Oil price, Amerisur, Coro, Range, Aminex, Jadestone And finally…
WTI $52.61 +$1.12, Brent $61.67 +$1.61, Diff -$9.06 +49c, NG $4.49 +16c
Oil price
Well it was at least a deal and one that markets liked, just about. Closing prices were well off the top showing that even 1.2m b/d off the market is no guaranty of returning to recent price levels. It looks like the Saudis will take most of the pain but at least Russia is inside the tent and not outside, so to speak.
With Libya cutting 300,000 b/d after a tribal dispute, Alberta cutting back for political and the rig count showing a fall of 10 units to 877 the market is a slightly tighter place post the meeting. This morning Brent is down 91 cents, WTI down 86 cents so no parties going on just yet.
Where there might be a party is at the AMER offices in Bogota after they appear to have a very good result at Indico-1 with ONGC although the news appears to have caught them rather on the hop. The well is at TD and has encountered the targeted lower sands of the LS3 in the Lower Une formation the same as at Mariposa which is 6.5km away and has flowed 3,200 b/d for the operators.
Indications are that there is a 283 foot gross, 209 net oil column with no OWC which certainly ‘significantly exceeded expectations’, indeed in respect of the ‘significant sand development in the Une formation we will now review with ONGC the reserves associated with the Indico structure’. With no OWC providing yet more positive news for the eventual size of recoverable reserves within the structure it is clear that there will be a re-think of further appraisal wells on the block. Amerisur has clearly got a substantial find on its hands here and with the oil sold from the wellhead at good prices adding substantially to their coffers they should indeed be very pleased. The rig now moves 6.5km to the south to drill Sol-1 which will now be even more eagerly anticipated.
Coro has announced an agreement with Petronas whereby they prepare a joint technical study over Block 2A offshore Sarawak, Malaysia. The block contains some large structures and with the new Government apparently having a better relationship with oil and gas companies this appears to be a superb opportunity for Coro. This is also shown by recent M&A activity in the area and whereby Coro has been given free access to a significant package of data which is a huge vote of confidence in the company by the Government. The data was acquired by BHP in 2016 and so is very recent and of high quality, processed to pre-stack depth migration and as I said it came free with the Government’s blessing.
If the data shows drillable opportunities then Coro will be able to apply for a PSC for the block which would have been unthinkable until recent months. The data will take some time to work up but it shows that the company is thinking about all sorts of ways of entering South East Asia and sometimes this sort of approach can be equally as rewarding as more traditional M&A avenues. This highly prolific basin may yield rich rewards for Coro as they look at the data provided by the Government having been shot by a previous company.
Range has announced that CEO Yan Liu has resigned, with immediate effect, Chairman ‘Kerry’ Gu is to take over as interim CEO but will be replaced when the company appoints a replacement, likely to be in early 2019. The shares are now suspended on the ASX as they search for another Aussie NED, a legal requirement down under.
Aminex has announce that it has successfully carried out remediation work on the sub surface safety valve at the Kiliwani North-1 well where gas was observed at the surface. The well is now completing further testing and analysis. This is good news from Aminex but the market are not reacting in a positive way, probably waiting for further news on the farm-out which is on track but moving more slowly than the management would like.
I met with Paul Blakeley, CEO and Dan Young, CFO of Jadestone last week, I had been looking forward to this as the former Talisman team are experienced in the area and with the Montara acquisition looking like a complete steal it merited further investigation. The management are indeed impressive and the strategy of putting together a portfolio of production assets to start with, that whilst seemingly goes against the trend, gives it a strong platform for growth.
When you delve more deeply into the Montara deal it looks more and more like a no-brainer on almost every metric. Production is being increased with gas lift installation and general optimisation, with facilities uptime expected to rise from 72% to 84% in two years, operating costs being reduced by 20%and corporate charges by 50% this really is low hanging fruit. With infill drilling and exploration upside inevitable as there is spare capacity in the FPSO any success can be brought on and paying back extremely quickly.
In addition to Montara the company has attractive assets elsewhere in the area with its Southwest Vietnam gas assets providing a range of possibilities for both near term and longer term growth from the asset. It is worth remembering that many of the key people at Jadestone are ex Talisman staff who worked in the area and are therefore able to use this knowledge to bring the project through the development stage.
Jadestone is generating significant cash flow from its portfolio at current oil prices and with strong gas demand in the region markets are hungry for energy. It is fully funded for a busy work programme over the next few years and has even suggested that by the end of next year might pay a dividend from its strong free cash flow. This will not impede current strategy to do further deals as the balance sheet is ungeared and could be used if appropriate.
Jadestone has every chance of being one of the big stories in coming months and years as the London market get to see more of the management who are indeed very impressive and I am sure will deliver the goods. The arrival on the Aim market was a wise move and the company raised money from what I can see is a wide range of quality investors across the board. As well as institutions I am aware that a large number of retail investors have looked at Jadestone and they would be wise to climb aboard whilst the company is so cheap as it surely won’t remain so for very long…
And finally…
With Chelski beating the Noisy Neighbours they ceded top spot in the table to Liverpool who eased past the Cherries. Spurs, the Gooners and the Red Devils all won making up the top 6 although the latter are well off the pace.
Altior seemed to win the Tingle Creek with some ease although conditions were clearly not to her suiting…
And India have beaten Australia in the first test of the series at the Adelaide Oval, this is their first win in Australia for ten years and probably enable a swift return of the players banned for cheating…
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