WTI $45.09 -14c, Brent $48.37 +14c, Diff $3.28 +28c, NG $2.52 -6c

Oil price

The oil price took the EIA inventory stats pretty much in its stride and indeed both are up by around 50 cents in early trading this morning. The pointer from other inventory numbers this week had been taken and although the build was 4m barrels against estimates of a small draw prices actually ended around all square. The market as is its wont, chose to look at the EIA domestic production number which was a fall of 40/- b/d down to 9.1m b/d.

Another small straw to clutch comes in the shape of Hurricane Joaquin which shows that the season is not over by any means.

Gulf Keystone

The long awaited updated CPR from GKP has arrived and at first glance it looks pretty impressive. At Shaikan, 1P reserves are up 55% to 306m barrels with 2P numbers up 114% to 639m barrels. This means that the company evolves from measuring oil in place to recoverable reserves which is a significant step forward. The increased knowledge of Shaikan re-risks the field’s commerciality and with solution gas rather than water drive will give greater predictability of the field performance. As mentioned in my recent note on GKP, the company has increased the reserves per well thus lowering capex as less wells will be needed. At Sheikh Adi FDP work is under way which we are told will lead to a reclassification from 2C resources to 2P reserves which will be further good news.

Gulf Keystone are all of a sudden starting to look like the real deal and this is a decent step in the right direction. Having met new CEO Jón Ferrier I am pretty sure that management is hands on and will mean that the process of rebuilding continues. The risks associated with the company have not gone away by any means, geopolitical concerns will always be there and of course getting paid whilst looking better than a few months ago is far from being assured. Either way shareholders can rest a little easier this morning and I think that the modest mark up in the shares is more to do with the oil price than this very decent addition to the reserve base of the company.

Caza Oil & Gas

Caza has announced an update of its financing discussions, the agreement with Apollo to waive the financial…

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