December production posted:
12/01/2015 1422681 0 0 SAINT MARTIN
11/01/2015 771796 0 0 SAINT MARTIN
Dec production averaged just under 46MMCF/day. Not too shabby. Let's see if this holds up in the coming months.
Update on Highlander from FCX today confirms our understanding:
Inboard Lower Tertiary/Cretaceous. FM O&G has a position in the Inboard Lower Tertiary/Cretaceous natural gas trend, located onshore in South Louisiana. During November 2015, FM O&G completed the installation of additional processing facilities to accommodate higher flow rates from the Highlander well. In December 2015, gross rates from the Highlander well averaged approximately 44 MMcf per day (approximately 21 MMcf per day net to FM O&G). FM O&G is the operator and has a 72 percent working interest and an approximate 49 percent net revenue interest in Highlander.
Thanks for the insight jd!
My take is Ag commodities are cyclical, with weather, acres planted, crop efficiencies (fertilizer, enhanced seeds, etc.) and price the main factors impacting the supply end of the equation. The demand side is pretty steady - with a gradual uptrend due to population growth. Currently, we are in a pretty deep down cycle in Ag commodities due to over supply. Like oil & natural gas, the current low Ag commodity prices are below equilibrium to sustain supply (and much of the information you provided tends to support that). Therefore, I think the current down cycle will, in time, turn up. As always, the timing of the eventual upturn is the million dollar question.
I think the way to play Ag from an investment perspective is to start accumulating Ag commodity futures - such as using DBA, RJA, WEAT, CORN, JO, SGG. Then, wait until the next up cycle in prices. For instance, RJA is currently hovering around $6, it usually trades in the $8 - $10 range when Ag prices are "normal" (i.e. equilibrium). Once the underlying Ag prices go up past equilibrium (next up cycle), then switch from the Ag commodity futures to Ag suppliers such as fertilizers as they tend to lag the Ag commodities in the cycles.
I think that it is because NG went up and the medium term weather forecast is looking colder than it was a few days ago. I hold both SWN and RRC. RRC had a nice day as well.
Thanks rk! I did not know that EXXI reported that. I went back and found it in their 11/9 qtrly conference call transcript. In that same transcript, Schiller states that they expect it to gross 45 MMcf/day once the additional amine unit is online. That would explain the Nov prod numbers being the highest month so far.,
Look forward to seeing the Dec prod numbers when they come out in Feb. If the well can produce 40 MMcf/day for a number of months without decline, that would put the reservoir in world class territory. If they can get that and higher NG prices ($4+), I would think they may start drilling development wells at Highlander.
I don't own any GULTU, but do own some BLMC in an IRA (I think BLMC is a better pure play on Highlander than GULTU).
A few things to note:
1) The Timing of when they add the additional amine unit will impact the monthly prod numbers. They have stated "by the end of 2015" in past communications. So, if they finish late Dec vs mid Dec vs early Dec vs late Nov will impact the reported #s. This being said, the Nov number was higher than all prior months - so they may have finished late Nov.
2) Given #1, we may not know the full month prod impact until the Jan #s come out in March. If they did get the additional Amine unit up and running towards the end of Nov, we may see it in the Dec #s in Feb as you suggest.
3) I thought the stated max prod after the new Amine unit is finished was 49 MMcf/d???
I believe you are talking about the Vernaccia well, correct? If so, a few thoughts/facts on this well:
1) The well was operated by ENI, who had the majority WI. Stone's WI was 22% and only had to pay 4% of the costs.
2) Even though ENI did not put out the dry hole news, it was reported a few weeks ago. ENI is an Italian based company so the news did not get much press here.
3) Had the well been successful, it would have been a nice positive for Stone as they would have tied it back to the Pompano facilities. So, they would have gotten their 22% WI share of the product as well as Pompano processing revenue. A key to their strategy is to get the Pompano facilities processing near capacity which provides big economies of scale. However, it was not a "make or break" well that SGY "decided to go all out on its own".