Posted by Malcolm Graham-Wood - Malcy's Blog
WTI $60.99 -65c, Brent $63.53 -90c, Diff -$2.84 -25c, NG $2.70 +3c
Oil will end the week down after a series of events but mainly due to the EIA inventory stats that surprised the teenage scribblers that pass for analysts on Wall Street. If they had been around last year or the one before that, or the one before that they will have remembered that as we approach March so does the Spring maintenance season and with it a fall in refinery runs and thus demand for WTI. The rise in gasoline stocks by 2.5m was also a surprise for the market but at least distillates drew.
Monthly production numbers from AMER were almost in line with expectations, a daily average of 6,749 bopd with a peak of 6,960, whilst the OBA saw 5,424 and 5,939. These numbers are down slightly but only temporarily, due to a workover on Platanillo-6 which will take around 300 bopd off the schedule until the middle of March.
The company has also announced that on 20th of February the 2 millionth barrel went through the OBA, this was a saving of $20.3m in the fifteen months of operation. With the OBA costing $18m to build and reducing transport costs from $14.05 to $3.90 and operating opex of $15 per barrel, the pipeline has paid for itself after just 15 months of operations and is set to increase the cost savings as production from the Putumayo increases.
At anything over $60 Amerisur is making proper revenues and it needs not many of its dozen planned wells to come in to increase that number by a meaningful amount. It would not be beyond the realms of possibility to assume that the company might decide to do what the market has failed to do recently and reward shareholders who have been more than patient.
Frontera Resources - Georgia on my mind...
I have recently visited Georgia where I met with all levels of local management and also spent a day visiting the operations at the Taribani field including the currently operating T-45 well. I will write more about my time with the company when this well has completed and the final details are known but my visit was perfectly timed as every sign is that this well, and therefore quite possibly all three in the programme, may have a meaningful implication for both FRR and Georgia.
Tuesday's announcement from T-45 was in itself very positive with news of the completion of open hole well logging which had deepened the well to 2,700m. The oil stained cuttings at 2460-2475m were confirmed to be within a 14.9m combined pay interval of Zone 13, further good news. This is a further developed pay section in addition to the original Zone 9, 14 and 15 targets and it should be remembered that Zone 13 was not included in the base case when the reservoir modelling was done.
The casing should now have been set and I would expect the rig to be de-mobilised in the next few days so that the well can be perforated and the frac job can be started, after which time production can be ascertained and oil from the appropriate zones can be co-mingled and brought to surface. Although nothing can be taken for granted at this stage, it is clear that very ‘live' oil flowed back in substantial quantities with the mud and that it is therefore highly likely that this well has indeed exceeded management's expectations.
In my absence this week a number of companies have made announcements, here are the highlights.
Saffron Energy updated the market on its progress in SE Asia and announced that it was withdrawing from the PO Valley acquisition. In the former the company says that it is ‘reviewing and negotiating a number of substantial and highly prospective opportunities in SE Asia that are consistent with its multi-TCF exploration strategy'. In the latter it appears that the deal has been called off ‘at mutual agreement' due to regulatory and tax issues and to avoid upfront dilution.
Rockhopper updated on its Greater Mediterranean portfolio by announcing improved production from Abu Sennan with net to RKH production of 880 boepd. Pricing here is good with local realisations a small discount to Brent. A four well programme is planned this year across Abu Sennan and El Qa'a Plain. Finally Egyptian receivables have been significantly reduced with all liabilities to Beach Energy now satisfied.
Jersey Oil & Gas has announced that a rig contract has been signed for the Verbier appraisal and it and potentially a sidetrack will be drilled this summer. Starting from a base of 25-130m barrels of oil equivalent there must be huge potential upside for JOG which carries none of this in the current share price. Any validation of nearer the top of this range would surely move that price by a significant amount.
Exxon has announced a 7th significant discovery offshore Guyana at its Pacora-1 well. Eco Atlantic was quick to point out that this was the closest well to their own Orinduik block and that Exxon has signed up a second rig for exploration in the area.
President Energy announced this week that it was to obtain a secondary listing on The Bolsa de Comercio de Buenos Aires, the Argentinian Stock Exchange. Being an Argentinian listed company as well will help significantly attract investors both institutional and private who are looking for high growth companies operating in country.
Reabold Resources has announced that it has raised up to £7.33m at 0.6p to exploit a number of opportunities that ‘have the capacity to provide significant returns on investment'. Whilst I was expecting a much larger raise I understand that new institutional shareholders have come in and existing ones have stayed. With the company's determination to maintain price discipline and with the ability to pick and choose its investments over the coming months they decided not to accept what was a long order book at lower prices.
My recent Core Finance CEO interview with Edward Bowen of EPI Group was in the bucket list edition of the blog, for those who missed it I am putting the link below.
The Gooners must be sick of the sight of the Noisy Neighbours but equally aware of their generosity of stopping after just three goals when they meet. On Sunday the next fodder will be Chelski who visit the Etihad, the Gooners meanwhile visit the Seagulls who should provide some respite…Spurs host the Terriers which should be straightforward as should the HubCap Stealers who entertain the Magpies. The Swans host the Hammers and Burnley entertain the Toffees whilst the Red Devils visit the Eagles on Monday night.
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