WTI $51.49 -$1.40, Brent $60.06 -$1.50, Diff $8.57 -10c, NG $4.33 -14c
Markets don't like uncertainly and that is what they are getting at the moment. Opec met yesterday and unusually didn't have an agreement ready to go partly as they couldn't agree exactly what to say. Today Opec is meeting at 0900 hrs and Opec+ at noon, I assume that a production cut will be forthcoming but with some lack of credibility as to its bite.
Actually I think this is what some members want, the KSA do not want to rile President Trump and can hide behind a wishy washy total whilst cutting if they want to. The Russians never like cutting but also know how the economics work and whilst I dont think sub $60 Brent suits them the fall in the ruble this year protects them somewhat. At the moment the market is spooked by the uncertainty, that is not going away any time soon whatever the communique says but there must be some downside protection from here.
Yet again President has come in with a successful well, the second well in the three well campaign, PFE 1001 has tested 400 b/d from the primary target which is double initial expectations and will come onto production by December 10th. At these rates of production and expected decline, the well would provide payback within twelve months assuming no great change in oil prices. In addition the secondary target also flowed successfully and here the oil will be kept in reserve for future production, the third and final well in the campaign is drilling ahead at the moment.
The management consider themselves ‘pleasantly surprised' at these rates and I'm not surprised, initially guidance for the three wells was 600 b/d and my guess is that we should be at a conservative 1,000 b/d and that is using the company's current forecast of 200 b/d for the third well. President remains set very fair and when final production from the campaign is revealed I would bet that it has, as they say, blown the b doors off.
Sound has commenced drilling at TE-10 in Eastern Morocco where they will test the North East Lakbir prospect at Greater Tendrara for both a material TAGI strat trap and a smaller TAGI structural closure. The NE Lakbir has update mid-case potential on a gross basis of 2.7 TCF of GOIP with a Sound internally estimated COS of 14%. The smaller structural closure has a mid-case potential, on a gross basis of 128 BCF of GOIP with a Sound internally estimated COS of 26%. With a gas development already under way the market appears to be overly concentrated on these wells without taking on board existing value of the company.
Ophir has announced that the Paus Biru-1 exploration well in its Sampang PSC in Indonesia is a gas discovery which has encountered 29 metres of estimated net pay within the target Mundu formation carbonate reservoir. After 9 days of being shut-in to build up pressure the maximum flow test produced 13.8 MMscfd through a 120/64″ choke for 55 minutes.
Over at Bualuang the news was not so good where the company had a dry hole while drilling a step-out looking fora small target to the north of the field. Overall this is undoubtedly good news and gives validation to the assets acquired in the Santos deal earlier in the year. The only question I have of Ophir at the moment is one of the new CEO, as I understand it a number of conversations have taken place but an announcement is not imminent, these things do take time.
An update from Premier in which they announce the completion of the Babbage sale and some production numbers. Guidance is on track with around 80/- boed so far for the year although recent numbers have been much higher, the November/December average is over 92/- and a peak of 98.7/- on 4th December. Finally the Zama-2 appraisal well in Mexico was spudded on 29th November and should reach the reservoir in the New Year.
Tower has announced that it has signed a contract for a rig to drill their NJOM-3 well which is expected to drill offshore Cameroon 2Q 2019. Tower owns this 100% and has yet to fund this process but there are good indications that there are multiple reservoirs to find in this process.
Another big weekend of sport, rugby union sees the return of the European Champions Cup with a number of compelling fixtures.
In the footy the big tie is the visit of the Noisy Neighbours to Stamford Bridge where Chelski have to put defeats to Wolves and Spurs behind them. Liverpool travel south the play the Cherries whilst the Gooners host the Terriers. Spurs are at the Foxes and in London it is the Hammers against the Eagles.
There is also some fantastic jump racing although quite small fields still. At Sandown its the Tingle Creek where mighty Altior is back out and facing Un De Sceaux and Sceau Royal and a good card at Aintree as well.