Malcy’s Blog – Oil price, Kistos, Victoria Oil & Gas, FAR, Coro, Blog from Houston

WTI $80.88 +9c, Brent $82.05 -12c, Diff -$1.17 -21c, NG $5.01 +22c, UKNG 212.49p +7.7p

Oil price

The IEA report out today added to the other two from last week and all are suggesting a slight cooling in the oil price scenario as we go into Q1 2022. Overall not much changes but some non-Opec supply increases which will mean that Opec+ itself will likely need to trim that 400/- b/d increases as I mentioned last week.

That means that Joe Biden will have to find another way to get the price of gasoline down although the irony of asking for extra supply from Opec+ hasn’t been lost on the US domestic business as they struggle to obey his green agenda. I’m already finding that Houston is confused and I think that energy policy is to be delicate, somewhat at odds with the actualité…

Kistos

Kistos yesterday announced that that Borr Drilling’s Prospector-1 jack-up drilling rig has left the Q10-A field (Kistos 60%) and arrived on location at the Q11-B discovery (Kistos 60%). The spudding of the appraisal well is expected later this week.

‘The Q11-B appraisal well represents the concluding planned activity in our 2021 drilling campaign and is anticipated to take a minimum of 6 weeks to drill and test. It is intended that the well will be suspended for future use in a Q11-B development. Kistos has previously estimated 2C resources for this accumulation of between 67 – 155 Bcf net. This estimate was independently audited by Sproule and will be refined following review of all the data from the forthcoming well.

At the Q10-A field, we have completed a successful drilling campaign, highlighted by the appraisal of the Vlieland sandstone formation in the Q07 and Q10 blocks. As previously announced, it flowed oil to surface at a maximum stable rate of 3,200 barrels of oil per day (bopd). Pressure-volume-temperature (PVT) analysis of downhole samples has confirmed a light oil of 33° API, with a low sulphur content. No formation water was produced or sampled on test. Work is ongoing to integrate the data into our subsurface models. Work has also begun on the development concept.

Following the testing of the Vlieland formation, a side-track was drilled from the Q10-A04-A wellbore at high angle through the Zechstein carbonates and clastics and completed in the primary Slochteren formation at a TVDss of 2,319 metres. Following data acquisition, the well is now producing gas from the Slochteren reservoir at a gross rate of ~800,000 Nm3/d (~5,080 boe/d) with the other horizons currently shut-in for reservoir management purposes. Following the completion of drilling and intervention activities on the Q10-A field, gross gas production has reached approximately 2,000,000 Nm3/d (12,700 boe/d).

Commenting, Andrew Austin, Kistos’ Chairman, said:

One of the key attractions of the Kistos portfolio is the significant near-term upside potential and I was delighted when I was able to announce the extremely positive results from the appraisal well in the Vlieland sandstone. This success continued with the positive result from the side track of the Q10-A04-A well, which has added materially to our production at a time of high gas prices. I am now looking forward to reporting the result of the Q11-B appraisal well in the coming weeks.

Another good RNS from Kistos with production up especially as they are producing from one of the three horizons in order to make sure the pressure equalises. So, as Andrew Austin said at the time of my interview, increased revenues substantially due to gas prices and of course the Q11 appraisal should be a Christmas present for shareholders.

VOG

Victoria Oil & Gas has updated on Logbaba well La-108 where perforations have been successfully added to well La-108 safely and under budget. As a result, an additional 42m of net pay has been added in the Upper Logbaba Formation in the well and in the first few days of production, the well has supplied up to 5.7 MMscf/d of production (all that has been needed), with a flowing wellhead pressure of over 200 barg (a unit of pressure).

The gas currently being produced from well La-108 has a Calorific Value (CV) that is about 4% higher than the Logbaba Field average, and the condensate is slightly lighter than the field average.  In the short-term we expect that only these new upper perforations will flow until there is pressure equalisation with the lower perforations. It will take some time to acquire sufficient data to determine how the well will perform over the long term, and we will provide further updates when we have a better understanding of the reservoir as a whole.

Roy Kelly, CEO of VOG said:

“I am absolutely delighted with this result, delivered safely and efficiently by our excellent team of staff and contractors, which included a local oilfield services company providing the wireline services. We saved time, money and any environmental risks by omitting any testing to flare, and the well was handed over to the production department straight after the perforating phase.

Only now do we have all sands in the development wells perforated, which will eventually allow us to gain a clearer understanding of deliverability and reserves from the current well stock. This takes time but is necessary to ensure we get supply-side forecasts right going forward; as we have seen, there is huge variability in the performance of the wells.”

VOG has been working towards this positive news with a great deal of work being done behind the scenes. It looks to have been a monumental effort by the new team and they have been careful not to over promise and under deliver, indeed this is the first time the market has translated news in the market into serious share price growth. 

Readers know that I have followed VOG for a very long time and it has tested the patience of investors and myself alike but now it looks like a more positive stance on the company is justified, maybe even that interview with CEO Kelly…

FAR Ltd 

FAR has commenced drilling the Bambo-1 exploration well in Block A2, offshore The Gambia. The Stena IceMax drillship arrived on site on November 12 after completing preparations and has successfully spudded the well.

FAR Ltd  managing director Cath Norman said:

“We are very excited to be drilling offshore The Gambia again and I thank our co-venturer PETRONAS and the Government of The Gambia for their support during a challenging period of uncertainty and delays. “We’re looking forward to working safely and efficiently with our trusted partners at Exceed and Stena.
“The well will be run as a tight well, and we look forward to announcing drilling results at the appropriate time.”

Far is another stock that has been through the mill in recent years and a number of shareholders didn’t stay the trip. Although success has many fathers they were certainly involved in the Senegal find and in my view were at the very least unfortunate in the events that succeeded it. 

Right now Far is back at square one in The Gambia and the well is getting rave reviews from investors who think that it could potentially be huge. After all it has 3 target areas with multiple prospects and its not far from home if that’s not too much of a pun. Yup its an exploration well with associated risks but the right sort of people are buying the shares…

Coro

Coro has binding JV agreements with the previously announced acquisition in Vietnam. It is a low cost entry for Coro into the fast growing Vietnamese energy sector as an independent power producer where Coro is to acquire 85% equity interest in a newly formed joint venture to be named Coro Renewables Vietnam in exchange for initial funding by Coro of US$500,000 to immediately develop a 5MW pilot rooftop project through to ‘Ready to Build’ status

VPE, a highly regarded local EPC contractor, to transfer its existing 150MW project portfolio into the JV and provide management services in exchange for a 15% carried interest in the JV. Coro have the option fund the 5MW pilot project through construction once de-risked with the option to fund the broader portfolio of over 150MW solar projects. All rooftop projects benefit from attractive economics and are underpinned by long term “take or pay” Power Purchase Agreements (“PPAs”) with creditworthy industrial customers and US Dollar denominated pricing.

Mark Hood, Coro’s CEO, commented:

“I am delighted to announce the entry of binding agreements in connection with our Vietnamese roof-top solar project, which moves Coro closer to maiden revenues with the pilot project and a step forward on our strategic goal of being a major regional player in the renewables space.”

It looks as if this deal could be really important for Coro and Mark Hood and he has picked what looks like a good deal in a very exciting market.

The opinions expressed here are those of the author

Malcolm Graham-Wood

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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 blog


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