WTI $47.43 -98c, Brent $52.04 -53c, Diff -$4.61 +45c, NG $2.95 +2c
With hurricane Harvey moving swiftly towards Texas and landfall expected overnight tonight much of the oil industry has shut in production both offshore and onshore. Twelve years ago almost exactly it was Katrina that came through and whilst Harvey isn’t as powerful at that was it is believed to be the biggest for some years. Interestingly the oil price hasn’t reacted much, it is up about 40 cents today but with only 10% of offshore production out it is the refinery closures that have hit hardest and gasoline prices have ticked up more.
Another cracking set of figures from SDX who produced revenue of $18m and net profits of $26.5m strongly supported by the Circle Oil acquisition. Production was a pro-forma 3,812 and netbacks more than doubled to $21.50. Apart from the M&A stuff SDX has had a great time operationally, in Particular at South Disouq where 25.8 Mmcfd was ‘significantly better than expected’ despite limited surface facilities and the company are excited about the deeper potential which they will soon target. Financially SDX is in a very strong position, they have cash of $27.6m and no debt, receivables down and the CPR showed 2C of 47.13 bscf of gas and 2.29 Mmbbls of condensate.
More importantly for shareholders the next few months are going to be very exciting with drilling campaigns in Morocco starting mid-September with 7 wells and in Egypt in Q4 the development activity. However there is more to come as CEO Paul Welsh told me, ‘in working the data in both Morocco and Egypt we have identified more opportunities within our acreage to expand these programs’ there is definitely much more to come. I have called this stock ‘cheap as chips’ in the past, this has not changed, with such a programme starting very soon, new prospects identified, a substantial asset base and strongly financed, SDX looks increasingly attractive.
Genel has made an agreement with the KRG that means that it waives any entitlements to unpaid bills in exchange for 4.5% of Tawke gross revenues for five years wef 1st August 2017 paying no capacity building payments which should be a net saving. Expect a boost to cash generation and although still carries oil price risk should eliminate the historic problems of receivables the market so dislikes. A lot is going right for Genel at the moment, meeting with them earlier in the week the news from Peshkabir is very positive and it seems that there is a persistent buyer of the shares which have been pushed to a year’s high.
Being north of the border for the last couple of days meant missing the Premier results which continue to show serious operational success in a number of areas. Production is up to 82.1/- b/d and accordingly guidance has been teased up from 75/- b/d to 75-80/- which still seems conservative. Catcher is about to sailaway and will be on for first oil by the end of the year and with successful drilling will be better than previously expected. During and after this period the company has finished its long running refinancing with debt of $2.7bn which gives necessary visibility. They also had success at Zama, in which PMO has a 25% WI and so far is showing as 400-800mmboe discovery which could be very valuable to either keep or use as an asset to sell and reduce debt.
Elsewhere M&A wise, they have sold their Wytch Farm asset for $200m and signed HOT with infrastructure partners for Tolmount as widely predicted. That just leaves Sea Lion where they confirm that they have a net 400m bbls and which ‘has the potential to be transformational for the company’. Good progress has been made on securing funding and commercial solutions for the project which remains a ‘phased development solution’ and capex to first oil has fallen from $1.8bn to $1.5bn. Clearly PMO want another partner for Sea Lion but whatever they say about it the economics look better and it will be their most important operated project over the next few years and should secure approval.
Life for the UK listed oilfield service companies has been very mixed in recent months but at the moment Hunting is showing a clean set of heels to them all mainly due to their exposure to the US onshore drilling market. With good news in perforating systems, where they sold more in 1H ’17 than in the whole of 2016, leading to upping shift levels and premium connections also doing well in offshore and onshore markets things are looking up. With most of the other quoteds having various difficulties at the moment it is a pleasant surprise to be extolling Hunting as the poster boy of the sector. With Jim Johnson taking over from Dennis Proctor next month I wish them both well for the future.
The second test between England and the West Indies started today at Headingly and winning the toss and batting, England have had another poor start, 48-3 as I write.
Sunday sees the 40th anniversary of the British Motorcycle GP on the mainland after the removal of the TT from the World Championship and the 300th GP start for 38 year old Valentino Rossi. As usual the weather could be a deciding factor which will hopefully play to Brit Cal Crutchlow’s strengths in what is turning out to be one of the closest championships for many years.
In the Premiership the top three all have home fixtures, the Red Devils host the Foxes, the Terriers entertain the Saints whilst the Potters go to the Baggies, how thrilling that might be…For most though the biggest fixtures will be on Sunday with the Gooners going to Anfield to face the HubCap Stealers, Chelski hosting the Toffees and Burnley going to Wembley to face the Spurs.
The F1 roadshow starts again, we are now in Belgium and Raikkonen is fastest in first practice.
York races have been exceptional this week and continue today with the Nunthorpe Stakes being the top of the bill.
Finally there is the small matter of the McGregor Mayweather boxing match in the early hours of Sunday morning in Las Vegas, should it not be a simple conclusion?