WTI $39.39 -7c, Brent $40.27 -17c, Diff $88c -10c, NG $1.85 +4c
Oil price bulls have a long three weeks ahead of them as they wait anxiously for the meeting in Doha on 17th April. It is not an exaggeration to suggest that there is much hanging on its success and as I mentioned last week, even a successfully talked up meeting then has to deliver and delivery has never been oil producing nations strongest suit. We already know that a number of key exporters such as Iran and Libya are staying at home and others may be in attendance in name only, the meeting that counts more is on June 2nd…
Between now and the 17th there are three sets of inventory data due and at a time when stocks they are a brimming and refineries in maintenance mode ahead of the upcoming driving season, banana skins await. After last weeks huge gain, analysts are expecting something over 3m barrels this week starting tonight.
Finally, the oil price finally last week lost its prop of a weak greenback as Fed hawks took the upper hand and made an April rate rise more of a likelihood than previously thought.
After the recent presentation by the company it was obvious that in the forthcoming reserves update there would be an inevitable downgrade, partly as the company has produced 1.62m barrels of oil in the year and partly as examiners price decks are loaded for downside protection. So it is with some clear delight that the company has been able to report this morning that 1P numbers at 15.2m barrels (2014 16.2m) could technically be described as an increase. The analysis takes into account the long term test of the T sands in Platanillo-20 and the increased recovery rates post the Schlumberger integrated study and the successful treatments on Platanillo-14 and 20.
This number is most impressive, being achieved with no new development or appraisal wells and in the face of the decision to shut in high cost production last year and to only spend free cash flow on drilling. Things are changing now, even at $40 oil, as the OBA is now only a month away from connection sending oil down at a much reduced opex. Add to that a more exciting drilling programme this year and reserves may well start to rise again. Expect two infill wells on Platanillo, PUT-8, Coati and the long term test on its Temblon discovery in the south of the block and things are indeed looking up and I havent even added the Paraguay well…Amerisur shares are up 55% so far this year and a formidable part of the bucket list which is where they deserve to stay.
Results this morning from Faroe which confirm that last year was tough, the company declared a loss of £52.9m but after a pre-tax impairment charge and exploration write-off of £83.6m that is not so bad, under the circumstances. Production at 10,530 (9,106) was good, performance in the companies main fields above expectations and 58% liquids and 42% gas in line with expectations and above guidance. For this year with the maintenance obstacles, the guidance is for 7-9,000 boe/d. As with a lot of the industry, costs are down big time, opex is down 30% to $23 pb ($33) and G&A costs are down by 44%. 2P reserves grew strongly, by 88% to 57.4m boe as Pil and Butch moved there from 2C contingent resources.
Last year was slightly disappointing with the drill bit but capex was very low, fully funded and tax efficient, the gross number of £50 ended up a net £12m. This year they remain conservative drillers but have plenty to keep shareholders interested and as last year are being conservative. The company has net cash of £68.5m and has only drawn £23m of its £155m RBL which leaves them in a strong position vis-a-vis the competition, the company has often said that it is on the lookout for less strong morsels and is ‘pursuing attractive consolidation opportunities on the UK and Norwegian continental shelves’. Faroe is in the bucket list and has also done well, this year the shares are up 51% so far but I remain confident that there is more to come so that is where they stay.
President has announced that the four well workover programme in Argentina is under way and should be complete by the end of April, they have also appointed a new non-exec director with local experience.
Cadogan Petroleum has announced that it has made a ‘highly preliminary’ approach to Ascent Resources. Up 70% today Ascent is worth three million quid….those with longer memories remember Cadogan….
As predicted it has been a truly dismal few days of sport. Firstly, I apologise to those boat race enthusiasts who berated me for not saying on Friday that the race(s) were on, I hope that you enjoyed the thrills and spills on Sunday.
England did indeed beat Germany in a friendly which therefore means nothing, tonight we play the Dutch, those old enough will spend the match remembering Cryuff whilst Woy Hodgson relies on James Milner to be captain, the words lace and boots come to mind…
The T20 World Cup moves on apace and after only just beating Afghanistan England find themselves in a semi with New Zealand, time for showboating is over now boys. On the other side of the draw it’s the Windies who did lose to the Afghans yesterday, against India…