Posted by Malcolm Graham-Wood - Malcy's Blog
Oil prices have drifted after the big rises earlier in the week but barring the unforeseen the market looks to be set reasonably fair. Today is the end of the week, month and quarter so don't expect any fireworks, also with Brent expiry and rollover of contracts looking economically attractive there shouldn't be much technical selling.
Retiring chief of Chevron, John Watson has made some interesting comments on the market, ‘the heavy sledding of capital and cost reductions is behind us' and he has a pretty optimistic view to leave to his successor. With capex half of last year and opex costs back to 2009 levels he says that the business is set pretty fair at this oil price with some potential commodity price upside. There is little doubt that some, if no all of the majors are showing signs of getting the cheque book out, viz Total being seen in all the best data rooms around the world.
Some companies just can't avoid playing a game of dare with their results announcements, today being the last day to present or fall foul of the authorities before the results window closes. Given that most if not all of the results are historic and of no use to man nor beast I will comment only on updates in the statements otherwise we will be here all day.
Starting with Peter Levine who shares my view of results, ‘they are a milestone only and in the rear view mirror'. Going forward he is pretty optimistic with the objective of delivering profits, good margins and cash flow that will lead to capital growth and ‘in the foreseeable future, dividends'. PPC expects the current Argentine portfolio added to the recent acquisition to give the company production of 2,300-2,400 b/d and on an upward trajectory, what's not to like?
I commented extensively on GPX after my recent meeting with John Bell and his hard work at the company continues. Tunisia is headed for the exit door, as will be Morocco should no partner be found there, whilst the Colombian assets are being held on a care and maintenance basis as GPX still sees value there. So his task continues to be managing the non-core assets whilst ‘preserving the value of the core assets in NE Syria. Finally he is taking a substantial axe to the cost base, my recent report said that last year's costs of $5m were down sharply, for the 1H 2017 the number is $1.8m proving how badly the company has been run over the years.
No figures here just an operational update post the hurricanes that have affected Texas recently. At VOBM#4 there is a further delay and the rig will now be on site on the 24th of October, I have ringed the date in my diary, after which it should be a 30-40 day operation. At VOBM#2 the workover rig is scheduled to be on site ‘early next week' and the company is bullish (nearly a typo there..) about prospects for this troublesome well. Finally, the work is underway on the gas processing facilities and first gas sales are expected in early November and revenue in December, a date I have also ringed in my diary along with the opening of my Advent calendar.
Independent Oil & Gas
The Thames pipeline acquisition was the feature for IOG as is saves them £100m of costs and makes the SNS gas hub project viable. The Blythe and Elgood FDP submissions are in and various agreements have been made with Schlumberger who will help in the prior period to the FID on the SNS project. Finally, as always, ‘Advanced funding and commercial discussions with key partners for the development of the SNS gas hub continue' and negotiations continue with the Skipper well creditors for ‘management of liabilities due December 2017' ouch.
Andrew Austin, RRE Chairman is confident that this is ‘the optimum time in the E&P lifecycle for smaller companies to acquire assets from larger ones' and he is certainly on the charge in terms of deals on the go. RRE is closing the deals already announced with Maersk, Sojitz and Egerton and expects completion in Q4 2017. Of more interest is a juicy titbit in the statement that says that the company ‘is advancing other transactions that will enable RRE to become a significant producer in the region', this I assume remains the UKCS and N Europe areas. This sounds to me like a big hint that a deal might be in the air and could propel the company towards its two year target of 10,000 b/d, watch this space.
In last night's Boropa Cup the Gooners won easily enough as expected but the Toffees slipped up at home drawing against Apollon Limassol…
This weekend the standout fixture, indeed maybe of the entire season is the visit of the Noisy Neighbours to Stamford Bridge tomorrow. Already missing Mendy for 8 months City are now short of Aguero who broke a rib in an Amsterdam taxi last night, as one does midseason and ahead of the biggest game of the year…Elsewhere the Eagles go to the Theatre of Dreams and Spurs head to the Terriers. The Baggies, due a bit of luck, host the Hornets and the Hammers entertain the Swans. On Sunday the Gooners host the Seagulls whose fans may not know which end to sit at (sorry!) Burnley go to Goodison and the HubCap Stealers are at St James's Park.
As we come towards the end of the flat racing season it is the Cambridgeshire at Newmarket tomorrow as well as the Cheveley Park Stakes and the Middle Park stakes. Also I think that the Ayr Gold Cup is at Haydock after the Scottish course let everybody down last week…
F1 moves to Malaysia and this morning the Ferraris and the Red Bulls are dominant with Mercedes struggling to find any pace.
And the cricket season finally ends after a week of tumult, Middlesex, last year's winners, lost at Taunton and blamed the pitch and are relegated with Warwickshire. Today is the last of the One-Dayers against the West Indies who go into it 3-0 down in the series.
And in the rugby Premiership the best looking games appear to be Wasps v Bath, Saints v Quins and the Tigers v the Chiefs.
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