WTI $43.78 +13c, Brent $44.62 -35c, Diff $0.84 -48c, NG $2.14 +6c
Just when the fundamentals look like getting the oil price down, another random act puts the mockers on it and up it goes again. Yesterday the EIA announced that inventories had built at a much higher level than expected, +2.8m barrels against the +560/- whisper. With a build also at Cushing and an unexpected rise in gasoline stocks it was a clean sweep for the bears until news came through from Fort McMurray in Canada, the home of its oil sands industry. The dreadful fires there have led to most of the population being evacuated and that included workers for Shell and Suncor amongst others. Canada produces a little under 2.5m b/d from oil sands and whilst it is unlikely to be offline for long it was all the bulls needed. Prices had risen when the news came through only to be hit by the EIA but overnight the news from Canada worsened and this morning WTI, clearly most affected, is up to $45.18 as I write with Brent tagging along up to $45.70.
The news from the AMER AGM came too late for the blog yesterday but the news is interesting and wasn’t particularly time sensitive. Three pieces of information came over, all with positive news one way or another. Firstly the OBA pipeline is progressing very well and the section under the Putumayo River is now complete and the project remains on target for completion at the end of May. Secondly the Jaguareté-1 well in Paraguay is at 3,850 ft having travelled faster than expected in a difficult section and is expected to be at TD in June. Whilst a discovery here would indeed be a game-changer it should be remembered that it is pretty much a wildcat and that should it not come in further activity in the country is unlikely. Finally the company has decided to re-enter the Loto-1 well with ONGC, this was drilled before AMER acquired its stake and discovered oil but was never successfully tested. With the temptation of pay the company will spend a modest $300/- and hopefully test the Mirador L4 and L5 zones. All this, together with cash opex costs falling from $20 to $13 and transport costs falling from $13 to $5, makes the company as attractive as ever within the sector.
An update on Hurricane ahead of the GM (no longer called EGM’s for some reason) which takes place next Monday to ratify the recent fundraising. The market correctly viewed the news as being highly encouraging for the company, not only was Kerogen backing the company substantially but that Crystal Amber was showing full support into the bargain. The shares have hovered slightly below the 15p level at which the deal has done but mainly as a couple of forced sellers have been cleaned out. With good two-way trade in the shares it seems that there are also buyers out there as well.
Discussions regarding the farm-out continue, as mentioned before HUR are in a stronger position now as with support from the major shareholders funding for the early production system is less daunting and even probably achievable without farm-out if necessary. Assuming the meeting goes ahead without any problems it will be all systems go for the first well to be confirmed, at present July 1st is still a realistic spud date. The AGM itself is on the 8th June and at that time we should get a much firmer idea of timings and detailed plans for Lancaster, also Dr Trice will be giving an interview to add any further data.
Another good day for WG and its employees as they sign a three year contract extending support for Shell’s UKCS offshore assets. With two one year extensions, the company say that it will safeguard 500 jobs, this third Shell contract this year comes hot on the heels of last week’s BP renewal and although terms are clearly not known will bring a little confidence back to Aberdeen and the industry.
So, the Noisy Neighbours lost in the Bernabéu last night and will not get a chance to win the Champions League this year, at least that gives Pep a clean sheet and avoids any embarrassing moments should Bayern and City have got to the final. As it is it will be an all Madrid affair and very close to call, San Pellegrino’s shout that it was close last night was probably only referring to the score…
Tonight the HubCap Stealers should beat Villarreal and make it through to the Boropa Cup final where the prize is huge, a place in the Champions League next year, not something they can achieve any other way.
And after his debacle in the Russian GP on Sunday I notice that Red Bull have sacked Daniil Kvyat and will replace him with Max Verstappen.