Oil price, PetroTal, President, Petrofac. And finally…

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WTI $65.28 +36c, Brent $68.55 +23c, Diff -$3.27 -13c, NG $2.95 +2c, UKNG 66.31p +4.16p

Oil price

It is that time of the month when the reporting agencies update their forecasts and thoughts about the state of the oil market. Looking at the Opec data they remain of the view that worldwide demand will increase by 6m b/d to 96.5m b/d this year weighted very much to the second half which will register some 98.82m up from their previous forecast of 98.6m. They see draw on Opec of some 29.12m b/d up some 500/- from their previous forecast and making the 2H see some serious stock draws.

The API saw a crude draw of 2.5m barrels, a build in gasoline of 5.6m and a draw of 900/- in distillates. Some difference but as we change the seasons and head towards Memorial Day that gasoline number can be accounted for. As ever it makes the EIA numbers important to corroborate the data.

The Colonial pipeline remains closed but word is that they are confident that they will start to open up again almost immediately which makes me think that either they have paid the ransom or have something else up their sleeve. While this happens shortages in gasoline are already beginning to bite particularly in the South Eastern states and we know how popular that will be in the gas guzzling southern states..

PetroTal Corp

PetroTal has announced an operational and corporate update today. The 7D well has been successfully drilled and completed, flowing at an initial rate of approximately 3,700 barrels of oil per day (bopd) during its first 10 days of production, and has averaged approximately 4,550 bopd during the past three days. It was drilled and completed in 33 days for a cost of approximately $8.6 million, 7% under the $9.2 million estimate.

During the past three days, Bretana oil field production has averaged approximately 11,100 bopd.  Two wells, representing 1,200 bopd, are currently shut in awaiting increased water injection pump enhancements, the 3WD water disposal well commenced drilling on May 3, 2021.

The company note that Estuardo Alvarez-Calderon, PetroTal’s VP Exploration and Development, is retiring at the end of May 2021,  Mr. Dewi Jones has assumed the role of VP Exploration and Development as of May 11, 2021. Finally, Q1 2021 financial and operating results will be announced on May 31, 2021 along with an updated corporate presentation, and a webcast virtual call on June 1, 2021.

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

“On behalf of the PetroTal team, I would like to personally thank Estuardo for his contributions to the Company.  Estuardo’s achievements in his career and at PetroTal have been remarkable and his presence in the office will be missed.  I am very excited about Dewi Jones stepping in to fill Estuardo’s role.  Dewi has been working with PetroTal for some time and the entire management team has a deep trust and confidence in his work and experience. 

 It is very exciting as a management team to be bringing the new 7D well on for the Company after almost a year lag from completion of the 6H well.  The stabilized flow rates of approximately 4,550 bopd look very promising and are in line with our technical estimates.  Continuing with our development plan, we commenced drilling the 3WD well that will greatly increase our water disposal capacity.”    

I am still impressed by the operational news coming through from PTAL which is far from in the current share price of c.15p. The market will at some stage take this onboard and with my existing TP of 50p not at its potentially highest there is clearly a great deal of running room for canny investors.

President Energy

President announce positive results from the secondary recovery pilot project in the main Puesto Flores field as well as potentially significant implications for arresting and reversing declines in certain of President’s mature structures in Rio Negro.

On 26 August 2020, the Company announced that it was to commence a pilot waterflooding project in the Puesto Flores field and that it would take time to evaluate such work. President say that the pilot project is showing concrete signs of success which if promulgated to other parts of the mature Puesto Flores field would not only in the short to medium term increase production and but would also extend out decline curves, thereby prolonging field life and ultimately have a beneficial effect on the extent of recoverable reserves.

President has now identified a potentially significant positive incremental response from two wells. The first from PFO-14 lying 700 metres away from PFO-26 and the other from PFO-10 which only 386 metres away. After having considered and discounted other potential reasons for the production increases from these two wells, the Company after careful analysis considers that they are a direct result of the waterflooding. The results at this stage show an aggregate increase from these two wells of approximately 15 m3/d of oil (circa 95 bopd) representing a 50% increase in oil production from PFO-14 and 25% from PFO-10.

Whilst taken in isolation, an amount of just less than 100 bopd does not resonate loudly in the context of President’s overall field production, this is value added production at little or no extra cost which could account in respect of these two wells alone for an additional sales revenue in excess of US$1.5 million a year at current prices with little incremental opex.

Much more significantly, the results to date suggest that a wider long term application of waterflooding may be successful in other areas within the Puesto Flores field and it is this that potentially could have a material impact on incremental production, the extension of decline curves, estimated ultimate recovery factors, in due course reserves and importantly field life. The pilot programme will continue and consideration will shortly be given as to the possibilities and practicalities of rolling it out on an extended basis with other old non-producing wells being utilised as injectors.

Peter Levine, Chairman, commented
“The results of the pilot waterflood programme are encouraging.
“With such evidence of success in one structure with two producing wells, whist monitoring how the production curves now progress, consideration is now being given to rolling out over time a waterflooding scheme where sub-surface conditions are suitable both within the Puesto Flores field and other of our fields in Rio Negro.
“As in the pilot programme, this is not the equivalent of an overnight sensation and is one that requires continued patience and diligence to develop a serious and impactful field scheme. Nevertheless, this should not detract from the potentially significant implications from the clear results so far”.

Petrofac

Petrofac has secured a contract with bp to develop operational procedures for their Greater Tortue Ahmeyim Project in Mauritania and Senegal. Centred on minimising risk and harm to personnel, plant and the environment, the procedures will encompass all offshore operations, including subsea, floating production storage and offloading (FPSO) and hub.

Steve Webber, SVP Operations, said: “bp is an important longstanding client and we look forward to supporting them in operating safely and responsibly, in their delivery of the GTA Phase 1 Project, which is creating a new LNG hub in Africa.” The Tortue/Ahmeyim gas field, with estimated resources of 15 trillion cubic feet of gas, is located offshore on the border between Mauritania and Senegal. The integrated gas value chain and near-shore liquefied natural gas (LNG) development will export LNG to global markets as well as supplying gas to Senegal and Mauritania.

The company has also announced that Alastair Cochran, Chief Financial Officer, has advised the Board of his intention to leave and take up a new role outside the Group on 1st September 2021. Afonso Reis e Sousa, currently Group Treasurer & Head of Tax, will succeed Alastair and will be formally appointed as Chief Financial Officer and Executive Director on the same date following an orderly transition period over the coming months. Afonso, who has been with Petrofac for eight years, spent the early part of his career in investment banking, focusing on the energy and infrastructure sectors. He has extensive experience at Petrofac in a variety of senior finance roles and has most recently led the Company’s successful refinancing.

Al Cochran has done a remarkably good job at PFC in the last few years in what it must be agreed have been somewhat difficult times. Whilst the transfer is going to be simple and straightforward I would like to put on record my thanks to Al for his help over the years, he has been very patient with me, not easy… and I wish him well in the future.

And finally…

Last night in the Prem the Red Devils lost 1-2 to the Foxes which was enough for the Noisy Neighbours to win the title, fully deserved and many congratulations, blue moon indeed! Elsewhere the Saints beat the Eagles 3-1 and tonight always a tricky derby Chelski face the Gooners.

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