Another upgrade from Tristone today going from a PT of 11p in early July to 27p today.
Says that the 7 wells in Algeria have the potential to derisk 56p of Risked ecploration NAV.
The emphasis here (what attracted me to them in the first place) is the very strong finances which will cover all explo costs in Algeria an dItaly even if Iberdrola dont exercise their option to take a 9% stake in one of PCI's assets for payment of a further $55m.
Worth remembering the neighbours in Algeria are Total with 8TCf of Gas and 840 mm blbs. Also BP with 5TCCf and 260 MM Bbls. Tristone give a P10 for Ain Tsila of 5TCF and 113 MM bbls for HTT and ISAS. The key question is not whether there is gas, but whether a commercial flow can be achieved (estimated by PCI as over 5 MMcfd). This is tight country and, as mentioned in previous posts, the key is to target the natural fractures, hence the use of the Wide Azimuth seismic that BP employed to great success on their territory.
Now, I dont like Algeria for the troubles that Sonatrach cause but this seems limited here given their participation and fairly good terms. The backignof Iberdrola also helps. So its a very strong cash position drilling a seond well - due to finish about now (first well completed but the two will be tested in Sept) of a 7 well programme and with some very attractive acreage elsewhere, especially in Italy.
The plan is for rigless testing allowing the rig to drill and move so completing the last fo thew 7 well end of Jan or into Feb. Clearly the first test result on the AT structure is key. Getting a commerical flow rate will be very significant. If not, all is not lost but it will hurt sentiment.
Also Two wells in Italy in 2010/11 and 2 wells in Tunisia following the farm out also in 2010. Note that these are just over the border from the VLibyan block 47 that proved a big success for Verenex (terms are somewhat better than in Libya though) One of the prospects was drilled back in the 50s with two poorly located wells. One went into the flank and one missed the structure. The flank well discovered oil. PCI also drilled ST in 04 but had to release…
