Oil price, Premier, Reabold, AAOG – And finally…
WTI $57.62 -$1.96, Brent $64.35 -$2.13, Diff -$6.73 -17c, NG $2.31 -10c
Oil price
It was a quiet day yesterday in the oil market until various stories about Iran started to come out of Washington late on. Rumours of a deal with Iran on their missile programme sent the oil price down by two dollars even though after Secretary of State Pompeo seemed to rule out any such deal later. A deal was made less likely by Iran apparently demanding that the US stop selling weapons to Saudi Arabia, that ain’t ever gonna happen…
The API stats were very mixed, we can expect this for a few days and they had a draw of 1.4m barrels, less than the 2.7 forecast. Products were also odd, gasoline showed a small draw but distillates built by 6.2m which flummoxed the watching analysts, not difficult that though…
Another excellent operational performance from Premier who continue to surpass themselves in all areas. First half production was 84.1 kboed 11% up on last year and on track for the FY guidance of 75-80 kboed. FCF was $180m which reduced debt to $2.15bn, debt reduction for the year is now guided to be at the top of the range which realistically should now be $300-350m+. Opex has reduced to $12/boe and capex remains at $340m.
As before, Catcher has been the star performer with another increase and now operating at 99% operating efficiency so the question is, where to go from here? Well, the ability to max production has moved the number to the right somewhat but as an insurance, the Catcher North and Laverda satellite fields are expected to get formal approval ‘imminently’. In addition, the Varadero infill well (V5) which is scheduled to spud in the second quarter of 2020, will help maintain Catcher Area production at 66 kbopd (gross). All this more than justifies the company’s original decision to go ahead with the project which was no slam dunk at the time.
At Zama there is a resource upgrade to 670-810-970 mmboe and elsewhere in Mexico the 3D seismic on Block 30 hopefully will delineate two slightly smaller than Zama prospects. Perhaps the most exciting part of the portfolio at the moment is Tolmount where the East well is about to spud (late) but everything else is on target to deliver first gas late in 2020 and there is even a Tolmount Far East to consider. It may be that Tolmount could be the next Catcher, its scale in reserves and production is meaningful and it could dovetail nicely, who would have thought that when they bought it?
At Sea Lion it looks as if we are genuinely getting closer to the latter stages of what has been an incredible journey. The company has compiled an impressively large set of independent reports and ‘these, together with the Preliminary Information Memorandum, will form the basis of a loan application package which Premier plans to submit imminently to export credit agencies for the senior debt component of the project financing structure’.
It is worth noting that the farm-in by the company into South Andaman and Andaman 1 recently, to add to their existing acreage at Andaman 2 will now give them a 20% interest and a partnership with Mubadala Petroleum offshore Indonesia. This now looks to be developing into a prominent part of the Premier portfolio who have been trying for some years to find the right add-on to their Asian assets and may be in business by late 2020 or early 2021.
There is actually a lot more in the update but these points are the most salient, Catcher is moving to the right and has wells to keep production up, Tolmount ‘might be the next Catcher’, the Andaman area has unique potential and of course Sea Lion should be a substantial part of the business in the next decade. Shareholders should be very happy, the stewardship of Premier is in good hands across the board. Below is the link to the interview I did with Tony Durrant a few weeks ago, it now becomes more apparent how important some of our discussions were as the story unfolds.
Core Finance CEO interview: Tony Durrant of Premier Oil
Reabold has confirmed today that as the Parta Energy deal has completed, Danube Petroleum (RBD 37.5%) will now own 50% of the Parta exploration licence. It will also own 100% of the Sole Risk Area which includes the IMI appraisal well which it plans to drill ‘in the coming weeks’.
Well, they got the money and whatever fish or fowl it was it means that the TLP-103C well will now be re-entered. Miton has taken £2.6m at 5.2p (current price 4.3p) in the hope that the money is enough to bring Djeno oil to the surface, if it is it will all have been worthwhile but it must have been some hell of a decision. Making up the £8.25m raise is £5.7m from sundry funds under an ‘Investor Sharing Agreement’ alluded to when the raise was initiated. I honestly don’t know what will happen at monthly sales times but then that’s part of the fun I suppose…
And finally…
So, Steve Bruce is confirmed as the new manager of the Magpies which will go down well in only some areas…
Celtic are at home in the second leg against FK Sarajevo and should be OK, leading 1-3 from the away leg in this Champions League qualifier.
And Joey Barton charged with ABH after an altercation in the tunnel at Barnsley, quelle surprise eh?
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