WTI $73.66 +$2.02, Brent $74.90 +$1.39, Diff -$1.24 -63c, NG $3.19 -2c, UKNG 73.0p -1.0p 

Oil price

As suggested yesterday the oil price didn’t seem to worry too much about the Fed rates policy which will be a movable feast over a couple of years but the greenback did waver. Regarding the situation in Iran the new President, Ebrahim Raisi has already shown himself to be very hard-line, his press conference yesterday wrote off any chances of any give on the nuclear situation, uranium enrichment will continue.

This should mean that a deal with the US and Europe is a non-runner but for some peculiar reason the EU and the USA for whom John Kerry will brief Joe Biden will lay down in front of the hard-line new President. More on Iran tomorrow I hope…

Petro Matad

Results from MATD today, totally irrelevant but the statement reminds us that the period was all about Block XX and the focus on progressing the exploitation licence. The CPR on the northern part of the licence which includes the Heron structure added some 20% to internal estimates and the MMHI approved the reserves report.

As one might expect the company kept a close eye on costs and had cash of just under a million dollars at year end and showed a net loss of $3.2m. Post the period end saw more of the same, the licence application ‘continues to progress’ and the Company and the Mineral Resources and Petroleum Authority of Mongolia (MRPAM) have agreed the area of Block XX that will be retained under the Exploitation Licence which includes the entire extension into Block XX of the proven and producing Toson Uul Basin.

To ensure funding of the Company through the Exploitation Licence application process and the preparations for the next phase of operations, the Company’s largest and founding shareholder, Petrovis Matad Inc. (Petrovis) agreed to make available to the Company a loan facility of up to $1.5 million, against which the Company can draw funds as required. $0.45 million was drawn in June 2021 to meet ongoing running costs.

Mike Buck, CEO of Petro Matad, said:
“There is no doubt that 2020 was a challenging year due to the disruption triggered by the global health pandemic. Despite the difficulties, the Company worked hard throughout to progress the application for the Exploitation Licence for Block XX through a complex and lengthy process. We appreciate the patience that many of our shareholders have shown as we continue to work with the Mongolian Government to secure the requisite approvals. The formal application for award of the licence has now been submitted to the Ministry and we are working with the relevant departments as they process the necessary documentation.”

Whilst the situation at MATD sometimes seems to be like running fast just to stand still, the team out there have done a great job in keeping the licence progress continuing throughout the Covid pandemic. Patience should be rewarded and when it does my feeling that the company can deliver under Mike Buck will return. Accordingly it must be a prime vaccine play and the only uncertainty will be the timing. 

Falcon Oil & Gas

Falcon has announced the commencement of the 2021 work programme, starting with operations at Kyalla 117 N2-1H ST2 in the Beetaloo Sub-Basin, Northern Territory, Australia with joint venture partner, Origin Energy B2 Pty Ltd, a wholly owned subsidiary of Origin Energy Limited.

On-site operations at Kyalla 117 have begun, with rigging up now complete, and clean-up operations resumed. These operations, if successful, will result in an extended production test being carried out to determine the expected longer-term performance of the well.

As announced on 19 January 2021, Origin submitted a notification of discovery and an initial report of discovery to the Northern Territory Government. Unassisted gas flow rates ranging between 0.4-0.6 MMscf/d were recorded over seventeen hours, which are preliminary indications of well performance, and an EPT is required to determine the longer-term performance of Kyalla 117.

In addition to Kyalla it is expected that work at Velkerri and Amungee will continue through this year.

Philip O’Quigley (CEO of Falcon) commented:
“The commencement of operations at Kyalla 117 is an exciting first step for the planned 2021 work programme which will cover three different plays in the Beetaloo providing key information that will help determine the future appraisal and development programme. We look forward to providing results as soon as they become available”

Philip tells me that this years program is a very busy one, they really need to be successful at cleaning up the Kyalla well and getting it to flow on its own, given the significant liquids component and the fact that this play is unique to Falcon / Origin in the Beetaloo this could advance the Beetaloo towards commercialisation.

The situation at Amungee also has serious potential, going back to the Amungee well is equally as exciting. There was deformation in the well casing between stages 7 and 8, in total they conducted 11 frack stages. Stage 1 (in the toe of the well) to stage 7 are all one side of the deformation. Stages 8 to 11 which are nearest the vertical well bore are obviously the other side of the deformation. There has always been the hypothesis that most (or maybe even all) of the 1,100 mcf/d came from the last 4 stages. They are now going back with a production logging tool (“PLT”) that will precisely determine the zonal contribution of the flow rate by measuring the velocity of the flow rate from each stage. The objective is to determine how much came from the last 4 stages only. The tool is a very precise engineering tool that can accurately calculate the zonal contribution.

KeyFacts Energy Industry Directory: Malcy's Blog