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Today's Oil & Gas Update - Amerisur Resources, Nostrum Oil & Gas and Colombus Energy Resources.

Oil & Gas Daily FlowNon-Independent Research; Marketing & Sales Commentary - MiFID II exempt information – see disclaimer belowMarket Update: Friday 11 October 2019Amerisur Resources (LON:AMER):

Amerisur Resources - Today's Oil & Gas Update - Very little geopolitical risk premium factored into oil prices

Oil & Gas Daily Flow

Non-Independent Research; Marketing & Sales Commentary - MiFID II exempt information – see disclaimer below

Market Update: Friday 11 October 2019

Amerisur Resources (LON:AMER): Formal Sale Process to conclude in Q4 2019

Nostrum Oil & Gas (LON:NOG): Difficulties in Kazakhstan continue

Columbus Energy Resources (LON:CERP) – Update on Saffron well - Rig ready to commence drilling operations

 

Energy prices         

Brent Oil US$60.3/bbl vs US$58.1/bbl yesterday

WTI Oil US$54.6/bbl vs US$52.5bbl yesterday

Natural Gas US$2.2/mmbtu vs US$2.3/mmbtu yesterday

 

Oil Prices

Whilst prices nudged higher, the still unresolved U.S.-China trade dispute, mounting evidence that global economies are slowing, and rising U.S. oil production will continue to keep a glass ceiling on oil prices in a market that has factored in very little geopolitical risk premium

Near term drivers will focus on Vladimir Putin’s visit to Saudi Arabia to discuss the production cut pact that OPEC and its Russia-led allies have been implementing for nearly three years next week

U.S. crude futures were up 1.15% at $54.7/bbl on the New York Mercantile Exchange, on the back of small drift in the dollar

Longer term, US-China trade tensions and the outlook for Fed policy remain the single largest drivers of oil prices in our view
 

Gas Prices

US natural gas prices made a lower high and a lower low closing yesterday’s session down 0.6%.

Prices are likely to hover at the current levels as demand will likely remain subdued during the shoulder season

This will last until either there is a supply disruption, from a storm, or the weather becomes colder than normal

There are three storms that NOAA (National Oceanic Atmospheric Administration) is watching. All three storms are in the Atlantic and none are expected to hit any areas that could cause a natural gas supply disruption

 

Sector Backdrop

Despite a tough capital market environment, UK equities in the Oil & Gas sector remained flat YTD (2018: -16%) wiping out September’s 8% gains

AIM Oil & Gas indices were also flat YTD despite some volatility, yet stabilising 2018’s 13% decline

These indices have largely tracked the oil price, and with the futures market also remaining steady

The small/mid cap constituents of the sector are due to engage in an active year of operational activity in 2020, with a number of high impact drilling catalysts
 

Company News

Amerisur Resources (LON:AMER): Formal Sale Process to conclude in Q4 2019

Share price: 17.6p, Market Cap: £213m  

Amerisur has provided a short update on the company’s formal sales process announced earlier this year.

The company has engaged with multiple well-capitalised parties through virtual and physical data rooms, and management presentations in Bogota, Colombia.

Amerisur has issued revised bidding instructions to interested parties, inviting firm proposals to acquire the entire issued and to be issued share capital of the company. This includes the bidder being in a position to comply with requirements of the UK Takeover Code relating to Cash Confirmation.

The Company is seeking to conclude the formal sales process in Q4 2019.

Conclusion: We are not surprised that Amerisur is being courted by a number of interested parties, given the quality of its asset base and considerable potential of the surrounding acreage. Total reserves are currently estimated to be 15MMbo (1P), 22MMbo (2P), and 31MMbo (3P) showing a slight increase to reflect production history that indicates larger oil in place and higher recovery factors. Further drilling activity on CPO-5 is scheduled for this year, commencing with the Indico-2 appraisal well. The 30-day well is planned to increase production and reserves with the potential to extend the Oil Water Contact.

 

Nostrum Oil & Gas (LON:NOG): Difficulties in Kazakhstan continue

Share price: 7p, Market Cap: £19.4m 

Following extensive testing on Well 41 in the Frasnian reservoir Nostrum has so far been unable to sustain a commercial flow of hydrocarbons from the well.

The company will now consider whether there are alternative approaches it can take to perforate other reservoirs.  The company does not forecast any production from this well in 2019.

In addition, Nostrum has obtained an extension of the Rostoshinskoye field subsoil use contract for appraisal activity for a three-year period until 16 August 2022. 

The company has also obtained an extension of the mining permit for the Chinarevskoye field to include the northern area of the field, which permit is valid for the duration of the licence.

Conclusion: Another blow for Nostrum and its shareholders, and the shares continue to languish. The strategic review announced on 24June 2019 continues, and the company has engaged Goldman Sachs to carry out a review of all strategic options available.

Columbus Energy Resources (LON:CERP) – Update on Saffron well - Rig ready to commence drilling operations

Share price: 4p, Market Cap: £33m

The drilling rig to be used for drilling the Saffron well (Talon #38) is now on location and ready to commence drilling operations on its acreage in the South West Peninsula, Trinidad.

The drilling operations will commence in the next few days following official Ministry inspection and approval.

Conclusion: The Saffron well will reach total depth of between 4000ft – 4500ft and will test three different horizons, the Upper Cruse, the Middle Cruse and the Lower Cruse (the primary target). The prospectivity of the Upper Cruse and Middle Cruse sands are difficult to judge based on available data but the company has an internal Geological Chance of Success of 45%, relating the to Lower Cruse. The South West Peninsula has been the holy grail for Columbus and hence the concentration on this important part of the island.

121 Oil & Gas Investment Conference, London, 28-29th October 2019

SP Angel is sponsoring the annual 121 Oil & Gas Investment Conference in London again this year

The event hosts some 25 exploration and production companies along with >160 investment funds and analysts over two days of 1-2-1 meetings. Click here to register to attend

  

Research – Oil & Gas

Sam Wahab - 0203 470 0473

[email protected]

Sales

Richard Parlons – 020 3470 0472

Abigail Wayne – 020 3470 0534

Rob Rees – 020 3470 0535  

 

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

 

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

 

Sources of commodity prices

Oil Brent, WTI

ICE

Natural Gas

NYMEX

 

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