WTI $59.47 +$1.23, Brent $62.43 +$1.29, Diff -$2.96 +6c, NG $2.91 +4c, UKNG 43.93p +0.18p

Oil price

Another good week for oil, WTI was up $2.62 and Brent $3.09 as the familiar combination of vaccine news,  stock draw and even the monthly reports from the agencies were positive albeit focused more on the second half of the year for the best news.

Elsewhere it is Presidents Day today so a holiday in the US but markets in the Far East and Europe have pushed oil on further again by around a dollar further. News that the freezing temperatures in the Permian Basin are disrupting the oil markets with gas and condensates and coagulating and trucks unable to get in through snow and iced roads. Last week’s rig count was up 5 overall to 397 and 7 to 306 in oil.

Many readers of the Sunday Telegraph yesterday would not have been able to miss the full two page spread on the return of Neil Woodford to fund management. My contact with him in past ventures have not been pleasant, for someone running an income fund he had a natural ability to bypass integrated oil companies yielding 10% but that will be small beer compared to the retail punters who lost so much money when the last venture went bust. When will we learn….?

Predator Oil & Gas

An operational and corporate update from Predator this morning where things are advancing on all fronts. Preparations for drilling MOU-1 in the Guercif licence onshore Morocco have begun and further progress has been made on implementing the Company’s forward work programme for the  Pilot CO2 EOR Project in the Inniss-Trinity field onshore Trinidad.

In Morocco, at the Guercif MOU-1 drilling programme, operational planning for the MOU-1 well in the Guercif Petroleum Agreement area has commenced and is on schedule. The MOU-1 well pad construction is being prepared for April 2021 and the drilling and well engineering program is being reviewed internally before release for the purposes of third party audit and any recommended modifications.

At the Inniss-Trinity CO2 EOR, swab tests and investigation of two of the four wells originally selected to evaluate well condition and, if suitable, return to production have been completed. A third well, not in the original program, was added to the investigative work.

All three wells recovered oil during swabbing operations (approximately 10 barrels in the recovered fluid), having previously only produced water. Fluid levels in the wells have risen in response to CO2 injection at AT-5X. The encouraging results facilitates moving to the next stage to reactivate at least two of these wells for production.

Swab tests and investigations  confirm potential for realising pre-injection desktop production plateau forecasts in the range 243 -547 bopd from Herrera #2 Sand and three further wells will be swabbed and investigated as soon as well services are released from other work and AT-5X is being prepared for further CO2 injection.

The addition of the Herrera #2 Sand perforating opportunity in a further well will create an inventory of up to seven production wells versus only three wells used for the forecast production profile in the pre-Piot CO2 EOR Project Plan submitted to the Ministry of Energy and Energy Industries. In addition it is noted that during the period from 15 January 2021 to 10 February 2021 WTI oil price has risen from $ 53.02/bbl to $58.25/bbl.

The next steps in the forward programme are, complete swab investigations of remaining three wells, further continuous CO2 injection at AT-5X and to continue enhanced production from existing production wells. PRD will also reactivate two of the seven available wells to add CO2 EOR production and determine the increase in incremental oil flow rates over one month of CO2 injection.

With regard to Offshore Ireland and the Floating Storage and Regasification Unit and LNG, the Company remains focussed on providing a niche solution to near-term security of energy supply for Ireland during a transition to a dominantly renewable source of energy.

In this context it was reported on the 6 February 2021 that technical problems had forced the shutdown of a key electricity generator (capacity 445 megawatts) until the end of June 2021. On average, gas-fired power plants meet almost 60% of Irish power demand. The shutdown coupled with cold weather on 6 January 2021 and low wind speeds, which cut off most renewable generators, resulted in “amber warnings” where there is enough power to meet demand but where reserve back-up power is critically low.

‘Nothing better illustrates the security of energy supply issue and the requirement for the near-term solution being proposed by the Company. On 19 February 2020 it was reported that Ireland was placed 154th on global ranking of 180 countries for sustainability and delivering on emissions targets.

Balancing the requirement to improve its global sustainability and emissions ranking with preserving near-term security of energy supply involves an inclusive, pragmatic and diverse approach’.

Finally, the warrant issues date February 2019 and May 2018 have both had their exercise date extended by one year due to COVID-19 delays.

Paul Griffiths, CEO of Predator Oil & Gas Holdings Plc commented:
“We continue to make solid progress with the Company’s CO2 EOR project onshore Trinidad at Inniss-Trinity. Latest results are very encouraging and support the impact CO2 is having in gradually enhancing oil production. Much of the hard work has now been completed and the next challenge is to scale up the injected  volumes of CO2 and resulting enhanced oil production to attain the optimum production profile achievable for the AT-4 Block. In Morocco we are excited to be in a position to execute the drilling programme as previously announced. Perseverance in Ireland based on the Company’s innovative  FSRU LNG concept  is paying off as issues regarding security of energy supply have now been crystallised in real terms by recent events. Despite COVID-19 we have continued to make substantive progress, whilst maintaining a sensible balance between risk – reward, and through deploying working capital judiciously, but to maximum effect, over diverse yet equally material  projects. “

Predator continues to deliver on all fronts albeit at different pace which is exactly what management has always expected. In Trinidad, scaling up the process is in sight after initial results have been extremely positive after which the potential is substantial. With Morocco now imminently ready for ‘execution’ I am most excited about that drilling programme which could make this year for the company. Also the situation in Ireland has started to fall into the company’s hands as the need for energy supply has been recently highlighted. 

The shares are also repaying faith from the investors as they have gone up by a factor of 5 since last April and more than doubled since November, some performance under these market conditions and in my view with plenty more to deliver from this exciting portfolio.

Pantheon Resources

Pantheon has announced the long awaited initial results of its Talitha #A with it having reached TD and logs and sidewall cores taken. Based on preliminary analysis the well has penetrated all objective formations and found oil in each of them. Now the key test is of the SMD Basin Floor Fan and the Kuparuk zones. CEO Jay Cheatham is full of confidence as below and shareholders will be keen to find out the results of testing. I am aware that there are many people out there who know much more than me so until they respond and the results are known I will hold off any further comments.

Jay Cheatham, CEO, stated:
“Our preliminary analysis suggests that this is a great result for our Company. Although the reservoir quality of the SMD did not improve from the PS#1 as we had hoped, it still has the potential to be a very good result. We’ll test it and make a more detailed assessment at that point. We were pleasantly surprised in the Basin Floor Fan and Kuparuk formations. The Kuparuk Formation is a major regional producer in the north  legacy portion of the North Slope. If successful, the extension of this prolific producer to the southern areas not only opens up a potentially large oil accumulation for Pantheon but also opportunities for the industry in general.”

“We’ve often said that any one of the four zones at Talitha could be Company makers, and we have three contenders in the SMD, Basin Floor Fan and Kuparuk, all of which show great promise. As always, we must wait until testing is completed before we can make  any definitive assessments, but at this time I would say Talitha #A has met or exceeded our expectations thus far.”

United Oil & Gas

A Total of 27.5m net pay interpreted over a 59m gross section in the targeted Alem El Buieb (AEB) reservoir, Initial testing will be completed in the coming days before the well is then brought onstream through the existing ASH Field facilities.

United Chief Executive Officer, Brian Larkin commented:
“We are very encouraged with the initial results of the ASH 3 well and we are delighted that it has been delivered safely, ahead of schedule and under budget by our licence partners. We anticipate the well will deliver a further uplift to our low cost production base, an encouraging result ahead of the spudding of our forthcoming exploration well and the remainder of our 2021 work, all of which is fully funded from operating cash flow.

“To date the ASH Field has produced close to 2 million barrels of oil, with current production rates at over 5,000 boepd, and we believe significant further potential exists within the licence.”

KeyFacts Energy Industry Directory: Malcy's Blog