WTI $48.22 +$1.43, Brent $50.89 +$1.04, Diff -$2.67 -39c, NG $2.67 +6c
Brent hasn’t been higher since the 23rd of June, roughly at the time that the Saudis started whacking up their production, partly of course to offset domestic use for summer power generation. Production from the KSA was 10.55m b/d in that month, up 280/- b/d according to Reuters and the Saudi response has been that ‘there was a strong demand for our crude as non-Opec supply is declining fast as well as outages and demand strength. Reports show that outages did continue then particularly from Nigeria. Readers will remember that after the expiry of September Brent on 1st August things looked bleak but writing here on the 3rd of that month I suggested that their might be ‘a decent rally’ as the charts were oversold and offered retracement. The 22% rally since then has come at a time of high stocks, increasing production, moderating demand and increasing short positions in the market which tells you all you need to know about the fundamentals…
Worth noting that the first shipment of US LNG has been exported from the US through the newly expanded Panama Canal on its way to Japan, this has come from the Sabine Pass liquefaction terminal, how long ago did we start talking about that? Finally the greenback remains weak and the inventory stats showed a draw in crude and gasoline which also helped the bulls this week.
Independent Oil & Gas
IOG has announced that the Skipper well has completed and the secondary targets were reached and were dry, the well is being P&A’d. The primary reservoir is as already announced good with viscosity above expectations and if confirmed in the lab will improve development economics. The shares are off the recent top maybe due to rather too high expectations but apart from that reflect significant success and determination. The commerciality of Skipper is increasingly likely to be confirmed and I look forward to interviewing messrs Routh and Young on TipTV next Tuesday.
I get regularly beaten up for having been too optimistic about PMO throughout this year and whilst that stance is not yet vindicated I felt that yesterdays results and presentation are moving in my direction. Certainly the share price is reflecting the good news, at present it is up four times since the January low and more than justifies inclusion in the bucket list. All the operational factors are ticking the boxes, production is beating guidance through efficiency and the significant ‘hidden value’ that has emerged from the E.ON deal. Indonesia and Vietnam are proving to be sound cash cows and higher gas demand from Singapore and infill drilling will be enormously productive there. Solan has been a right royal disaster but now it is onstream, the second well now online and producing cash flow so time to let sleeping dogs lie and learn from mistakes.That means ensuring that Catcher is ready for production next year and with better than expected productivity may require fewer wells thus saving more money, the capex is already 20% below sanctioned budget. With opportunities in the gas portfolio at Tolmount and its neighbours the Southern Gas basin has a number of interests that work at <30p/therm. Sea Lion remains in progress with FEED going well and costs falling as ‘bid packages’ are assembled and will be triggered when in sight of sanction so bids maybe under way at the end of the year. Premier still consider that a farm-down is required here and whilst many companies show interest the sight of a cheque book will work wonders.
The financial highlights were of positive operating cash flow, genuine and long-lasting cost reductions and capex being lowered but the carrot of progress on debt restructuring was all people wanted to hear about and here the news appears to be moderately positive. Expect to hear early thoughts on a deal in maybe late September and a conclusion by the end of the year but with enough headroom to continue to develop the asset portfolio. Overall I think that the benefit of the doubt having been given, has rewarded such a call and that Premier has made a significant move in the right direction. Whilst debt levels are still worrying, the management has done more than enough to look forward to coming out of the other side, not something a number of commentators have suggested. Still in the bucket list.
Tullow announced yesterday that it has received first oil from TEN which to be frank I thought had already happened but good news all the same.
And on this subject Aminex announced that it had received first payment for Kiliwani North Gas from the TPDC which is highly significant and validates all Jay’s hard work and determination to succeed with this project, it also vindicates those of us that believed in it all the time!
The TipTV interview that I did on Tuesday updating the bucket list has proved very popular for some reason and the link is below. The order that the companies come in, so that you dont have to watch it all is as follows:
PANR,SOU,AMER,RKH,HUR,CNE,FAR,IAE,PMO,FPM,PMG,BLVN,VOG and TLW
TipTV interview: Oil Bucket List 2016: Stellar results on recent stock picks – Part 3
For those who cant receive these by email it is on www.malcysblog.com under interviews.
The Olympics are concluding this weekend and whilst it has been exceptional for Team GB I suspect that it has done little for Brazil. with few people being able to afford tickets most venues have been virtually empty apart from the Team GB followers shouting the odds. yesterday provided more medals in all sorts of sports and there might be a little more tonight and tomorrow.
For the first time tonight the Premiership launches Friday night football which is all we need, football every night of the week. The Red Devils host the Saints which is always tasty and pick of the fixtures tomorrow include Spurs v the Eagles, the Gooners continue their tricky start going to the Foxes, whilst on Sunday the happy Hammers have their first league fixture at the London Stadium and old rivalry is renewed in the North East as the Maccams host the Boro.