Oil price, Predator, Columbus, iog, Petrofac, PetroTal, Trinity And finally..
WTI $35.49 +$1.78, Brent (August) $37.84 +$1.81, Diff -$2.35 +77c, NG $1.85 +2c
If there had been a blog on Friday my notes tell me that I would have put in this section that the Opec+ discussions led by the KSA with regards to sustaining the production cuts until the year end were seemingly gathering momentum. Even some tetchiness from Russia (mainly as their oil companies see airlines starting up again before long) didn’t stop a general feeling from the cartel that ‘close coordination’ between MbS and Putin after a conference call still exists.
This morning Algeria has called for an emergency meeting with regard to quotas that should be held on Thursday of this week. It seems that both Russia and the Saudis have tacitly approved of this move and this might make some sense, selling prices for July are about to be set and a meeting on the 4th of June could nip any price setting problems in the bud.
Finally the other thing I would have mentioned on Friday would have been about inventories where, apart from at Cushing, were disappointing but also showed a 2m b/d increase in imports primarily from Saudi Arabia, irony of all ironies…Also on Friday the Baker Hughes rig count showed overall units down 17 to 301 and oil down 15 to 222, another record low.
Predator Oil & Gas (LON:PRD)
Predator have commented on an operational update from Columbus this morning saying that CERP has started Phase 2 of the CO2 Pilot Project in the Innis-Trinity field. The immediate objective is now to maintain CO2 injection at the optimum rate of 9 MT per day in accordance with the pre-injection reservoir engineering recommendations. This enables the company to closely monitor and calibrate parameters to control downhole pressure and temperature conditions to maintain efficient continuous injection.
The work in Trinidad is clearly going well, in particular as a concern has always been the integrity of the very old wells, some at Inniss Trinity are over 60 years old but are being receptive to CO2 injection. It also goes a long way to confirming the low level of capital investment required for utilising existing wells without any new drilling, very important when considering the potential scale up in Trinidad.
I asked Paul Griffiths, Predator CEO for some additional comments about this project, I think it is worth repeating them in full below.
‘Successful CO2 sequestration has always been a strategic component to the business model. Trinidad like most countries recognises the importance of the impact of climate change. Promoting greener credentials is important for attracting future investment in a post COVID-19 scenario. Demonstrating a successful carbon-neutral CO2 EOR project would be a practical example of how the transition to greener energy dependence could be financed in the short term for an economy mainly dependent on historical industries for its economic well-being.
The value of CO2 sequestration and the scope for potential carbon credits is not quantifiable at present. However if governments are serious about capturing and sequestrating CO2 until greener energy dominance prevails, then they must put more effort and resources into providing a truly global carbon credit trading platform, based in London preferably of course where the trading expertise exists, to facilitate ethical investment in projects that are seen to meet the desired objective of reducing anthropogenic CO2 emissions whilst at the same time cushioning local economies during what will be a complex but essential transitional process.’
I am not sure that the market has yet any idea of how, by becoming one of the leaders in the development of carbon storage capacity in Trinidad, an intangible value could be created for Predator. A carbon-neutral CO2 EOR project would be an efficient and practical way of moving oil companies towards the goal of ethical investing in fossil fuels, Predator may be that vehicle…
Columbus Energy Resources (AIM:CERP)
Not just the above joint announcement with Predator indicates that there a number of good things going on at Columbus at the moment although sometimes you have to look hard to find it. Sometimes having no IR or PR or any facilitation of message giving means that this is a true false economy, don’t spoil the ship for a ha’porth of tar as they used to say…
Anyway, the reason I say that is that last week CERP slipped out an RNS that was hidden behind a submission to the Trinidad for permission to drill the Saffron-2 well after the 1 well was so successful. Leo Koot has been long waving the flag for the South West Peninsula and the first well was highly successful with logs showing over 300′ of high quality sands that was so good that they are fully carried for the 2 well.
The second well will be drilled from the same pas as used in the first and will target the Lower Cruse intervals encountered in the 1 well. More important is that the key objective is to do an extended production test with the intention of making this a production well aimed to produce the circa 40° API oil and approval from the Ministry would enable drilling in Q3 2020.
iog has awarded the Core Project Phase 1 well management contract to Petrofac, the project comprises development and production of the Southwark, Blythe and Elgood fields in the Southern North Sea. Petrofac is intended to be the operator in the drilling programme and has performed this role for nine other companies in the UK North Sea and has drilled over 400 wells for more than 100 operators globally. During the execution phase Petrofac will manage well engineering, procurement and logistics, assure well construction and integrity, and provide onshore and offshore personnel to support the drilling campaign.
Andrew Hockey, iog CEO said ‘we are very pleased to have selected Petrofac as the well management contractor for Phase 1 of our core UK SNS gas development. Petrofac have demonstrated that they have the right credentials and expertise to execute what will be a critical role in helping IOG to deliver a safe, productive and cost-effective five-well Phase 1 drilling campaign kicking off in the first half of next year.’
So not only were PFC able to announce the above contract it came hot on the heels of them announcing a contract extension in Iraq with the Basra Oil Company on ICOEEP. Winning any contract is good at the moment but for PFC in Iraq is making a point, for the obvious reason but also as it proves that people who deal with Petrofac stay with Petrofac.
PetroTal Corp (LON:PTAL)
A brief announcement from PetroTal this morning as results are delayed as expected for regulatory reasons but of more importance is that the Bretana oil sales pipeline is expected to reopen in July allowing the Bretana field operations to reopen. In their last announcement they said they had a contingency of approximately $42m but the recent recovery in the oil price has reduced to nearer $35m which I imagine will be crystallised in the 3rd or 4th quarter. The company are in discussions with parties to facilitate the amount being settled over a three year period from cash flow.
Trinity Exploration (AIM:TRIN)
Trinity has received a VAT Bond from the T&T Government totalling $2.8m for outstanding VAT receipts from the Government. Whilst this is only money they would have had anyway it shows that the Government is trying very hard to show willing hence the below.
The VAT Bonds are part of a rapid response by the T&T Government to support businesses through the current Covid-19 pandemic. The Value Added Tax (Bond-Payment Refund) Regulations 2020 were issued on 3 April 2020 with the aim that VAT Bonds would be made available for companies that have refunds due in excess of TT$ 500,000 (c. US$ 74,000). The VAT Bonds have a maturity of 3 years from the date of issue, carry a coupon rate of 3.30% per annum (paid semi-annually) and are freely transferable. Trinity moved swiftly, immediately applying to the Board of Inland Revenue (“BIR”) for the VAT Bonds following publication of the Regulations and, since their issue, commencing discussions with local financial institutions with a view to monetising them in the near term.
Yup, its all starting again…. Newcastle host a ten race card and over the next few days there are a lot of opportunities to part company with your moular…