Posted by Malcolm Graham-Wood - Malcy's Blog
WTI $65.74 -21c, Brent $76.46 -86c, Diff -$10.72 -65c, NG $2.89 -4c
Oil was down modestly on Friday and pushed it into negative territory for the week, WTI lost just 7c and Brent 33c after the usual ups and downs. There are still opposing forces operating which will likely keep things range bound at least until the Opec meeting on 22nd of this month. With 11 days to go posturing is very much underway, at the weekend Iran, unsurprisingly, took offence at the US appeal to the Saudis to increase production to keep prices down.
What Opec/Non-Opec will do may well be decided on Thursday as I understand that senior Saudis have been invited to Moscow to watch the opening fixture of the World Cup which is between Russia and Saudi Arabia, who would have guessed at such a coincidence?
Some oil watchers are still pinning their hopes on a price fall led by ever increasing US production, last week it reached 10.8m b/d but still short of having any real impact of the market. The rig count showed a rise of 2 units overall, and up by only 1 in oil to 862 units which won't rock the boat too much I would have thought, to put it into perspective Venezuelan production has fallen by more this year than the US has risen…
At this stage I still think the Opec meeting will decide to carefully monitor the situation and where necessary ensure that the market is supplied with crude oil as and when the situation demands, or something similar, certainly not a free-for-all which would delight Iran.
Echo has announced that it has successfully completed its EWT on the CSo-85 well on their Fracción D acreage in Argentina. They report 16 days of stabilised gas production at a variety of choke sizes from 6-14mm achieving a maximum rate of 2.5 mmscf/d at tubing head pressure of 432 psi. After this the pressure gauges were left on for 19 days to monitor pressure build up, the results of which were very positive and indicate that the well is in direct communication with a volume of the 4 bcf in the Springhill reservoir.
Integration of this data indicates that it will be possible to convert some or all of the currently classified gross best case prospective resources of 15.3 bcf immediately into contingent resources. Also, the deeper Springhill C3 reservoir has some 11.6 bcf which may have a similar expectation of reclassification. The company, along with partner CGC are evaluating drilling an additional Tobifera gas well on the western flank of Cañadon Salto to target 18.8 bcf of total gross prospective resource of 18.8 bcf (best case) in addition to confirming existing contingent resources of 19 bcf (gross best case) in the current campaign. Success on this would support an early decision for a gas development at Fracción D and the companies are working on a fully costed development plan, including pipeline and associated gas processing facilities, upon which such a process could go ahead and on what timeline.
Echo have had remarkable success with amongst their first projects in the portfolio of Argentinian assets they purchased only last year already potentially going ahead. With a recent raise with high quality institutional investors made to take advantage of current low prices in oilfield service companies, and significant potential from the current drilling campaign it seems odd that the market has yet to take this onboard, a pick up in the share price must be on the cards before long.
First day of dealings today for Block Energy the latest Georgia based company to appear on the market. The company has raised £5m at 4p which I am led to believe is significantly more than they had originally expected and has some high quality institutional backing. I am meeting with the management tomorrow so will report back after that as there are some important questions to ask them.
Finally the arrival of another Georgian based company on the market can only be good news for Frontera Resources as it will surely highlight the huge potential in the country which up until now has been to a large extent missed by the market.
In my haste to complete Friday's blog I left out half of the important sporting events due at the weekend…
Although the F1 roadshow is providing us with a number of potential winners which is refreshing, the actual races are turning out to be remarkably boring. With extra wide cars and circuits that prohibit overtaking, qualifying now generally is way more fun than the race itself. Yesterday's procession proved that and whilst the table is very close, the racing is not.
Talking of not close is the mismatch arranged for Tyson Fury who fought an Albanian five stones lighter and a foot shorter than himself. Woefully out of touch it took him four rounds to despatch someone he should have done in four seconds…
The Scotland v England cricket match yesterday was close and with England treating it like a warm-up match for the series against the Aussies this week they deserved what they got. Very poor bowling on a pocket handkerchief of a pitch deservedly got despatched and when it came to cruising to victory the middle order folded in a typically cavalier fashion reminiscent of ye old England.
The rugby was also interesting and close, notably England just losing in South Africa and Ireland shaded in Australia, whilst Wales won in Argentina and Scotland in Canada. Round two next weekend should provide more good games. France provided interest by going in at half time against the All Blacks 8-11 ahead and promptly lost 48-11….
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