WTI $45.27 +29, Brent $46.36 +32c, Diff -$1.09 +3c, NG $2.69 +6c
So, a victory for The Donald had equity markets as well as currencies and commodities in a right twist, early falls were mainly trimmed although the greenback weakened which helps oil. Knock on effects for crude are probably marginally favourable, he hasn’t Obama’s zeal for climate change and the environment so certainly in the US industry may be better placed and that goes for pipelines as well I guess. Internationally there will be interesting developments in foreign policy and finding out who are friends of the US and who aren’t, that may determine who the USA buys crude oil from…And who it fights with…..#new friends….
WTI had fallen to $43 at one stage before the rally kicked in, partly aided by the EIA inventory stats. After the API build of 4.4m barrels the EIA number of +2.4m was higher than the whisper of +1.6 but bearable, with bigger than expected draws in gasoline and distillates and imports falling overall stocks actually fell on the week.
Does the announcement of SP acquiring OMV UK and its assets West of Shetland finally mean the Private Equity has finally decided to dip its toe in the energy water? For $750, potentially $1bn, the company funded by Blue Water Energy and Blackstone has acquired stakes in Schiehallion, Rosebank and Jade which is a reasonable move into the trendy West of Shetland postcode but hardly the size of investment in the company mission statement. At least the former BP crew will know what they are dealing with even though not all is profitable at the moment.
Finally Ophir has managed to find a way of getting Schlumberger back to the table although at quite a cost in terms of field equity. OPHR are forming a JOC with OneLNG (Golar and Schlumberger) to develop the Fortuna FLNG project offshore Equatorial Guinea. They have 33.8% with the others taking the 66.2% against their field interest of 80%. With a FID likely 1H 2017 and first gas 1H 2020 the company expect to be producing 2.2-2.5 mtpa for 15-20 years ie monetising 2.6 TCF of gas. Costs to first gas are $2bn of which quite a lot will be debt financed and it appears that OPHR’s costs will be capped at $150m. I presume that this means that other partners are prepared to take some of the risk off OPHR and that they can farm-down as well if necessary. Overall it is a tick in the box to get Fortuna finally close to some action but at what cost, others are reluctant to take on debt even if it is against a potentially profitable development although until 2020 investors nerves may jangle.
HUR announced yesterday that they had spudded the Lincoln well targeting a similar prospect to the recent find at Lancaster. If in line with expectations the discovery may be of the order of around 250m unrisked resource barrels which given its closeness to Lancaster would make those barrels all the more valuable. Given the weather out there timings are more than usually difficult to predict, I would expect around 45 days plus or minus for bad conditions. There is no EWT planned and I assume that with the weather in mind the well will be logged but not tested, perfectly satisfactory if the result is what they are hoping for after the analysis of the Arco oil interval below the sandstones.
Today it’s the cricket that dominates as England scored a very reputable 537 all out on what to be fair was a pretty easy track. With India 63-0 at the close it shows how difficult it will be to take the required amount of wickets but this is an excellent start with centuries from Joe Root, Moeen Ali and Ben Stokes. Tomorrow’s and finally already looks like a weighty tome!