WTI $18.27 -$1.60, Brent $28.08 +26c, Diff -$9.81 +$1.86, NG $1.75 +7c
Forget the line above, at least for WTI as Brent isn’t doing so bad. WTI, as I write and before the opening in the US, is down 38% at $11.32 which interestingly could be worse. That is because as I have been saying for a few days now that the physical market is effectively shut down, forget the bath, as a producer you are paying buyers to take the stuff away. (See prices of Canadian crude and landlocked oil down at $4 last week). If you are long you are so so, wrong…
This is exacerbated by the fact that WTI for May expires tomorrow making a rollover pretty much a necessity albeit a very costly one. So prices for June WTI are a more ‘realistic’ if you can say such a thing $22 with July at $28 and $30 for the August contract. With the Baker Hughes rig count on Friday showing a fall of 73 overall to 529 and in oil by 66 to 438 it’s getting worse before it gets any better.
Elsewhere news about COVID-19 is that in some areas the people are getting ‘unlocked’, parts of Germany, Scandinavia and even the USA are slowly returning to normal and Boeing are opening up at least one factory later.
Angus has issued a 4%, £1.4m convertible to Knowe Properties, a 10% equity holder in the company. This is a very wise move indeed as it enables Angus to repay the Riverfort loan, immediately by £250,000 and being able to alter the remaining terms significantly in their favour. This is good news for Angus, it comes at a difficult time to raise money and it reduces the impact of the Riverfort deal as well as strengthening the company’s capital base.
Nothing much to add to the Coro figures, the bright spot has been from Duyung (15%) where the operator recently increased its volume estimates with a new CPR expected later this year.
Trinity Exploration & Production
Trinity has provided an operating update for Q1 this morning, production in the period was 3,291 b/d and whilst the company insist that its guidance of 3,100-3,300 assumes no new drilling it would be a creditable position. Cash increased in the period to $14.2m with an operating break-even of $26.70/bbl but with a new target of $20.50.
There has been no new drilling this year but 3 RCP’s and 39 workovers and the continued deployment of Weatherford’s SCADA system means that so far the deep cuts the management have made aren’t yet having an effect on production. Trinity has a strong balance sheet and a well known ability to keep costs low along with a good hedging system even offsetting current prices and is probably one of the tightest ships out there right now.
With apologies, this should have been blogged last week but things overran me! Lamprell has made a decision to consolidate its operations into one yard ‘for the time being’. Jebel Ali has been mothballed and Sharjah will be shut later in the year. The Hamriyah yard continues to operate offering expansion opportunities if necessary.
With an overhead reduction of $23m in the market Lamprell is being ultra cautious by saying that they are ‘withdrawing 2020 guidance as we are seeing signs of deceleration and delays in some areas’. The company are also in discussions with their IMI shareholders regarding pushing back the next installment of its strategic capital expansion in Saudi Arabia and given the state of the markets they may not get the push-back they might have seen only a little while ago.
I spoke to Doc Holiday of Total Market Solutions on Friday, we tried to establish if and where there was any future value in the oil sector. Companies covered included:RRE, ECHO, CHAR, PPC, RDSB, DGOC, GENL, LBE, PRD, CERP, IOG, RBD, UJO, PANR, BPC, CORO. Here is the link.