Posted by Malcolm Graham-Wood - Malcy's Blog
Oil prices faded at the end of last week for no great reason, TS Nate worried traders who thought that it would take out refining capacity but in the end whilst it was all gong and very little dinner by recent standards. The fundamental news is much more positive, the Putin/Salman talks concluded amicably and at a forum in Moscow the Aramco CEO confirmed that the IPO was ‘on track' for a 2018 listing which should encourage supply discipline from Riyad. Indeed with Iran and Venezuela talking about ‘deepening cuts' and the Moscow meeting possibly extending them to the end of the year most things in the oily garden are coming up roses, so to speak. With detailed inventory stats this week likely to be sympathetic to the bulls last week may just have been a correction. It's Columbus Day in the US today so a holiday…
Jersey Oil and Gas
Statoil has announced this morning that the Verbier sidetrack well is a discovery (JOG 18%) ‘with a minimum proven recoverable volume in the immediate vicinity of the wellbore of 25 million barrels of oil equivalent' which is incredibly good news. Initial estimates of 25-130 of oil equivalent are very encouraging but it is likely that an appraisal well will be drilled to look at the sands in the Verbier fan but I understand that Statoil is very excited by the good data points including the 10 Y well data. They will interpret the seismic but this all reads well across the rest of the block which includes the Cortina prospect and the Meribel lead. JOG Andrew Benitz was obviously delighted when I spoke to him this morning saying that this was ‘nothing short of fantastic news' and that the sidetrack exceeded pre-drill estimates.
I visited JOG last week and spent a day at their offices which I will write up shortly, I was going to do so today but this news has rather superceded that visit. Suffice it to say that, for a small and relatively new company in the sector, they have a highly experienced yet dynamic team, who are flat to the boards assessing potential production deals which hopefully should deliver 1H next year, more later.
Peter Levine is not letting the grass grow under his feet, he has today announced a well programme at the very recently acquired Neuquen Basin assets at Puesto Flores and Estancia Vieja. The three well programme comprises three workover wells and two more contingent wells, of these five wells, four were shut in prior to the President deal. These wells will be funded from existing cash reserves and are aimed at bringing back production and to test by-passed intervals which demonstrated evidence of hydrocarbons during original drilling. My guess is that previously Chevron may have cherry picked the bigger and better sands and have unwittingly left potential rich pickings behind.
With its existing portfolio and now the acquired acreage, President is likely to have an extraordinarily busy time in the next few months and with so many opportunities to increase production should easily deliver on Peter Levine's upbeat expectations, accordingly I remain of the view that these shares are extraordinarily good value at 8.175p. He is coming in to Core Finance on Wednesday to explain everything so watch this space….
Columbus Energy Resources - It's Colombus day, let's do a deal...
Another man on a mission is Leo Koot, CEO of CERP who have announced a placing, subscription and open offer to raise £4.1m this morning. Schroders has agreed to take a 10% holding in the company by investing £3m at 5p and with management investing £100,000 and an open offer for £1m available the company is well funded for this stage of its journey. The proceeds are to be used to accelerate their growth strategy on current assets in Trinidad by further increasing production and cash flow as well as potentially acquiring ‘value added' M&A opportunities.
I have met with Leo Koot a number of times and he has injected into Columbus what he calls ‘new energy, vision and focus' and tellingly describes the company as ‘an oil production-led South American exploration business', whilst these need to be proven it has certainly been a good start. The number of Latam players is definitely on the rise as smart managements realise that the continent is full of promise and potential and more importantly, open for business.
PFC has announced a Master Services Agreement with Gazprom Neft over three years for engineering services on the Garmian field in the Kurdistan region of Iraq. No indication of size here but adds to the recent flurry of orders adding to a building backlog.
Wood Group has completed its acquisition of AMFW, let's hope that it is more successful that the Amec acquisition of FW. Wood has sensibly appointed Ian McHoul, Linda Adamany and Roy A Franklin as NEDs and would do well to listen to their wise council.
Last week I gave an interview to Jeremy Naylor at IGTV, we discussed the bucket list and how well, or badly it has done and for the first time I gave a sneaky look at which companies are on the subs bench for the upcoming changes in the list. Look out for comments on Sound, Hurricane, Amerisur, VOG, SDX, JOG, Aminex, Echo, Trinity, Wentworth, Ascent and Empyrean…And subs bench…..
Watching England play football brings a whole new meaning to the expression ‘watching paint dry' and listening to Ryan Giggs and Ian Wright made one think of joys of the past. If this lot of rubbish represent us in Russia next year then I shall be washing my hair on the few occasions that they play…
Scotland however will not be in Russia as they narrowly failed to qualify yesterday but did very nearly make it. Tonight it's Wales v Republic of Ireland, as I understand Wales can draw but the RoI have to win, let battle commence. Northern Ireland are in the play-offs ok.
In the baseball, the Yankees beat the Indians last night to keep the series alive. The Red Sox battled back against the Astros and they also now trail 2-1. The Dodgers are 2-0 up against the Diamondbacks and the Nationals and Cubs are all square heading back for 2 games in Chicago. All 8 teams play tonight.
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