Malcy’s Blog – Oil price, PetroTal Corp & finally

WTI $39.62 -$1.28, Brent $42.35 -94c, Diff -$2.73 +34c, NG $1.78 -4c

By Malcolm Graham-Wood

Oil price

Oil fell yesterday as the reported numbers of the COVID-19 virus rose again across the USA and in record numbers leading to concerns about oil demand falling away again. Then again US jobless claims came in better than expected at 1.3m, down 100,000 and continuing claims were 18m some 7.5m off the peak. Trade figures from Germany, France and Italy this morning are better with all those equity markets gaining again.

There have been a number of articles, as one might expect about the fact that not only is Joe Biden ahead in all key states for the November election but that even in the Lone Star state of Texas he has decent support which is something else altogether. In turning its back on the Republican party the state might be careful what it wishes for, as whilst the long dreamed energy independence may be drifting away other factors may effect it more.

A Biden Presidency would remove sanctions on Iran which would be another nail in the coffin for US domestic production, already falling and a lower price would cement the demise of the industry for a long time. Biden would presumably also have a change of policy with China on trade and of course taxes will go up big time making equity markets nervous for the right reasons. Texas voting for the democrats would be astonishing would also appear to be turkeys voting for Thanksgiving, be careful what you wish for….

PetroTal Corp

First quarter 2020 results from PTAL this morning for what was a monumentally frustrating period from many angles. Production was a Bretana field record at 9,686 b/d with sales of 10,313 so we know that the bar is encouragingly high. Also in the period the 6H well was drilled successfully and under budget and the CPF-1 was completed with a capacity of 16-18/- b/d.

The year end reserves were all strongly better than the previous year, P1 up 20%, P2 up 21% and P3 up 8%. 1Q  Revenues were $48.1m as oil prices fell royalties were $1.8m and funds flow of $15.1m was down on 4Q 2019 as expected. Operating costs of $6m were the same but transport costs rose on the back of the new oil sales contract.

Cash at the end of Q1 was $7.4m ($21.1m at y/end) and is currently $24m, the contingency liability, $40.8m at the end of March due to the sudden oil price fall actually falls with projections of forward oil prices in Q3 and Q4 being higher, right now it is probably nearer $25m.

Subsequent events, mainly due to the COVID-19 virus have shut down the pipelines and of course the Bretaña field was shut-in and is expected to restart this month. There has been a significant reduction in costs at the operating, transport and G&A levels whilst restructuring of the contingent liability, an extension to the oil sales contract including ‘adequate hedge protection to avoid downside losses’ as well as lower pipeline tariffs and fees. With the equity issue raising $18m PetroTal has taken all the necessary efforts to restructure the business and is now on a very solid footing to resume its growth pattern and I remain very positive for this very well managed company.

And finally… 

Sport is certainly back, another F1 GP still in Austria but this time is advertised as the Styrian GP, if it’s as citing as last week…

Racing this weekend is from Newmarket, the July Cup and Ascot.

The cricket is awful, England’s batsmen were way more rusty than I expected and the Windies batsmen are already in control. Whoever advised Jimmy Anderson to wear that headband…

In the Prem last night the Cherries drew 0-0 with Spurs, the Toffees drew 1-1 with the Saints and Villa lost 0-3 to the Red Devils. This weekend on Saturday the Canaries might go down after playing the Hammers, the Hornets entertain the Magpies, the Mighty clarets go to fortress Anfield whilst the Blades host Chelski and the Noisy Neighbours go to the Seagulls. Sunday sees the Toffees at Wolves, Villa host the Eagles, the Cherries entertain the Foxes and of course it is the North London Derby at White Hart Lane.

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 publication.

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