The Oil Man: Oil price, ExxonMobil, Rockhopper, Andes Energia
3rd February 2016 12:29
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WTI $29.88 -$1.74, Brent $32.72 -$1.52, Diff $2.84 -23c, NG $2.03 -13c
When the market feels upbeat, it envisages a meeting between OPEC and non-OPEC producers which results in a supply cutback and a sharp rally in prices. When it wakes up and finds it was all a dream, reality sets in and the fundamentals still show varying degrees of misery.
The Venezuelan oil minister continues his tour of producing nations, one day Russia, the next Qatar; after that he's off to Iran and Saudi Arabia to try and gather support - but it don't come easy, as the song goes.
When he gets to Iran, for example, he will have read the head of the National Iranian Oil Company's comments about March production targets, which are an almost impossible 2.3 million barrels per day (b/d), up from 1.5 million in January and 1.44 million this month, but still headed the wrong way. There is a way out of all this, but it will take more than a whistle-stop tour to fix it.
Add to that the inventory stats and one could get even more down in the dumps; last night the American Petroleum Institute reported a stock build of 3.8 million barrels, with Cushing adding 141/- and gasoline up by another 6.6 million barrels. With mild weather forecast in the latest quarterly report, there are few straws to clutch at…
ExxonMobil
After the disaster that was the results and share price reaction (Bo was "surprised" at the market reaction), sort of steadied the ship; upstream was bad, as expected (but without the writedowns and impairments) and downstream was good, doubling the profits from fourth-quarter 2014.
Capital expenditure cuts are significant and the buyback is suspended, but this is just keeping the powder dry - Rex is planning stuff, the statement read well.
"The scale and diversity of our cash flows, along with financial strength, provide us with the confidence to invest through the cycle." For this, read: we have substantial buying power and will use it when appropriate.
Rockhopper
The Italian government has decided not now to award the production concession to for Ombrina Mare, despite the company having all the required technical and environmental authorisations and despite an extension to the licence having been awarded until December 2016. The company's other Italian interests, in particular Guendalina, are not affected and I have nothing in my valuation at all for Ombrina Mare.
As ever, Italy defies logic; a country that is energy-short and hardly flush with cash, it has produced curbs on hydrocarbon production that is much-needed domestically. Hardly the stuff to encourage inward investment, although it was ever so.
Rockhopper talks about its options, which include claiming for damages and compensation against the Republic of Italy and an arbitration process under the Energy Charter Treaty - but realistically it may just broaden its expansion into the greater Mediterranean area further away from Italy…
Sundry
has announced a production update for December in which it has 2,036 b/d net in Argentina and a 26% share of 1,251 barrels of oil equivalent per day in Columbia.
More importantly, the Vaca Muerta remains a top priority for, amongst others, Exxon…
And finally…
A big programme in the Prem last night, the feature of which was a wonder goal by Jamie Vardy as the Foxes stayed top with a 2-0 victory over the HubCap Stealers.
Elsewhere, there were wins for the Noisy Neighbours, Spurs and even the Red Devils, whilst the Gooners dropped points with a 0-0 against the Saints.
The Hammers were gifted an early advantage against Villa, down to 10 men after 17 minutes, and duly won 2-0. The Eagles' poor run continued with a 1-2 home defeat to the Cherries and the Baggies rescued a point against the Swans.
Tonight it's the Toffees hosting the Magpies and Chelski go to the Hornets to complete the set of fixtures.
And in South Africa, the one-dayers are underway; England have won the toss and are batting.
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