The Oil Man: Amerisur, SDX Energy, Falcon Oil

WTI $45.52 -$2.30, Brent $48.38 -$2.41, Diff -$3.06 +9c, NG $3.19 -4c

As predicted, the oil price is continuing to head southwards as goons around the world telegraph their innermost worries for all to see. Accordingly, which respected wheeler dealer wouldn't partake of a touch of short-selling, safe in the knowledge that with three weeks to go to the OPEC conference uncertainty would prevail?

The stories yesterday weren't actually that bad, just various  group members suggesting that whilst an extension is on the cards, further cuts were unlikely, beware as they say, careless talk costs er, money…

Amerisur

I'm actually quite surprised that Amerisur didn't go up much more yesterday afternoon when ONGC released the results of the Mariposa-1 well on the CPO-5 block in the LLanos basin in Colombia.

The 120 ft of oil saturated net pay, particularly where they drilled it on the edge of the block could be very significant indeed. This is AMER's primary interest in that part of the world and as there is a lot of oil up there infrastructure is not a problem. Indeed, if it goes to plan, what with other recent successes, the 7,000 barrels per day target has just got a lot easier.

I understand that John Wardle's comments were of what can only be described as significant joy and his real words certainly not for a family publication such as this. It's been a good few weeks for AMER and I would expect further rallying of the share price to take all the good news into account.

SDX Energy

Overall the news this morning from SDX Energy is very encouraging, the deeper part of the well confirmed reservoir intervals and true, they were not worth completing here but for a virtually free carry it was a no-brainer and valuable information was gleaned.

So, they made a discovery in the Abu Madi and to prove the source rock in the Cretaceous section both of which ticked the appropriate boxes. Sure it was difficult to find a trap, but then when the well was first planned that wasnt the target, it was 5km East of this location and as I said it was a very cheap reservoir test.

The news that they have proven hydrocarbons in the block is, to quote Paul Welch 'truly awesome' and of course the next location is already staked and permitted to test the horizons at SD-Deep.

This well is undoubtedly a major achievement, already a gas and liquids discovery which is near infrastructure and enabling fast-track monetisation the well has proved potentially transformational with this deeper oil potential. I mentioned the next well, but exposure is not limited to that, with the source rock and reservoir proved there is plenty of scope left in what is a very big block, 1,275km².

All in all, confidence remains high and with such upside and of course other high value assets in the portfolio the sell off this morning is well overdone.

Falcon Oil & Gas

Sasol has sold its 35% stake in Beetaloo to origin giving them 70% of the project, Falcon Oil & Gas stays at 30%. The carry, which gives FOG £154 million of free spend remains the same and the moratorium also goes on. I have written on Falcon recently so no need to add much more, but I remain of the view that the moratorium may well cede at least part of the Beetaloo and will lead to at least a start of a development.

Bear in mind that Australian energy policy is nothing short of a disaster, with gas and LNG being shipped all over the world at 'favourable' tax rates and yet a shortage of domestic gas, you couldnt make it up…

And finally…

Last night in the Boropa Cup it was Celta Vigo 0, Red Devils 1, return leg next thursday…

This weekend the Prem is spread over three days, tonight Spurs go to the London Stadium to take on arch rivals the Hammers which is never easy. Tomorrow the Noisy Neighbours host the Eagles then on Sunday the HubCap Stealers entertain the Saints and of course the Gooners welcome the Red Devils.

It's Guineas weekend which is always the proper start of the flat season and I notice that four of the mighty Frankel's offspring are represented in the two races. Also over the pond it is the Kentucky Derby and Oaks, good luck to Sailors valentine in the latter…

And the first big One-dayer starts the season off with England playing Ireland today…

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.