WTI $77.62 +$1.74, Brent $81.26 +$1.98, Diff -$3.64 +24c, NG $5.77 +15c, UKNG 261.0p +18.94p
By Malcolm Graham-Wood
Oil remains in favour and I still concur, yesterday’s OPEC+ meeting decided to maintain the existing pact and increase production of 400/- b/d. Ministers had to decide between continued Covid effects and increasing demand growth, I think the latter is winning and that draw on stocks for the rest of this quarter will keep the market tight.
In the USA drivers will pay on average $3.19 per gallon for their gasoline which is up 1.5 cents w/w, a rise of 1.4c m/m and a gain of $1.018 y/y.
PetroTal has announced the 30-day initial production rate of over 7,700 barrels of oil per day for well BN-8H. All amounts herein are in United States dollars unless otherwise stated. This represents a ‘significant 30 day initial production rate for well 8H’.
The well 8H delivered over 7,700 bopd average production during its first 30 days of operation, with the most recent rate at 7,575 bopd and as of October 3, 2021, during its first 30 days of operation, the well has produced 231,000 bbls. Importantly well 8H is outperforming management expectations; and, based on the 8H well’s ongoing performance and an expected $45/bbl oil netback, the 8H well should pay out in approximately 45 days, overall.
This is an exceptional performance and should be recognised as such and PetroTal is also pleased to announce it has entered into additional put options with strike prices of $70/bbl Brent oil for approximately 25% of the H1 2022 management production profile.
‘PetroTal continues to play a key role in bridging communication efforts between the government and local residents by promoting some of their key initiatives directly into the community; and, in order to create alignment with all stakeholders, PetroTal’s efforts include local labour allocation, financial support to develop sustainable projects, and intellectual resources to execute on those local projects’.
Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:
“Well 8H is an example of a fantastic well performing at the most opportune time of the year, and it has also provided a wealth of reservoir data. We aim to continue delivering this type of operational quality in the future. PetroTal is also pleased to represent an important liaison in ongoing community and government social agenda matters, promoting some of their key initiatives such as Social Profitability under a fair and just distribution of the central and regional government’s fiscal share.”
What can I say, PTAL is continuing to deliver the goods and this well is the perfect example. The team has got everything and more from this well which will pay back in around 6 weeks and adds over 7,500 bopd and fantastic $45 netbacks at these oil prices. I remain very happy with PTAL and think that at least a doubling in the share price is the very least one can expect, and then some…
Further to the announcement on 31 August 2021, Lamprell has provided a funding update. The Group has agreed, in principle, the structure and commercial terms of a USD 45 million UAE Export Credit Agency backed revolving trade loan facility with two regional banks (the “Initial Facility”). The Initial Facility will assist with the working capital requirements of the two IMI newbuild jackup rigs which are currently under construction at the Group’s Hamriyah yard.
As part of the terms of the Initial Facility, there is an option of a further USD 45 million accordion funding arrangement subject to the provision of additional security to the banks similar to that for the Initial Facility, which will be agreed in due course and is expected to be available in Q1 2022.
The drawdown of the Initial Facility will be conditional on, amongst other things, the Group successfully completing a 19.99% equity raise. As previously announced, the Company expects to undertake the equity raise in Q4 2021.
Take a look at the Lamprell chart and you will see the history of the company, over the years this fantastic engineer seems to move from feast to famine in the order book and along with it its demand for funds and the need for equity, the 19.9% shouldnt be a problem but nevertheless is another need. After that it will be back to the races with the company showing just how good it is operationally I’m sure.
Echo has provided an operational update regarding its Santa Cruz Sur assets, onshore Argentina for Q3 2021. The Company has announced a further three wells from the Campo Molino oilfield have been brought online. All the recently reactivated wells are producing in-line with expectations. Maximum daily reported production achieved after these wells have been online has been around 350 bopd (net to Echo) This represents a further 20% increase from production levels announced on 26 August.
In the month of September liquids production net to Echo averaged approximately 290 bopd. This continues to represent an almost 50% increase in the total daily liquid production rate at Santa Cruz Sur when compared to the period immediately prior to the restoration of production from the Campo Molino field just over a month ago. Production levels from the seven reactivated wells continue to indicate that the shut-in period has not had a detrimental impact on reservoir behaviour in the Campo Molino oil field, with those wells now being managed to deliver the same average monthly rate as had been achieved prior to shut in in April 2020.
Liquids produced at Santa Cruz Sur can cater for a variety of blend types, as and when required from customers. Given the opportunity presented by improving markets, and increases in realisable prices for higher quality products, the Company has optimised its commercial position by focussing production and sales on the highest quality blends, the prices of which have increased more quickly than other blends.
As a result of the demand and increased realised prices of higher quality blends, production from Santa Cruz Sur will, in the short term, be managed to focus upon production to deliver the highest quality and highest-priced blend which can be delivered from existing producing wells.
Martin Hull, Chief Executive Officer of Echo Energy, commented:
“Our pursuit of value for shareholders continues as we look at ways of maximising the price of our sales. The work we have done in recent months has borne fruit and we are now seeing materially higher prices for our higher-quality blend. This, coupled with increased production levels from the reactivated wells at Campo Molino, means we are seeing stronger cashflows as we head towards the end of the year.”
Gulf Keystone Petroleum
GKP has made a Shaikan Payment Update in which it confirms that a gross payment of $38.5 million ($30.1 million net to GKP) has been received from the Kurdistan Regional Government. The payment is comprised of gross $32.1 million ($25.1 million net) for Shaikan crude oil sales during July 2021 and gross $6.4 million ($5.0 million net) in relation to the arrears from the outstanding December 2019 to February 2020 invoices.
Following receipt of the arrears payment calculated based on the KRG’s proposed amendment to arrears repayment terms as announced on 13 May 2021, the current outstanding arrears balance is $45.2 million net to GKP. The Company continues to engage with the KRG on its proposal.
Empyrean has advised that it has awarded a contract for the well site survey over the Jade prospect to China Oilfield Services Limited on Block 29/11, offshore China.
Empyrean is the operator of Block 29/11 in China and has 100% working interest during the exploration phase. In the event of a commercial discovery, its partner, China National Offshore Oil Company, may assume a 51% participating interest in the development and production phase. In preparation for spudding of the Jade prospect well in mid-December 2021, the Company has agreed a comprehensive scope for the survey with COSL .
The objective of the well site survey is to identify all possible constraints and hazards including man-made, natural and geological features which may affect the operational or environmental integrity of a proposed drilling operation. In addition, the survey is designed to provide sufficient data to fully assess potential top-hole drilling hazards at the proposed well location and to ensure the rig can be secured safely onsite.
The survey is scheduled to commence in late October 2021, subject to a safe weather window for operations.
Empyrean CEO, Tom Kelly, stated:
“The well site survey contract award marks an important and crucial milestone towards conducting of a safe drilling operation in mid-December 2021. We are thankful to both CNOOC and COSL who both have enabled detailed discussions and timely approval during our planning process. December 2021 is shaping up as an important event in the corporate history of this company.”
The last sentence by Tom Kelly needs something added to it, like Worcestershire sauce to a Bloody Mary. As to say that December will be an important event is like saying eggs are important in an omelette. I have been watching Empyrean for years now and whilst I don’t want to decry the rest of the portfolio where there is upside, this is where the meat and potatoes are.
Jade is going to be potentially huge to EME and should it come in will reward the team there for their persistence, hunger and determination and shareholders will be generously rewarded. Indeed shareholders have a chance to fund the programme and avoid dilution if the shares go up enough in order for the warrants to convert…
The opinions expressed here are those of the author
Malcolm Graham-WoodRead More
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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