Saints & Sinners: Oil & Gas
Ithaca Energy (LON:IAE) jumped 6% to 116p during afternoon trading after the company said initial peak gross oil production rates from the Athena field of 22,000 barrels of oil per day ("bopd") (4,950 bopd net to Ithaca) as metered into the BW Athena's storage tanks. Oil export operations have commenced. The flow from each of the four oil production wells is being supported by electrical submersible pumps, the operating parameters for which are being monitored to stabilise long term production rates. Water injection will be used to support the reservoir pressure of the field and thereby maintain and sustain production rates. An initial cargo has already been offloaded from the BW Athena to the shuttle tanker "Betty Knutsen". This and future cargoes will be transferred to Ithaca's Nigg oil terminal from where Athena crude will be sold to the market under the Company's marketing contract with BP. At current oil prices, the project is anticipated to achieve payback within twelve months.
Lochard Energy (LON:LHD) pushed 8.5% to 9.625p at the mid-price on the back of the Athena production update. Clive Carver, Non-Executive Chairman of Lochard said "First oil from Athena is a significant milestone for Lochard Energy, particularly as it was a field that was originally generated in-house by the current Lochard geological team led by Mike Rose. We are pleased with the initial peak gross oil production rates from the Athena field of 22,000 barrels of oil per day (2,200 bopd net to Lochard). We have a diversified portfolio of North Sea assets which we believe show similar potential and we look forward to progressing more of these fields to similar successful outcomes."
Tullow Oil (LON:TLW) moved 3.5% better to 1490p after the company said that the Paon-1X exploration well in the CI-103 license offshore Cote d'Ivoire has intersected good quality light oil in a Turonian fan system. Paon-1X is the first deepwater exploration well drilled in the CI-103 license and has encountered 31 meters of net oil pay in a gross interval of 74 meters of turbidite sands. Pressure data indicates that this interval contains a continuous hydrocarbon column and samples show that it is a light oil of 41 degrees API. Further analysis is required to determine reservoir quality and the extent of the fan system. Following completion of logging operations, the well will be suspended for possible future use in appraisal and development operations. The Eirik Raude dynamically positioned semi-submersible rig drilled the Paon-1X well to a final depth of 5,090 meters in water depths of 2,193 meters. Tullow--45% operates the CI-103 license and is partnered by Anadarko Petroleum--40% and the Societe Nationale d'Operations Petrolieres de Cote D'Ivoire-Petroci--15%. The company looks forward to further drilling in CI-103 during 2013.
Volumes in Sefton Resources (LON:SER) have been catching the eye over the last few trading sessions, with over 28 million shares changing hands yesterday, and over 21 million shares trading before the end of lunch today. We will be watching this one closely over the coming sessions to see if it can break the 2p level.
Range Resources (LON:RRL) continued its bullish run of form, adding another 8.5% during early trading to trade at 7p. The shares have been chased higher over the last 24 hours after the company announced that drilling operations on the Shabeel North well in Puntland, Somalia has commenced. adding that the planned target depth of the well is 2,400 meters and drilling is expected to take 45 to 60 days to complete.
Nostra Terra Oil & Gas (LON:NTOG) surged 16% to 0.58p at the mid-price during afternoon trading as investors started to jump back in ahead of another potential update on drilling at Bale Creek. Reading through the last update Alden McCall, Chief Operating Officer of Nostra Terra said "There are three critical stages in the drilling of horizontal wells that can present particular technical challenges. The first of these is to build the curve from the vertical portion into the horizontal leg. The second is to keep the drill bit within the targeted pay zone for 2,000 feet or more of drilling. The challenge of the final stage is the process of "completing" the well to bring it into production. While the first horizontal well in Warrior proceeded according to plan, we encountered delays in drilling the first horizontal well at Bale Creek. The drill string became stuck several times. This required re-drilling of a section of the well just at the beginning of the curve, which inevitably slowed our progress. We learned from this experience and modified the drilling plan accordingly. We are pleased that the first two horizontal wells have been drilled successfully and that the third is underway. We look forward to updating on further progress and announcing the results of all three horizontal wells in the coming weeks." Now this update was on the 17th of May, so the market should be expecting an additional update any day now. We will be watching the newswires closely.
Magnolia Petroleum (LON:MAGP) have been a fantastic market over the last few week of trading, pushing from 1.2p up to the recent high of 2.775p, so it was no real surprise to see a few traders taking profits today. The shares slipped by 3% to 2.3p during lunch, albeit on very thing volume. Once the volume picks back up it would be no surprise to see the bullish run continue, as for a small oil company to be working alongside ExxonMobil and Chesapeake, should be enough to keep investors glued to the newswires looking for additional updates.
Gulfsands (LON:GPX) jumped 11% to 91.5p during afternoon trading, albeit on very thing volume of just under 100,000 shares. The market as not been the best of friends with this one for some time now, for obvious reasons, as they have major operations in Syria. The company has been diversifying its asset base into Tunisia, and recently said drilling operations at Sidi Dhaher No. 1 (SDHR-1) well is expected to commence on May 31 following the completion of safety and operational audits. ADX Energy Limited, operator of the Chorbane License onshore Tunisia, has completed the final safety and operational audits of the drilling rig and related equipment that will be used during the upcoming production testing program on the well. Testing program is taking place in a well that has previously been cased and suspended in anticipation of a subsequent production test, this will be a multi-stage operation with expected time duration of approximately three weeks. Gulfsands has a 40% interest in the Chorbane permit and in the event of a commercial success with exploration on the Chorbane permit, Gulfsands will be entitled to become the operator of the Chorbane permit.
Saints & Sinners: Mining
Cluff Gold (LON:CLF) were pretty much unchanged at 70p after the company reported first quarter results that said it is retaining its 2012 production guidance of 60,000 to 70,000oz. Revenue in three months ended March 31 $23.6 million (2011: $26.4 million) Pretax profit $1.4 million (2011: loss $509,000) Ebitda $5.31 million (2011: $463 million) Operating profit $1.41 million (2011: $563,000) Diluted loss per share $0.89 (2011: $1.10) Cash and cash equivalents at end of period $53.4 million (2011: $22.4 million) 1Q production at Kalsaka in line with management expectations at 12,504oz. Says cash margins sufficient to fund business development.
URU Metals (LON:URU) pushed 13% higher to 5.25p at the mid-price after the company said that it has received positive NI 43-101-compliant preliminary economic assessment of the Zebediela Project, one of two sulphide nickel projects currently part of the South African Nickel joint venture. The preliminary economic assessment or PEA of the Zebediela Project projects a pretax and pre-royalty net present value of $1,018 million, an internal rate of return of 25.7% and a 3.8 year payback period at an 8% discount rate. Indicated resources stand at 485.4 million tons at a grade of 0.245% Ni with additional inferred resources of 1,115.1 million tons at a grade of 0.248% Ni. Using indicated resources only, a proposed open-pit mine is envisioned with a 25 year mine life producing 56,600,000 lbs of recoverable nickel per annum. The project is projected to a lowest-quartile cost nickel producer. Substantial opportunities are available to the South African Nickel Joint Venture (SAN JV) to increase the project value through resource accretion and the addition of a magnetite concentrate revenue stream.
Connemara Mining (LON:CON) jumped 25% to 11.5p during afternoon trading on almost 5 times the average daily volume for the stock. Reading through some of the old updates I found this little snippet from the update on the 16th of May "that an airborne survey targeting gold deposits over a block of five company licences in the Wicklow/Wexford area of Ireland has been completed, and said the results are expected within six weeks, after which the next stage of exploration will be decided." Possibly the market is expect another update shortly? We will continue to watch this one closely over the next few sessions for any signs of an update.
Red Rock Resources (LON:RRR) surged 25% to 2.2p during afternoon trading, on just over 4 times the average daily volume before the end of lunch. Possibly the market has started to align itself ahead of this little snippet from the last update "A logistical and drilling strategy has been devised to maximise the length of the field season, with drilling expected to proceed from early June to end September."
Caspian Holdings (LON:CSH) pushed 10% to 0.45p at the mid-price during afternoon trading on decent volume. Looking through the last few updates I found this "Caspian is currently drilling hole 4 out of five holes in a 1,500-metre diamond core drilling campaign to appraise extensions to the La Parrilla orebody, which is targeting an open zone to the west of the existing open pit. To date, a total of 1,172.80m has been drilled. Hole 3 has been completed and the Company awaits assay results." Possibly the market is expecting the assay results announcement imminently?
From the trading floor
Today the Bank of England held the benchmark interest rate at 0.50% today and that helped push the FTSE 100 Index 107 points higher to 5491 (1.98%) on volume of 480 million as the US bell rang for the open. The FTSE AIM All-Share Index was 0.63% higher on volume of 618 million shares.
Gold - ↑Trading at $1622, up $4 (+0.23%)
Silver - ↑Trading at $29.54, up 12c (+0.37%)
Copper - ↑Trading at $7560, up $67 (+0.88%)
Zinc - ↑Trading at $1898, up $2 (+0.08%)
WTI Crude - ↑Trading at $86.94, up $1.93 (+2.27%)
Brent Crude - ↑Trading at $102.35, up $1.72 (+1.71%)
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