WTI $61.70 -42c, Brent $70.39 +2c, Diff -$8.69 +44c, NG $2.60 -1c
Another mixed day yesterday but in the end the Trump manoeuvres on the trade front knocked the stuffing out of US markets, the big dinner is tonight and in my view anything could still happen. Today both blends are up around 50 cents so crude would end slightly up on the week but it could be a long night in Washington and anything could happen.
Chevron announced yesterday that they were walking away from the bid for Anadarko, CEO Michael Wirth stating that they were ‘not prepared to win at all costs and will not erode value’ familiar words…In addition if the Occidental deal goes through (Total are paying $8.8bn of the $38bn cost) then Chevron get a $1bn break fee…
INFA has announced this morning that it is in an advanced stage of negotiations with two final off-take partners which should shortly come to a conclusion. They also state that a deal might be for all 7 caverns not just the first 2 in the current phase 1 plan, sounds good yes? Here’s the rub, or at least why the shares are down today and close to testing the lows. The good news is that should the bigger deal go ahead then phase 2 FID could advance from Q4 2020 to Q4 2019 bringing forward the whole process. The bad news is that this way the existing phase 1 process would be delayed by 6 months to Q4 2019 as the phases are merged.
So, the market’s reaction is that a delay to the process is worse than a bigger deal later, probably consistent with any market’s inherently pessimistic outlook, this stock has a chequered past remember. I would wait and see what sort of deal turns up before pre-judging but would think that if a deal is signed it will be a huge step nearer to the land that has been promised for many years…
Victoria Oil & Gas
In my abbreviated blog yesterday and after the disaster that befell it I promised to add to my comments on VOG, mainly to be honest as at that time I hadn’t had my conversation with CEO Ahmet Dik, I now have had that discussion.
Let’s take as read all the stuff about increased gas production, new customers and the strength of the balance sheet and the new board.
The market has been incredibly concerned that although the contract with ENEO was signed last December and sales started that month, that ‘invoices for gas consumed in 2019 worth $3.6m remain outstanding’. As part of the discussions with ENEO the two companies are working on a fully termed agreement including a bank guaranty which one might argue should have been signed before production but that is surely 20:20 hindsight.
Right now I have been convinced that once this is sorted, and I believe it will be, VOG will soon be paid for the overdue amount and then monthly payments thereafter in a ‘comfortable and regularised manner’. One of the reasons for this is that in the next few years ENEO will need significantly more power from VOG to the tune of 100-150 MW probably in 2020 and 2021 due to grid deficits that can already be identified. If they are going to use VOG and there is precious little choice, then they are going to have to start paying and quickly and regularly.
I may be giving everybody the benefit of the doubt here, I may be too trusting even after all this time, so shoot me, at this stage this is what I think will happen, after all it is only 3 months invoices unpaid and there are companies out there that have 120 day payment terms, just saying….no names…
Yesterday I sat down with Jeremy Naylor of IGTV and talked a few oil stocks, the link is below but for ease of reference and to save you the bits you don’t want to watch (?) here are the timings. Eco (Atlantic) 1m20s, Hurricane 5.15, Morocco 9.00, Sound Energy 9.20, SDX 9.45, Chariot 10.45, Predator 11.40, South America 13.45, Amerisur 13.55, President 15.18, Echo 16.12.
After last night’s semi finals both the Gooners and Chelski are into the final of the Boropa Cup which is to be held in Azerbaijan. For those desperate to attend you should remember that Zenith Energy are operating in the country at the moment and this could be an important time to visit this very friendly oil company, indeed Chelsea were playing in Baku the last time I was there…
On Sunday the only games of import are the Noisy Neighbours at the Seagulls and Wolves host Liverpool, only wins will do.
The Spanish Grand Prix is also on Sunday, can Ferrari pull out the stops they have promised all season but not delivered?
And it is also the final of the Rugby Union Champions Cup in which Sarries take on Leinster, what a match that promises to be.