Opec week finally comes around and as usual it seems that most of the decisions have been made in advance in order to give the impression of harmony and accord amongst the member states. Obviously, with the Opec/Non-opec agreement there are more meetings to squeeze in ahead of Thursday’s formal session but there always have been plenty of meetings on the side of the main event.
The only danger I see is if for any reason the expected outcome, which is a rollover for the rest of 2018, does not happen. There is little doubt that such an accord is ‘in the price’ and anything less than that would be seriously disappointing. Clearly the market has got it into its head that Russia are the potential banana skin and that industry leaders last week put significant pressure on Secretary Novak to influence Vlad but I think that the relationship with the KSA is probably stronger, at least for the moment. It hasn’t stopped some of the more childish scribblers using licence and referring to Putin as the Czar of the international world oil industry but there again kids will be kids eh?
The Keystone pipeline repairs are, as I suggested last week, going to take longer than expected to complete and as a result it will be the year end and not the month end when it will be back on stream. This might mean that up to 500/- b/d of crude will be off the US market with consequent effects on the market. One of which you can see above as WTO strengthens (at one stage it nearly breached $60) and the differential narrows, the other is of course a move into prompt backwardation and a fall in inventories, all good for the oil price in the short term. With US production up at 9.66m b/d they are doing their best to ease the situation, any other time that would have been grist to the bear’s mill but not at the moment.
I notice that recently listed United Oil & Gas has farmed into a 20% interest in the Walton-Morant licence offshore Jamaica. Tullow has been building seismic data here over the last three years and will acquire more next year. Whilst this is clearly high impact, high risk, frontier acreage it does show that there is continued interest in Latin America at the moment.
President continues to be active in the financial markets and today announces its first Argentine commercial bank loan with two leading banks in country. They have, with Banco de Credito and Banco Hipotecario arranged an $8m loan over 42 months at 7.5% above Libor. This will be used to defray part of the cost of the recent acquisition of the Nequén assets bought from Chevron and will free up more of the company’s other financial resources and positive cash flow to ‘materially grow its Argentine business as appropriate’.
With over $21m raised in recent weeks in both equity and debt markets, the company’s flexibility is seriously improved and any reduction in exposure to IYA has got to be good news. Whilst the whole sector is appearing to take little or notice of $60 + oil and share prices are ludicrously low and offering significant value in many areas patience will be needed but when investors do work it out PPC will be one of the first to rally.
World Oil & Gas Week
This time next week hundreds of delegate will have just started this year’s WOGW in London. I am hoping to get along as there is an extensive list of speakers from all parts of our industry. As a member of the Judging Panel for the Awards Dinner on tuesday I know quite how much time is put in trying to select the very best in each category.
With wins in the Prem for the Noisy Neighbours, the Red Devils and the Gooners, who yet again won with a late pen, and all of Spurs, Chelksi and the HubCap Stealers dropping points the top of the table has a Manc look to it. At the moment the blue side of the City are going to take some catching though.
The rugby showed how much progress Scotland have made in recent years, it would have been interesting against 15 players but still I expect a comprehensive thrashing of the over confident Wallabies. Next season’s Six Nations now takes on a much more interesting note with the home nations very even, England v Scotland on February 24th 2018 is definitely one for the diary…Elsewhere England were not in cruise control against Samoa but did have plenty up their sleeves whilst the All Blacks as usual beat Wales.
The cricket proved that England have not lost the art of the middle order collapse and the defeat was a spineless, pathetic apology for a professional touring team. The worst thing is that this is about as good as it gets for England who, apart from the obvious selection of KP, have no one else in the draw to lean on, I hear Mark Wood is 80% fit, olé as they say in all the best bars in Adelaide…