WTI $59.09 +62c, Brent $65.06 +32c, Diff -$5.97 -30c, NG $2.27 -4c
When I signed off yesterday, quite late I admit, oil prices were about $1.50 higher after news from G20 that an agreement had been reached between Saudi Arabia and Russia to keep supplies under control until March 2020. Looking at the prices above you can see that Brent in particular lost most of that gain late in the day and with it the differential fell below $6. Now, it is not unusual that the differential drops just after expiry and the August Brent contract disappeared at the weekend but confidence in both did fall yesterday.
Whether it was because day one of the Opec meeting took over six hours to ‘ratify’ an already agreed deal (no one, least of all Opec Ministers like a deal imposed on them) and rumours circulated that there was a divide and that is before the others get let in today at the Opec+ meeting. Finally, again as expected after recent refinery run data and driving miles stats the gasoline price is on the up again, last week it was $2.71, up 5.9c w/w but still down 13.1c y/y. World growth numbers are already being talked down.
Reabold has announced a placing which raises a modest £2.65m, at 1.10p, it is at a 29% premium to its last raise and also the 90 day VWAP and a nil discount to last nights close. The proceeds are for ‘further strategic investment into the current portfolio and potentially into further investment opportunities’.
Unlike other companies the RBD model, with its invest, develop, sell strategy means that tapping the market is important in order to add value for shareholders in such cases as the West Newton discovery recently. The significant rise in the share price, like that of Union Jack, gave an opportunity to raise money, when the ducks quack etc but for Reabold in particular although the money helps it is not the main reason.
My view of West Newton has been clear, it is a massive discovery that has yet to be appreciated by the market either on an oil or a gas basis and as such more money has to be spent in order to ensure that shareholder returns are as high as possible. Reabold might be a holder or a seller of the asset but it aint letting go at this price, hence the raise. Obviously it adds to the balance sheet for other projects such as Romania but in the meantime onshore UK is significantly undervalued and as such the company’s best way of franking that value is to invest more in it. As I recently said about UJO, Reabold shareholders have something special here and should hang on for the ride…
There are only two important things for IOG this summer, successfully drilling the Harvey appraisal well and getting the farm-out done. I say farm-out because the alternative of raising the hundreds of millions necessary to develop the ‘Core Project’ as it is known at home themselves is not a runner, at least not at the moment.
So, Harvey is still on target to spud in July according to today’s announcement, assuming that is the case, and in the event of success, which the company reiterates is 63%, will take around two months giving a date of early October for the result to come out.
As for the farm-out the company say that things have ‘progressed substantially’ and they state that they expect further updates, plural, in July, this they say is needed to provide a ‘significant’ amount of development funding prior to FID. You bet they need funding via a wealthy partner who can provide the moolah for development but only one thing gets me, if I was a potential farminee I think I would want to know the result of the Harvey well before I got the cheque book out, call me old fashioned…
Wimbledon continues and after 15 year old Cori ‘Coco’ Gauff beat Venus Williams on the first day then shocks are definitely back in.
Tonight sees the first Semi Final of the Womens World Cup and England take on the USA who are number 1 in the world.
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