WTI $46.34 +57c, Brent $48.60 +54c, Diff -$2.26 -3c, NG $2.90 -7c
Coming out of the St Petersburg meeting with oil up 50 odd cents a barrel can be considered quite a result really. Although June adherence was allegedly 98% there are strong warnings from the Saudi/Russian alliance at the top that there will be ‘no more free rides’, ie we know who you are. The KSA have backed that up by announcing that August liftings for export will not exceed 6.6m b/d although I refer to my usual point about domestic summer demand, that still means production of around 10m b/d. Both de facto leaders suggested that the agreement could and would likely need to be extended beyond 1Q 2018 but the thorny problems of Libya and Nigeria were avoided, could this be that left alone they will self-destruct anyway?
Dave Lesar at Halliburton sees high US domestic production but that fear is lessening, it won’t go away but we might be nearing the interim peak. Finally inventory stats tonight and tomorrow will now return to centre stage for the oil price direction.
Andes Energia- A Phoenix from the ashes?
I have watched AEN for many years and liked it a lot, partly as I think that its position in the Vaca Muerta is huge compared to its market cap and more recently as I feel that Argentina is proving a good place for energy companies. (Viz President, still grossly undervalued) Yesterday it was confirmed that the company would back into the Argentinian E&P business of the Mercuria Energy Group, the combined entity having a very strong position in conventional and unconventional assets in Argentina and be renamed Phoenix Global Resources. The new company will be headquartered in London where 6 of the 118 employees work but most importantly I imagine new Chairman Sir Michael Rake, best known recently for Chairing BT and Worldpay and with history at Barclays Bank, Easyjet and KPMG as well as being an advisor to Teneo alongside Brian O’Driscoll. Anuj Sharma will remain CEO and Philip Wolfe should be a strong pair of hands at CFO, so the new board is certainly powerful and seemingly independent and of course Mercuria is expected to be a ‘significant long term shareholder’ in the company. The statement says 25% AEN and 78% Mercuria so free flat will be somewhat of an issue.
With the company’s new scale and upside comprising a significant work programme in development, as well as exploration in both existing conventional reserves and unconventional prospects such as the Vaca Muerta there is no doubt that this is a fairly compelling merger. Phoenix will have its work programme for the next two years funded by assorted debt of around $160m provided by Mercuria, but with existing debt paid down and the decks cleared will leave it open to further corporate activity. South America is certainly hotting up right now with high quality investment opportunities in a number of areas such as Rockhopper, President, Amerisur and Echo on the mainland, not to mention the Trinidad players who are all raising their games on offer to investors.
Yesterday I did my usual Voxmarkets Podcast, the link is here for comments on Providence, Premier, Pantheon, Savannah and Falcon Oil & Gas.
In the swimming Ben Proud wins a gold in the butterfly and Adam Peaty breaks his own record in the heats.
Lots of transfer news, Mendy signs for the Noisy Neighbours and the Hammers sign the ‘little pea’ which could be the deal of the season…