WTI $40.74 -$1.01, Brent $43.61 -45c, (New contract Jan $44.47 -72c), Diff $2.87 +56c, NG $2.36 +10c
What was a bad week for the oil price, with WTI falling $3.55 and Brent $3.81, ended with the terrorist action in Paris on Friday night. It would be easy to say that this has heightened the geopolitical environment, and it is no doubt true that military action will step up in the area, but for the time being nothing has changed on fundamentals. The key numbers for the crude market are quite simply based on an oversupply of oil at a time when demand is flimsy at best. The IEA report was the last to come out on Friday and whilst it showed a bigger call on Opec of 31.28m b/d, and also bearish on non-Opec supply growth, these alone do not a bull market make.
The Baker Hughes rig count was down 4 units overall but oil actually rose by 2, again nothing to change much and oil fell and at these levels the chartists who have been getting quite excited are no longer so frisky. Indeed, from holding on to bullish trends they have fallen through moving averages and are looking pretty exposed. My technical guy is now most worried about levels of around $38 for WTI and $42 for Brent, not a million miles away. G20 in Turkey may well actually be of some use, see Marcus Ashworth for a good analysis of the situation paying particular regard to the position of Putin who may just be the key piece on this particular chess board.
Not much to report from the Ithaca 3Q numbers which are out today, there is a conference call at noon and I will report anything back from that in due course. Production is in line with guidance at 12,355 boe/d and the 12/- target remains in place, hedging gains continue to be made and are in place until June 2017. Unit opex is $33 per barrel, down 40% and will fall to $25 when Stella comes on. With capex and net debt falling and a new investor on board, the outlook is good and assuming that Stella does actually come to the party next summer Ithaca will remain right up there as a preferred stock on the list.
Premier has announced that it has sold its Norwegian business and all its assets to Det norske oljeselskap for $120m. This deal seems rather neat to me as it pays down debt, gets out of Vette which was unlikely to be sanctioned anytime soon and leaves management able to concentrate on core geographies and projects. My positive note on the management last week was well received but there is a nagging doubt on Solan that just doesnt go away. I have asked for a catch up with company management in the hope that this can be settled or at least explained to a rank amateur like me!
Rockhopper confirms today the news that it indicated last week that first gas has flowed at Civita. Starting at 12,500 scm/d and rapidly building up to 25,000 scm/d (equivalent of 160 barrels of oil a day) by the end of the month this is further good news for the company’s operations in Italy. Coming hard on the heels of the successful completion of the side-track at Guendalina, the combined production of the two assets will be over 100,000 scm/d (700 barrels of oil) and at current gas prices and exchange rates bring net revenues to RKH of circa $9m in 2016. This is the company’s first operated field development and was completed on time and on budget and provides a useful part of the growing Mediterranean portfolio as well as a valuable financial contribution to the coffers.
Petrofac has announced another contract win, they have been awarded the EPC work for the sulphur recovery plant at the Fadhili gas plant by Saudi Aramco. Whilst no value has been attributed to the contract (industry press reports of around $1.7bn are probably reasonably accurate) it it is another useful addition to the order book in the KSA and will calm investors nerves in what is still a very difficult sector.
Andes Energia has announced a collaboration agreement with Canacol Energy whereby Canacol buys 49% of Andes’s stake in Interoil. This is a good partnership for Andes with a leading E&P player in Colombia and bodes well for the future. I am a big fan of Andes Energia and its management and wrote recently about how it will benefit from political change in the country. It is worth checking out the chart comparison between them and YPF which is normally very close, in the last month, on the political news, YPF is up 35% whereas AE is flat, someone hasn’t spotted the huge advantage to the company of a new Government…
And it’s that time of year again as the Oil & Gas Council host World Oil & Gas week in London. Already underway, as over 1,000 company executives attend to listen to over 100 presentations and also catch up over three days (and nights…) concluding with the Awards Dinner on Wednesday.
International weeks are usually a proper waste of time but not tonight for the ROI who entertain Bosnia Herzegovina in the second leg of their crucial play-off tie. 1-1 in the first leg with the important away goal makes the Irish the favourites to join most of the other home nations in France 2016.
It’s time for Muzza to step up and this afternoon he starts the ball rolling with his group match against David Ferrer.
And for Rosberg he gets a few points in Brazil, funny how he has stepped up to the plate just when it’s too late…
In the NFL,
The Detroit Lions stunned the Packers at Lambeau Field to win only their second game of the season. Carolina moves to 9-0 after an easy win against the Titans. They are joined at 9-0 by the Patriots who edged out the Giants 27-26. However, the loss of Julian Edelman could prove crucial in the coming weeks.
A late field goal from the Jags led them to victory over the Ravens in Baltimore. It’s their first away win in 13 games. Elsewhere, the Cardinals defeated the Seahawks, the Bears beat the Rams and the Redskins crushed the Saints 47-14.
Tonight, the undefeated Bengals take on the Texans in Cincinnati.
And finally, Peyton Manning became the all-time NFL passing yard leader, however he had a poor game and the Broncos lost to the Chiefs 29-13.