The Oil Man: Sound/Saffron=Coro, Amerisur, Frontera
22nd January 2018 15:14
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WTI $63.37 -58c, Brent $68.61 -70c, Diff -$5.24 -12c, NG $3.18 n/c
Last week was the first down week in a while as supply concerns from the reporting houses, led by the EIA in the US took the wind from the sails.
However, the weekend meeting in Muscat gave some fresh impetus as last year's adherence was 107% with December being 129%.
Indeed, the Russian and Kuwaiti Ministers afterwards dismissed the idea of the agreement ending early, giving support in early trading.
The rig count fell, overall by 3 to 936 and in oil by 5 to 745, although it's hardly noteworthy given the improvement in drilling techniques…
And, of course, this week it's time for Dav-Oh where the good and the great meet up and spend other people's money. Companies who send CEO's and other 'C' suite directors to listen to politicians and hope to meet this year's pop star du jour. Take a look outside the window and see a record Alpine snowfall and read that last year global temperature actually fell, only saying…
Sound→Saffron+Po Valley = Coro with SE Asia spice..
has confirmed that it is selling its Italian portfolio of oil and gas interests to for a consideration of 185,907,500 new shares which will be issued directly to Sound shareholders.
Saffron is buying Po Valley for 200,000,000 shares and will remain suspended until the general meeting, expected to be in February, is concluded after which it will return as Coro Energy, echoes of perhaps?
Saffron also gives details of its future Pan Euro-Asian gas strategy. Its Italian portfolio will have 2P gas reserves of 43.7 billion cubic feet and 2C resources of 44.6 billion cubic feet plus 2.4 million barrels of oil resources, and they will still be looking to acquire assets in Europe but the focus will be on Asia.
Here, they expect to look at exploration licences in SE Asia, where prospects are highly attractive as demand for gas outstrips supply and makes "compelling investment propositions for investors".
Starting in Indonesia, the company expects to acquire a series of assets, "leveraging existing infrastructure, relationships and processing capability which should enable new discoveries to be brought to market quickly".
It is interesting to note that "the company has pre-identified strategic partners to the business to fund and de-risk such assets", which lead me to believe that this progress should be pretty rapid and aimed at early returns to investors, especially given chairman James Parsons significant experience in both Indonesia and Malaysia.
Saffron acknowledge the need to raise money for this journey and have proposed a placing of new equity to raise up to £14 million.
This is planned to be done at 4.38p per share and will have warrants attached to subscribe at 6.57p being 150% of the issue price.
In order for existing shareholders to participate in the raise it is envisaged that an open offer will take place after the shares have returned from suspension to raise £2 million, also at 4.38p.
This will leave Coro as a fully funded gas exploration vehicle concentrating on Europe and the Far East.
Sound remains committed to Morocco where it has significant exposure in a number of areas and Echo is of course seriously involved in South America.
Investors who feel that gas is a global, forward looking play now have three vehicles to choose from in this stable, a veritable Holy Trinity…
Amerisur Resources
In an Ecuador update this morning, has made an agreement for the construction and commissioning of the Chiritza pumping station from the RODA pipeline at Cuyabeno to the SOTE pipeline at Lago Agrio.
This will increase the carrying capacity of this section of the pipeline by 4,000 barrels of oil per day to 9,000 barrels of oil per day.
Amerisur will build and commission the Chiritza station at a cost of $3.7 million (£2.6 million), capped at $4 million. This payment will be considered to be pre-payment of the existing tariff over the first 5,000 transported so the company will recover the cost of this pumping station investment.
All being well, the construction and commissioning will be completed in October 2018. With so much activity at Platanillo and other nearby blocks, MD John Wardle is unsurprisingly upbeat about the advantages both for Amerisur and Petroamazonas in this action.
Frontera Resources
An update from on the Ud-2 well where sustained deliverability of natural gas has been confirmed and indicated the presence of natural gas in the Gareji reservoir.
It is understood that it is of high enough calibre of gas for distribution through the Georgian national grid.
CEO Zaza Mamulaishvili is "delighted about the early and potentially material success at the second of the three testing intervals".
Whilst there is clearly much work still to be done this preliminary announcement can only be considered to be good news.
Angus Energy
has announced that it has farmed-in to UK onshore block PEDL 244 which includes the Balcombe field near Crawley in West Sussex.
They will form a partnership with existing owners, Cuadrilla and Lucas who are farming down by a pro rata 25% to Angus who will also operate the discovery.
This looks like an opportunity for Angus to use their experience in the Weald basin and to drill the Balcombe 2Z horizontal well which is expected shortly assuming the deal goes through.
Angus will need to raise the £2 million within 20 working days and, of course, pay for the conventional horizontal well. For Cuadrilla and Lucas they will be able to focus on their shale operations in the North West of the UK.
And finally…
The Jags put up a valiant fight against the Patriots last night, but it will be Tom Brady and Bill Belichick in the Super Bowl once again. They will face the Philadelphia Eagles after they beat the Vikings 38-7. It will be a repeat of the 2005 Super Bowl when the Patriots won 24-21.
In the Prem, there were wins for the Noisy Neighbours, the Red Devils, Chelski and the Gooners, Spurs were held by the Saints and the HubCap Stealers go to the Swans tonight.
Kyle Edmunds continues to progress and is now in the quarter finals in the Australian Open which is most impressive.
And white ball specialists England won again to go 3-0 up in the five match series against the Aussies.
Malcolm Graham-Wood is an independent oil industry expert and freelance contributor, not a direct employee of Interactive Investor.
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.