The Oil Man: Pantheon, Providence, President
22nd January 2016 12:56
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WTI $29.53 +$1.18, Brent $29.25 +$1.37, Diff +28c -$1.61, NG $2.14 +2c
At last, a rally, as traders sensed some short closing yesterday - and it has carried over into today; as I write, WTI is $30.91 and Brent $30.84. The WTI price will be watched closely by chartists, as $30.85 is the Fibonacci retracement resistance level and a close above that would please them no end.
Even if the week does end up well it will be put down to transient, unimportant reasons such as the cold weather about to hit the North East of the USA, or maybe IS militants attacking Ras Lanuf again.
The Energy Information Administration (EIA) stats weren't too clever, showing a build of 4 million barrels, higher than the whisper of 2.8 million, and, although Cushing only added 191/- barrels, the total stock of 486.5 million barrels was the highest for this time of year for 80 years, apparently…
And in Dav-oh, where all the big chiefs are hanging out, it was the turn of the Saudis to speak; they said that $30 oil is "irrational" and that, whilst the short term is "bleak", the long term is much more rosy.
Pantheon Resources
has virtually halved from the peak as the market tries to determine whether the second Texas well is as good as first thought, or a problem child. Today we have a sort of holding statement from the company, who must have been somewhat irritated by a number of short sellers pushing against an open door.
VOS#1 has a blockage; the company has completed a pressure build-up test and have a number of other potential solutions to try. I think that the clue is in them saying there is "such a large section of net pay" and that they are accessing the data from wells on the Double A field, where similar problems have been encountered. The worst-case scenario would be to put it on production; it is, after all, a commercial discovery.
With further work to be done to sort out this blockage, I can understand why the market is nervous and also how the work of the shorters is being made easy in the vacuum of no news. This may continue, but I am going to stick to my guns and, especially back at 82p, I am going to reiterate my 200p+ unrisked valuation; if the well is eventually sorted, it should be more. Institutions should take note and use this opportunity wisely.
Finally, the first well, VOBM#1, is performing well and negotiations are underway to start commercial production of gas and liquids in first-quarter 2016.
Providence Resources
has this morning announced the start of a seismic programme in the southern Porcupine and Goban Spur basins offshore South West Ireland.
This area contains the Newgrange exploration project, about which the company is very excited. The market still has bad memories about items such as Barryroe and, at the moment, it is difficult to make a case for buying the shares - but, with a sub-£20 million market cap, there must be a chance of a surprise on the upside from the company.
President Energy
A Paraguay update this morning from , who are battling away in the region with consistent determination.
They have today announced that their Pirity and Hernandarias concessions are estimated to hold 3 trillion cubic feet and 440 million barrels, or 940 million barrels of oil equivalent (mmboe), of gross mean prospective resources in six identified main structures.
Seismic data has identified 23 leads in the Cretaceous and Palaeozoic plays; the company has applied for a new licence area and are reorganising other areas of interest.
There is no doubt that the company firmly believes this investment in Paraguay is "laying foundations" in-country and these new resource estimates, combined with vigorous cost-cutting, will see them successful for the long haul.
Sundry
kicked off the results season, beating the whisper by 2 cents but slightly missing on revenue, down 39% at $7.74 billion (£5.4 billion) in the quarter. Things aren't that bad, though, as they have added another $10 billion to the buyback programme.
has completed its Canadian acquisition and will now produce 200 barrels per day (b/d) from the country, of which 80% is oil. Proved and probable is 1.5 mmboe, 0.9 million of that in the former category.
Italy is long haul, but they have Cascina Alberto onshore exploration play with . The company has $2.4 million in cash and a positive cash flow, while the general and administrative expense (G&A) is sub-$3 million…
Finally, the trade press is reporting a statement from Worldview, who say they are "evaluating and preparing for a possible all-cash offer" for the shares in that they do not already own: i.e. 70%.
PCI are up 30% this morning, at 17.5p, but I thought you had to pay at, or higher than, the price paid in the last year, in this case around 130p; I'm sure a bid at that level would be listened to…
And finally…
The cricket has moved up to Centurion Park, but with England being two up with one to play, it already has a dead rubber feel about it. Batting on what looks like a sweet track, South Africa are 157-1 as I write.
The big game in the Premiership this weekend is Chelski's trip to the Gooners; they don't often go there needing points to avoid relegation, so Sunday's game might at least be fun…
Elsewhere, it's another mix-up: the Canaries, under the new leadership of Ed Balls, host the HubCap Stealers, Spurs go to the Eagles, the Foxes host Stoke and the Saints go to the Theatre of Dreams.
The Maccams have the long trip to the Cherries, the Hornets host the Magpies, the Noisy Neighbours go to Upton Park for the last time and there is a tasty derby as Villa go to the Baggies. The other Sunday fixture is the Toffees hosting the Swans.
Back to the European Champions Cup in rugby, where Stade Toulousain host the Sarries and Leicester go to Stade Francaise - note that Toulon have applied to play in the Premiership, which would be great fun.
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.