Posted by Malcolm Graham-Wood - Malcy's Blog
After the Donald made his announcement last night it was a bit like after the Lord Mayors show, the actualité was that all we had expected came true and ironically the oil price fell somewhat. Whilst it is understandable that the market fell a bit it would be wrong to assume that these sanctions will not harm Iran, they will lose between 500-1,000/- b/d of production and although they have been producing flat to the boards lately this will undoubtedly harm their economy. Who will risk incurring the wrath and ultimately get on the US banned list?
Ironically it is probably only the Saudis that could turn on a million barrels a day although combined Opec/Non-Opec could make it up. At this stage however it is a heaven sent (if that's the correct saying in this respect) chance for the Saudis to tighten the market some more which is what I expect for the time being.
An operational update from AMER full of exciting promise about some of the most talked about wells for a long time. At the ‘N' sands the Pintadillo-1 is nearly ready to go and is expected to spud at the end of this quarter, looking for 11.4m barrels of oil it is a key well for the company.
Next up is the news from the CPO-5 block where the Mariposa-1 well is flowing satisfactorily and indeed the operators have plans to perforate additional zones which is good news. Indico-1 is expected to spud in June looking for 10.3m barrels of oil.
Finally at PUT-8 the Miraparriba-1 well operations have been slightly delayed but is expected to spud in June with a target of 4.4m barrels of oil. All these wells are meaningful but there is no doubt that both the ‘N' sands and CPO-5 would be significant discoveries so the next few months should be very promising indeed for AMER which is extremely undervalued whether or not these wells come in.
It is also drilling time down in Argentina where Echo have spudded the ELM-1004 well on the Estancia La Maggie gas prospect on Fracción C, the first in a four well back to back exploration programme. With the CPR giving the company an aggregated NPV 10 of over $182m net to Echo this is an important time for the company. The next two to three months should be very exciting and any success would undoubtedly rerate the shares which given they are in the bucket list would be fine by me.
I met with Steve Bowler, CEO of IGas yesterday and can confirm that things are going very well at the company on both major fronts. Today's AGM statement confirms current production of 2,323 b/d and guidance of 2,300-2,400 is maintained. With high crude prices and opex this year a likely $32.50, the conventional side of IGas is providing massive underpinning to the stock.
The other front is of course the unconventional and at long last both IGas and the industry have a much better shale season in front of them. With the application due in for Ince Marshes this summer and spudding of both Tinker Lane and Springs Road also due in the summer things are looking up on this front.
The situation in the winter which showed just how dependent we are on foreign gas must be something that is encouraging not just for IGas but the others with upcoming work programmes as well. With a carry of $240m IGas is in a perfect spot and the valuation is extremely undemanding at this price.
Tonight Frontera is hosting a shareholder meeting to update on the exciting programme they are involved in at the moment. I am very much looking forward to joining the company at the event and look forward to seeing you there.
The Podcast was on Tuesday this week owing to the Bank Holiday, here are a few stocks that I talked about.
So last night owing to the Swans losing to the Saints we said au revoir to the Baggies as they move, surely temporarily, to the Championship. Final positions are not all finished yet but I suspect that the Terriers might need something from tonight's game at Chelski. Also playing are the Gooners at the Foxes, the Noisy Neighbours in a dead rubber against the Seagulls and Spurs host the Magpies.
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