WTI $58.65 -$2.80, Brent $62.15 -$2.71, Diff -$3.50 +9c, NG $2.51 -13c, UKNG 48.48 +1.68p

Oil price

Oil seesawed as first the Opec+ meeting was deemed to be a done deal, then a bigger than expected opening of spigots signalled some doubt and now it is considered to be a responsible measure to keep oil in line with economic recovery.

The JTC saw increased stock draws but also cut 2021 demand by some 300/- b/d, the number being in line with inventory reductions and with 2H demand up 3.6m b/d to 98.2m b/d we appear to have a Goldilocks situation…If you understand all that you are better than me Gunga Din.

Retail gasoline prices have stabilised for another week but are still nearly a dollar higher than last year, I would expect to see further draws in gasoline as the weather picks up, vaccines increase and Americans get behind the wheel again. Today a gallon of Exxon’s finest will rush you $2.857 u/c on last week up 8.7c m/m and up 93.3c y/y.

United Oil & Gas

UOG announce a discovery at the ASD-1X well at Abu Sennan in Egypt, preliminary results suggest the exploration well encountered a total of ‘at least 22m net oil pay interpreted across a number of reservoirs, including the Abu Roash C (“AR-C”), Abu Roash E (“AR-E”), Lower Bahariya and Kharita Formations’.

Well-testing is now planned, and if successful, will be followed by an application to Egyptian General Petroleum Corporation (“EGPC”) for a development lease over this new discovery. The well was drilled by the EDC-50 rig, which, after completion, will move to the Al Jahraa Field within the Abu Sennan concession to commence the drilling of the AJ-8 development well. This well will target the Abu Roash and Bahariya reservoirs in an undrained portion of the Al Jahraa field.

United’s Chief Executive Officer, Brian Larkin commented:
“Today’s announcement is another positive result from Abu Sennan, which, initial interpretations suggest, is in line with our pre-drill estimates. With the well testing set to begin shortly, we look forward to understanding the full potential of the ASD-1X well.

“A number of additional targets and leads have been identified within the Abu Sennan concession and the results of ASD-1X and other recent wells will better inform our understanding of the acreage.   We will continue to work with our JV partners to prioritise these opportunities which can ultimately be brought into production in short time frames.

“With the EDC-50 rig moving to drill the AJ-8 development well after the completion of ASD-1X, we look forward to providing further updates on the continuing 2021 Abu Sennan drilling campaign.”

Another useful discovery for UOG and at long last the share price is moving up in order to at least partially justify the good news coming through. The news below with Prospex is also good but expected, getting things done in Italy is still glacial in terms of progress though.

Prospex Energy/UOG

With 17% and 20% respectively the two companies today announce that the Operator has stated that full environmental approval for the Selva Gas field has been received by the Italian Government. The next step is the granting of a full production licence and the parties expect to submit the required documentation in Q2 2021.

Prospex non-executive Chairman, Bill Smith, said, 
“Gas production at Selva promises to transform Prospex Energy’s financial profile and with this in mind the granting of full environmental approval for the development of the field is a key milestone for the Company.  With a planned maximum production rate of up to 150,000 cubic metres/day, Selva on its own is expected to generate annualised revenues several times greater than our historic annual corporate costs which, in turn, will enable us to pursue additional low risk exploration and development opportunities both at Podere Gallina and at our Spanish projects.

“Next steps for Selva include the submission of the required documentation for a production concession licence later this quarter, as well as the commencement of preliminary development work at the site.  Environmental approval will also aid the progression of discussions with potential non-equity funders for our share of the development costs. Together with the recently completed acquisition of the El Romeral Gas & Power Project in Spain, tangible progress is being made to build a highly cash generative business focused on European gas and power opportunities and I look forward to providing further updates on our progress.”

KeyFacts Energy Industry Directory: Malcy's Blog