Posted by Malcolm Graham-Wood - Malcy's Blog
Oil was up over a dollar on friday making the best part of two on the week, another 50c rise this morning is getting people worked up about new highs and even big figures. My year end target of $60 for Brent was looking pretty sorry for itself back in June but I didnt change it then and i'm not planning to now. I am on $70 for June of next year but only as a target, if the growth remains as I have always said, +1.6m b/d and the Opec/Non Opec deal is extended or even tightened that is perfectly feasible.
Check out the rig count as well, at $55 WTI one might have expected an avalanche of rigs to be taking advantage, but down 8 oil units to 729 the count is the lowest since May. I remain of the view that US shale, whilst an important number is not the elephant in the room as some portray it as being. Sure, I expect production and more forward selling but so far its not obviously having a significant effect.
Finally the rounding up of 100 or more Princes, Ministers and prominent businessmen in Saudi Arabia at the weekend should have no effect on oil policy or production but it is deemed to be further control being taken by MbS who will take over as Monarch next year.
October production numbers from AMER and of course the vital OBA export figures all of which point to the company hitting its short term targets. Average production of 6,172 b/d with a peak of 7,398 and current of 6.023 shows that although it swings around somewhat the numbers are increasing.
The OBA export numbers were better still, an average of 6,102 was good but better was a peak of 8,001 b/d which shows that when production is flowing well the pipeline and export facilities can cope. The 3rd export pump at the Platanillo export facility is now fully installed and completing testing with the aim of being in service later this month. The company remains on course to hit its target of 7/-b/d + by the end of the year and whilst there are always times when production and transportation can be hit for all the usual reasons in the area it seems that with CPO-5 on L/T test production is, at the moment, reasonably stable and rising.
AEX is down this morning after an announcement that has spooked the market regarding gas production from Kiliwani North-1. Following a power outage a few days ago in Dar es Salaam gas demand fell and has reduced flow rates to around 1 mcf/d and their is some technical validity to the thought that the well is draining a compartment within the Greater Kiliwani North structure and ‘exhibiting slow recharge'.
Solutions include installation of compression facilities, which should boost production at minimal cost, in the meantime the current, lower production should have beneficial effects on maximising long term recovery and better reservoir management.
AEX has no debt, cash in the bank and whilst problems at Kiliwani North are irritating, investors should be concentrating more on the Ruvuma PSA where a 25 year development licence has been applied for. It should be noted that the announcement from Solo, who are not the operator, is probably slightly more accurate and that a 20% fall in the AEX share price is way overdone and an opportunity to buy some cheap stock…
Union Jack/Egdon Resources
A modest deal onshore UK today but for Union Jack it builds their position and adds near term cash generation. They are buying 20% of the Fiskerton Airfield oilfield in Lincolnshire from Egdon Resources for £137,000 plus UJ will fund re-processing of the 3D seismic dataset at a cost of around £35,000.
With the Noisy Neighbours beating the Gooners 3-1 yesterday despite Wenger's feeling of huge grievance about the fall of Sterling and Chelski beating the Red Devils 1-0 there is quite some gap opening up at the top and they are playing terrifyingly good football. Elsewhere Spurs kept in touch by beating the Eagles 1-0 and with the HubCap Stealers beating the Hammers 1-4 they put the final nails in Mr Bilic's coffin he was sacked as the spectators sang ‘in the morning'. With the Terriers beating the Baggies, there might be a vacancy there although the thought of Tony Pulis turning up on the doorstep might give Hammers and Toffees fans nightmares if the thought of David Moyes was not enough…
For Australians the Melbourne Cup is the horserace that stops a nation and so at 4am tomorrow all will come to a standstill.
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