WTI $54.12 +51c, Brent $57.90 +2c, Diff $3.78 -47c, NG $3.09 -10c
The Chinese data overnight was a touch disappointing but it is worth noting that data shows a decent pick-up in the country adding to strategic stocks in recent weeks. Lots of statistics to ponder on, the API inventory numbers showed a rise of 760/- barrels and the buffoons finished the year getting the sign wrong again with a forecast of a 900/- barrel draw. The Baker Hughes rig count which is again in the spotlight, showed a fall of 37 rigs last week after falls of 18 and 29 in previous reports,
And the good news for drivers in the States continues, last week average gasoline prices fell again, at $2.299 a gallon that is down another 10.4 cents on the week, a massive $1.03 on the year.
President Energy- Patience is a virtue…
The most interesting news of the week was the update from President on operations in Paraguay, these can be difficult to read due to technical problems on the rig but I managed to get a long chat with Chairman Peter Levine who was able to give me a good run through of the situation there.
Lapacho flowed condensate and gas from the Santa Rosa and there is enough evidence to view commercialisation as there is a ‘significant hydrocarbon accumulation’ of 1.5 TCF and associated liquids in the Greater Lapacho area. Gas was evident all the way down but a valid flow test was not possible due to ‘bore hole annulus communications with the overlying Pirgua formation’. It should not be considered a failure at this early stage, there are massive challenges at every step in a new, frontier basin that has little or no infrastructure and it was undoubtedly right to plug and temporarily abandon this site before costs became out of control.
The Hernandarius concession beckons with Paleozoic targets in the Santa Rosa being much shallower and with improved reservoir porosity giving an enhanced level of liquids in the mix. More seismic will be shot here in the first half of 2015 with a view to drilling after that.
So this is no way a disaster more a frustration, a frustration at not being able to flow the well and prove that the company has indeed revealed a whole new petroleum system. There is little doubt in my mind that President has proved the concept, it is now time to start the process of judicious farming-out which is necessary and appropriate bearing in mind the immense size of the opportunity in Paraguay. In the meantime the rig has been released and investors should watch Amerisur very carefully, in addition to their own exciting developments they will now be drilling their Paraguayan acreage which will be interesting for them and a no-lose situation for President.
Time does not permit a longer write up at the moment but as in the heading, investment in President as in any frontier acreage requires patience, I happen to believe that if investors display that they will be rewarded.
Cape has won a five year contract extension with EDF Energy for support of their 8 nuclear power stations in the UK.
Victoria Oil and Gas has signed a major GSA with ENEO in Cameroon for two power stations in Douala over 2 years at $9/mmbtu.
Range Resources has sold its Drilling Services company in Trinidad for $4.3m in cash plus other debt payoffs making $7.2m in total which seems fair enough. With Lind paid down it appears that LandOcean, Abraham and Core are related parties and will now control the future of the company. At this moment I find it difficult to see how shareholders can benefit from the new arrangements but I still believe that the asset has significant upside, its more of a question as to who will benefit, time will tell if shareholder apathy was a good thing or not…
And Jupiter has announced that it has borrowed $3.4m at 15.5% for ‘operations and debt repayment and servicing’ which doesn’t appear to make much sense but then holding these shares has rarely made any sense…
The management merrygoround is fully under way, the Eagles regretting sacking Tony Pulis which was obvious and paying big money for Pardew which is not. The Baggies sacked Irvine which was an odd hire in the first place and Chris Hughton has gone to manage the Seagulls… Finally Gillingham have sacked Peter Taylor as they languish close to the relegation spots in Division One.
In the Prem tomorrow that standout fixture is probably Chelski at White Hart Lane although the Gooners host the Saints. Man U have a hard game at the Potters and the Hammers host the Baggies and the Noisy Neighbours host the Maccams. Its the 1st round proper of the FA Cup on Saturday so watch out for some giant killing…
Just remains for me to wish everybody a very Happy, Peaceful and Prosperous New Year.