WTI $38.46 +$2.12, Brent $40.33 +$1.59, Diff $1.87 -53c, NG $1.87 +2c
A decent up day yesterday as the long mooted meeting actually got some traction. Apparently at least 15 Opec and non-Opec countries will meet in Doha on April 17th. The market is now getting revved up about the possibilities of 70% of world oil production freezing at January levels. By any stretch of the imagination this is a bit too optimistic but dreamers will always be dreamers. We dont know whether Iran will be there or if Kuwait will ease back its policy but for the time being the market wants to believe. Inventory numbers last night were not as bad as expected but still a build of 1.3m barrels so stocks remain at highs. Finally the Fed appeared less hawkish about rates, slipping in just the two hikes this year instead of the planned four.
The UK budget yesterday was kind to the sector for once and if you pay tax in the North Sea the bill will go down. Unfortunately not that many do, but the tax break on decommissioning was helpful as was the £20m for seismic funding. Overall it was helpful and things like the UK Guarantee scheme can only help.
Whilst managing its debt mountain hasn’t gone away, today’s statement is pretty chipper under the circumstances and the company beat its production forecast whilst keeping 2016 guidance at 44-48/- boe/d. As with other companies EnQuest has had material success in grinding costs down, opex is now $29.70 from $42.10 in 2014. That debt pile is high at $1548m but the company say that they are well within its net debt to EBITDA covenant of 5 times for 2015.
Hurricane has announced that Alistair Stobie has been appointed as new CFO, with immediate effect. Stobie has a lot of experience having recently been at Zoltav Resources and Oando. Before that he founded Volga Gas and what went on to become Panoro Energy. I suspect that this is a very canny appointment, he is big on Capital Markets experience and he will fit very well with CEO Dr Robert Trice.
There will be more on GKP tomorrow as the analysts call is at 2pm, hasn’t anyone told them about Cheltenham! The bottom line on the company remains the same, operationally they are excellent and Shaikan is indeed a world class asset as proved by the production numbers hit in last period. I have a lot of time for Jón Ferrier who has been working flat out since his arrival on the strategic review but despite ongoing interest from various parties none have as of yet, come to the party. This leaves GKP in a difficult situation, with Shaikan beginning to decline later this year money really needs to be spent on the asset quite soon so new capital is badly needed. The company has seen a rationalisation of the portfolio to concentrate on Shaikan but the ominous and worrying phrase is in the statement ‘ strenuous efforts are currently underway to strengthen the balance sheet, not only to ensure our ability to remain as a going concern’. More after the meeting….
SOCO has announced results this morning which show that whilst the company is not immune to the oil price situation it is in better shape than almost anyone else in the sector, indeed what’s not to like about $103.6m of cash, no debt and no impairment charge? The CEO talks of ‘synergistic acquisition situations’ and the company has historically paid dividends and specials so all options are open.
Sirius Petroleum has raised £500,000 to ‘pursue a number of opportunities’ in relation to the project funding of the Ororo field, there may be more to come from Sirius as I believe that they are looking at a number of projects. I am meeting the guys soon and may come back with more later.
Last night in the Champions League the Gooners got undone by the terrible triplets from Barca, MSN they go under. Bayern Munich were 0-2 down to Juve but turned it around to end up winning 4-2…
Tonight sees more Boropa Cup action with the HubCap Stealers appearing to have not too much to do at the Theatre of Disappointments to go through. Spurs have it all to do as they are 0-3 down from the first leg at Borussia Dortmund.
England let Chris Gayle get off to a start and you cant do that, a swift hundred and its all over.
And a Happy St Patrick’s Day to you all and even more fun if you are at Chelters. Quite brilliant to see Sprinter Sacre running up the hill like he used to.
Thanks for the post and an interesting blog. Can I ask what keeps ENQ off your 2016 bucket list?
Is it essentially the debt figure?
To a certain extent yes, I feel that of the ones I look at the debt is probably the most worrying but I am not that concerned, yet. I already like Ithaca, Faroe, Premier and Parkmead, to have any more would over expose the bucket list so to speak.
Many thanks for your kind comments.