WTI $58.11 -84c, Brent $63.84 -2c, Diff -$5.73 +82c, NG $2.93 +12c
With only two days to go until Opec D-Day things are remarkably quiet by historical standards, normally stances are being set and requirements demanded but right now only two things matter, how long will the accord be extended and are the Russkis on board.
How long is relatively easy, the market expects a rollover until the end of 2018 and whilst a cop-out would be ‘let’s check at the May meeting’ that would be a big sign of weakness. As for the Russians then although they hate the idea of subsidising anyone else I think that they will fall into line, after all it is common sense although that rarely has much to do with policy does it?
Physically WTI had a bad day yesterday, operators of the Keystone pipeline found and fixed the leak in Dakota and announced that they would restart the pipeline albeit at reduced pressure. That knocked the recent wind out of the WTI sails and with it the newly acquired back as well as the narrowing differential to Brent. Brent itself acquitted itself quite well yesterday, after testing the important $63 low it bounced and by the close it was 75 cents off the bottom and nearly back in positive territory.
Capital markets day at Shell and now I am no longer invited I can sit in the warm and save five hours of my life not watching presentations. The news is good with recent management moves being vindicated with the cancellation of the scrip dividend being the most obvious sign although the confirmation of the $25bn buy back by 2020 is also very welcome. Organic fcf is up $5bn, by 2020 at $60 it goes up to $25-30bn which sort of validates the faith a handful of us had at the time of the BG bid, others had less faith…The $30bn divestment programme is almost complete and will carry on at $5bn pa for another three years. Shell continues to outperform BP and this statement proves that they are in better nick than them, the giveaway that must have been done with much pleasure, was the scrip which BP couldnt manage yet. I remain happier with Shell for the time being as they appear to be hitting the straps just that little bit faster mainly due to the foresight made in the BG bid.
A red letter day for AST as the IPPC Permit Preliminary screening appeal decision went in their favour. Not only was the appeal rejected but the oppo has been barred from objecting ever again. This means that subject to an Environmental Permit should be forthcoming ‘in due course’ and work can begin on the adjacent processing facility. This will have a ‘significant margin boost’ as the facility will treat and upgrade the gas from the Petišovci field and gas can then be sold to Slovenia and into the European transmission network at up to 50% higher prices.
Colin Hutchinson, Ascent CEO is my guest on Core Finance TV tomorrow morning and of course afterwards the link will be on Twitter and in the blog.
Excellent news too this morning from Frontera where the Ud-2 well on Block 12 in Georgia has started to flow gas of a quality acceptable for the Georgia national grid. After clean up and a stabilised flow is established the company should have a good idea of flow volumetrics, however the company are clearly confident as they are talking about completing the technical design of an 18km pipeline for natural gas distribution. This news presents significant opportunities for the future from local reservoirs and should they be forthcoming then the potential is indeed very substantial, I hope to visit Georgia early in the new year so watch this space.
More production figures from TXP this morning which seem to be a little disappointing in the Grand Ravine block but overall satisfactory. September production was 1,369 b/d and October 1,472 b/d and exiting at a higher rate which is good news. Production from the four wells drilled this year remain strong with 299 b/d in the period and with four more wells being prepared for which should spud starting in January 2018 and the plan is to continually drill deeper in established pools.
Yesterday I recorded my regular Monday Voxmarkets Podcast in which I discussed Trinity, Range, Cabot, Amerisur and Sound Energy, the link is here.
I have publicised this extraordinary event in previous years and this year is bigger and better. A charity night out on Friday 1st December at The Roundhouse in Camden, London where the worlds of rock and Oil meetup. Top guest is Joe Lynn Turner formerly of Deep Purple and Rainbow and he is supported by Graham Stewart of Faroe Petroleum and Spike Evans of Timis Corp. For a ticket or more info contact Ed Westropp on Edward.westropp@FTIConsulting.com
There is mid-week Premier League football this week as the Seagulls host the Eagles which is confusing for fans singing, Spurs go to the Foxes, the Red Devils are at the Hornets and the Baggies host the Magpies…
It looks like as the Toffees are taking forever making a decision on a new manager as today’s guess of the day is big Sam Allardyce who was a former guess of the day until he got bored…