WTI $46.26 +62c, Brent $49.25 +54c, Diff -$2.99 -8c, NG $2.56 +7c

Oil price

Oil is steady enough, last week after all the confusion of the Opec meetings saw a modest rise, WTI was up 73 cents with Brent up $1.07 at one stage nearly breaching the magic $50 level. With everything settling down I imagine that most parties will be happy with the outcome, the Saudis gave a modest 500/- b/d back after various parties, including somewhat surprisingly Abu Dhabi, kicked off.

But the new level of 7.2m is plenty good enough to ensure that stocks continue to draw in Q1 and with Opec+ meeting monthly it should be easier to monitor and if necessary change those output numbers. My own guess is that demand should increase quite rapidly when the vaccines kick in and economies pick up.

Finally the Baker Hughes rig count showed an overall rise of 3 units to 323 and up 5 in oil to 246.

Predator Oil & Gas

An end of year operational update from Predator today, one in which despite the COVID pressures, the company is able to report positive news on all three fronts.

Starting in Trinidad, where the onshore pilot C02 EOR injection in the Inniss-Trinity field into AT-5X commenced on 18 May 2020 for a period of 30 days, with a total of 380 metric tonnes of CO2 successfully injected during the period and 30 days following cessation of the initial CO2 injection, oil production increased sharply in a CO2 EOR monitoring well.

Production was sustained at an average rate 88% higher than the average rate for the CO2 EOR monitoring well in the month prior to the start of CO2 injection and at the end of the monitoring period in November, planned CO2 injection re-commenced at AT-13. This time an immediate response in the CO2 EOR monitoring well was observed with an increase in production of 60% relative to the average pre-injection production rate in the five days preceding injection.

Enhanced incremental oil production for the single CO2 EOR monitoring well is estimated to be approximately 2,200 barrels of oil since the commencement of CO2 injection and CO2 sensors have detected no increased CO2 emissions at surface at AT-5X and AT-13 above the pre-injection background base line, demonstrating the effectiveness of subsurface sequestration of CO2.

The forward programme Q1 2021 includes, to continue CO2 injection at AT-13 and observe impact on monitoring well, evaluate potential to progressively add CO2 EOR production wells based on AT-13 CO2 EOR injection performance and make operational efficiencies and optimise CO2 injection volumes to further reduce operational costs.

PRD will continue discussions with potential joint venture partners to focus on capitalising on the value of the success of the Pilot CO2 EOR project in de-risking CO2 EOR operations and CO2 sequestration as well as ‘continuing discussions with the Ministry of Energy and Energy Industries regarding developing green fiscal incentives for anthropogenic CO2 sequestration operations as an interim measure  until such time as a carbon credit trading platform is established’.

Onshore Morocco, the Guercif drilling programme is ready to go with the Star Valley Rig 101 remaining securely stacked in Morocco awaiting lifting of COVID-19 restrictions, well inventory and equipment remain available and accessible in-country and the drill location and 2021 budget has been approved by partner ONHYM.

With the EIA also approved for the three wells and plans are afoot to coordinate with SDX to create ‘mutually attractive logistic efficiencies’ on the programme.  Predator has also completed independent mapping of the new 31.7km²  MOU–4 Prospect, 6 kilometres to the NE of the first; MOU-1; drilling location

SLR has performed an updated independent assessment of the new MOU-4 Prospect concluding with an  upgrade of gross audited Best Estimate recoverable prospective resources for Miocene gas targets to 819 BCF with addition of the MOU-4 Prospect, representing an increase of 92% over previous SLR resources estimates.

With seismic amplitude-supported MOU-4 drilling target equivalent to the  entire producing gas reservoirs in the Rharb Basin suggesting that it is  Commercially viable due to low cost of onshore drilling and development; the proximity to existing energy infrastructure; and the short lead time to a potential declaration of commerciality post-drilling.

Predator has ‘multiple potential options to monetise including: satisfying Morocco’s entire current gas requirement for gas-fired power generation; compressed natural gas transport by road or rail to Morocco’s major industrial centres; and for on-site electricity generation to support, during periods of interrupted supply, the new 87 MW wind farm being constructed by EDF RE and Mitsui & C. in the adjacent Taza area (operational 2022)’.

Finally, substantial progress has been made in Ireland with an independent engineering study commissioned to evaluate the scope of infrastructure improvements required to accept new gas at higher pressures into the onshore gas transmission grid. With modelling solutions for LNG transfer under way, NDA’s executed ‘with a significant global LNG player and a leading European finance broker for infrastructure deals’ much is moving along and a significant programme of work is scheduled for next year.

Paul Griffiths, CEO of Predator Oil & Gas Holdings Plc commented:
“We entered 2020 with a number of operations at an early stage of planning and execution. We exit 2020 on the back of: a successfully executed Pilot CO2 EOR Project with confirmed CO2 sequestration in Trinidad and enhanced oil production; a 92% increase in gross prospective gas resources at Guercif with a clear pathway to drilling and for potential early monetisation; and an FSRU LNG project  that is gaining us access to global players in the downstream energy business.

Operational progress has been achieved despite the huge challenges posed by COVID-19. The key takeaway from the prospective resources upgrade at Guercif is that it underpins and increases the diversity of the options to monetise the gas both in-country and, in the upside case, for export. We have a “head-start” in discussions with potential gas purchasers given the progress that our FSRU LNG project has made. Management has demonstrated the ability to build downstream areas of collaboration and to engineer and successfully execute a complex onshore CO2 injection project in Trinidad.

Sequestrating CO2 in Trinidad is consistent with our goal of contributing to reducing CO2 emissions, now a vitally important investment ingredient for third party financing of infrastructure projects in our part of the energy sector. In this respect this makes us a “pathfinder” operator in Morocco, already executing a CO2 sequestration strategy in our wider project portfolio. With this material upgrade in prospective Guercif gas resources, we have taken all pre-drill steps necessary to ensure that we can attract finance to fast-track  gas appraisal and development at Guercif following a successful short-term outcome to the MOU-1 drilling programme.”

I have written up a good deal of the RNS as well as quoting CEO Paul Griffiths in full as I think it is important that shareholders realise quite how exciting the upcoming programme is on all fronts. I hope to add an interview with Mr Griffiths in the next week or so to bring out some key points.

President Energy

Also with an operational and production update is PPC who announce that production has hit 4,000 boepd, evenly split between oil and gas. A compressor has been fitted at the Las Bases field and is commissioned whilst the newly drilled LB-1001 well is producing with the EVN-x1 well at Estancia Vieja ‘to follow’.

With production elsewhere ‘steady’ the total current production is approximately 4,000 boepd of which 2,000 boepd is gas production. As for prices, ‘the Company notes the recent positive upward movement of both the oil price and Argentina gas prices, the latter particularly welcome since it coincides with the Company materially increasing its gas output.

The oil price receivable by President for December production is estimated at more than the US$42 per barrel mark for the first time since March with the current spot gas prices achieved in the first week of December being US$2.10 per MMBtu which prices fluctuate week by week. These prices permit the consideration of the drilling expenditure in 2021 referred to above’.

Peter Levine, Chairman, commented:
“Steady progress is being achieved but we have the capacity within ourselves to build on this and achieve more. In this regard the announcement today and those made recently demonstrate such capability and underline the potential in our assets which we continue to work hard to realise.

“We look forward to increased activity next year and expect to make an announcement within the next two months regarding future plans and timing”.

President continues to deliver the goods and the value of the production makes a mockery of the market cap which should be a multiple of this. A company of such inherent value should clearly remain in the upcoming Bucket List…

United Oil & Gas

UOG has announced the results of an independent evaluation of Prospective Resources that has been prepared by Gaffney Cline covering the Walton Morant licence, offshore Jamaica, which is now held 100% by United. The report gives the Walter Morant licence unrisked mean prospective resources of over 2.4 billion barrels assigned across 11 prospects and leads.

Of this, 406 MMbbls gross unrisked mean Prospective Resource is estimated for the Colibri Prospect, the prime exploration target on the licence – an uplift of 77% compared to previous independent report. It also shows the first independent review of Morant Basin indicates major potential including Thunderball lead with mean unrisked recoverable prospective resources of 603 MMbbls

Jonathan Leather, Chief Operating Officer, United Oil and Gas, commented:
“United has long held the view that the Walton Morant Basin is a highly prospective and exciting basin, with billion-barrel potential.  This is the second independent report on the licence and the first to explore prospects across the full basin.  The results are exceptionally positive and support our strong conviction that this is a transformational asset.

“While the 77% uplift in the unrisked mean Prospective Resource estimate for Colibri, our main target in the Walton Basin, is an excellent result, we are just as excited about seeing the multi-billion-barrel potential of the licence as a whole.  A successful outcome for Colibri now opens up even greater possibility in this region.

“Since concluding the agreement with the Jamaican Government to take on operatorship earlier this year, and informed by feedback from companies who have engaged with United and the previous licence operator in the data-room process, United has been making good progress on the committed work programme, and the CPR results here are another step towards reaching the Company’s ultimate goal of being in position to drill the first exploration well offshore Jamaica for over 40 years. We are actively seeking partners to join us in making this happen – and unlocking the potential that is clearly present in Jamaica. This latest verification of potential will greatly help in that goal.”

This report is clearly good news for UOG and validates their long term belief in this acreage. The proof of the pudding will be in their success with the farm-out process which will happen next year. How any potential partners value the acreage in Jamaica will be the definitive judgement, watch this space..

KeyFacts Energy Industry Directory: Malcy's Blog