, Brent $48.61 -91c, Diff $4.74 -12c, NG $2.80 -1c

Oil price

The oil price continues to make no headway against a tide of bad news that includes the Chinese trade stats, a strong dollar post the NFP numbers and the further increase in the rig count. Not to mention 32m barrels a day plus from Opec with more to come and the EIA saying on Friday that US refiners are running at record levels of 17m b/d +, not seen since 1990, good news for now but sure to end in tears as we approach Labor Day and the end of the driving season.

Friday’s figures from the CFTC showed a modest pick up in exposure by hedge funds etc in the crude market but it needs to be much more if the market is to believe that a wall of money thinks we are near the lows. Both crudes were off by 7% last week which ended as I mentioned with the rig count which in oil was up by 6 making an increase of 32 in only three weeks, so if US shale really was comfortable at $60 will we now see a fall again in the ensuing few weeks?

Rockhopper

Rockhopper has announced this morning that it has acquired a portfolio of non-operated production and exploration assets in Egypt from Beach Energy for $22m. The assets include a 22% interest in the Abu Sennan concession and a 25% interest in the El Qa’a Plain concession which adds 1,300 boe/d and 4.5 mboe of 2P/2C reserves and resources. The cost of $22m will be funded $11.5m in cash plus $10.5m worth of shares giving dilution of around 3.5% but capped at 5%.

There are a number of very positive points to mention with regard to this deal, not least the attractive terms which after adjustments comes in at under $4.5 per barrel of oil equivalent. The deal provides good cash generation with limited capital commitments and this and the Italian assets should cover group overheads going forward which we know is a big tick in the box. RKH estimates cash at the end of this year of $110-120m so is very strongly placed to take advantage of any other opportunities that this market throws up.

Rockhopper has identified the Greater Mediterranean and North African geographies for de-risking exposure to the North Falkland Basin, ironically at a time when that drilling…

Unlock the rest of this article with a 14 day trial

Already have an account?
Login here