The Oil Man: Oil price, Rockhopper, Amerisur, Faroe
20th December 2016 10:53
WTI $52.12 +22c, Brent $54.92 -29c, Diff -$2.80 -51c, NG $3.39 -2c
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…
Rockhopper
An update from , whose shares have been unfairly treated in recent weeks, the market tarring them with the uncertainty brush.
Today RKH shows us that economic production from Egypt and Italy is 1,350 barrels of oil equivalent per day (boe/d) with realisations up from €0.12 to €0.18, which is handy enough.
The company is making significant progress on Sea Lion through progress on the FEED, with much improved economics giving an updated field development plan; indeed life of field costs on phase one are now as low as $35 per barrel.
Whilst on the Falklands, the insurance settlement on the Isobel Deep fiasco resulted in RKH getting a net payment of $49 million (£39.6 million), which seems ok under the circumstances.
In Italy, the Ombrina Mare nonsense has resulted in the company going to arbitration; don't 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 $80 million 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 - 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.
Amerisur
has announced an acquisition of a couple of assets in Columbia from . It's taking the remaining 50% and operatorship of PUT 30 and a 40% WI in PUT 9 at an "immaterial" cost.
This is the sign of the OBA pipeline 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.
Faroe
We have been waiting for the announcement of new debt arrangements for a while and so today's announcement comes as no surprise.
With its extremely strong position, a new $250 million reserves-based lending - plus $100 million accordion - and a Norwegian Krone (NOK)1 billion (£93 million) Norwegian debt facility - plus NOK500 million accordion - are just what the doctor ordered, and conclude a highly successful year for the company.
And finally…
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…
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.
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