leadf
logo-loader

Morning Flow - Touchstone Exploration and more...

Market Update: Monday 15 June 2020  Touchstone Exploration (AIM:TXP): Cascadura-1ST1testing suggest flow rates of up to 9,700boepd President Energy (AIM:PPC): Drilling to commence in Paraguay PetroTal (AIM:PTAL): PTAL confirms oversubscribed placing ahead of reopening the Bretana oil field

.

Oil & Gas Daily Flow

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

 

Market Update: Monday 15 June 2020 

Touchstone Exploration (AIM:TXP): Cascadura-1ST1testing suggest flow rates of up to 9,700boepd

President Energy (AIM:PPC): Drilling to commence in Paraguay

PetroTal (AIM:PTAL): PTAL confirms oversubscribed placing ahead of reopening the Bretana oil field

Energy Prices         

Brent Oil US$38.0/bbl vs US$37.9/bbl on Friday

WTI Oil US$35.1/bbl vs US$35.7bbl on Friday

Natural Gas US$1.72/mmbtu vs US$1.79/mmbtu on Friday

 

Oil Price News

Brent and WTI oil futures finished lower on Friday after hitting a multi-month high earlier in the week

In the futures market August WTI settled at US$36.51, down US$3.29 or -8.27% and August Brent finished at US$38.73, down US$3.57 or -9.22%

Prices initially held up on the back of the OPEC+ agreement to extend its output cuts

However, throughout the week, the market started to question demand, dampening the potentially bullish impact of the supply cut extension

Among the major concerns were a gloomy outlook for the US economy by the Federal Reserve, worries over a surge in new COVID-19 cases and rising US supply

Concerns over future demand increased after the Fed said that it expected unemployment in the US to be c.9.3% at the end of 2020 and that it would ‘take years to fall back’

Interest rates are expected to stay near zero at least through next year

 

Gas Price News

Natural gas prices remain weak as weather patterns have shifted modestly cooler for this week

At the same time, LNG volumes have slipped, and the latest storage injection pointed to a long slog, dependent in part on consistent heat over the summer, to bring supply and demand into balance

As the week ended, daily balance data shifted weaker, with production marginally higher to end the week, and LNG volumes dipping back under 4.0Bcf level

 

Company News

Touchstone Exploration (AIM:TXP): Cascadura-1ST1testing suggest flow rates of up to 9,700boepd

Share price: 50p, Market Cap: £92m

Touchstone has announced the final production test results from the Cascadura-1ST1 well on the Ortoire exploration block.

The final test results comprise both the lower test (6,056 to 6,218ft) and the upper test (5,570 to 5,915 ft).  

The upper test suggests an Absolute Open Flow (AOF) natural gas rate of 390MMcf/d at the sandface.

In addition, the final 24-hour extended flow test rate, limited by capacity of surface test equipment, averaged 5,472boepd, 86% natural gas, at a final sandface drawdown of 4%.

Pressure data suggests that the well was still cleaning up at the end of the extended test period.

The Condensate Gas Ratio ("CGR") was 28bbls/MMcf of 55° API condensate produced during the extended flow test.

On the lower test, low and buildup test results suggest an AOF natural gas rate of 92MMcf/d at the sandface.

The final 24-hour extended flow test rate, limited by the capacity of surface test equipment, averaged 5,157boepd, 87% natural gas, at a final sandface drawdown of 12%.

The CGR here was 26bbls/MMcf of 55° API condensate during the extended flow test.

Gas analysis indicated sweet, liquids rich natural gas with no hydrogen sulfide and no entrained water.

The Company has also confirmed that based on the data obtained during both tests, the Cascadura-1ST1 reservoir appears to be unbounded within the area of investigation, confirming a larger pool than originally anticipated.

Absolute Open Flow Potential (AOFP) modelling indicates that it is reasonable to design for an initial gross production rate of between 7,750 and 9,700boepd (6,200 to 7,760boepd net) based on estimated gross rates of 40 to 50MMcf/d of natural gas and 1,100 to 1,400 boepd of condensate.

Our take: A very positive outcome for TXP in our view, the low sandface drawdown, high reservoir pressure, and rapid recovery suggest a sizeable reservoir with significant production potential. The Company will likely require additional drilling and production at Cascadura to fully understand and optimise production from the structure.

 

President Energy (AIM:PPC): Drilling to commence in Paraguay

Share price: 1.7p, Market Cap: £21m

President has announced an update on its Paraguay asset and its drilling plans for Rio Negro in the second half of the year.

Locations have been identified for two new wells which President is planning to start drilling within the next four months.

The first well will be the Las Bases 1001 development well targeting proven un-produced attic gas in the Las Bases structure with 6bcf of total recoverable reserves; target depth is 1,700m and P50 well rate is 100,000 m3/day (605boepd) and estimated costs of US$1.9m.

The second well will be the Estancia Vieja EVN-x1 exploration well.

This will target a new and so far un-drilled independent structure for both gas and oil to the north of the producing Estancia Vieja field; P50 case is oil production of 40m3/day (252bopd) and 60,000 m3/day of gas (350boepd).

Target depth is 2,000m with estimated costs of US$2.5m completed.

In a success case, the whole of the Estancia Vieja north structure will be opened up with an estimated 14Mmbbls of Oil in Place and 26Bcf of Gas in Place which will require up to a further 6 wells.

Once completed, the wells can be placed on stream fairly quickly.

There are no 2P reserves booked for the Estancia North structure in the current independent audited 2P Group

The term of the Pirity Concession, being the principal asset of the Company in Paraguay, has benefited from an extension of time due to force majeure, the result of which means the Concession period extends until the first quarter 2022.

In the event of successful drilling, this period will be extended further into a long-term production licence. 

Our take: President benefits from operating in a low-cost environment, and today’s update demonstrates the value of the Company’s conventional onshore wells in central locations with the benefit of owning and operating the regional pipelines and infrastructure in our view.

 

PetroTal (AIM:PTAL): PTAL confirms oversubscribed placing ahead of reopening the Bretana oil field

Share price: 11p, Market Cap: £76m

PTAL has confirmed it has raised gross proceeds of US$18m issuing 141m new shares and 71m warrants, representing an 11% discount to Friday’s close.

The placing shares will represent approximately 17.3% of the enlarged share capital.

The Company intends to use the net proceeds of the placing for ongoing development of the Bretana oilfield and to enhance working capital. 

In particular, the net proceeds will be deployed by the Company in connection with the proposed reopening of the Bretana oilfield which is anticipated to occur in July.

Our take: A good result for PTAL, underlining continued investor support for the sector despite unprecedented oil price volatility. Given the recent fall in global oil prices and the temporary shut in of the Bretana oil field, the Company has quite rightly sought to preserve liquidity. The fundraising and the arrangement announced with Petroperu today provides a significant boost to the Company’s liquidity position and flexibility to prepare for the reopening of the Bretana field, which is expected to occur in July. 

 

Research – Oil & Gas

Sam Wahab - 0203 470 0473

sam.wahab@spangel.co.uk

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

 

 

Disclaimer   Non-Independent Research

This note has been issued by SP Angel Corporate Finance LLP (“SP Angel”) in order to promote its investment services and is a marketing communication for the purposes of the European Markets in Financial Instruments Directive (MiFID) and FCA’s Rules. It has not been prepared in accordance with the legal requirements designed to promote the independence or objectivity of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

SP Angel considers this note to be an acceptable minor non-monetary benefit as defined by the FCA which may be received without charge.  In summary, this is because the content is either considered to be commissioned by SP Angel’s clients as part our advisory services to them or is short-term market commentary.  Commissioned research may from time to time include thematic and macro pieces.  For further information on this and other important disclosures please the Legal and Regulatory Notices section of our website Legal and Regulatory Notices 

While prepared in good faith and based upon sources believed to be reliable SP Angel does not make any guarantee, representation or warranty, (either express or implied), as to the factual accuracy, completeness, or sufficiency of information contained herein.

The value of investments referenced herein may go up or down and past performance is not necessarily a guide to future performance. Where investment is made in currencies other than the base currency of the investment, movements in exchange rates will have an effect on the value, either favourable or unfavourable. Securities issued in emerging markets are typically subject to greater volatility and risk of loss.

The investments discussed in this note may not be suitable for all investors and the note does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. Investors must make their own investment decisions based upon their own financial objectives, resources and appetite for risk. 

This note is confidential and is being supplied to you solely for your information. It may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose. If this note has been sent to you by a party other than SPA the original contents may have been altered or comments may have been added.  SP Angel is not responsible for any such amendments.

Neither the information nor the opinions expressed herein constitute, or are to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. Opinions and estimates included in this note are subject to change without notice. This information is for the sole use of Eligible Counterparties and Professional Customers and is not intended for Retail Clients, as defined by the rules of the Financial Conduct Authority (“FCA”).

Publication of this note does not imply future production of notes covering the same issuer(s) or subject matter.

SP Angel, its partners, officers and or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

SPA has put in place a number of measures to avoid or manage conflicts of interest with regard to the preparation and distribution of research. These include (i) physical, virtual and procedural information barriers (ii) a prohibition on personal account dealing by analysts and (iii) measures to ensure that recipients and persons wishing to access the research receive/are able to access the research at the same time.

SP Angel Corporate Finance LLP is a company registered in England and Wales with company number OC317049 and whose registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SP Angel Corporate Finance LLP is authorised and regulated by the Financial Conduct Authority whose address is 12 Endeavour Square, London E20 1JN.

 

Recommendations are based on a 12-month time horizon as follows:

 

Buy - Expected return >15%

Hold - Expected return range -15% to +15%

Sell - Expected return < 15%

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

PureGold Mining provides production update and growth story that is just...

PureGold Mining (CVE: PGM- LSE: PUR) CEO Darin Labrenz joined Steve Darling from Proactive on-site at their PureGold Mine in Red Lake, Ontario. The company started pouring gold there at the end of December. Labrenz also telling Proactive about some of the other exploration they are looking at...

1 hour, 1 minute ago

10 min read