WTI $40.13 -99c, Brent $42.78 -75c, Diff -$2.65 +24c, NG $2.99 +2c

Oil price

Despite Friday’s fall, oil was up significantly last week as markets moved to risk-on following the vaccine news. WTI rose $2.99 and Brent $3.33 during the week and is up again this morning as the markets look to the Opec JMMC meeting tomorrow to potentially be a key indicator ahead of the Nov 30/Dec1 Ministerial Meetings.

Friday’s Baker Hughes rig count showed a rise overall of 12 units to 312 and in oil the increase was by 10 to 236, maybe $40 WTI is that level…

President Energy

Testing success at new exploration well EVN-x1 is announced by PPC  this morning and is good news although the company strikes a cautionary note ‘and it is therefore appropriate to take at this stage a conservative and step by step approach’. Having said that the well will be placed into production ‘within the next 14 days’ and the workover rig is now moving to its next location.

The company say that preliminary testing of the lower of the two identified pay intervals shown by logs has now completed and that oil and associated gas successfully and continuously free flowed to surface without need for swabbing or pumping. In addition PPC say that this represents the first time any hydrocarbons have flowed from this previously undrilled structure and that the results are ‘in line with P50 success case expectations with initial production of over 200 bopd expected plus associated gas’. As has happened before the company will hold back the upper gas prone interval to be produced at a later time.

Peter Levine, Chairman commented “Encouraging results and a successful end to our Q4 two well drilling campaign. “Whilst work continues in our fields, we are now getting down to plan for next year with drilling very much on the agenda during 2021. We expect concrete plans to be made available by the end of January. “In the meantime, we continue to make progress even in these challenging times”.

President continues to deliver the goods and the share price simply does not reflect the sheer size and quality of the portfolio built up by Peter Levine in Argentina. As he says, the company has depth, expertise and underlying potential which so far is unrequited, if PPC was valued like similar vehicles its market cap should be nearer £100m…

Block Energy

Block has announced an operational update this morning from its West Rustavi oil & gas field in Georgia. 

Construction of Block’s gathering line between the EPF and the WR-38Z well has been completed on time and on budget. The pipeline has been successfully pressure tested at 6,600 kPa with no failures. The EPF is now ready to receive gas from wells WR-16aZ and WR-38Z, which will remain shut-in to conserve gas until the gas sales line has been constructed and gas sales can commence.

Block says that ‘The Georgian independent gas company, Bago LLC, which has agreed to purchase the gas from the EPF, has received all required permits and is continuing with the construction of its gas sales line, to recover time lost consequent to the COVID-19 pandemic. Once the sales line is complete, oil production from West Rustavi will recommence and first sales of associated gas will be achieved’.

Block Energy Chief Executive Officer, Paul Haywood, said:

“I am extremely pleased with the continued progress we have made with our EPF at West Rustavi, despite the operational challenges that COVID-19 has presented. Safely completing the assembly of the EPF and construction of the gathering line on time and budget is a testament to the relentless efforts applied by the team to deliver this important milestone. Focus is now on supporting Bago to ensure the safe and efficient installation of the sales pipeline, which will allow gas sales to commence.

I am beginning to feel a good deal more optimistic about Block, after its rather mixed year, the share price continues to recover and the word on the street is that powerful influences have been at work behind the scenes. Although the shares have quadrupled since the April low the market cap is still only £15m which could be seen as pretty low if the operations in Georgia kick in as planned.

Helium One

Helium One has announced a placing and subscription raising £6 million at 2.84p per share, amalgamation with Attis Oil & Gas Limited and Proposed Admission to AIM. Apparently the Placing attracted ‘strong support from institutional and other investors and was significantly oversubscribed’.

Net Proceeds will primarily be used to fund infill seismic acquisition and three well drilling programme in Q1/Q2 2021 targeting high priority Prospects over the Rukwa Project. Admission is expected to become effective and dealings in the Ordinary Shares will commence on AIM at 8.am on 4 December 2020.

Helium One CEO, David Minchin, commented:

“We are delighted with the response that we have seen during this oversubscribed fundraise.  We have seen significant appetite to be part of the Helium One story with investor demand of over £8.5 million.  The £6 million raised in the Placing will provide us with sufficient capital to ensure delivery of our aggressive drilling programme.  This programme will help us prove up what we believe is an asset that has strategically global implications and the ability to assist with the supply of the world’s helium demand for a number of years going forward. 

Having written up Helium One recently after I was fortunate to have a long chat with CEO David Minchin, the scope for this story becoming a very big investment opportunity is very much becoming a probability. There is little doubt that the end market is not only potentially huge, and that the pricing structure should become more visible in due course, which means that the company’s potentially game-changing Rukwa project in SW Tanzania could deliver big time.

The pricing of this deal has meant that it is highly dilutive to existing shareholders but the need to raise money from both existing and new shareholders was the top priority. For big holders like Scirocco the dilution for its shareholders might have been a tough pill to swallow but right now they look to be sitting on a potential Helium gem, now it’s down to the spin of the drill bit…

And finally…

I still don’t know what the footy Nations League is, less likely now as England went out to Belgium in an awful performance last night. With only Wales winning and Scotland and Northern Ireland also losing it may be a blessing…

Lewis did what only Lewis can, came from behind and used a set of intermediates until they looked like slicks and won the Turkish GP and with it his 7th, record equalling victory.

Rugby’s Autumn Nations Cup saw England dominate Georgia 40-0 whilst Scotland beat Italy and Ireland defeated a very subdued Ireland 32-9.

Dustin Johnson ripped up Augusta and cruised to his first but likely not last green jacket.