WTI $41.34 +$1.21, Brent $43.82 +$1.04, Diff -$2.48 -17c, NG $2.70 -30c
By Malcolm Graham-Wood
Oil and markets in general rose sharply yesterday on the back of the latest vaccine success this time from Moderna who’s offering is 95% effective. The Opec+ JTC met yesterday ahead of today’s JMMC meeting and said that October compliance was some 96% not counting the one-offs. Market chat says that there might be a recommendation to take a three month holiday in the 2m b/d increase due to start in January.
Exciting times for BPC as they announce an operational update ‘one month out’ to Perseverance#1. The well is on track to spud before the end of 2020 and is scheduled to take between 45and 60 days as a tight hole. The well is targeting recoverable prospective resources of 0.7 billion barrels of oil, with an upside of 1.44 billion barrels, solely for the northern portion of the B structure.
In the event of success, Perseverance #1 would substantially de-risk the total B structure, which extends for between 70 and 80 kms, has a mapped areal closure of over 400 km2, and has a ‘best estimate’ aggregate recoverable resource potential in excess of 2.0 billion barrels
Commenting, Simon Potter, CEO of BPC, said:
“Many shareholders have been extremely patient and have stayed the distance, as has the majority of the management team, and we are now in the position to deliver the Perseverance #1 exploration well in compliance with our long-held exploration licences in The Bahamas. Perseverance #1 is a potentially basin-opening well, with the kind of scale and associated value uplift exposure rarely offered outside of oil majors.
At the same time, our activities, in the event of success, have the capacity to be economically transformative for the nation of The Bahamas, and could ultimately contribute billions of dollars in royalty revenues to the national treasury, at a time when the dual impact of recent hurricanes and the Covid-19 pandemic has been especially hard-felt by most Bahamians. Many other nations in the region such as USA, Mexico, Trinidad and Tobago, Suriname and Guyana, have over the past decade safely and responsibly drilled offshore wells, developed or continue to develop offshore hydrocarbon resources, and reaped the economic benefits of an established or a whole new industry. Moreover, these other nations have been able to do so at the same time as seeing growth and development of existing industry sectors, such as tourism.
BPC is fully committed to ensuring safe and responsible operations, and has assembled an experienced team of drilling personnel, supported by many of the world’s largest and most respected oil services contractors, with a collective track record of drilling many thousands of wells safely, all around the globe. We are especially pleased that one of the most modern, technically capable drilling vessels in the world will soon leave port ahead of drilling. In support of this, logistics plans to mobilise both equipment and personnel safely to site have been finalised, funding is in place, and we have completed a huge body of work to ensure that best practices have been applied as our health and environmental safety plans and protocols have been developed, contracted, and approved.
I look forward to updating shareholders of our continued progress – this is an exciting time for BPC.“
As we near the time to spud this incredible well excitement is growing, and in the space of a matter of weeks we will find out what this huge prospect has to offer. In recent comments and in my interview with the company which I have repeated below, it is worth noting that BPC is no longer a one trick pony and with the CERP acquisition and other acreage deals having been done risk is lowered.
As the industry’s highest profile wildcat well though it will be followed at the end of January with considerable interest. Either way there is plenty of scope for the shares to run up ahead of the spud date, playing this well will require all of its shareholders skill as I’m sure that social media will fuel the flames…
Echo has announced an update on the resumption of the Argentine value added VAT reclaim process, and the successful monetisation of an initial proportion of the Argentine VAT owed to the Company. The VAT reclaims relate to operations from the Company’s 70% non-operated working interest in the Santa Cruz Sur assets, onshore Argentina and, as confirmed in the Company’s Interim results for the period ended 30 June 2020, had previously been delayed as a result of Argentinian lock downs as a result of the COVID-19 pandemic. Currently, VAT owed to Echo subsidiaries Eco Energy TA Op Limited (TA) and Eco Energy CDL Op Limited (CDL) now totals US$ 1.4 million.
Disbursements of Ars$ 4million (approximately US$ 49,000) now received, and resumed processing of further sums by AFIP (Administración Federal de Ingresos Públicos) in Argentina, demonstrate a re-commencement of activity in country following months of COVID-19 related shutdown, and an encouraging development despite international borders currently being still effectively closed.
In addition to cash proceeds now received, and with increased AFIP collaboration, the Company has been able to monetise a further Ars$ 3.5 million (approximately US$ 43,000) of VAT credits via the exchange of VAT credits in lieu of consultancy services with suppliers to the Company.
The Company considers that the monetisation of these initial credits, together with an enhanced level of AFIP collaboration, is a visible demonstration of business opening up within the current COVID-19 restrictions in Argentina. Given the Company’s material outstanding VAT credit position, these events provide the Board with optimism as regards to renewed expectations of near-term future additional cash VAT receipts.
The outstanding US$ 1.4 million of VAT owed to the Company will, when received, will provide the Company with significantly increased flexibility with regard to its strategic plans and operational priorities.
(The opinions expressed here are those of the author, a columnist for Share Talk.)
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Disclaimer: Malcy’s Blog is provided for general information about the international oil and gas industry and the companies that operate within it. It does not constitute investment advice and Malcy does not buy or sell shares, warrants or bonds in any company written about within the blog. Information is taken from publicly available sources and any comment is that of the author who does not take any third party comment in the publication.
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