The Oil Man: Oil price, Premier, Independent, Tullow

WTI $48.22 +$1.43, Brent $50.89 +$1.04, Diff -$2.67 -39c, NG $2.67 +6c

Brent hasn't been higher since 23 June, roughly the time that the Saudis started whacking up their production, partly of course to offset domestic use for summer power generation.

Production from the Kingdom of Saudi Arabia was 10.55 million barrels per day (b/d) in that month, up 280/- b/d according to Reuters, and the Saudi response has been that "there was a strong demand for our crude as non-OPEC supply is declining fast as well as outages and demand strength".

Reports show that outages did continue then, particularly from Nigeria.

Readers will remember that, after the expiry of September Brent on 1 August, things looked bleak. But, writing here on the third of that month, I suggested that there might be "a decent rally" as the charts were oversold and offered retracement.

The 22% rally since then has come at a time of high stocks, increasing production, moderating demand and increasing short positions in the market - which tells you all you need to know about the fundamentals…

Worth noting that the first shipment of US Liquefied Natural Gas has been exported from the US through the newly expanded Panama Canal on its way to Japan. This has come from the Sabine Pass liquefaction terminal - how long ago did we start talking about that?

Finally, the greenback remains weak and the inventory stats showed a draw in crude and gasoline, which also helped the bulls this week.

Independent Oil & Gas

Independent has announced that the Skipper well has completed, the secondary targets were reached and were dry and the well is being plugged and abandoned.

The primary reservoir is as already announced good, with viscosity above expectations and, if confirmed in the lab, will improve development economics. The shares are off the recent top, maybe due to rather too high expectations, but apart from that reflect significant success and determination.

The commerciality of Skipper is increasingly likely to be confirmed.

Premier Oil

I get regularly beaten up for having been too optimistic about Premier throughout this year and, whilst that stance is not yet vindicated, I felt that yesterday's results and presentation are moving in my direction.

Certainly the share price is reflecting the good news; at present it is up at four times its January low and more than justifies inclusion in the bucket list.

All the operational factors are ticking the boxes: production is beating guidance through efficiency and the significant "hidden value" that has emerged from the E.ON deal. Indonesia and Vietnam are proving to be sound cash cows and higher gas demand from Singapore and infill drilling will be enormously productive there.

Solan has been a right royal disaster - but now it is onstream, with the second well now online and producing cash flow, so time to let sleeping dogs lie and learn from mistakes.

That means ensuring that Catcher is ready for production next year - and, with better-than-expected productivity, it may require fewer wells, thus saving more money; the capital exepndotire (capex) is already 20% below sanctioned budget.

There are opportunities in the gas portfolio at Tolmount and its neighbour the Southern Gas basin has a number of interests that work at <30p/therm. Sea Lion remains in progress, with FEED going well and costs falling as "bid packages" are assembled and will be triggered when in sight of sanction - so bids may be underway at the end of the year.

Premier still considers that a farm-down is required here and, whilst many companies show interest, the sight of a chequebook will work wonders.

The financial highlights were of positive operating cash flow, genuine and long-lasting cost reductions and capex being lowered, but the carrot of progress on debt restructuring was all people wanted to hear about, and here the news appears to be moderately positive.

Expect to hear early thoughts on a deal, maybe, in late September and a conclusion by the end of the year, but with enough headroom to continue to develop the asset portfolio.

Overall I think that the benefit of the doubt having been given has rewarded such a call and that Premier has made a significant move in the right direction. Whilst debt levels are still worrying, the management has done more than enough to look forward to coming out of the other side, not something a number of commentators have suggested.

Still in the bucket list.

Sundry

Tullow announced yesterday that it has received first oil from TEN which, to be frank, I thought had already happened - but good news all the same.

And on this subject Aminex announced that it had received first payment for Kiliwani North Gas from the Tanzania Petroleum Development Corporation, which is highly significant and validates all Jay's hard work and determination to succeed with this project.

It also vindicates those of us that believed in it all this time!

And finally…

The Olympics are concluding this weekend and, whilst it has been exceptional for Team GB, I suspect that it has done little for Brazil. With few people being able to afford tickets, most venues have been virtually empty apart from the Team GB followers shouting the odds. Yesterday provided more medals in all sorts of sports and there might be a little more tonight and tomorrow.

Tonight, for the first time, the Premiership launches Friday night football - which is all we need: football every night of the week...

The Red Devils host the Saints - which is always tasty - and the pick of the fixtures tomorrow includes Spurs v the Eagles and the Gooners continuing their tricky start going to the Foxes, whilst on Sunday the happy Hammers have their first league fixture at the London Stadium and old rivalry is renewed in the North East as the Maccams host the Boro.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.