Posted by Malcolm Graham-Wood - Malcy's Blog
WTI $54.63 +$1.20, Brent $63.48 +95c, Diff -$8.85 -25c, NG $4.45 -7c
Oil rallied yesterday but still feels like a weak market. With the Thanksgiving holiday today and ‘Black Friday' tomorrow trade will be slim and may accentuate unusual price movements ahead of the Opec+ meeting, now only a fortnight away.
The downside was accentuated yesterday by further reports of Saudi November production, they certainly took on board the advice to provide crude oil to all who asked and have pumped or sold from inventory over 11m b/d so far this month. The EIA inventory stats were mixed, the headline figure, a build of 4.85m barrels was worse than expected but a draw at Cushing mollified analysts as did a draw of 1.3m b's of gasoline. The next fortnight will be nerve wracking on all fronts, will the KSA bend over, so to speak, in response to President Trump's declaration of friendship, we shall see…
It seems like I am writing about President almost weekly at the moment, but the news from Argentina is coming thick and fast and today's announcement is incredibly positive. Even by their own high standards the news from PFO 1001, the first well in the three well programme, is way in excess of expectations, so much so that management have had to be somewhat reserved about production over the three wells. The well has been tied in flowing 600 b/d from the primary target formation which is amazing as it flowed 1,000 b/d at initial peak and has been choked back for reservoir management purposes. It should be remembered that the last announcement suggested that the secondary target would be produced but now there is an abundance of riches in the well this 240 b/d has been temporarily isolated and will produce at a later date.
As for PFE 1001, the second well in the programme it has been successfully cased and has noted 43m of oil pay in two target formations which again bodes well for potential production. This well will be tested next week and following that the rig will move to PFO 1005 to drill the third well in the campaign.
What does this mean for President? Clearly the initial target of 600 b/d from all three wells has already been exceeded but the management are correctly being extremely cautious about guidance as the second well has yet to be tested and the third well to be spudded. Having said that, I am prepared to hazard a guess that if you add up the new 600 b/d plus the potential 240 b/d getting you to 840 b/d then add only the 200 b/d each expected from wells two and three you get to an additional number of well over 1,000 b/d which could itself be a cautious number. A read through of increased, highly profitable cash flow, meaningful raise in earnings and inevitable upping of proved resources make these wells some of the most high margin in the industry. President has a real winner on its hands here and the shares are already bucking the recent trend of oil sector under-performance, there is much more to come.
Egdon Resources/Europa Oil & GAs/Union Jack Oil
Egdon announces that the Wressle planning application has been recommended for approval which in itself should be very good news. There was a time however that a council planning committee would nod such a recommendation through, now this is no longer the case. I wish the companies well at the upcoming meeting and hope that especially having had extensive additional work and improvements made the approval is granted, having said that I won't be standing on one leg waiting for the verdict…
In a quiet week for sport it seems that Martin O'Neill and Roy Keane have paid the price for a bad year for Irish football. The relegation in the Nations Cup appears to be the final straw, it will be interesting if either men make a return to club management.
And I notice that Robert Kubica is returning to drive for Williams next year after almost losing his life in a rallying accident in 2011.
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