WTI $59.04 -94c, Brent $67.03 -83c, Diff -$7.99 +11c, NG $2.75 -7c
As expected last week was a damp squib, maybe towards the top of the recent range, maybe too much expectation from the trade talks but WTI managed a rise of 22 cents on the week whilst Brent retreated 12c. Talk of global GDP disasters is one thing but the Chinese oil imports were substantial last month and retail gasoline prices in the US continue to rise, no sign of driver fatigue there at all. The Baker Hughes rig count on Friday showed a fall of 10 units overall to 1016 and in oil by 9 to 824, again for choice a bullish sign….
President has announced a massive, fully funded $50m 2019/2020 work programme comprising 15 new wells and 20 workovers plus pipeline construction and infrastructure works in the Rio Negro province in Argentina. In 2019 between now and mid-year there will be at least 10 workovers at Puesto Flores (oil), Estancia Vieja (oil/gas), Puesto Prado (oil) and Las Bases (gas) and the rig is being mobilised to the first location. By the end of May restoration and commissioning of the oil treatment plant at PP will enhance margins by the delivery of oil from the field to local refineries.
May to November will see the upgrading of the gas plant at Las Bases in order to be able to handle 250,000 m³ of President’s own gas by the end of October. The company report that in any event there will be flow of Estancia Vieja and Las Bases gas on temporary facilities. From July to the year end a target of 7 new production/appraisal wells has been set. By the end of September completion of overhead electric lines between Estancia and Puesto Flores and the commissioning of an electricity generation plant to power the latter field from the former’s gas and to sell surplus electricity generated to the grid will be complete.
By the end of October the new 16km section of pipe from Puesto Prado to Las Bases will have replaced the Older pipe and after that a further workover programme is to be advised as soon as the company has had an idea of earlier success. 2020 sees a rolling out of 8 wells and phase 2 of the upgrading Las Bases gas plant completed to the original capacity of 1 million m³ of gas.
The programme will be fully funded and President say that they expect by the end of 2020 that the company’s financial borrowings will have been reduced by over $6m. Not content with all this the company say that outwith these plans they also expect to drill up to 2 wells in Puesto Guardian, 1 in the Pirity concession in Paraguay and up to four exploration wells in Louisiana all of which will be funded from the company’s own resources. Putting all this together the company is targeting a 50% exit production growth on this year and next and will provide more detailed guidance as projects develop.
At 7.25p the shares are a very cheap option on what looks like a significant growth in investment across virtually the whole of PPC’s portfolio and should prove rewarding for those prepared to see this substantial work programme unfold.
Sound has updated today from the TE-7 well in Tendrara where pressure readings have increased following the latest retrieval of the pressure gauge data. The measured pressure data provides further information on the extent and quality of the reservoir at TE-7 and provides confidence in the TE-5 Horst discovery ahead of the FID. The company’s estimate of connected GOIP around TE-7 is now a volume exceeding 115 Bscf, in July 2017 the number had exceeded 40 Bscf and must be highly encouraging.
Last week, amongst the many other interviews etc I was asked to put down a five minute video for the Investing Channel in the US on my views on the oil price, the link is below for aficionados only…
Over the weekend in the Euro qualifiers England put away the Czech Republic 5-0-, Northern Ireland beat Belarus 2-1 and Scotland came away from San Marino with a 0-2 win, not something the fans enjoyed. Tonight England are in Montenegro which appears to be a bit like Galatasaray on speed.