WTI $70.78 +46c, Brent $78.80 +10c, Diff -$8.02 +12c, NG $2.98 n/c
With WTI up by $1.79 last week and a modest gain of 78c for Brent, the Opec+ meeting in Algeria was always going to be the decider for this morning’s opening. As it is, with WTI up $1.48 at $72.26 and Brent up $1.96 to $80.76 as I write, when he wakes up Mr President is going to get Tweeting.
Having said that, it was always likely that it would be so, the Saudis said repeatedly that no customers were short of oil and Russian Minister Novak reminded the President who it was that was actually getting the price up. So, no change in output from Opec+ as they appreciate that it will be a tricky 4th quarter but with downward pressure next year.
Trinity Exploration & Production
A ‘transformational’ interim from Trinity who reported production of 2,771 b/d in the period, up 16% and revenue growth up 49% at $30.1m. With a 58% increase in EBITDA to $9.3m or $18.6 per barrel, operating break even was $28.50 pb. The cash position is now very healthy, the pro-forma number post the raise is now $19m after the $20m raise after the period end. Production guidance for this year is for an average of 2,800-3,000 b/d and although there is no official guidance for next year I am working on a figure of c. +10%. The medium term target is for 7,500 b/d which would indicate something from the East Coast which is discussed below.
Trinity got to work with the drill bit very quickly and drilled 2 new wells in the period, 7 recompletions and a continuous campaign of 62 workovers and reactivations. Since then they have accelerated their onshore drilling programme with a planned 8-10 wells p.a. which means that the onshore programme will be self funded by 2020 and with continued double digit growth. The East Coast Asset Development continues and the company are reworking the TGAL FDP which offers the chance of a ‘step-change’ in production in the medium term.
Trinity are in a very strong position to outperform within the sector, they offer a stable and well funded platform for growth with ‘significant reserves and resources’ able to provide a meaningful period of growth in the short, medium and long term. The company have worked as hard as anyone I know in the industry to reduce costs over recent years and have an underlying very low, fixed cost base which contributes to those high margins. Finally, It is worth noting that the management have 24% of the equity in the company which means that they are more than usually aligned with the other shareholders in Trinity.
President has announced that it has spudded the PFO 1001 development well in the Puesto Flores Field which is now drilling ahead. This is the first well in a three well programme and each should take 21 days and be completed by a workover rig and if successful tied into PPC facilities. The target is 2P (probable) oil reserves which in the case of success would convert into the P1 reserve category.
The target for the three wells is an additional 600 b/d for the year end field exit production and the three wells are expected to cost $10m between them and payback in 12 months. This is highly profitable additional production and shows just what a strong position President is with increasing cash flow and exceptional prospects.
Tullow has announced that the Cormorant -1 well is water bearing in the sandstones encountered and with wet gas signatures indicative of oil being encountered in the underlying shale, indicate a working oil system in the area. Whilst this is disappointing it should not mean that the basin is sub-commercial and others with nearby licences can consider it an important marker for their prospects.
Liverpool continue their excellent start to the season and are top of the Premiership this morning. The Noisy Neighbours put 5 on the Bluebirds but Chelski couldnt beat the Hammers.
Anthony Joshua found out that Povetkin was no mug but after a while he pulled the stops out and ko’d him in round 7. With Fury v Wilder on Dec 1 the AJ fight at Wembley on April 13th looks most interesting.
In the MotoGP at Aragon, the anticipated battle between Lorenzo and Marquez failed to materialise when pole sitter Lorenzo crashed out at the first bend leaving team mate Dovizioso to battle the Honda alone. Marquez eventually took the win from Dovi with a brace of Suzuki’s in an excellent 3rd and 4th Yamaha’s woes continued with Rossi only managing 8th and Brit Cal Crutchlow managed a hat trick of crashes over the weekend resulting in ‘nul points’