Posted by Malcolm Graham-Wood - Malcy's Blog
The dust is settling on the oil complex at the moment and Brent crude is down some 50 odd cents as I write. A bit more money is coming off the table from the traders who think that enough is enough but they remain long in case of further geopolitical trauma. Worries that Opec and Non-Opec might ramp up production exist although in my view that is unlikely at least until the market has an idea of quite how much Iranian crude is off the market and when.
I continue to remain positive on demand numbers and not as worried regarding US production, sure it's high but still only less than matches demand growth. Friday's rig count showed overall units up by 13 to 1045 and oil up by 10 to 844 which is high but not excessive.
Another very positive operational update from PPC this morning from the Neuquén Basin in the Rio Negro Province. A seven well programme at Puesto Flores is under way comprising of six producing wells and water injector, this follows the success of the initial programme that ‘materially increased production'.
There are also preparations underway for a long term test of the gas wells at Estancia Vieja which will be initiated in June and if successful will result in sales through state of the art mobile LNG units based at the Estancia Vieja Battery.
Finally there is to be an accelerated three well drilling programme at Puesto Flores to start in September and will comprise two development wells and one step-out appraisal well. This is because ‘not all production in this field can be explained as coming from four-way closures; there may be combined traps (stratigraphic and structural simultaneously) extending beyond the previously defined field boundaries within the Concession'. Rig and main contractors have been identified for this work have been identified.
It can be seen that operationally PPC is very much firing on all cylinders and all the news from this basin is good and furthermore significantly beats any potential forecast at the time of acquisition. The company notes recent press relating to the state of affairs in Argentina but say that ‘there are no current or envisaged material adverse changes to President's financial position or prospects' and that its oil and gas are being paid for on a monthly basis on a satisfactory basis. At the current price PPC is genuinely sitting at a fraction of its appropriate value, its true price should be way in excess of the 10.15p on offer in London today.
I notice that David Clarkson has joined the Sound Energy board, this is very good news indeed, I have known David for a long time and he will be an excellent addition to the Sound Board.
An operational update from Petro Matad this morning and having met with Mike Buck recently I am slowly being re-converted to the faithful. There has been a slight delay but the Snow Leopard 1 well should spud on block V in July and followed by Wild Horse on block 1V ‘seamlessly'. Snow Leopard is targeting 90 MMbo of resources potential but having been recently upgraded Wild Horse is targeting 490 MMbo. Over at block XX the tender process is complete and the permitting process is progressing ‘smoothly' and is still on schedule to drill late 3Q or early 4Q. Exciting times for MATD lately and whilst the shares are already up around 60% on the quarter these wells offer significant size of prospect and so one couldnt rule out further rally on any success.
Touchstone has announced progress towards its target of 2,000 b/d production with 1,543 in Q1 and rising in April. The first five wells have already been successfully drilled and ‘should have potential for significant production coming on stream as wells are completed'. It goes without saying that at recent oil prices the company is more profitable on a per barrel basis.
More corporate activity from Ophir today as they announce a farm-out of a 40% WI of block EG-24 in Equatorial Guinea to Kosmos. Kosmos will carry Ophir for the full cost a 3D seismic survey on the full block and will ‘partially' carry Kosmos for any well costs if they progress to the 2nd period of the licence as well as paying back costs to Ophir. This makes a great deal of sense to Ophir, Kosmos is the natural partner as it is all over that part of the world and keeps Ophir's options fully open after this transaction.
Savannah Petroleum, Coro Energy and Rose Petroleum
I mentioned on Friday that the above were presenting at a TPI event tonight and I am very much looking forward to it. Each speaker has much to say, Andrew Knott has an exciting agenda closing the Seven deal and with a drilling programme already successful in Niger. James Menzies is an inspired choice for Coro and as Founder of Salamander his appointment should bring with it much in the region. Finally I recently met with Matt Idiens, CEO of Rose Petroleum and he too has a most interesting piece of real estate in the US and has just done a small raise to bring it forward in the near future.
The Premier League ended yesterday pretty much as predicted with the HubCap Stealers winning but as Chelski lost it didnt matter. Ditto at the bottom as the Swans went down and the Saints stayed up.
Fulham v Derby in the Championship playoffs tonight might be worth a gander…
In Barcelona the GP was fairly straightforward for Mercedes who completed a shutout as Vettel tried a risky and slow stop for fresh rubber behind the virtual safety car. He came out behind Verstappen and that's where he stayed despite Max putting his front spoiler into a Williams and leaving half of it on the track.
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