Posted by Malcolm Graham-Wood - Malcy's Blog
The only major item of note yesterday was a narrowing of the discount of WTI to Brent, this came partly as traders feel that the the UK pipeline reopening brings more Brent to the market and slightly weakens the relative prices and partly as the gap has simply become too high. Apart from that with Christmas approaching traders are quietening down and leveling their books, also holidays are being taken early, something I can corroborate if out of office replies to the blog yesterday are to be believed….
An update from Rockhopper whose shares have been unfairly treated in recent weeks, the market tarring them with the Premier uncertainty brush. Today RKH show us that economic production from Egypt and Italy is 1,350 boe/d with realisations up from €0.12 to €0.18 which is handy enough. The company are making significant progress on Sea Lion through progress on the FEED with much improved economics giving an updated FDP, indeed life of field costs on phase 1 are now as low as $35pb. Whilst on the Falklands the insurance settlement on the Isobel Deep fiasco resulted in RKH getting a net payment of $49m which seems ok under the circumstances.
In Italy the Ombrina Mare nonsense has resulted in the company going to arbitration, dont hold your breath for a settlement. Overall costs are coming down still, Italy headcount is now down 50% and in the UK the Salisbury office is to go, with the London office now the only one left open. With $80m of cash on the balance sheet the shares are ludicrously cheap but I do understand the mechanics of the Premier/Sea Lion situation which is dominating sentiment. Having said that, if you compare Sea Lion with the Cairn/Far discovery offshore Senegal, and I think you can, Woodside, or anyone else for that matter would be better placed to farm-in in the Falklands on pure value grounds. More on RKH after I have seen the company tomorrow.
AMER has announced an acquisition of a couple of assets in Columbia from Talisman. They are taking the remain 50% and operatorship of PUT 30 and a 40% WI in PUT 9 at an ‘immaterial' cost. This is the sign of the OBA cluster policy in action and at negligible cost, strengthens the asset portfolio by being the main player in the area. Amer shares are well below what I value them at and have suffered disproportionately to the sector, I would expect this to be re-balanced in due course as the local issues are sorted.
We have been waiting for the announcement of the new debt arrangements for a while and so today's announcement comes as no surprise. With their extremely strong position a new $250m RBL + $100m accordion and a NOK 1Bn Norwegian debt facility +NOK 1/2bn Accordion is just what the doctor ordered and concludes a highly successful year for the company.
Win those games you might drop points in and you are halfway to the title and last night the HubCap Stealers nicked the three points with the only goal of the match in minute 95…
England are making hard going of chasing nearly 800 runs, as I write they are 190-4…
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