WTI $52.36 +$2.58, Brent $61.44 +$2.72, Diff -$9.08 +14c, NG $2.98 +2c
The oil price has had a good run, up nearly 20% since the low on December 28th or thereabouts and due to a combination of Opec+ production cuts and ongoing trade talks. This morning it takes a breather, off about a dollar but both grades remain above their crucial ‘big figures’.
The above havent changed but the EIA inventory stats were again mixed last night, overall the bears had it small time, crude drew but at 1.7m, less than forecast and the API number. Products, which I continue to argue are difficult to read at this time of the year, did rise, gasoline by 8.1m which was higher than the API number and distillates by 10.6m which was marginally above the API data. I will worry about the distillates number if there isnt a cold snap which is about as likely as Lord Lucan appearing on the board of Angus Energy…
The Premier updates continue to please and today is no exception. All the boxes are being ticked, starting with production which came in at 80.5 kboepd up 7% y/y and a group record. With November and December averaging 92/- b/d and Catcher doing a gross number of 66/- b/d the year ended well. Guidance for 2019 is 75/- b/d which seems cautious but they do lose a short 10/- b/d from disposals and the 97% uptime can hardly be maintained for ever.
So to the debt, which remains high but is coming down faster than expected, at year end it was $2.33bn which was down $390m on 2017 and below guidance of $2.4bn. The Tolmount Main gas project received sanction in the period and the platform is already under construction. With the Tolmount East appraisal well to be drilled in ‘mid 2019’ first gas is still on track for Q4 2020. In Mexico the Zama appraisal well is drilling now, it is at the top of the reservoir looking for the oil water contact (OWC) and then will checkout the deeper exploration prospect before testing the sidetrack, expect a result soon followed by Zama-3 in March.
Elsewhere the Sea Lion project financing continues, LOI’s to contractors have been converted to contracts, a good deal of the environmental, fiscal and admin paperwork is ‘far advanced’. Paperwork is being prepared for the lenders and given that the UK Government has potential exposure too one can understand that they have a lot on their plate at the moment.
This is a good operational announcement ahead of the figures on March 7th where the full presentation will be made. The debt reduction is welcome and more than expected, I like the hedging programme and the pulling in of cash to cut the borrowings. Despite that it is continuing with Tolmount, Zama and even Sea Lion to add to the existing good quality portfolio which gives confidence for the future.
A brief comment on MATD this morning as I have a meeting with CEO Mike Buck in the book for next week where I hope to get chapter and verse. Talking post well analyses after two high profile dusters is brave but demonstrates a deal of optimism for the remaining programme. In block V they like the light oil from the drilling fluid in the dry holes and they like the Taats Basin especially the Raptor and will next drill Fox or Raptor. In Block XX they have mapped the Heron, Gazelle and Antelope prospects and with Heron being deemed to be an extension to the Petro China discovery it becomes an appraisal well. Apart from that it will be more exploration and the high risk/reward that goes with that…More next week.
When I read the Angus announcement I thought that I was in some parallel universe, I’ve heard a lot of pony in my near 40 years in the sector but this takes the bacon. Ex Chairman, who left for a good reason as I remember, trying to sack CEO and replace him with Lord Lucan and Adam Habib which immediately prompted the resignation of Rob Shepherd (which is a very telling indeed). As for the financing and the £3m facility the less said about that the better. What a total shambles, whatever the quality of the asset this looks like being as close to uninvestable as it gets, your call…
I wouldn’t normally comment on Non-Exec or broking appointments but the announcement that AEX has appointed Linda Beal as an independent NED is encouraging for shareholders and provides much needed backbone to the board. I don’t comment on broker quality as such but the addition of a good city and oil industry name as an advisor can also only help the process for the company. All they need to do now is to fill the Chairman role, I’m sure that the usual headhunters are on the case…
The disruption on the M6 last night prevented most of the Burton fans from getting to the first leg of the Haribo Cup semi-final and quite a good thing too. When they are at home for the second leg I hope that they are singing that old football song, we’re going to win 10-9, we’re going to win 10-9…..
On today's podcast: W Resources provide an update on progress at La Parrilla, its tungsten-tin mine in Spain. Emmerson completes the Environmental Baseline Study at their potash project. Malcy talks about: Eco Atlantic O&G, Range Res, Bahamas Petroleum & Hurricane Energy. John Stepek author of Sceptical Investor.
SP Angel daily look at commodities and miners, featuring: Bluebird Merchant Ventures* (BMV LN) – Funding raised to complete pre-construction phase for Gubong gold mine Cora Gold* (CORA LN) – Sanankoro oxides demonstrate up to 97% gold recoveries Chaarat Gold* (CGH LN) – Joint venture to build gold mine in Kyrgyzstan Strategic Minerals* (SML LN) – Moving to 100% ownership of Redmoor
John Peters, Managing Director of Strategic Minerals, commented: "The recent resource upgrade has highlighted the potential world class nature of the Redmoor Tin/Tungsten project and has given the Board confidence to consolidate control.”
Five financial stories, trending today in a 70 second podcast, including: Accrording to the the British Chambers of Commerce, UK companies look set to cut investment by the most in 10 years in 2019 because of Brexit, even if Prime Minister Theresa May gets a deal to ease the country out of the bloc.