Malcy’s Blog – Oil price, IOG, Petro Matad, President, Touchstone, Empyrean & finally

WTI $59.32 -28c, Brent $62.95 -25c, Diff -$3.63 +3c, NG $2.53 n/c, UKNG 48.3p -0.3p

By Malcolm Graham-Wood

Oil price

Same old, same old as the oil price remains in the doldrums, last week WTI gained 67 cents and Brent 80c, hardly setting the world alight. Data shows that so-called money managers have been taking money off the table probably as they see the Opec+ meeting dampening down the oil market.

IOG

IOG has announced the spudding of the Elgood development well, 48/22c-H1 and hence the start of the Phase 1 Development Drilling Campaign. Elgood is the first of five planned development wells in IOG’s Phase 1 project and is expected to take approximately three months to drill and complete, after which the rig will move on to Blythe in early Q3.

The Noble Hans Deul jack-up rig mobilised from the Cromarty Firth on 1 April and reached the Elgood field location early on 4 April. After preparation and jacking-up the Elgood well spudded at 1730 hrs on 9 April.

 Andrew Hockey, CEO of IOG, commented: 

 “We are very pleased to have kicked off the Phase 1 drilling campaign, another key milestone for the Company as we continue to progress towards commercialisation of our Core Project.  This drilling campaign has been planned meticulously by the IOG drilling, subsurface, subsea and HSE teams since early last year, in collaboration with our main drilling contractors Noble Corporation, Petrofac and Schlumberger and our partner CalEnergy. We have a very clear collective focus on ensuring safe and efficient performance leading successfully to First Gas in Q3 2021 at the Blythe Hub before continuing into 2022 at Southwark.”

Petro Matad

A Block XX Exploitation licence update this morning where ‘progress has been made on the 2 remaining steps needed to be completed prior to award. These recommendations have been incorporated into the documentation which is now ready for final review by the Mineral Resources Professional Council (MRPC) as required under the Mongolian government’s Exploitation Licence application procedure. The MRPC has been asked to convene the meeting as soon as possible. If required, the meeting can be conducted virtually as was the MRPC review of Heron reserves.

The other step is the exploitation area and here the company has had what seems like pretty substantial success. The amount of the block that has been retained, when awarded, is the entire extension into the block of proven and producing Tosun Uul Basin. ‘This basin contains an estimated 2 billion barrels of in place oil in the Petro China operated areas in Block XXI and XIX immediately to the north of Block XX. The agreed Block XX Exploitation Area contains all of the prospectivity identified within the proven basin. Petro Matad will look to undertake near field exploration drilling in this area, in parallel with the development of the Heron oilfield’.

So right now the formal application is in process but has been delayed due to Covid, it is fair to say that the bureaucracy has been working efficiently during the pandemic and these final approval meetings may well be virtual.

Finally the company has procured  an unsecured loan facility from major and funding shareholder Petrovis of $1.5m which seems to be pretty wise and on helpful terms. This should mean that MATD are well placed to process all this licence stuff without having to worry about funding during Covid and when the applications are being processed.

I remain confident that having ticked so many boxes it will not be too long to gain the necessary approvals and then with a following wind it is not difficult to imagine drilling on Heron and with all those barrels to go after at Tosun Uul. With this potential upside one could not rule out finding a new partner or farminee which of course would accelerate the process even more.

President Energy

President has updated with regard to its H1 2021 drilling campaign in Rio Negro, Argentina. The new well LB-1002 in the Company’s Las Bases Concession has been drilled, logged and cased on time and on budget. The rig is now moving to the next well location, EV-1001 at the Estancia Vieja field. The spudding of EV-1001 is projected in approximately 10 days.

The new well LB-1002 at the Las Bases field, Rio Negro, Argentina has been successfully and safely drilled to the target depth of 1,302 metres, logged and cased on time and budget. The well unexpectedly encountered certain swelling shales when drilling which affected progress downhole but these issues were successfully overcome and caused no difficulty in running the pre-drill designed slim hole casing.

The electric logs aligned with the mud logs holding no surprises and identify a total of approximately 7 metres (23 feet) of net gas pay in one contiguous sandstone interval of good permeability and porosity (the latter being estimated at 20-25%) in the Centenario formation which was President’s target. The results support President’s pre-drill projection of an initial production of some 40,000 m3/d (1.4 MMsft/d or circa 230 boepd) which is subject to the forthcoming testing. The well will be completed during this month using a coiled tubing unit which
will be mobilised to site within approximately the next 14 days, with the well projected to be on production by the end of this month. As previously announced, once President has reviewed the initial production data, a decision will be then made as to future drilling in the Las Bases field.

In the meantime, the rig is being moved (“Drilling, Transport, Mobilisation”, or “DTM”) to the next well EV-1001 at the Estancia Vieja field, Rio Negro Province. This will take some 5/6 days with spudding of this well expected to take place within the next 10 days. The subsequent well, EV-1002, is also at the Estancia Vieja field and accordingly the DTM to that well will be faster.

Peter Levine, Chairman, commented
“Whilst downhole the well was a tad trickier than expected, the new well LB-1002 was drilled, logged and cased on time and budget. “It’s very much step by step but it’s good to get the first well of the programme drilled successfully and under our belt. We now move to the completion and the test of initial production with all present indications together with analogue well comparison supporting our pre-drill production estimates of volumes.

“Our drilling programme in Argentina continues in the Estancia Vieja field and further announcements will be made in due course. “All other material workstreams including but without limitation Salta, the treatment plan and Paraguay farm-out are on track and proceeding in accordance with expectations”

Touchstone Exploration

Touchstone has  announced the completion of flowback testing of the Cascadura Deep-1 well, confirming a liquids rich natural gas discovery on the Ortoire block onshore Trinidad. The company  perforated the top 199 feet of the 449 feet identified as potential pay in sheet four of the overthrust Herrera formation on April 8, 2021.

The average flowback rate during the extended 24-hour test period was approximately 4,262 boe/d, including 22.9 MMcf/d of natural gas and 449 bbls/d of NGLs. Peak flowback rate of approximately 4,567 boe/d was observed, comprised of 24.5 MMcf/d of natural gas and 477 bbls/d of NGLs.

Approximately 48.8 MMcf of natural gas (8,138 boe) and 1,081 barrels of NGLs were produced during the testing period with field analysis indicating liquids rich gas with no hydrogen sulfide and no produced water. The well is currently shut-in for a minimum four-week pressure build-up test.

Paul Baay, President and Chief Executive Officer, commented:

The positive test results from Cascadura Deep-1 further expands the opportunity on the Ortoire block as we now expect to have two distinct and separate sheets producing from two wells in the Cascadura structure. We will accelerate operations required to bring the two Cascadura wells onto production as the test results allow us to properly size surface facilities for reservoir management. We are also moving forward with the required applications to establish a second Cascadura surface location, designed for up to four development wells. The test results demonstrate the clear future production opportunities for the Company.

I said last week when the market gave TXP a spanking that it was unnecessary especially given the nature of the block. This is good news as expected, and only when the whole block is assessed will the market find out quite how much in the way of hydrocarbons there are in there. Put together I expect a number of very substantial discoveries and for me that makes the shares still way too cheap.

Empyrean Energy

Its been quiet down at EME for some time but today’s announcement upgrades the chances of success at their Jade and Topaz prospects on block 29/11 offshore China. The  Internal assessment of GCoS for Jade upgraded from 32% to 41% and Internal assessment of GCoS for Topaz upgraded from 30% to 35%.

Empyrean CEO, Tom Kelly, stated:

 “Whilst much of the major work in addressing the prospective resources and Geological Chance of Success of our Chinese assets was completed some time ago, the Company has been continuously reviewing the dataset in order to select the best prospect to drill first, resulting in the decision to prioritise Jade as a commitment well. The Company is in discussions with a number of interested parties, and both the Gaffney Cline assessment of GCoS and the Company’s view on GCoS following the additional work are highly relevant and are being used in presentations. We look forward to updating shareholders on further progress of our plans in the coming weeks and months.”

I am scheduled a meeting with Tom Kelly shortly and will refer back immediately after that.

And finally…

So, Hideki Matsuyama won the Masters becoming the first player from Japan to wear the famous Green jacket.

And Rachael Blackmore kept her winning run from Cheltenham going by winning the Grand National on Minella Times, another first as no women had ever won the race before.

In the Prem, on Friday night the Cottagers lost 0-1 to Wolves pretty much condemning them to the Championship next year. On Saturday the Noisy Neighbours lost at home to Leeds United, Liverpool ended the drought at Anfield beating Villa 2-1 and the Eagles lost 1-4 at home to Chelski. Yesterday the Gooners beat the Blades 0-3, Spurs lost 1-3 at home to the Red Devils, Burnley threw away an early lead and like on two previous occasions opened up with three goals and this time just held on to win 3-2.

(The opinions expressed here are those of the author, a columnist for Share Talk.)

Malcolm Graham-Wood

Source Link https://www.malcysblog.com/2021/04/oil-price-iog-petro-matad-president-touchstone-empyrean-and-finally/

Website Link www.malcysblog.com

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 blog


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