WTI $75.64 -18c, Brent $79.31 -10c, Diff $3.67 +$1.95, NG $4.34 +32c
Traders tell me that physical markets will remain quiet ahead of the Opec meeting next week, with that meeting happening on Thanksgiving Day and the thinly traded Friday afterwards anything might happen. There are all sorts of stories doing the rounds about Oil Ministers trying to cut deals but the only one will count will be in Vienna next Thursday so dont expect too much.
Libya is still a fair bit short as the El Sharara field isnt back up yet but the EIA report that US crude and condensate production was over 8.6m b/d in August the highest since 1986. At the pumps US consumers are now only paying $2.89 a gallon, down 4.7 cents on the week, 32.5 cents year on year.
It is becoming clear that a full agreement is becoming more likely between Iraq and Kurdistan on a potential oil policy settlement that may lead to an agreement on oil exports and revenue sharing post the temporary export deal announced last week. Under that deal, Iraq will receive oil from the KRG via its exports through Turkey as Botas will allocate oil to SOMO’s storage tanks at Ceyhan. In return the KRG will receive payment from Baghdad thought to be $500m at present.
I plan to write up a few words on Genel post the recent Capital Markets Day and will try and get a more definitive view on the agreement by then, also Tony Hayward is speaking at the Oil Council Assembly as I speak.
Yesterday’s first sessions at the Oil Council’s Annual World Assembly were as always well attended and comprised of excellent speakers with collaboration at the forefront of every speech. Its interesting that at a time of lower oil prices the industry starts to pick up and realise that maybe it has been overspending in the good times. Certainly I got the message that the industry gets used to big fluctuations in the oil price every now and again and intends to use this one to get costs under control, perhaps easier said than done. The NOC’s and IOC’s were all mainly upbeat and even Petrofac and MOL were still pretty positive. For someone like MOL with a strong balance sheet and who is inevitably a buyer in these markets one can even actually be quite bullish. Later presentations on East and West Africa were unsurprisingly upbeat and Keith Hill of Africa Oil gave yet another superb performance with slightly less ammunition than last year.
The conference continues today and with the Gala Dinner tonight is the Annual Awards Ceremony which is always the highlight of the year, late blog tomorrow…
The first thing to say about this deal is that its not being done on the cheap, the premium is higher than I would have expected and the big red share price indeed went well red. Most of what I speculated on yesterday will prove accurate, savings of $2bn a year are probably conservative and disposals will mean the sale of around $7.5bn worth of revenue but the regulator will be the biggest issue. With the big three becoming the big two, the approval may take some getting as the combined market share in some processes will be astronomical, too high even for a free market economy. The knock on effect for other service companies will be mixed, sure some will be squeezed out by this action but remember, if you have to get three quotes for a piece of work then someone else will now get on the list.
I said yesterday that Salamander should take CEPSA’s hands off given the bid they made appeared to be ridiculously generous, it seems that that offer had a very limited time limit which has already expired. Apparently they are withdrawing their off ‘after holding talks with Salamander’ so what on earth transpired in that meeting? We may never know but if I was a holder of Salamander of any size I would want an explanation of why another bid for the company has gone west. So, what happens now to the process, is the Sona deal still what the company want most, assuming it is still on the table or will there be a quick trip round to Ophir to see if Nick hasn’t already been put off by all these shenanigans?
Aminex has put out an IMS this morning confirming all the good news that they have been accumulating in recent months. The company are fully funded to production in H1 2015 when Kiliwani North reaches first gas and they have completed the seismic on Ntorya which will provide further good news I expect.
An injunction to stop drilling at the Badada-1 well onshore Kenya has popped up this morning but I suspect it is a little local difficulty rather than a major league problem. Looking at the line up on Tower’s side of the case shows assorted heavyweight Kenyan Cabinet Ministers including the Minister for Petroleum, the Cabinet Secretary and the Attorney General to name but a few so expect this to be sorted before long.
San Leon has announced the spudding of the Gieraltowice well in the Karpaty area of Poland today, one of these wells needs to come in as its year 4 of a 5 year programme…
With all the goings on at the bigger end of the US oilfield sector it will be interesting to see how Enteq get on, todays results are in-line with expectations and the company sees the recent oil price fall not yet affecting the North American rig count or demand for their equipment. Internationally Enteq are stepping up sales to China and the Middle East which may prove a useful balance against the US focused business.
The infernal break goes on with a series of friendlies that include Ireland playing the USA and of course Scotland playing England at Celtic Park. I suspect that this may be a bit more than a ‘friendly’ and Premiership managers will want to see their little treasures on and off quickly before they get booted into row Z…
And we are turning back to cricket as the England team head for Sri Lanka where they will play a series of games starting at the weekend as a prelude to the world cup. I note that last week Rohit Sharma scored 264 on his own in a one day game and i’m just trying to think who might do that for England, ah yes I remember and I think he”s signing books at the moment…