WTI $45.76 -50c, Brent $48.79 -46c, Diff -$3.03 +4c, NG $2.41 -17c
Oil got a bit drifty yesterday, markets eased off after last weeks record breaking antics and oil followed suit. Various external forces which were all slightly bearish also had an effect. Firstly the spat between the US and China escalated as the former were apparently preparing to impose sanctions on ‘at least a dozen Chinese officials over their alleged role in Beijing’s disqualification of elected opposition legislators in Hong Kong’.
In Iran, authorities instructed the Oil Ministry to prepare to move to full oil sales ‘within three months’ as they feel that President Elect Biden will lift sanctions on arrival in the White House. Retail gasoline rose last week, at $2.156 it was up 3.6 cents w/w, +6c m/m but still 40.5c down y/y. It did also come as gasoline sales during Thanksgiving week were the lowest since 1997.
An update on operations at the Santa Cruz Sur blocks onshore Argentina today from Echo who say that a continued improvement in market conditions mean that they continue to successfully bring oil wells back into production that had been shut in earlier this year.
‘Since 17 November 2020, three additional Springhill fields and 1 Tobifera field have now been brought back online in the Chorrillos and Palermo Aike licences increasing gross oil production by around 50 bopd to approximately 300 bopd (c.210 bopd net to Echo’s 70% interest). This recent increase in oil production represents an uplift of approximately 19% across the Santa Cruz Sur assets’.
‘Gross gas production from Santa Cruz Sur continues at a rate of 14 MMscf/d (10 MMscf/d net to Echo’s 70% interest). The production levels from individual wells previously shut in continues to indicate that the shut in period has not had a determinantal impact on reservoir behaviour. The programme to restore previously shut-in production is ongoing and given these positive results, and continuing market improvements, the Company and its partners are reviewing options to accelerate production reopening’.
In addition, post-shut in production levels at the Palermo Aike field suggests that new opportunities may be available to capture additional production potential. In this field, post-shut in pressure and production data indicate the potential for significantly increased production levels through a combination of production optimisation on the existing field and, later, with new development wells. With just the existing well stock, the data indicates a gross production potential of between 126 bopd and 189 bopd (88 bopd to 132 bopd net to Echo’s 70% interest) subject to availability of increased liquid storage and separation facilities at the field. This compares to an estimated restricted gross production rate of 31 bopd pre-shut in earlier this year.
Finally the company also suggest that the Palermo Aike field was historically overlooked due to a lack of infrastructure in the area, which restricted production rates. However, the seven-month shut in period and subsequent production start up has provided important subsurface data to assess the field’s potential in more detail. The Company now believes that there is also exciting commercial potential with future development wells targeting other parts of the field. These will be assessed and included in the portfolio of production opportunities across the Santa Cruz Sur assets as the 2021 operational plan is progressed.
Martin Hull, CEO of Echo Energy, commented:
“This has been a very busy period for Echo. Further to recent announcements on the debt restructuring and fundraise which have provided Echo with a materially strengthened financial platform, and positive steps to recoup and streamline our VAT payments in country, I am very pleased to announce that we have continued to reopen previously shut-in fields leading to material production increases.
Across these fields, we are pleased to have seen no evidence of any reservoir deterioration as a result of the shut in periods and in the case of the Palermo Aike field, we have in fact seen a material increase in production levels. We see significant potential for further field reopening’s and production optimisation activity across our production assets both this year and throughout 2021 in what is shaping up to be a busy operational period for the Company.”
Echo has genuinely started to show signs of a decent pick up and maybe deserves a modicum of a rally from the lows.
In the Prem last night the Seagulls lost to the Saints by way of another VAR penalty..
Tonight in the Champions League Chelski host FK Krasnodar and the Red Devils go to RB Leipzig.
Yesterday saw the 2022 World Cup draw, England got Poland again, as well as Albania, Andorra and San Marino. Wales drew Belgium, the Czech Republic, Belarus and Estonia whilst Northern Ireland got Italy, Switzerland Bulgaria and Lithuania. Scotland drew Israel again, Denmark, Austria, The Faroe Islands and Moldova.