WTI $40.67 +$1.45, Brent $42.65 +$1.36, Diff -$1.98 -9c, NG $2.52 -10c
Oil rallied hard again yesterday making a two day rise of over three dollars, it started with Trump beating the virus and carried through the Norwegian oil and gas strike which has now taken 6 fields off-line some 330/- b/d, 8% of that country’s crude.
Yesterday I mentioned Delta, the latest storm of the season which is moving towards energy operations in the Gulf. Overnight it has been upgraded to a category 3 and operators are moving non-essential staff out of the GoM ahead of it hitting tomorrow and Louisiana on Friday.
Today the oil price has drifted off as concerns that the US will not pass a further relief plan and as the API stats were not as good as might have been expected.
President report drilling success at LB-1001, Las Bases concession in the Rio Negro, Argentina. They reached TD of 1,700m where it has been logged and cased and the results are in-line with pre-drill reserve estimates of 6 BCF and production of 100,000 m³/d in 54m of net gas pay over 6 formations. The share price is to be frank, a total joke given the potential that exists in the Argentine portfolio.
Predator Oil & Gas
Yesterday I was fortunate to catch up with Predator CEO, Paul Griffiths. With exciting operations at its CO2 EOR project in Trinidad as well as an exciting, nay compelling, drilling prospect in Morocco drill ready it also has an LNG project underway in Ireland.
Here is the link to the interview:
Core Finance CEO interview: Paul Griffiths of Predator Oil & Gas
A trading and operations update from SDX showed production of 6,488-6,598 boe/d ahead of guidance of 6,000-6,259 boe/d. The company is hoping to accelerate the South Disouq drilling campaign to Q2/Q3 2021 from late 2021 to early 2022 and the Morocco campaign which is hoped to accelerate into 2021. A quiet few months on the drilling front but recent successes are substantial and being evaluated.
Cash and liquidity remains strong, with cash as at 30 September 2020 of c.$9.2 million and the $7.5 million EBRD credit facility remaining undrawn and available up to 1 November 2020 at which point it will amortise to US$2.5 million of availability. Together with cash generated from operations, the Company is fully funded for all of its planned activities in 2020 and 2021.
Mark Reid, CEO of SDX, commented:
“We have continued to perform strongly in the second half of 2020 despite challenging global conditions. Production is ahead of guidance; we have a healthy cash and liquidity position; and we now plan to accelerate an exciting and potentially transformational drilling campaign in South Disouq into Q2/Q3 2021.
In addition, as a result of the recent LMS-2 well in Morocco, and further work interpreting existing 3D seismic data, we are very encouraged by a new prospective horizon that we have identified and which we believe is present throughout our acreage.
Gas consumption from our Moroccan customers is now back to around 90% of pre-COVID-19 restriction levels and we go into the final quarter of 2020 with momentum, exciting and new prospectivity and strong cash generation.”
Weir has announced that it is selling its oil and gas division to Caterpillar Inc for an EV of $405m and the proceeds will be used to reduce debt. It is an interesting call, some will agree that it is better to have all your eggs in one basket, others have always said that Weir had a good balance between energy and minerals.
Whilst in previous years management have been able to get a good tune out of both instruments, including historic oil & gas acquisitions, it seems now that concentrating on just the one natural resource is in the best interests of shareholders.
As from now Weir will be a ‘Premium Mining Technology Business’ whatever that means, but as when its original business was overtaken, shareholders will be asked to take a huge amount on trust, now that is quite a call….