Oil price, Genel, Echo, Block – And finally…
WTI $55.06 -48c, Brent $60.61 -98c, Diff -$5.55 -50c, NG $2.69 +5c
Crude drifted yesterday mainly on the EIA stats which a bit like the API numbers and the Genscape Cushing data showed a build in crude partially down to release of strategic supplies. The good news is definitely on the product front with gasoline drawing 4.7m barrels at the API and 3m yesterday and distillate stocks also falling.
Other stuff like the shutting in of the Keystone pipeline which takes 600/- b/d off the market helped and of course the Fed’s rate cut boosted other markets and weakened the dollar.
DNO as operator of the Tawke PSC has announced 3Q production of 119,800 bopd slightly impacted by the workover of the P-2 well and the side-track of the P-3 well at the Peshkabir field. By the year end DNO expect it to be averaging 120,000 bopd and maintain that rate into 2020, interestingly cumulative production from the licence is now 300 MMbbls, ‘a significant milestone.
DNO also stated that the Peshkabir-to-Tawke gas project is on track to be delivered in Q1 2020 effectively eliminating flaring and enhancing recover-ability. These numbers and the gas project show just what sort of scale Genel’s business in Kurdistan has, on our recent visit we saw the potential for it to move up significantly again with the Bina Bawi gas and oil project and the Sarta field with Chevron expected next year. Investors should be highly satisfied with a business that has the weight of production to maintain a high capex programme and pay a meaningful dividend that can only give major support to the shares and a base for proper upside potential.
Echo has announced that following seismic analysis the company has decided the final location for the first of the four well exploration programme at Tapi Aike with partner CGC. The location is called Chiripia Oeste and will be renamed Campo La Mata x-1 (CLM x-1). The primary target is a stratigraphic trap in the Magallanes Formation (“Magallanes 20”) at 2,000m with the secondary location in the Anita Formation (“D3”) and a shallower secondary interval (“Magallanes 60”) will also be targeted by the well.
The achievement of these technical and operational milestones will enable drilling of CLM x-1 to be commenced on schedule during December 2019, if not before. The rig will be mobilised to the CLM x-1 location once its existing activity with CGC has completed. In the case of success, completion may be followed by mechanical stimulation which is standard procedure in this basin. Investors have been waiting for the drilling to start on Tapi Aike right from the beginning, now we are only weeks away from seeing what the drill bit has to offer.
After yesterday’s announcement of a GSA with Bago, a local supplier and purchaser of gas at $5.24 per MCF, with Bago paying for infrastructure, today Block announce the completion of drilling at WR-38Z well in its West Rustavi field. The well showed multiple fractures and oil shows during drilling but we will have no idea about flow rates or productivity until after testing ‘over the coming weeks’.
Block’s share price has been rallying significantly back up to the 8p level but any move back up to the 17.5p high will need a decent flow rate from this well and a rebuild in trust from the market. Both of these are perfectly possible and the management is taking steps to up the profile and I have already had one meeting with PH and have been offered another so things are improving on that front.
Africa Oil Week
Next week is Africa Oil Week and I, along with many other oil industry colleagues will be in Cape Town. On the Monday evening I have been prevailed upon to chat/interview any of the visiting oil industry leaders who are in town. You are all therefore cordially invited to join us at this event and if you are in town with a company that would like a short interview then I will be happy to include them in my ‘Pit lane walk’.
V & A Waterfront
5.30pm till 7.30pm
Gutted to see that the away hoodoo continued with the Washington Nationals beating the Houston Astros in the deciding leg of the World Series..
Last night’s Haribo Cup saw Liverpool beat the Gooners after a 5-5 draw and pens whilst the Red Devils beat Chelski. Colchester will,fancy their chances against them in the next round, Oxford who face the Noisy Neighbours may not…
England have named an unchanged side for the RWC final on Saturday, and yes, I will be in Cape Town to watch it…..