Posted by Malcolm Graham-Wood - Malcy's Blog
I am just back from a trip to West Africa, Cameroon to be exact where I was fortunate to see the Victoria Oil &Gas operation in action and to visit Bomono and the Bowleven wells now mostly, part of VOG. Much more on that in due course but it is safe to say that I was most impressed with the whole set up.
Having had a couple of good days, oil is slightly easier this morning after the EIA stats poured cold water on the better numbers from the API. Higher than expected stocks didnt go down well and the US domestic production numbers were up by 52/- b/dto 9.2m b/d.
Two pieces of news out whilst I have been away, one on the drilling front and one more in a financing vein. Cairn announced that the VR-1 well which was a 5km away step-out had successfully encountered better and slightly thicker sands than before which was the primary target of the well. The secondary target, the VR Aptian carbonate prospect did not provide commercial quantities of crude which is a shame but well offset by the news on the primary target.
FAR has announced that it is raising $80m at 8c which is a very modest discount of less than 5%. The proceeds will go towards development of Senegal, spending on the recently acquired blocks in The Gambia and other general expenses. With all the activity in this area in only the last few weeks those who have been given the chance to participate in the placing are fortunate indeed.
Two pieces of news from AMER this week, one was the monthly production data from Colombia which is creeping up nicely, and is now heading for the 5/- b/d mark through the OBA pipeline and the other was in the form of a new director. Dana Coffield joins the board after an exhaustive search and he becomes a new independent non-executive Director and brings with him a wealth of knowledge from his time at Gran Tierra but more directly the Putumayo Basin. AMER is way too cheap at these levels and is oversold, something that will, almost certainly change before long.
The news from PPC earlier in the week was also mainly strong as the company announced that the latest workover well the DP 1001 was performing a lot better than had been expected. Without the need for a pump yet the well is still flowing at around 350 b/d making the PG area around 800 b/d. Now, clearly the well will need pumping but this is excellent news from the area. Not so good news is the weather where torrential flooding has made roads into rivers and impossible to yet move the rig to the next project, the three well frac programme but it won't be long i'm sure.
When is a PSC not a PSC? When the Georgian Government try to sell the VIA block which is partially owned by RRL and on which the minimum work programme has been completed. Whilst this is no longer a ‘material asset' for Range it is still important and Governments cannot surely behave like this wherever they are located. If they do attempt to ‘re-sell' the block I would advise any potential purchaser to stand by for incoming legal action…
Other notable things this week while I have been away, BP confirmed that they had indeed sold the Forties pipeline system to Ineos for $250m, half now, half on an earn-out over 7 years.
Providence Resources have announced that they and their partners on 3/04 have agreed to underwrite the cost of some more 3D seismic.
Premier has done a handy deal by selling the Pakistan business for $65.6m with a fair bit up front to ensure the deal gets done. The price seems to be in line with market expectations but above Premier's own internal NAV. This progresses the non-core disposal programme and reduces net debt, a little!
Cape has announced an insulation and passive fire protection contract in Kuwait. There is no value announced but you can be sure that it will be worthy of celebration for such a good contract.
And surprise surprise Wood Group have already found another $40m of savings in the Amec deal, given how cheap they got it I wouldnt be surprised to see more costs coming out of the deal.
One of the most exciting weekends of the sporting season and in both the action starts early. The Masters will have already teed off as I write this, increasingly tired after the flights but very much worth the while.
The same goes for the Grand National meeting at Aintree and as I know that there is a party of oil leaders going tomorrow I wish them luck…
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