Oil price

Oil news yesterday was again mainly concentrated on Saudi Arabia who started giving details about the round up over the last few days. Apparently over 200 people have been brought in and over $100bn of missing public funds are being investigated. It looks like there is a link to the Lebanon here as the case crosses international borders.

The KSA also added fuel to the oil price flames as they announced yet another export cut, December liftings will see another 120/- b/d from sales to clients over November which will add to the comfort of the bulls.

Independent Oil & Gas

IOG has announced that following up from the recent CPR on Harvey, ERCE has added a fully risked ‘expected monetary value’ (EMV) of £79m. This is their technical detail on the analysis. ‘The EMV has been calculated on the mean of the Low/Best/High estimates of the prospective resources following the derivation of Harvey production profiles.  Low/Best/High estimates of unrisked prospective gas resources are 45/114/286 BCF on the Harvey structure, 36/90/226 BCF on licence’. IOG state that they see a ‘compelling’ case for drilling Harvey, and who wouldnt to be honest, with a planned appraisal well in 1H 2018, FID in 1H ’19 and first gas in Q1 2021.

Provided IOG can finance this and the other SNS gas hubs, and there is no reason now why that cannot happen, then progress from here should accelerate and a highly profitable development should soon be under way. With UK demand for gas very strong and costs still under some pressure IOG would be well advised to kick on as soon as is practicable and with a market cap of just £23m the upside looks substantial.

Reabold Resources

I met with Sachin Oza and Stephen Williams of Reabold Resources yesterday, after their first deal announced last week I was delighted to be asked in to hear about their strategy going forward. Both are former analysts at M&G where they have gained a deep knowledge of the oil cycle and how best to invest in what they call the value chain and have been planning an oil fund of their own for some time. Now, with strong investor backing in the Reabold vehicle they are finally on their way as demonstrated by the Corallian deal last week. The team see the opportunities of investing at the low part of the cycle when costs are low and other buyers are few and far between.

Assets they are looking at are normally at the cusp of production with appraisal planned and little exploration risk. In many cases a huge amount of work will have been done by the existing owner and this far outweighs the value of a CPR or other forward looking work. These assets are in Europe but are not confined to projects like Colter or even the North Sea, I get the impression that RBD has looked extensively on the continent. They look to work in tandem with current owners of the assets they invest in and find generally that their injection of capital is welcome when others are not putting up the money. At the moment the investment size sweet spot appears to be between $2-5m for RBD but after initial deal I can see other partners investing in the assets as they progress. The next step would be to up the ticket size to say, $5-10m, after a few of these one can start to see the earlier investments bringing in revenue.

Whilst this is early days for Reabold I find this investment model pretty appealing, they have plenty of experience in the sector and are backed by a number of genuinely supportive investors. At the size they are looking at I should imagine that there are plenty of deals around, so the idea that for the foreseeable future investors deal flow and operational updates should be pretty regular. Whilst these words are only a short look at RBD I expect to be hearing from, and writing about, the company a lot more in the not too distant future, indeed they have a large and growing retail following as I can testify to following announcement of my meeting with the team yesterday.

And finally…

The international break is upon us and we don’t look at ridiculous friendlies either, feel sorry for Northern Ireland who got a shocker of a pen decision and go to Switzerland on Sunday 0-1 behind. It will give them no comfort to know that the England – Germany farce tonight will have a video ref… Tomorrow the RoI are in Denmark for another tricky encounter…

Racing is at Aintree and Wincanton as the jumping season really kicks in.

And in F1 with Lewis already champion the Brazil race is relatively meaningless but i’m sure that it will still be most exciting with young Max V trying to add to his recent tally.

Sunday sees the final round of this years MotoGP where Marquez should capitalise on his 21 point lead over Dovizioso but the Fat Lady hasn’t sung yet.

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