Malcy’s Blog – Oil price, Echo, Amerisur, VOG, Eco, Reabold, Egdon, Union Jack, EOG – And finally

WTI $56.20 +18c, Brent $63.46 +7c, Diff -$7.26 -11c, NG $2.17 -8c

By Malcolm Graham-Wood

Oil price

After all that huff and puff oil had a modest up week, WTI gaining 57c and Brent 99c. The same old factors tug on the oil price, geopolitics in the Gulf one side and GDP worries on the other. What will the Fed say on Wednesday we ask? Recent data seems very mixed with significant gasoline demand and jobs data pretty positive but the GDP figure was still only 2.1% below the last shout by a full point. Inventory data has also been affected by Barry, this week it should settle somewhat.

With trade talks resuming there may be some blue sky but there will also be clouds with or without silver linings ahead and given China has had low-end GDP numbers I wouldn’t be standing on one leg waiting for good news.

Echo Energy

Echo has announced that the initial seismic processing of data from the 3D survey over the Eastern cube at Tapi Aike in Argentina is now complete. An analysis is being conducted and early indications highlight a similar amplitude feature as seen on the 2D data. This will provide Echo and CGC with the operator further input as to identifying the best drill locations on the block.

Seismic from the Western cube is still being progressed and the company remain confident for a drilling campaign starting Q4 2019. Things are really beginning to come together for Echo at Tapi Aike in a programme that couldn’t be shortened and the upside is still of significant proportions.

Amerisur Resources

An operational update from Amerisur this morning which confirms Sol-1 as a ‘modest discovery’ as previously indicated. The CPO-5 drilling programme continues with the Indico-2 appraisal well-aimed at increasing production and to test the extent of the OWC to better define field reserves which had previously been 22.7 MMBO of 2P gross reserves given by McDaniels.

The Plat -22 sidetrack has been completed and is now on production and the end of June WI production for the company was 5,537 BOPD and FY guidance of 5-6,000 BOPD remains in place.

Victoria Oil & Gas

As promised last week, VOG has confirmed that term sheets have been signed with Aksa Energy to supply them with up to 25 mmsfd of gas to their planned 150 MW power station to be located in Douala Cameroon. Favourable gas prices of $6.75 per mmbtu have been achieved and for a period of 25 years plus an option to extend by five years and with a 70% take or pay component.

This is indeed a truly significant contract and for all concerned parties.  From the top down in Cameroon at Presidential level, with Ministerial involvement and of course the Director-General of ENEO all parties have worked with VOG and Aksa to make this happen. With Aksa hoping to have the power station up and running by 4Q 2020, this provides the opportunity to supply more gas from Logbaba and decent incentive for the well at Matanda next year.

CEO Ahmet Dik has said that the deal ‘would dwarf the current level of gas sales and propel VOG into a profitable trajectory of growth which has always been our aim’. The modest rise in the share price today must reflect some degree of closing risk in the project otherwise the enormous potential for VOG Ebitda which might see growth by multiples has really not been taken into account at all, this is a truly spectacular contract to have won by any standards.

Eco (Atlantic) Oil & Gas

It seems that Total has farmed-out 40% of its interests in the Orinduik and Kanuku blocks to Qatar Petroleum in a deal likely to add excitement to an already frenzied market. With Tullow asking for an extension to drill being perceived as being positive for the well these moves are exciting the market place. The deal means that Total can concentrate on its LNG expansion plans and with QP on an oil buying frenzy they must have huge confidence in the area.

With Eco (Atlantic) Oil & Gas now the 2nd largest WI holder with 15% they will stand out as being a massive target for others if this part of Guyana comes in. The well spudded on the 4th of July so has been drilling for 25 days of a potential 40 but this corporate activity can only up the excitement on what is already one of the most followed drills in recent years….

Reabold Resources

At Parta, the rig has mobilised for the IM-1 well and that should mean spudding in around 8 days from being in place. In California, the VG-4 well has produced at 480 bopd and 742/- thousand cubic feet per day which is exceptionally good and now both VG wells are on production. Of much more significance is that permits have been awarded for three more wells at West Brentwood giving the company extra ‘running room’ and an opportunity to accelerate the programme here which is good news. At the more modest Monroe Swell, the Burnett 2A and 2B wells are yet to achieve stabilised production rates in line with initial testing and the company are hoping that re-entry and clean up of the perforated zones will do the trick.

Finally, at the Curlew-A prospect the offshore UK, the site survey is expected to complete this week, RBD has an effective 29.6% interest via its stake in Corallian Energy and is chasing best estimate 2C contingent resource of 38.8 mmboe. Not forgetting the ongoing testing at West Newton which could be hugely significant, there is much to play for at Reabold.

Egdon/Union Jack/EOG

Good news for the participants at the Wressle field today, Egdon as the operator has announced that subject to certain conditions the planning appeal will be uncontested by the North Lincolnshire Council. Whilst this is not a total wave through it should mean that this small but profitable field should soon be adding decent barrels, I have heard 500, maybe 700 b/d could be produced.

And finally…

A quite amazing weekend of sport started on Friday with Ireland, chasing 180 odd being bowled out for 36 thus losing a test match against England that they must have thought they could win.

In the afternoon we saw one of the finest races ever seen, the ‘King George’ saw Enable beat Crystal Ocean on the line with a number of O’Brian horses, including the Derby winner trailing in behind. Can Enable now do the Juddmonte and then possibly the Arc?

And then yesterday, when the German Grand Prix turned into an ice rink with a number of leading contenders all, seemed to ignore others and come off at the same corner on a shocking selection of tyre options. Max Verstappen won in the end but you wonder how these guys never learn.


By Malcolm Graham-Wood

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