WTI $54.50 +$1.96, Brent $58.53 +$1.15, Diff -$4.03 -81c, NG $2.12 -1c
A decent rise on Friday after the IEA report was not as bearish as it might have been. With an upward revision for 2019 demand and a cut, albeit modest, in the Non-Opec supply, the call on Opec crude stays above 30m b/d at 30.7 and 30.2 in the 3rd and 4th quarters of this year respectively after which don’t ask…
Predator Oil & Gas
An update from Trinidad this morning where well workover operations at AT-4 and AT-5X have started to survey downhole conditions to ensure that no obstacle will prevent Predator’s s preferred downhole completion design from being installed across the Herrera sand interval chosen for the first injectivity and production test. These are the wells chosen for the initial pilot CO2 EOR programme and ‘clears the way for the next stage of the CO2 project to begin’.
CEO Paul Griffiths also says in the announcement that ‘simultaneously we are accelerating our plans to drill in Morocco and expect to conclude an option on a rig in the near future’. The company has been working hard on the Morocco licence and has great enthusiasm for it, viz ‘We are looking forward to a very busy and exciting period of sustained operations over the next 6 months with Morocco potentially offering a transformational opportunity for near-term value creation for our shareholders’. All in all, PRD are beginning to look like the most interesting play in the sector over the next few months.
Eco (Atlantic) Oil & Gas/ Tullow Oil A home run first strike…
The partners have announced this morning that they have made a major oil discovery offshore Guyana at the Jethro-1 well. The well proves 55 metres of Net High Quality Pay on the Orinduik Block in the Lower Tertiary sandstone reservoir and confirms multiple prospects up-dip of recent discoveries notably by Exxon in the Stabroek Block.
This is a substantial discovery made more important by the high-value nature of the barrels it will produce and in a stroke de-risks a lot if not all of the Orinduik Block. The fact that it way exceeded pre-drill estimates does credit to the high quality seismic and the development should be simply done with little appraisal and low-cost wells. The Block has 2.5bn barrels of gross unrisked resources and with this find, the valuation will be impacted for both these quoted companies, just think what might happen if the Cretaceous can be proved up? This field could be 20km² and with 55m of pay could be huge, those pre-drill estimates of 100m or even 200m might end up being conservative.
The Tullow conference call was extremely informative, with few worries about oil/gas mix and porosity and whilst the oil samples are on the way to the lab the way they flowed was clearly encouraging. With 90% net to gross and the oil/water contact plenty deep enough the partners really have hit the jackpot here. And remember that Total farmed-out to Qatar Petroleum before the result was known to make both those parties, amongst many others, looking for a bigger piece of this latest oil hotspot…
The share price movements this morning have been, as expected, very positive but £250m on Tullow’s market cap and £1oom +on Eco’s is only part of the story. The rig moves off to drill the Joe prospect which whilst a separate play type can only have been materially de-risked by this result. For Eco, it is a validation of their strategy and also for Tullow to whom this has been something big and will also go on to be a company changer. There is a long way to go yet for these companies but for Eco, in particular, it is a success of the most spectacular nature and at 124p the shares still have considerable upside from here.
Reabold Resources/Union Jack Oil
A brief update from West Newton where the operator has announced that the rig has been mobilised on the A-2 well which signals the start of 4-8 weeks of testing. They also announce that permissions are in place for the West Newton B site and for drilling and testing two wells in that location.
Briefly, no great surprises in the weekend’s footy with the Noisy Neighbours tucking a few away and Liverpool doing the same, whilst Sours and the Gooners both won it may be the win by the Red Devils against Chelski that is the most interesting.
With the RWC only a few weeks away the warm-up games are underway and yesterday, Wales, unbeaten in 14 games and about to be crowned No 1 in the world after the All Blacks lost on Saturday, unfortunately, lost at Twickenham.
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