WTI $63.95 +$1.87, Brent $68.60 +$2.35, Diff -$5.55 +48c, NG $2.13 +1c
Brent crude is around $70 this morning as the Middle East is gearing up for more potential military activity after the events of the last week or so. Although most news organisations are typically blaming the US and specifically the President, there is the small matter of attacks on the US embassy in Baghdad and the death of a US oil worker which had set up the serious chance of a reprisal of some sort. So the US drone that killed Major-General Qassem Soleimani, a leading Commander with significant ‘form’ is what has started the latest round of Middle East turmoil and is the trigger in the minds of the fourth estate.
In addition the rig count has fallen again, with overall units down 9 to 796 and oil ones falling by 7 to 670. The EIA inventory numbers showed a draw of 11.4m barrels, over three times the forecast and interestingly US crude oil exports at 4m b/d were a record. So, the oil market is now jittery and set for some weeks of potential further gains, CFO’s across the industry will be rubbing their hands together and sharpening their pencils.
In a drilling and operational update this morning Echo has announced both the perforation and initial stimulation operations at Tapi Aike and also the drilling at the Campo Limite exploration well. At Tapi Aike the deeper, secondary target has been perforated and mechanical stimulation will commence shortly and end within two weeks.
After that, the shallower “Lobe C” primary will also be perforated and stimulated, taking a further two weeks. In the meantime the CLix – 1001 well has spudded and will reach total measured depth within a week followed by wireline logging operations.
It is now all systems go at both Tapi Aike and Santa Cruz Sur so Echo shareholders will have much to watch from both areas in upcoming weeks and months.
Genel has announced that the TT-34 well is nearing completion and had produced from all zones tested at a maximum combined flow of over 3,900 bopd with a 28/64” choke. With the inclusion of this test production gross production from the Taq Taq field is 13,650 bopd.
Individual zone testing is now underway and will determine long term production strategy but the well should be placed on production around the middle of January at an initial flow rate of 1,500-2,000 bopd. The rig is now preparing to spud on the northern flank of the field.
It is also worth noting that during the ISIS instability in the region,Genel did not have a single day of downtime and there is no reason to think that this would change in the current situation.
NUOG has raised £420,000 in a placing at 0.0525p to further strengthen the balance sheet and liquidity position ahead of bringing about a reverse takeover before 4th May 2020. The company looks like it is positioning itself for the inevitable deal.
Reabold has announced that its VG-6 well at West Brentwood, California has encountered oil and gas shows consistent with pre-drill expectations.
Eco (Atlantic) Oil & Gas
Whilst the Carapa-1 well came in uncommercial for Tullow over Christmas it was a much better experience for Eco who confirm that the prospectivity of the Orinduik block is much better with Exxon now producing 32º API from Liza to the North and now 27º API from Carapa to the South. This is probably, ironically, the best outcome for Eco as it may accelerate Orinduik ahead of others in the eyes of Total and Total.
I expect at least two wells this summer which should prove up the discovery at Jethro and also a billion barrel prospect elsewhere on the block. In the meantime we have a new CPR being prepared and should be out by the end of the month. I still believe that there is substantial upside for Eco after the vicarious problems it had at the end of last year.
The Second test against the Proteas at Newlands in Cape Town is under way and on day four England have set South Africa 438 to win in just over four sessions. At tea they are 46-0.
I hope that everyone had a good time over Christmas and again I wish you all a very peaceful and prosperous New Year.