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There’s big money to be made here, and of course manoeuvring going on behind the scenes. Shouldn’t underestimate the importance of the OBA to Amerisur, highly strategic - and to others besides...
Unconventional oil running out of funding and support
Unconventional oil difficulty sustaining earnings with short-life wells (over-stated production claims)
New conventional resources become increasingly difficult to find and expensive to get to market
Investment in green energy reduces investment in upstream projects and new finds / production (stoking supply issues medium term)
Venezuela and Iran out of the picture for the foreseeable
OPEC holding their line, this time they’ll choose to ignore Trump!
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Demand remains robust confounding analysts...
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Plenty more upside, $70-80 range looks more likely for 2H 2019, than $60-70
They need to find the depth of water and will be going deeper - down-dip. Indico is faulted-in and the seal over the structure is clearly good - they just need to establish how much oil has accumulated there. Next question - does the play extend north towards Mariposa? There’s simply too much oil in Indico and Mariposa for these to be an isolated / one-offs.
Find the traps, find the oil; there’s no shortage of source! (rock)
Assuming Indico appraisal delivers a sound result would still expect to see 2-3 rigs on duty in CPO5 before Interims.
Eh?
Look at the vertical pay
Look at the free flow data from 1st well
Look at wellhead PSI
Look at the P1 reserves from a single drill
Go way! ;o)
Good luck with drawing water from the Indico structure... ;o)
If the current valuation wasn’t so derisory I would be amused. Not much to chuckle about at these prices. Too tempting
a target now I fear.
...that is NOT in my opinion ‘the question’!
So it was a expo-duster, well guess what - it happens. Yup an over-reaction today but the market will re-rate this share as production builds, which it will, and confidence in Plat returns, which it will.
Look back on today in a few months time and take the lesson. There was always a risk the trap at Calao wasn’t present, to my mind it was a low risk, but that’s E&P, you take the rough with the smooth.
CPO5 and the Indico complex in particular, has plenty more to give.
...2nd and 3rd rigs will come all idc.
Just as long as they do it right, and get the intel they need.
Abundantly clear there’s a lot of oil in these LS3 traps. If the black stuff has indeed filled these to the brim, the oil will also be found down-dip (within the LS3 over a far larger area) and if the migration path is trending from the NW corner of CPO5 to SSE You can understand why Calao could be a highly significant well.
Pavo is a more defined trap, but if deep enough and oil bearing Calao could be an eye-popper. And it may be they need their interpretation to be right.
Strange indeed we haven’t (yet) seen any holdings RNSs. Perhaps less so that there hasn’t been an update on Calao progress, as ONGC will go at their own pace and will be recording all the intel they can to establish fluid dynamics within and across the LS3 (assuming good sands and trap).
I sensed after Indico, they were pretty confident of the LS3 play (continuing) between Mariposa and Indico
Given that this ‘complex’ is updip from Mariposa with its back to the NE/SW fault trap, I think Calao will be a v solid discovery, with solid upside potential. Much has been said about combi traps but to my mind it’s about the sands - and crucially their depth. If Indico is anything to go by (filled to the absolute brim) it strikes me oil has indeed migrated updip and backed-up on that fault...filling the sands down-dip.
Assuming no technical issues all I can deduce is we’re now appraising Calao. Way, way overdue for this to be a dry well now. They’ve been at target depth for too long.
Much along the lines of the my post y’day, Colonel. More convinced than ever there’s a game afoot, and our II sellers aren’t exactly helping the cause...view from the cheap seats.
Much of what we’ve seen in recent weeks has been highly irregular, bizarre even:
Have stranger things happened at sea?
Someone has been quietly hoovering up stock ~17p from IIs whose investment policies have shifted to other areas and sectors. I would think it’s been going on for 5 weeks at least.
Clearly a worry as am not sure a declaration need be made as the trade instruction, ‘Buy as much as you can, as cheaply as poss” seems to still be ‘open’.
Thoughts?
Yes indeed, a pretty emphatic “Go figure!” instruction has been sprayed on the walls this morning. ;o)
You don’t issue an RNS like that and be sitting on a dry well release ;o)
I mean, we’re talking Inst’l Relations “101
#toptips
Couple of things spring to mind immediately on today’s news:
1. If 50% of Put-8 is $19m what value 30% of what already and yet to be proved-up in CPO5
2. This is a confident move, not the sort of move one expect from a business on the back foot (which the SP would suggest)
3. This is a bold move...what was the trigger for THAT I wonder? We know Calao is an important drill to help size the LS3 play- does this development suggest a self-funding and expedited fwd drill programme there? ;o)
I reckon we could be about to go orbital, as soon as these IIs have finished rearranging the furniture!
Doesn’t really matter whether that was a buy of a sell, as for every buyer there has to be a seller. In recent weeks it’s clearly been a buyers market but the steady trending up to the bid is encouraging.
Most likely scenarios for the delay:
-Issues: Unforeseen technical challenges during the drill, faulting, reservoir pressures, weather, mechanical failure etc
-Interest: Tracking horizontally within LS3 and logging or analysing further or completing
...but encountering dry LS3 or no reservoir sand dev ain’t one of the reasons! Further assuming no tech issues during the drill, the top of the LS3 would have been met weeks ago. If the top of the reservoir sands are dry then establishing water depth is of little interest or consequence ;)
Re that tender doc...and would also go some way towards explaining that mouthwatering tweet from AMER a few days ago citing Llanos 34 production numbers. No coincidence- they will be targeting much the same within 3 years. Terrific growth potential here.
Fossil fuels will increasingly fall out of favour for good reason but biting the hand that feeds is not the smartest play. There needs to be an orderly transition over many decades else we will find ourselves facing one almighty oil supply and macro economic crunch. As Basil points out, demand for petrochemicals will continue to rise inexorably and EVs still need to be fitted out, built, delivered and of course charged!
E&P pure-plays seeking funds may struggle in the coming years as will those seeking massive investment to develop remote, deep water basins. While it may no longer be the investment darling it once was, as a strategic asset and core component of so much of today’s AND tomorrow’s production, supply chain and CTM fabric, news of its sudden demise is somewhat misplaced and exaggerated.
So what have we got here then?
..and what a 'Grand' day it was!
Served on board HMS Cardiff - "The Red Dragon Escort Agency" - late '80s between Dubai and the Khor Fakkan.
https://en.wikipedia.org/wiki/HMS_Cardiff_(D108)