Market ReportOil & Gas Market Wrap

Oil majors fade as crude prices drop back

The price of a barrel of Brent crude declined 2.1% to US$46.61

Sound Energy's Tendrara permit is in Figuig province, north east Morocco

Oil majors sprang a leak on Monday as crude prices fell further below the US$50 a barrel mark.

BP PLC (LON:BP.) dropped 4.65p, or more than 1%, to 452.5p and Premier Oil PLC (LON:PMO) was a penny or 1.4% off at 69.50p.

The price of a barrel of Brent crude declined 2.1% to US$46.61 and a barrel of US light crude was 2.2% down at US$44.97.

Jasper Lawler at CMC Markets said: "A pullback in the price of oil has left oil & gas and basic resource sectors at the bottom of the UK benchmark."

Oil analyst Malcolm Graham-Wood said: "The news from Turkey over the weekend had a modest but immediate effect as the Bosphorus Strait was shut for a few hours thus keeping about 3% (EIA) of world oil off the market.

"A few hours later all seemed relatively calm and the Strait was re-opened but serves to remind us that geopolitical worries are never far away."

Meanwhile, there was plenty going on among smaller-cap oilers.

Europa Oil & Gas plc (LON:EOG) spurted 5.71% to 3.62p after providing a positive update on its portfolio of seven offshore Ireland licences.

The company has identified potential resources there of up to 4bn barrels of oil and 1.5 trillion cubic feet (TCF) of gas.

EnQuest PLC (LON:ENQ) farmed down a 20% stake in Kraken to Delek, effectively at ground floor cost. Shares in the group fell 0.25p to 29.5p.

Delek will assume its share of capex from January 1, 2016, as well as pay a US$20m advance to EnQuest on completion of the deal, which will be repayable in five years if revenues fail to cover Delek’s costs in that period.

Broker Mirabaud Securities said: "Although the consideration clearly does not imply much value in the project at all, the deal should shave a considerable US$120mln off EnQuest’s capex budget for the year.

"Given the strain on the company’s balance sheet, it makes sense to reduce its exposure to the project."

But shares in Sound Energy PLC (LON:SOU) were 2p, or 6.1%, slicker at 35.27p after the Mediterranean-focused oil & gas explorer revealed highly commercial and better-than-expected gas flow rate from Tendrara licence in Morocco.




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