Rex International Updates

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SP Angel Morning Oil & Gas Gulfsands Petroleum, LGO Energy and Rex International Holding
By SP Angel
November 19 2014, 9:50am


Comment

Todays news from Pantheon resources regarding the reduction in rig costs and increased availability, while great news for the Pantheon, and indeed all the other Junior E&P companies operating in the US onshore segment (such as Nostra Terra, Empyrean, Magnolia, etc.), it is a clear the impact that the current price environment is having on capital spending plans.

This reinforces our belief that the immediate layer of investment, where it can be arrested, will be, and that any investment still on the slate for consideration is now in the process of being withdrawn. Ultimately this will create a “hole” in future production, which in turn will swing the Supply/Demand balance towards supply, driving prices up significantly.

As a consequence, we are more optimistic for the longer term outlook for the oil price than we have been previously, and with each piece of anecdotal data, we are increasingly convinced that we will see prices significantly above $115/bbl within 3 years. The exact timing, however, will be dependent on the economy, or rather whether it will be another soft landing, or a hard landing.

News Items

Rex International Holding – Sharpening Focus

Today the company announces the execution of the agreement that novates the interest in the Inniss-Trinity to LGO Energy for $5mm. while the funds are deminimis for the company, it provides further focus on the key assets within the portfolio, which to our mind is essential for the upcoming demonstration of

drilling activity in 2015. While Trinidad has been on our work programme for the company’s valuation, we had not sufficiently delineated the asset for the purposes of valuation, hence it does contribute any value to our S$1.10 valuation. Consequently, we reiterate our S$1.10 Target Price and BUY Recommendation.

LGO Energy (LON:LGO) – Building Production and Running Room

There are two bits of news today, one which has been announced by Rex International, and the other is the ongoing drilling success at Goudron, and both are in Trinidad. While we have come to expect the success in Goudron, a reflection of the increasing knowledge base that this management ream has over its asset, the prospect of the addition of the Inniss-Trinity (“INT”) field to the LGO portfolio brings significant running room for the company. We believe that the company’s investors will be happy with today’s news, doubly so as the acquisition of the INT field creates the prospect of the same successes experienced in Goudron being replicated.

Gulfsands Petroleum (LON:GPX) – Diversification Picks Up Pace

Today’s news provides two bits of information that should ease the pressure on the shares, and both essentially detailing the same thing, namely, the continued diversification away from its existing asset base. Given that the company has just taken a convertible, it is now more important than it was before that cash flow is established quickly and that it continues to build its portfolio so as to minimise the impact of the loss (possibly temporarily) of its Syrian operations.

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Brent touches $80 on possible OPEC output cuts, strong US data
4 Hours Ago
Reuters







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Brent briefly touched $80 a barrel on Friday on speculation OPEC could agree to output cuts at its meeting next week, with strong U.S. economic data also bolstering oil prices.

Venezuela reiterated its call for production cuts, with Foreign Minister Rafael Ramirez saying it was willing to cut its own output if the Organization of the Petroleum Exporting Countries agreed to reduce production at its Nov. 27 meeting.

Libya, Ecuador and Venezuela earlier called for OPEC to cut production. Iran urged fellow OPEC members to shore up oil prices while saying a reduction in output was unlikely.

"There's been a lot of rumors on what OPEC might decide to do in its upcoming meeting in the last 24 hours," which fueled a jump in both Brent and U.S. crude prices, said Victor Shum, managing director of downstream energy consulting with IHS.

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Oil above $80 on China rate cut, possible OPEC move
51 Mins Ago
Reuters
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Brent crude oil traded above $80 a barrel on Friday after China cut interest rates and on speculation OPEC could agree next week to reduce oil production.

China's central bank cut its benchmark interest rates for the first time in more than two years on Friday to lower borrowing costs and support an economy on track for its slowest annual growth in 24 years.

Read MoreWhy oil is more likely to test $100 again next year

The rate cut added to a positive mood among oil traders anticipating an agreement by the Organization of the Petroleum Exporting Countries on Nov. 27 to trim production in an attempt to bolster oil prices.

Brent rose $1.05 to trade at $80.38 shortly after 9:30 a.m. EDT after touching a high of $81.61 earlier in the morning. The benchmark looked set to snap an eight-week losing streak if the gains were sustained on Friday.


U.S. crude was up 59 cents at $76.44 a barrel, down from a session high of $77.83.

"Commodity prices have risen across the board," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank.

Read MoreUS shale and OPEC oil: Game of chicken?
"There is hope that this step (lower Chinese interest rates) will lift commodities demand."

There was increasing speculation that OPEC would move to reduce its output to reverse a market collapse that has knocked almost 30 percent off crude oil prices since June.

Venezuela reiterated its call for production cuts, with Foreign Minister Rafael Ramirez saying it was willing to curb its own output if OPEC agreed to reduce production at its Nov. 27 gathering.

Libya, Ecuador, and Iran have also called for OPEC to cut output.

"I hear more and more sounds indicating that markets are expecting a possible cut in OPEC production, from a more balanced view earlier," said Hans van Cleef, senior energy economist at Dutch bank ABN Amro in Amsterdam.

Investors kept a wary eye on talks in Vienna between Iran and the big world powers over Tehran's nuclear program.

Read MoreStuck again: Iran nuclear talks set to hit hurdles
Sharp divisions remain at the talks, which could result in the tightening, or ending, of sanctions that have severely restricted the Islamic state's oil exports.

Officials have said the nuclear talks could be extended to March from Nov. 24.