Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Plumbs,
They're still testing TO-14 and the commercial outcome of the well has yet to be determined. They're still expecting this to be a transformational year from the interim statement. So its still in play at TO-14 yet, they have yet to start testing of TO-13 (they described it as a cornerstone well when drill results came out).
"We believe that early 2024 finds Corcel on the verge of a material transformation, with the groundwork for these developments having been meticulously laid over the final six months of 2023."
Not nearly as negative a picture as some are trying to paint, seems the company is still positive on the transformation. This is the current situation:
"TO-14 currently undergoing flow testing having encountered weather and engineering delays, testing work continues on the well with oil encountered and ultimate commercial prospectivity is yet to be determined."
We're still waiting to hear if the well is commercial once fully tested and then they'll move on to test TO-13. Its just some more waiting.
Regards,
Ed.
Breq,
Possibly. This well reached TD, whereas TO-4 only penetrated the top 8m of the Binga. Oil companies test from the bottom up so you could be correct in saying that they've been trying to get the deepest parts of the well to flow first and spent the last number of weeks looking for a solution to that.
Regards,
Ed.
Nige,
Bad timing for sure just before Easter break, but a lot of companies will release updates like this. They may need to do an acid squeeze or something similar on part of the well, but all we can do is guess at present. I'd assume they didn't want to take time to get this engineering work done or folks would have been shouting for an update if we hadn't got one by end of April etc, they do have to keep the market updated etc. More prospective zones in TO-14 yet to be tested, so its a wait and see. Hopefully we'll get more updates on the engineering work over the coming weeks.
You could be correct as these delays have put the timeline out now for sure and the company would be coming under more pressure to update. Maybe the could have held off a little longer, but perhaps that still wouldn't have made a difference. It may take weeks to sort out the issue they've encountered. I'm sure we'll hear in due course.
Regards,
Ed.
Morning Nige,
That's the thing though they haven't completed the test of TO-14 yet let alone testing TO-13. In fact the RNS also reads
"The Operator is following through with the completion program for both wells with continual updates to the program based on new information obtained with progression of the engineering work."
To complete the wells they must think this engineering work ongoing will solve it.
Regards,
Ed.
Morning Sienna,
I even said yesterday with the declining volumes of trading on the run up to Easter I wasn't expecting an update until next Tuesday. Imo they should have held off as the RNS is inconclusive. It suggests they need an engineering solution to test the most productive zones in the well so testing is still ongoing. They haven't said specifically if these engineering solutions include a sidetrack, if it were mechanical failure or a well integrity issue. RNS is very vague, but it sounds as if there are still untested zones down there for whatever reason.
They currently have £9m in undrawn notes and are in the process of selling those Ni assets so still remains cheap in my view currently. The fact that they're still planning on well completion suggests its far from over yet and the market sure does like to overreact at times. They should have really held back under the cover of the operator until they had a clearer update of what is going on.
Regards,
Ed.
Goodness me I wasn't expecting a late RNS, have read it several times today so far. Its a hard one to interpret for sure. They say they're having difficulty flowing TO-14 yet are competing the well not abandoning it? They continue to test the most productive zones, the well testing continues and they haven't started testing TO-13 yet, weather delays etc. They're also progressing the engineering work too. As well they retain their position on the recoverable from the field. Its just a pity they didn't mention how much of the well had been tested and how many of the "productive zones" remain untested. It leaves more questions than answers compared to prebivous releases. But reading it several times suggest everything is still ongoing at both wells.
Regards,
Ed.
Hi guys,
You're welcome. I agree testing has been going on for around six weeks and the last RNS the company described themselves as a production company so its definitely looking positive. Sonangol as the operator sure will want the job done right, so they'll not waste cash just cause they have it. They'll also gather all the data they require for what could be a large project, multiple flow stations, many kms of pipe and even export buoy planned. So they need to get it right from the start, both these wells should provide plenty of data on how the field performs.
That's interesting that CRCL keep reminding folks through social media about what's going on (I'm not on twitter/X). With six weeks of testing you would think they would have a good idea about both these wells. Presentation does suggest that both wells will be produced in parallel so we could get an update on both soon. Agreed too that if things weren't progressing as per presentation they wouldn't keep advertising it. With trading volumes declining on the run up to Easter hopefully we'll get our momentum back again next Tuesday.
Regards,
Ed.
Good morning Nige,
I'm good hope you are too! Yeah looking forward to the Easter break for sure, its always nice to get such a long break from the markets, unfortunately we are currently in the UK wet season it seems so it'll have to be indoor fun rather than outdoor fun. Hopefully we'll see some more spring and summer weather again soon. I hope everyone has a nice Easter break!
Well it all depends on what flow rates they get, one mans disappointment could be another man's gusher! Look at the oil price back in the 60's and 70's compared to where it is now. These wells were commercial back then:
https://www.statista.com/statistics/262858/change-in-opec-crude-oil-prices-since-1960/
So for wells like this to be commercial they'll not need high flow rates at circa $85/bbl. The company recently described themselves as an E&P company and given the recent presentation then that's what I expect them to be. I'm still looking forward to a transformational year and beyond. Given the drilling results by CRCL and approved by the operator Sonangol that's what I'm still expecting. They should see better flow rates through modern completion and logging, but better still would come from horizontal completions so that is always an option as pointed out by CRCL.
2 mile horizontals and 20 plus stage frac are commercial at $85/bbl in the US and Canada etc so they'll have many options open to work on these redevelopments. They'll not need 2 mile horizontals nor frac on this field, I was just using an extreme example of what is commercial at $85/bbl (flow rate dependent of course). We know that the reservoir is highly fractured, we know that there is mobile oil down there which has returned to original pressure, its all in the RNS to date. So long horizontals or frac is like overkill on these wells imo, I'm still expecting them to flow naturally from these vertical wells. If they didn't flow it wouldn't take very long to find out, the recent presentation for 2024 flow rates would look very different and I doubt the company would be describing themselves as an E&P. I can understand that when a JV is planning a potential $140m development for FFD they may want to try a LPT to make sure oil saturation and pressure sustains flow and before committing to an EPS. Seems to me like that is what they're doing. When Sonangol gives the nod CRCL will update. I'm still eagerly awaiting that time, my guess now is likely after Easter.
Regards,
Ed.
Morning Luke,
Well said, there won't be a company in Angola that knows more about Angolan oil and gas than Sonangol. The facts are all there in the drilling results for TO-13 and TO-14. If some don't want to wait for the results of the flow testing of these wells its each to their own. Sonangol didn't rush the drilling of these wells, so no surprise they're taking their time over testing too. Exciting times.
Regards,
Ed.
Here is a good place to start:
https://www.shalexp.com/wyoming/companies
From the brief look another that should be on the list is Apache Corp or APA. It has to be those with deep pockets.
Regards,
Ed.
TNM,
You're welcome. I guess that will depend on the ultimate flow rates of these two wells. I'd imagine they'll drill as many wells as required to get to their Q4 production target. So yeah we may see another 1 or 2 wells drilled during that appraisal period. From my contact with the company the FFD is likely to require quite a few more wells as per previous RNS' perhaps sidetracks and horizontals. I guess as production naturally declines they'll infill across the field.
Regards,
Ed.
TNM,
Forgot to reply to your last point. Yes pumps could also be used as could laterals for longer completions, both would aid the amount of recoverable oil per well. I think the most likely will be the return of pressure support at some time (water flood). So yeah I agree ESPs are also an option.
PS. not sure why none of the capital letters showed on my last post, bit twilight zone on here today. :)
Regards,
Ed.
tnm,
that's understandable, i've been tempted to add more at this level too. we'll just have to find out what is causing that pressure down there and the return to original pressure. there is a possibility that the solution gas has recharged too as well as the oil. could there also be water drive, no water was logged in the wells so the water is currently a mystery. even on to-13 it was just oil shows and the most down dip well to date. could there be water on down the flanks close to the two injection wells, perhaps, we may find that out at a later date. because the reservoir is very over pressure there could be both drive mechanisms ongoing, both solution gas and water drive. hopefully we'll get more info from the testing and the ffd drilling. there's plenty of infill and stepout space left yet, south eastern flank of the field looks pretty sp****. i'd like to see if they mention the gor with the flow test results. something down there has recharged the pressure.
nige,
the company has already suggested to-13 and to-14 are connected, therefore likely to be on a similar pressure regime. also 120m of oil shows in to-13 and 80m of oil shows in t-14. we don't yet know the downhole or flowing pressure of these wells. to-14 closest offset well to to-4 (12580bopd), so hopefully that one will flow quite well even if it doesn't meet to-4 rates (it may do but not counting on it). to-13 is around 1.4km away so reservoir quality may change even if its still highly fractured. my guess at the moment would be that to-14 on the crest is likely to flow better than to-13, even though to-13 was first described as a cornerstone well and has a larger oil column. reason being, production history of the field, to-14 positioning. could to-13 still outperform the other wells, it may do, its the most down dip well on the field. increased depth normally means increased pressure. my current view is with modern logging and completion these wells should outperform the 1960's well given the information from the drilling to date. we'll know either way very soon. the company now describing themselves as an exploration and production company is the most telling statement yet.
regards,
ed.
Luke,
Good man, fingers crossed. This one sure has the potential to make folks a lot of money for sure given the contents of that presentation and our low starting point. I do check in every day too even though I'm planning on staying for at least FFD of Tobias and Galinda. That would likely cover at least the next acquisition too. When we're awaiting a potentially game changing RNS its only natural folks will check in at least several times a day.
Regards,
Ed.
Hi Nige,
Yeah likely some twitchy fingers from some. Yup given the presentation details we're still on course for news very soon from both wells. Then CPR, seismic, Tobias appraisal etc etc still all to come this year. CPR will make for interesting reading as will forward plan for Tobias.
Regards,
Ed.
Nige,
The presentation I take as the current info as it was released since that testing RNS came out. I'm taking my timing from that. That puts us at late Q1 for TO-14 testing and very early Q2 for TO-13 testing to complete.
Regards,
Ed.
Sienna,
The way I see it at the moment, the lower the launch pad the further it'll launch. We're not valued at much higher than BCE right now and they flowed at around 40bopd! So market not pricing much in here at present at circa £15m cap. If the recent presentation is anything to go by this is due a dramatic re-rate long before year end. I'm fully loaded and ready to go. Any time you're ready Sonangol. :)
Regards,
Ed.
If some can't be bothered to use a calculator, that would have put the value of the 2P reserves at $628m (July 2022). That didn't include the fall off chair big discovery at CCU or BFFDU, the infrastructure, the injected gas etc etc. Its still largely down there too thanks to not enough injectant. PS faulty coiled tubing units can be replaced or hired in the USA, they're commonplace over there for well treatments and completions. I'm sure they wouldn't even have to go to Alberta again to get one of those.
Regards,
Ed.
The increased reserves and value RNS also makes interesting reading for the reserves at the Cole Creek Unit and the Barren Flats Unit.
Here it is from the horses mouth:
Arthur Millholland, President & CEO, commented:
"The updated reserves of the Company and the significant increase in COPL's 2P NPV 10% to $492 million illustrate the benefit of the timing of our acquisition of the Cuda assets in a high oil price environment. We purchased these assets for $19.15 million with the incremental reserves acquired at a cost of $2.20 per barrel. This is a remarkable metric to the comparative valuation of the 2P Reserves of $15.70 per barrel as at July 31, 2022. We will continue to release updates to the market as we work through our plan as presented earlier this year."
"This is a remarkable metric to the comparative valuation of the 2P Reserves of $15.70 per barrel as at July 31, 2022." $15.70/bbl then, worthless now apparently! :)
Regards,
Ed.