The Oil Man: Amerisur, Trinity, Pantheon
9th August 2017 13:35
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WTI $49.17 -22c, Brent $52.14 -23c, Diff -$2.97 -1c, NG $2.82 +2c
A bit of drift for crude markets yesterday, news was a bit thin on the ground and mixed in content. On the positive front, various other producers joined the KSA in cutting back September liftings and OECD inventories fell by the biggest year over year amount since April 2014.
After hours the API stats were better than expected for crude oil, drawing by 7.8 million barrels against forecasts of 2.7 million, but gasoline stocks built by 1.5 million barrels as analysts had expected a draw of about the same number.
Other less positive news came from who announced that the Pernis refinery was restarting, albeit at a reduced rate. Tonight's EIA stats will as usual be interesting. Yesterday it increased US production expectations modestly for this year with no changes for 2018.
Amerisur Resources
An update this morning from on the CPO-5 block and Mariposa-1 where ONGC have officially filed as a discovery.
The well flowed a controlled 4,601 barrels per day of 40.8° API crude with a restricted choke indicating "strong further production potential".
A LTT will lead to production probably towards the end of this year. ONGC have a reputation for being slow, but once a decision has been taken to produce will back it with significant funds.
AMER's 30% will therefore give them a substantial boost, which is why they have remained confident of their short and medium term production guidance.
Although I have no worries about the Putumayo region it is comforting to see that this success up north can significantly add to their reserve base, increase production and therefore value.
With the market currently showing little interest in E&P companies, I would suggest that this is an incredible store of value that will be unlocked, possibly with little notice. Accordingly, investors should keep a close eye on the recent uptick in activity in South America.
Trinity Exploration & Production
In today's first half operational update, uses the phrase "step-change" a number of times, this is most accurate as the company increases its financial performance with each step of the transition following the return to the capital markets.
Operationally, production is solid, increasing short and medium term despite a one-off fall in the second quarter for specific, unavoidable reasons.
It is now back over 2,500 barrels per day, indeed during August it is expected to be between 2,550 and 2,650 barrels per day, full year guidance remains at 2,600-2,800 and 3,000 barrels per day is expected within 12 months time.
Financially, things are also improving. The consolidated netback was "very robust" at $13.5 billion (£10.3 billion) the period ($3.30 for the same period last year) and the balance sheet remains strong with cash of $11.5 million from revenues and the raise.
Both OPEX and the G&A charge are below budget as the management ruthlessly ensure that margins are preserved.
Trinity continue to maintain that it is important to strengthen foundations in three areas, firstly by maturing the pipeline of value-creating producing growth opportunities, secondly by "enhancing asset integrity", and finally by delivering on their growth strategy.
This will be helped significantly as they have managed to justify contracting a new rig to execute and enlarged RCP programme.
It can be seen that Trinity management is rigorously managing costs thus increasing margins as production rises, along with maintaining cash levels.
The company is particularly aware of the need to grow reserves and production in order to maximise cash flow "from our core assets, while achieving a market value that is more reflective of our underlying assets".
With its "diverse and deep portfolio" of low cost production and development assets that it can bring into play in due course Trinity is back in the game, big time.
Pantheon Resources
Giving investors dates by which things may happen has its drawbacks as have found. Today, they partially update the market on VOBM#2H where the frac job has been completed successfully flowing gas and oil to surface.
It is too early to make an accurate assessment - that will be done after a workover rig has installed more kit and done flow tests - but there appears to be optimism in the camp. Expect news in - about - three weeks…VOBM#4 is running a bit late, but only due to the previous user running a bit late, expect it to be on site in -about- the second week in September…
All being well the 1, 2 and three VOBM wells should hook up to the gas facility together by the end of September although we know that there might be a delay as the pipeline operator has a maintenance programme that might delay until - about - mid-November.
Genel Energy
Continuing good news for as it announces what it has been paid for May oil sales. $39.59 million was paid to the Tawke partners of which $9.9 million was net to Genel and contained $6.39 towards receivables which is good.
For Taq Taq the numbers are $12.24 million of which Genel's share is $6.93 million and of which $1.18 million was paying back receivables. All in all a respectable set of numbers and more food for thought when I meet the company later this month.
Sundry
have confirmed the acquisition of 50% of P2209 in the UK SNS. No value to the deal is given which makes life as ever more complicated in terms of value. I took PMG out of the bucket list for this main reason, it is difficult at best to be able to recommend a share about which such key information is missing as is IR.
has announced that Stifel has resigned as broker and Nomad which means that a new one has to be found, sharpish.
This is a very disconcerting move and should be sounding alarm bells very loudly. The company is suspended as it attempts to buy , but something may be rotten in the state of Denmark as the Bard might have said…
And finally…
Real Madrid beat the Red Devils in last night's friendly where both teams played pretty much their best sides.
No medals since Sir Mo in London at the tummy bug games continue. Any bets on whether only he will provide the whole of the Team GB haul?
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.