Pantheon Resources complete VOBM#2H, Polk County frac

Ops update out. Frac looks successful on VOBM#2H although early days and they’ll need a bit of time before all frac water has been recovered. If successful, could be the first really good bit of news for PANR in 2017. More to come? Indeed…. the long awaited VOBM#4 sidetrack is now due to begin in mid Sept (previous guidance was early August).

If successful, it will be worth the wait and should propel PANR back into the 90’s. That’s a multibagger from recent 45p levels. Plenty of upside ahead based on successful ops over next few weeks. Downside looks priced in but if they do hit probs with VOBM#4H, no doubt the sp will take a hit too.

Plenty of risk remains with VOBM#4 side track but company looks like it’s learned from previous ‘horizontal’ drilling which has proven to be too difficult in this environment. Vertical wells look the way to go from here on.

RNS Below:

9 August, 2017, Pantheon Resources plc

Operational Update

Pantheon Resources plc (“Pantheon” or “the Company”), the AIM-quoted oil and gas exploration company with a working interest in several conventional projects in Tyler and Polk Counties, onshore East Texas, is pleased to provide the following update:

VOBM#2H, Polk County

Pantheon is pleased to confirm that the fracture stimulation procedure (“Frac”) on the VOBM#2H well, designed to remediate near wellbore skin damage caused during horizontal and deviated drilling, has been completed.

Initial results indicate that the Frac has been successful, with the well, which is presently in the process of recovering frac water, flowing both gas and oil to surface. The Company cautions however that it is too early to make an accurate assessment as to the ultimate performance of the well until the remaining frac water has been recovered, production tubing installed and flow testing completed.

A workover rig is required to install the production tubing and this procedure and subsequent testing is estimated to take a further three weeks on a trouble free basis. Results will be reported at the conclusion of testing operations.

VOBM#4, Tyler County

The operator has been notified that the mobilisation and delivery of the drilling rig, contracted for the planned sidetrack of the VOBM#4 well is now expected during the second week of September 2017. This is due to the third party currently utilising the rig, requiring it for longer than initially forecast.

Providence discovers water

 

It’s like a summer paddling pool with a puncture. Deflated is an understatement. The first part of this summers blockbuster multi-billion exploration play has come in with nothing more than ‘water’. Very disappointing for all investors. PVR management played a blinder in getting this well drilled for ‘free’ and in fact got roughly $5m+ out of it.

It’s not over yet. There are two targets and the deeper (drombeg) target should be unrelated to the Druid target.

I would estimate another 10 days to 12 days before they get into the drombeg zone. So not long to wait.

The company has a decent cash balance and still has the billion barrel Barryroe Discovery under its belt plus a bucket load of other interesting licences to exploit. PVR is not a one drill wonder and there’s still plenty to come from this company who has shown a great deal of common sense by derisking and farming out prospects.

From the RNS today…

The 53/6-1 (pre-drill designation 53/6-A) well, which spudded on July 11, 2017, is located in c. 2,233 metres of water and c. 220 kilometres off the south-west coast of Ireland.  The well, which is being drilled by the Stena IceMAX drill ship, penetrated the Paleocene Druid prospect within the pre-drill depth prognosis having been safely drilled to section target depth.  Preliminary petrophysical analysis of ‘Logging While Drilling’ (LWD) data indicates that the Druid prospect comprises a porous water-bearing reservoir.

In accordance with pre-drill plan, operations will now proceed to assess the deeper Lower Cretaceous Drombeg exploration target, which is situated c. 1,000 metres beneath Druid.  A further operational update will be provided once the Drombeg prospect has been penetrated or as appropriate.

OPEC rumoured to have called an EGM for July 17th

Bear in mind this is just a rumour doing the rounds. But there might be some sense in it. OPEC and Russia are set to meet on July 24th to discuss further options to help rebalance the Oil market. In past meetings, Russia have made it clear that they would prefer an OPEC concensus (amongst OPEC members) prior to engaging in talks. In other words, get your house in order and make your minds up. Then come to the table and present something to us which you have full backing on.

So perhaps the meeting on July 17th is precisely that… OPEC agreeing the ‘next’ plan and gaining agreement ahead of presenting to Russian’s on July 24th?

It could also be about ‘compliance’ and the Saudi’s may want to discuss some of the June numbers with some members as they have slipped a little. The IEA published their monthly report today highlighting some issues in June. Key points summarised below:

  • Compliance with OPEC cuts slips to 78% in June vs 95% in May
  • Non-OPEC compliance 82%
  • Algeria, Iraq, UAE and Venezeula pump more than allowed
  • 2017 global oil demand growth forecast revised up by 100k bpd to 1.4mln bpd
  • Global oil stocks fell in May to 266mln barrels above 5 year average vs 300 mln in April
  • Sees hefty stock draw later in 2017 provided there is strong compliance with OPEC cuts and even if Libya,Nigeria output recovers further
  • Call on OPEC crude to rise steadily through 2017 and reach 33.6blb bpd in Q4

Now… further to the above and recent ‘draws’ that have blown the market estimates out of the water over last 2 to 3 weeks, PoO is still languishing around $45pb. It defies all common sense but the main reason why PoO is not mocing higher seems to rest with the hedge funds who are largely Net short. For the last few months they have sold into every PoO rise. Their intention is simple. They want deeper cuts. They don’t want a slow drawn out rebalance. OPEC is not listening and currently sticking to their game plan but ultimately they need the hedgefunds on board with the uplift in prices otherwise it’s just going to be a speculators playground where draw by draw means absolutely nothing. In time, the hedge funds know they cannot suppress the oil price forever as the data will deliver more signs of a rebalance in the coming weeks as Saudi’s pump less exports and concentrate supplies locally due to summer demand leaving the US short on supplies. So it’s a mexican stand off at the moment. However, if you read the tones coming from Goldman Sachs of late, they seem to think that the oil market needs some ‘shock and awe’ to jolt the hedgefunds into net longs and get the price properly moveing north and into teh high $50’s. Now… GS are known for saying one thing and doing the opposite. So don’t read too much into that. But they do have a point, unless PoO gets a strong firm catalyst, it could just drift along in the low $40’s.

So over to you OPEC members and Russia. You have the markets attention for July 24th and if nothing comes from that meeting, I suspect the knives will be out for PoO again regardless of the size of future DRAWs.

Good news for sharehub picks PVR and PMO.

Great start to wednesday morning for two of the top ten thesharehub picks for 2017. First up.. Premier Oil announced a whopper of a discovery in mexico. Whilst their interest is on the smaller side at 25%, it’s still roughly around 250mmboe based on early indications. Of course, this is early days stuff and in the absence of flow tests and pressure data, it’s hard to determine the commerciality of the discovery. That said, it’s sizable and even assuming lower recovery numbers of circa 20%, the net barrels to PMO would be around the 50mmboe range. That’s around $500m in value based on $10pb. The well is not complete yet and drilling continues so further upside / barrels can stil come from Zama-1. In bigger picture terms, this discovery is a potential game changer for PMO. The company desperately needs to reduce debt and has struggled to find a farm in partner to ease the development costs on the Sealion falklands prospect/licence. Cash strapped and handcuffed by their debt partners, PMO could sell the mexico interest ‘early’ in the exploration phase which would raise much needed cash to fund Sealion or other prospects like Tolmount. In nut shell, Zama-1 gives premier options which they didn’t have before. It has potential to heal many of the wounds the company has inflicted upon itself (namely Solan) and ease debt fears. Game changer news for PMO.

Next is Providence Resources. At last the Icemax drill ship has begun drilling the first of two prospects with multi billions of barrels being targeted. This really is the summer blockbuster drill of 2017 and should the first prospect come up dry, then no fear, as the drill bit heads lower to test the second deeper target.

The first prospect should TD in around 3 weeks or early Aug and the second much the same although early Sept more likely. Certainly one to watch and PVR’s share price helped or underpinned by their Barryroe discovery made some years ago – although the market is pricing this at next to nothing until a farm in partner is sought/finalised.

Exciting exploration news and with a bit of better sentiment in the sector coming from an expected PoO rebound in H2, the top ten sharehub picks should (at last) be getting a shift on.

Faroe announces successful DST on Brasse appraisal

Terrific news for Faroe shareholders. The 6kbopd flow tests are exceptional considering the step out far flank position of this appraisal.

Full guide to Brasse (up to date) below via company website:

Drilling of the Brasse Exploration Well 31/7-1, in the Norwegian North Sea (NO), commenced in May 2016 targeting Jurassic aged sandstones in a four-way dip-closed structure. This well, operated by Faroe, was drilled to a total depth of 2,780 metres and encountered approximately 18 metres of gross gas-bearing and approximately 21 metres of gross oil-bearing Jurassic reservoir. This reservoir is analogous to the reservoir at the Brage Producing Oil Field (Faroe 14.3%), located approximately 13 kilometres to the north of Brasse. Extensive coring, wireline logs and pressure data showed that the well had encountered oil and gas in reservoir sandstones of medium to good quality. The presence of oil and gas was confirmed subsequently by fluid sampling.

A successful side-track appraisal well was completed in July 2016; the objective was to appraise the south eastern part of the hydrocarbon bearing structure previously identified by the main discovery well. The Brasse side-track reached a total depth of 2,530 metres (MD) and encountered a 25 metre gross oil column and a six metre gross gas column. Results based on extensive coring, wireline logging and sampling show that the well has encountered oil and gas in medium to good quality Jurassic reservoir sandstones, similar to those seen in the main well, and provide important information about the reservoir distribution in Brasse. The hydrocarbon-bearing interval in the side-track well was found to be at a similar pressure level to the hydrocarbon-bearing interval in the initial discovery well.

Drilling of the Brasse Exploration Well 31/7-1, in the Norwegian North Sea , commenced in May 2016 targeting Jurassic aged sandstones in a four-way dip-closed structure. This well, operated by Faroe, encountered approximately 18 metres of gross gas-bearing and approximately 21 metres of gross oil-bearing Jurassic reservoir. This reservoir is analogous to the reservoir at the Brage Producing Oil Field (Faroe 14.3%), located approximately 13 kilometres to the north of Brasse. Extensive coring, wireline logs and pressure data showed that the well had encountered oil and gas in reservoir sandstones of medium to good quality. The presence of oil and gas was confirmed subsequently by fluid sampling.

A successful side-track appraisal well was completed in July 2016; the objective was to appraise the south eastern part of the hydrocarbon bearing structure previously identified by the main discovery well. The Brasse side-track encountered a 25 metre gross oil column and a six metre gross gas column. Results based on extensive coring, wireline logging and sampling show that the well has encountered oil and gas in medium to good quality Jurassic reservoir sandstones, similar to those seen in the main well, and provide important information about the reservoir distribution in Brasse. The hydrocarbon-bearing interval in the side-track well was found to be at a similar pressure level to the hydrocarbon-bearing interval in the initial discovery well.

Total gross volumes of recoverable hydrocarbons are estimated by Faroe as operator to be 28-54 mmbbls of oil and 89-158 bcf of gas (43-80 mmboe in aggregate).

The Brasse Discovery is located within tie-back distance to existing infrastructure: 13 kilometres to the south of the Brage Field platform, in which the Company holds a 14.3% working interest, 13 kilometres to the east of the Oseberg Sør Field platform and 13 kilometres to the south east of the Oseberg Field platform.

In May 2017 an appraisal well was drilled on the Brasse discovery which successfully penetrated the oil-water contact on the flank of the Brasse Field and encountered approximately 8.5 metres of gross oil-bearing Jurassic reservoir above the oil water contact. Preliminary results based on extensive coring, wireline logs and pressure data show that the well has encountered oil in a sand rich reservoir of very good quality and preliminary analysis confirms the same oil-water contact as in the discovery well and side-track and indicated good pressure communication within the reservoir. Accordingly a Drill Stem Test (DST) has been undertaken which provided clear evidence of a highly prolific reservoir and excellent quality sands with multi-Darcy permeability at this location with the well flowing at a constrained maximum stable rate of 6,187 bpd of oil from a 3.6 metres perforated interval, through a 1” choke. The site sampling of the fluid produced during the DST confirmed good quality light crude similar to the nearby Brage field (Faroe 14.3%), with the presence of 36.2° API oil with a gas/oil ratio of 887 scf/stb ( to be confirmed by onshore laboratory testing) Trace element analysis revealed no undesirable components and the oil flowed sand and water free for the duration of the test.

The Brasse appraisal programme continues with the drilling of a side-track well, targeting a location approximately 1,000 metres west of the current main well bore. The objective of the side-track is to map the reservoir distribution and further delinate the Brasse structure. A further announcement will be made at the completion of drilling activities including a revised estimate of recoverable resources for the discovery.

PL740 was awarded in 2015 and extension acreage PL740B was awarded in 2017.

Hurricane Energy opt for self finance on EPS

Disappointing is a word that can be used both lightly and heavily. Where Dr Trice and team are concerned, i’m afaid I view the news on Placing/Debt finance as heavily disappointing.

Had Dr Trice and team delivered a funding deal that suited ‘ALL’ shareholders, then I think it would still be ‘slightly’ disappointing. A farm out deal was always the best way to avoid dilution and mitigate the risk. Avoiding a right issue is equivalent to handing II investors a nice netry level and diluting long standing and loyal pi’s in the process. Very unfair and very unpopular. It wasn’t needed. A rights issue could have been organised. Dr Trice has had 6 months to sort the funding package out and instead investors were handed a fudged interim placing followed by a massive bout of dilution.

The problem for Dr Trice and team began with the CPR. As stated by thesharehub at the time, it was significantly below expectations in terms of the bookable 60mmboe required to secure a decent farm out deal. Instead, the CPR delivered approx 38mmboe based on the FPSO / EPS field life of 6 to 7 years. Dr Trice and co tried to look at getting the FPSO modified to perform over 10 years rather than 6. Based on today’s fundraiser, it looks like that plan failed.

Unfortunately this situation is becoming all too common in the markets. Sirius Minerals is another example whereby huge dilution was required merely to secure the next funding round. It was not done at a fair value price and whilst SXX has recovered some of the ground lost, the upside potential has diminished. HUR investors are not split into two types. Those that have size/scale to profit from smaller growth projections and those that have had their holdings diluted and growth projections reduced. With 2 billion shares in issue, it’s going to be a long time (18months+) before HUR can justify a market cap of £1bln or 50p a share.

For long term holders, it’s certainly a stock worth tucking away and revisiting in a couple of years. But for near term investors who like cash investments to convert to profits via growth shares, it might be time to exit HUR and look for the next growth opportunity which will deliver over the next 6 to 12 months. I suspect if you exited HUR and came back in 12 months time, you’d probably find the share price has barely moved.

Hurricane Energy is part of thesharehub top ten for 2017.