Written by:
12/29/2010 11:53 PM 

Following my update only 5 days ago, Nido Petroleum have announced the abandonment of their Tindalo well in the Philippines, citing water production issues. This comes only days after an announcement stating testing was ongoing and that production fluid was being flowed in order to test flow rates adequately. Unfortunately it seems it wasn't only production fluid that was flowing. Testing showed reducing flow rates and high water-cut reducing oil production.

Following the testing of the well, the JV have determined Tindalo to be uneconomical and have are initiating shut down and abandonment of the well. A decision regarding the use of equipment is yet to be made, bearing in mind the JV exercised their option over the equipment with high daily costs associated (options remain open, most likely choice being a move on to Yakal in SC54).

This news is no doubt devastating to long standing and patient shareholders, who after reading Nido's announcement only days ago, would have hoped the worst of Tindalo was over, and that the cash flow they had been anticipating would finally eventuate. Again as per our last update, Gindara is still has the potential to be a company changing prospect, but cash flow issues (funding Gindara and Galoc Phase 2 development is on the horizon) and the disappointment surrounding Tindalo may result in quite a rocky share price in the near term. Given the existing production from Galoc, the share price should form a base, albeit possibly at a lower level than the 12c level we have seen in the past. What price that is remains to be seen, but exaggerated share price movements may result in good entry points for those looking for a nice risk and reward play. Nido Petroleum certainly remains on my watch list.

Disclaimer: This article/blog should not be considered investment advice and no investment decision should arise based on the information published above. Always seek the advice of a licensed professional before making any investment decision.

Trackback Print

Tags: oil , nido petroleum , Tindalo

Categories:

Location: Blogs YourWealthWatch Blogs - Dave Press Stocks

Your name:
Your email:
	(Optional) Email used only to show Gravatar.
Your website:
Title:
Comment:
Add Comment   Cancel