WTI $57.10 +$2.17, Brent $61.30 +$2.73, Diff -$4.20 +56c, NG $2.15 +4c
A big rise yesterday as President Trump backed off a bit in the tariff war and didnt want to have American kids without their electronic gifts of choice over Thanksgiving and Christmas. Not quite so clever now as the Chinese data was poor in both industrial output and retail sales and the API stats didn’t quite roll as planned. They showed a build of 3.7m against the scribblers wrong sign of -2.8m bbls so we go to the EIA numbers later for corroboration but the gains have been given back this morning.
It looks like the impasse has been broken at Heron-1 for MATD and that Central and Provincial Governments are ‘resolving their issues and have given verbal approval for the company to resume operations on Heron-1 whilst necessary paperwork is completed’.
Operationally, preparations are being made to drill the 8 1/2 inch section as soon as possible. Standby costs so far are +/- $150,000 which is a pain but the company remain confident that both Heron and Gazelle should be completed before the end of the drilling season. The shares have rallied by 33% which is good but will only go better when some or all of these three wells come in.
Full steam ahead for IOG this morning as they bring forward the process for delivery of the Core Project, phase 1 contracts are being retendered and will be awarded shortly after FID, expected next month. First gas is expected in July 2021 from the Southwark field but the company is confident enough to bring forward the drilling programme so that Elgood comes earlier and will then come onstream with Blythe. Whilst this involves higher initial capex it means that these fields will come onstream over winter 2021 which should more than offset the risk given higher prices in the winter.
Whether it is the increased capex and the unexpected earlier costs as described above or a reluctance to raise any equity in the funding process, the proposed amount of the bond issue goes up from £70m to £88m and the marketing process starts this week. The next few weeks with this and the Farm-out completion preceding the FID makes it an important time for IOG.
The Touchstone figures spoke for themselves and as a result of cash flows and acceptable netbacks the company is in a ‘comfortable’ position despite a sometimes heavy tax load. The debt is still a concern but as a result of the extension executed in 1Q 2019 the commencement of principal payments doesnt happen until January 2021. Clearly of most significance to Touchstone right now is the Coho-1 well which spudded last week and which is ‘potentially transformational’ to the company.
Zenith has announced that drilling operations at the C-37 well in the Jafarli Field, Azerbaijan have commenced. Zenith has taken time and trouble with personnel and kit and innovative financing and the next few months will fascinating and not without a chance of significant success.
Yesterday I did a Podcast with Doc Holiday of Total Market Solutions, we talked about, RRE, ECO, RBD, MATD, BLOE, UJO and Amer. Here is the link.
How could it happen? Celtic conceded 4 goals on the night at home and lost the tie 5-4 overall and now go to the Mickey Mouse competition on a thursday night.
The second test at Lords was due to start this morning but heavy rain means that little if any play is expected today.
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