Posted by Malcolm Graham-Wood - Malcy's Blog
With the US market shut for Independence Day the oil market was extremely quiet, nothing to report.
It's never a dull moment at SOU as today they report excellent news from Sidi Moktar where the Koba-1 well has come in as a ‘producible gas accumulation' that can move rapidly to production. The local market is very strong with additional demand from a large phosphate plant who crave gas to significantly add value to their product which otherwise would be exported untreated. The company also believes that there is potential for the pre-salt so will reprocess existing 2D seismic and acquire new to complete the picture. With poor quality cement bonding at Koba-1 it has been decided that there is little point in drilling Kmar-1 so the rig will now be demobilised and returns to Tendrara. This is good news for Sound and proves that it is now a meaningful player in Eastern Morocco with a growing asset base.
Starting as they mean to go on, Echo are reporting quarterly on operations although clearly there is not much to say at this stage. Technical work has commenced at Huayco after which the decision to go ahead with the operation. The company report that they are looking for more opportunities in Bolivia and a number of projects are being assessed.
Very good news from PPC this morning as they update the market on record sales in June. Invoice revenue at the Puesto Guardian concession alone was in excess of $1.2m and if you add the Louisiana expanded production, which contributes $200/- of highly added value free cash flow even at current oil prices, you have a significant set-up.
I think that the market has yet to understand quite how potentially valuable PPC might be, continually increasing production in Argentina with a highly favourable oil price regime gives potential for growth of free cash flow releasing value. With over 20m boe the reserves are not taken into account by the market, investors should take another look at my recent interview with Chairman Peter Levine to see how determined he is to prove up this incredible opportunity.
Another monthly update from AMER who announce average daily production of 4,576 b/d with a peak of 5,109 b/d and now at 6,075 b/d due to successful well treatments. The OBA had a peak of 4,180 b/d with a peak of 4,518 b/d which is below par due to equipment maintenance in Ecuador which will be completed shortly, meantime excess production is being stored in the field.
SDX is rapidly becoming the gift that keeps on giving as every report to the market gives more potential for value add in its African portfolio. Today it releases an operational update which starts with a resource update, its CPR on South Disouq gives it 47-180 Bscf of gas and 2.29-8.73 mmbbls of condensate. With the company moving to an early production system that is scheduled to bring it on in early 2018 (and may be sooner), value is coming from this source amazingly swiftly. Put another way this is 50m boe on a single discovery and their 55% WI gives them 29.6mmboe which is 3x their current reserves, seriously boosting the bottom line.
In Morocco things are hotting up as the rig is being mobilised and on schedule to spud in September whilst at Meseda the kit to facilitate the long awaited production increase is being tested. SDX is showing signs of aggressively progressing its portfolio and new opportunities are being assessed all the time, the recent oil price dip has delivered one or two possible gems I am led to believe. Today's share price move is just completely wrong, SDX is increasing in value all the time as today's report shows, On every measurement possible, with reserves increasing, valuable production not far away and a top quality management team busting a gut to deliver added value investors in SDX should cont their blessings, commodity risk apart their company is cheap as chips and should be bought.
Very briefly on EME as I have only just started to look at the company again and yesterday had a long call with Tom Kelly whom I rate very highly. Today he announces that Mako South-1 has exceeded the operators expectations and delivered exceptional performance with 23 ft of net pay in ‘excellent rocks'. The gas is 100% methane so expect further action from here before long. The Dempsey well in California shouldnt be long so I will comment more when time permits, but after the Sugar Loaf sale it seems that the boy is back with avengence…
Very briefly today, lack of time but Rangers supporters had a tough start to the new season and although we are only in July appear to have already been knocked out of Europe by a team of part-timers from Luxembourg…
Muzza, Bedene and Konta have hard matches at Wimbledon today, after yesterday's debacle of players turning up and leaving shortly after ‘injured' but still claiming their 40,000 euros things can only get better…
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