WTI $71.31 +35c, Brent $78.43 +20c, Diff -$7.12 -15c, NG $2.84 -1c
The oil price just about managed a small gain yesterday although conditions were hardly ideal, disappointing Chinese growth stats and a strong dollar wouldn’t have helped. Set against that was a lower than expected production report from Iran and more noise about what the US will do to Venezuela after Sunday’s elections, the result of course we all already know…After hours the API stats were also worse that forecast with a stock build of 4.9m barrels against expectations of a short 1m build although gasoline and distillates drew which helped a modest amount.
An operational update from the Lancaster EPS this morning as the offshore installation phase commences with installation of the Enhanced Horizontal Xmas trees on the two existing wells. The ‘Far Superior’ offshore construction vessel successfully landed and secured both Xmas trees and will be demobilised. CEO Robert Trice commented ‘all workstreams are proceeding well, we remain on budget and on schedule for first oil in 1H 2019’.
This is good news to know that the offshore activity is under way and with the SURF equipment and the mooring systems next to be installed the project is still running on schedule. Whilst information flow has been expectedly light, as there has been little to report, it is clear that all is going well and on schedule. Hurricane remains a top bucket list pick as it heads towards the Lancaster EPS target on time and on budget.
Zenith has announced that the due diligence is under way with regards to the possible acquisition in Indonesia. The decision whether or not to proceed has been deferred to the 2H of this year whilst the company focuses on its crucial operations in Azerbaijan.
A trading and operational update today from Prems where all continues to go well in all areas. Catcher production is now in excess of 60/- b/d making group production now over 90/-, Q1 averaged 74/- b/d making full year guidance of 80-85/- b/d look eminently achievable. Tolmount sanction is expected in 2H of this year and a Zama appraisal well on block 7 in Mexico should spud in Q4. The company has also achieved ‘significant’ success in licence awards in both Indonesia and Mexico in this quarter.
The start of ‘significant debt reduction’ will occur 2H of this year and in 2019 and the covenant leverage ratio is forecast to fall to 3x EBITDA by year end at current oil prices. At $75 oil the Sea Lion project in the Falklands must be looking quite special right now and Premier is to appoint a pathfinder bank ‘shortly’ to assist with the arrangement of senior debt facilities for the project. With significant contributions from contractors and the project a meaningful part of Premiers production into the next decade the FID is still on track for 2H of this year I imagine.
I had a chat with Doc Holiday of Total Market Solutions earlier in the week and chatted about oil in general and a few stocks such as BPC, CORO, ECO, ECHO, FPM, GENL, HUR, JOG, PMO, SAVP, SDX and TRIN.
With Villa getting a draw last night they find themselves in the Championship Play-off final against Fulham which will bring back memories from when both were in the upper echelon of footy.
The England squad for the World Cup is to be announced later, no Hart or Wilshere we are led to believe but room for a surprise or two i’m sure.