Daily Oil & Gas Monitor
Enegi Oil (LON:ENEG) – Next Stage Complete: Enegi’s disclosure that it has farmed out the preliminary G&G work to Azimuth marks a significant step forward for the Company as it now provides us with some measure of when we can get an update on the acreage’s prospectivity. Given that Azimuth is in a hurry to grow, that can mean one of two things: (i) that this acreage will be lost in the mountain of other work that the Azimuth seeks exposure too as it grows, or (ii) that it happens quickly. Whilst this is good news, the Company has given up 50% for what is essentially a scoping study, which we believe could be too high.
In this news:
• Azimuth assumes 50% interest
• In return for funding the work programme
• Geological, geophysical and reservoir work to assess the hydrocarbon potential of the Exploration Area within the first 12 months of signing the agreement
• Enegi will retain a 100% working interest in the Malvolio Area
• The work to be undertaken also includes agreed geological, geophysical and reservoir analysis over the Malvolio Area.
Faroe Petroleum (LON:FPM) – Thar She Blows!: Faroe’s announcement that it has made a discovery on its Rodriguez exploration well is good news for the Company and its partners in the block. How good that news is open to interpretation, not least by the Company themselves. The fact that the range of its volumetrics is so wide (gross 19 – 126mm boe) is more a reflection of the fact that this was not the primary target. After what historically has been a slow start for Faroe, the Company now appears to be hitting its strides, and increasingly looking like it has a sustainable business going forward.
In this news:
• Significant gas condensate discovery in the Lower Cretaceous interval in the Rodriguez exploration (PL475 – 6407/1-6S)
• Hydrocarbons in the well’s secondary target – the Lower Cretaceous
• Preliminary volumetric estimates suggest a discovery between 19 and 126mm bbl of recoverable oil equivalent (net to Faroe 6 – 38mm boe)
• Further appraisal will be required to establish the lateral extent and size of this discovery.
San Leon (LON:SLE) – Making Waves: Today’s announcement by San Leon that Cairn’s farmin to its Foum Draa block has been approved by the authorities is the last stage that was required prior to starting the process of planning and drilling a well in the highly prospective Moroccan offshore blocks. While this will lift all the Moroccan players, such as Tangiers Petroleum (TPET LN & TPT AU) and Longreach Oil & Gas (LOI CN), this serves as a timely reminder that San Leon, despite leading the development of the Polish gas shales, has extensive interests outside of Poland, and what is a well-balanced exploration and appraisal portfolio. Following this news, we are reiterating our BUY Recommendation and 25p Target Price.
In this news:
• San Leon Finalises farm-out to Cairn Energy PLC (Cairn) of Foum Draa Block, Offshore Morocco
o Cairn has assumed operatorship
§ Cairn 50% (Operator)
§ San Leon 14.17%
§ Serica 8.33%
§ Longreach 2.5%
§ ONHYM 25%
o Cairn will pay past costs, being $1.5mm ($850m net to San Leon)
o Carry amounts to first $60 million towards the drilling of the commitment exploration well
• Exploration well targeted for Q4 2013
• Drill an exploration well targeting a Lower Cretaceous objective in Q4 2013.
Tethys Petroleum (LON:TPL) – All Coming Together: Today’s announcement by Tethys that the gas prices that it achieved for its Kazakh gas production has more than doubled (to ~$72.8/cu metre or ~$2.0/mcf), and come on the back of what has been a hugely successful period for the Company both with the drillbit and Corporately. The drillbit has been successful in its Kazakh acreage, increasing the prospect of substantial reserves growth, and the fact that Total SA and the China National Oil and Gas Exploration and Development Corporation has farmed into its Bokhtar PSC in Tajikistan. 2013 appears to have got off to a successful start for the Company, and the outlook doesn’t look any less buoyant.
In this news:
• New gas price after marketing and distribution costs $65 ($72.8 including VAT) per 1,000 cubic metres (previously $32.5 including VAT for the Kyzyloi and Akkulka Fields)
• Current total production 430,000 cubic metres (15.2 million cubic feet or 2,530 barrels oil equivalent) per day
• Further production increases achievable through the tie-in of other already drilled wells, and targeting shallow gas prospective resources
• Net Proved + Probable gas reserves from the fields are 2.1bcm (73.8bcf) (Gustavson & Associates, December 31, 2011)
• Net mean unrisked prospective gas resources of 18bcm (634bcf) (Gustavson & Associates, April 30, 2012)
• New Kazakhstan-China gas trunkline under construction (passes through Tethys' contract areas) should provide further upside upon completion in addition to the existing pipeline through which Tethys currently sells its gas.
Tower Resources (LON:TRP) – Action!: Tower’s announcement that the farmin to its 0010 licence has been completed is a welcome step forward for the Company, as it now starts the next stage of the exploration in planning the Welwitschia well. With drilling now expected in the next 12 months, we believe a lot will be dependent on Repsol’s drilling priorities. While we see a slim prospect of drilling in the acreage in 2013, there is a lot of activity in the wider basin in 2013, which will have some measure of read through to Tower, and will certainly help their consortia to plan its well better. At this stage we are reiterating our BUY Recommendation and 5p Target Price.
In this news:
• Under the terms of the farmout agreement, Neptune has now released escrow funds of approximately $5.3mm to reimburse Arcadia for 30% of Arcadia's past costs on the Licence and Neptune will assume 30% of costs from 1 July 2012
• The interests are:
o Repsol 44% (Operator)
o Tower 30%
o Arcadia 26%.