The Oil Man: President Energy, Ascent Resources, Far Ltd

WTI $54.54 +24c, Brent $60.62 +13c, Diff -$6.08 -11c, NG $2.93 +4c

A sluggish start yesterday for the oil price; the inventory stats were fine, but the API had taken the kudos the day before, so it was a bit like after the Lord Mayor’s Show. Having said that, both the KSA and Russia talked the talk in comments and interviews, and there is clearly serious intent to maintain $60. With a couple of noticeable refinery outages in the US and the UK it was as much a product price led rally later in the day.

Yesterday evening was crucial in the finances for Venezuela as the $1.1 billion payment by PDVSA was due as mentioned here a few days ago.

In a televised broadcast, the President said that this one would be paid today, but that’s all folks. Now the country is going into voluntary debt restructuring which could mean anything….

President Energy

Yet more information from President Energy (PPC), as the company announce a significant upgrade to Prospective Resources in their Puesto Guardian concession and the Matorras and Ocultar licences in the Salta Province of Argentina, all 100%-owned and operated by the company.

The potential scope of these upgrades has led the company to start a farm-out process for the Matorras and Ocultar licences as this will ‘fast track’ exploring the major potential of these prospects and increase shareholder value.

The findings mean that Aggregate Paleozoic gas/condensate prospects net to PPC are mean unrisked prospective resources (MUPR) of over 7 TCF of gas, with an upside of 20 TCF and 185 million barrels of condensate.

In addition there are new unreported Cretaceous oil prospects of over 40 million barrels MUPR identified in the area.

Chairman Peter Levine said in the announcement that “President, as a profitable producing company, remains clearly focused on positive cash flow, profit margins and materially expanding our production base both organically and by way of acquisition”.

With Argentina becoming increasingly popular for inward investment at both major company and mid-cap level, there is little doubt that the portfolio assembled by President has significant value and accordingly the shares are still very much undervalued.

Ascent Resources

Ascent (AST) has announced this morning that export production from the Petisovci Field in Slovenia to INA in Croatia has commenced. With the addition of the Pg-11A well today it will be fully up and running.

Next up the company are planning re-entry and completion of existing wells to increase production. The situation is made better by the fact that INA will take as much gas as AST can provide thus nullifying the need for finding new customers.

They company raised £1 million last week on primary bid as the INA contract took longer to complete than they had expected, but with revenue now coming through they are suitably financed.

Should the IPPC decision go their way, there is further good news around the corner. I met with Colin Hutchinson earlier in the week and am convinced that he is handling all the processes extremely well, and that AST should move a good deal higher, part of that process has started this morning.

Far Limited

I met with Cath Norman of Far when I was in Cape Town last week and I can confidently say that things are going very well in all their areas of operation.

The situation in Senegal has been discussed many times and whilst arbitration is under way there is little more one can add.

All I would say is that clearly the market hasn’t appreciated the value in the company that it has, for example, attributed to Cairn (CNE) and that this will come out at an appropriate event in the future.

Whether this is the arbitration or something different I can’t say, but surely it will.

For what it’s worth I am as convinced as ever, if not more so that Cairn is seriously considering selling all or part of its 40% stake in the project. Indeed, this may already be underway.

The reason I say this is that, whilst Cairn is still the operator, it has in its gift, or whoever buys that stake, the significant possibility of passing on that to any potential buyer.

Should that buyer be a super major then, perhaps with the Far 15% stake added to it would give a majority in JV decisions. If I was advising them, with so much interest in the region I would consider it to be a value that would go once the operatorship transferred to woodside as currently envisaged.

To give an idea of potential upside for Far, I understand that Cairn would only sell if the offer was just too good to be unturndownable…

Away from Senegal it is worth remembering that Far has an 80% stake in a potentially huge prospect in The Gambia which will be drill ready in 2018 and where Far has done a lot of the leg work already.

Here where the data room is open the company can offer farminees the opportunity to get in at the ground floor on what might be another Senegal, who knows, may be even bigger.

With the 80% stake Far can tempt majors with a big stake and of course the operatorship in a country where the new Government are very much open for business.

Shareholders in Far have been patient way beyond most would expect and you couldn’t blame them for abandoning ship things have taken so long.

However, I would seriously advise holding on as I think that the next few months will vindicate that patience and reward by what should still be a multiple and that is just in Senegal, in the Gambia they may yet have another….

And finally…

The Toffees fell out of Europe last night, but to be honest they haven’t seemed committed to the Boropa Cup from the outset. Whereas the Gooners have and are now in the last 32 and look as good as any other side in the competition.

This weekend sees two standout ties both on Sunday, the Noisy Neighbours take on the Gooners and Chelski will welcome back Jose with the Red Devils. Spurs host the Eagles, also on Sunday whilst tomorrow sees the Hammers hosting the HubCap Stealers, high flying Burnley going to the Saints while the Cherries have a long trip to the Magpies.

There is some fantastic jump racing as well this weekend, the Charlie Hall Stakes at Wetherby sees the return of a number of favourites including Cue Card and Coneygree. There is also a good card at Ascot with a few old favourites making seasonal reappearances.

Finally, the Ba Baas take on the All Blacks which should see many points on the board.

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

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.

Source.