The Oil Man: Amerisur, Faroe

WTI $63.51 +50c, Brent $68.12 +48c, Diff-$4.61 -2c, NG $2.70 +2c

A modest bounce yesterday with the Russian Oil Minister suggesting that they will discuss long term cooperation at the upcoming ministerial talks. Equities bounced which took commodities with them and Bloomberg announced that March OPEC production was at a years low.

The API stats after hours were mixed, the headline draw of 3.28 million barrels was better than the expected build of 2 million but the build at Cushing was perceived as worse and oil is slightly weaker this morning.

Amerisur Resources

A number of announcements out from Amerisur (AMER) this morning, whoever said that news was thin on the ground? An operational update says that the first complete tanker of 350,000 barrels of crude loaded on 22/3 and was sold to Shell (RDSB).

Elsewhere the most interesting news is that a rig was mobilised to Pintadillo-1 to test the first of the  ‘N’ sands anomalies, should this be successful three wells will be drilled back to back, the well is targeting estimated P50 resources of 11.44 million barrels of oil which would be success indeed.

The Miraparriba-1 well on PUT-8 should spud early May as the exciting well programme rolls out, this will likely include Indico-1 on CPO-5.

Monthly production averaged 6,476.5 barrels per day with a peak of 6,647.5 barrels per day and exports through the OBA were 5,544.8 barrels per day and a peak of 5,809.2 barrels per day.

Reserves were slightly down due to production and two poorly performing wells but offset by success at Mariposa and Mecaya.

Overall things are going very well at Amerisur and with crude well over $60 cash flow and revenues are good and there is still substantial upside potential from an exciting exploration programme.

Faroe Petroleum

Good news also today from Faroe (FPM) who announce ‘significant’ discoveries at Hades and Iris in the Norwegian Sea.

At Hades there is a 35 million gross column within the Cretaceous Lange Formation of which 15 metres are net reservoir sandstones of moderate to good reservoir quality. Preliminary gross volumes of recoverable hydrocarbons for the Hades prospect are estimated to be 19 – 113 million barrels of oil equivalent, exceeding pre-drill estimates.

The Iris well directly below, encountered a “218 metre, high net-to-gross sandstone interval, within the Jurassic Garn Formation, containing a 93 metre column of gas/condensate” within the column the reservoir is thought to be 85 metres of sandstones of “moderate to excellent quality”.

Here recoverable hydrocarbons are thought to be in the 19-132 million barrels of oile range, also exceeding pre-drill estimates.

The discoveries are conveniently located near to infrastructure with the Morvin Field eight km away and the Asgard complex 20 km distant. Exceptionally good news from Faroe who yet again have exploration success, sometimes from acreage that has been in the portfolio for some considerable time.

Such success has caught the eye of DNO who have paid well above market price (125p) for a 15.37% stake in the company previously owned by Delek Group who have also done very well out of their investment.

This is like Ithaca (IAE) all over again pretty much as predicted when Delek took the stake although this time they arbed the holding on.

It is also exactly what I have been saying of late with respect to the oil sector valuations, if the price in the stockmarket is lower than it costs to go drill for the stuff you dont need to be a rocket scientist to know what will happen.

DNO say they are there to “support the Faroe management”, the last time I looked Faroe management didn’t look like they needed any “support”, this is a Trojan horse if ever I saw one…

And finally…

The only thing to concentrate on tonight is the Champions League match at Anfield where the HubCap Stealers take on the Noisy Neighbours. The scousers are one of the few clubs to have beaten the Mancs this season and with Aguero injured there is never a better chance to strike.

And that Ronaldo goal…

Malcolm Graham-Wood is an independent oil industry expert and freelance contributor, not a direct employee of Interactive Investor.

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