WTI $55.93 +2c, Brent $59.86 -$1.20, Diff $3.93 -$1.22, NG $3.62 -10c
A lot of economic stats today led by the Fed Monetary Policy this evening, apart from that the UK has unemployment data and the MPC minutes as well as a bunch of Euro numbers to inspire Super Mario. Also on numbers we had the API inventory data after hours last night, yet again the teenage scribblers exceeded themselves going for a draw of 2.4m barrels when the actual number was a build of 1.9m. Two more stats for those who like them, the US produced 9.12m b/d in the week to the 5th December, the biggest number since the EIA started monitoring the number in 1983 and they also say that on average, US households will spend $550 less on gasoline in 2015 compared to this year, so get the calculators out you economists…
A pre close season operational update from Chariot today and speaking to CEO Larry Bottomley this morning the mood is surprisingly upbeat. But then Chariot is in a pretty strong position and well placed to participate in what might be a period of significant consolidation in the sector over the next year or two. At present Chariot has $42m in cash and expects another $13.5m in from partners next year all being well. Now obviously that figure is only of interest if you know what the cash burn is and that guidance won’t be available until the analysts jamboree in February, but we do know that Chariot has pretty low commitments and if Woodside were to exercise their option in 2Q 2015 then they would be fully carried in the Rabat Deep in Morocco.
Chariot is looking to ‘find additional partners’ in most areas it operates in, for example, having done a smart deal to relinquish and re-licence in Namibia it has eradicated current commitments and is now behind others in the queue to drill which should go some way to de-risking the play without further cost to Chariot. Thus they can speak to the companies who were interested in partnering before and also to re-open the data room into the bargain. Actively seeking partners/farminees in Mauritania and Brazil will eventually reward the company’s patience and it should be noted that costs are down dramatically, in Brazil the seismic bill has fallen from $25m to $7.5m through a combination of cost savings and carry. As the company says, there may be fewer dollars around but those that are are going a lot further, in some places the cost base has ‘collapsed’ in the sector. A side effect of this is that Chariot is seeing ‘a tidal wave’ of opportunities coming through the doors, some of which might add value but will only be pursued if they meet the strict value creating targets in place.
Chariot is on the list of companies that tick most of the boxes needed in this market, it has cash and the ability to control when and where it spends it, it is carried in most of its projects and with long licence periods and now few commitments can to a large extent control its own destiny. Finally, with the size of the fields it is associated with it should be able to be amongst the lowest cost producers in the industry, most important at sub $60 crude oil.
Confirmation of Ministry approval in Tanzania for the Solo deal means that the first part of the transaction can now go ahead and Aminex will sell 6.5% for $3.5m as already announced. Due to the delay the option to buy the other 6.5% will now be extended to 30th January 2015.
No great surprise to be wiped away by Sri Lanka in the cricket yesterday and losing the series 5-2, quite lucky to get two really, wonder what it would be like if the selectors picked the best team instead of their mates?
In the Clueless Cup last night Chelski beat Derby easy enough but the Blades pulled off a good win against the Saints, for whom the miserable run continues. Tonight sees Spurs host the Magpies and the other QF sees the HubCap Stealers going to Championship leaders Bournemouth which should be simple enough….
Finally in football, in the FA Cup last night Yeovil beat Accrington Stanley to set up a home tie in the 3rd round with Man Utd….
Lots more enquiries about the lovely Mr Whittock, I have an address to send cards etc but wont publish here, drop me a line and I will furnish the details.