Posted by Malcolm Graham-Wood - Malcy's Blog
There is little doubt that less than 24 hours away from one of the most crucial Opec meetings in recent history few if any people know what the outcome might be, and i'm talking participants as well as spectators here. In Vienna even a chance chat over a coffee is ‘an official meeting' so yesterday was full of such discussions sometimes by phone. So, President Putin ‘met with' President Rouhani and agreed to ‘coordinate' their production, the Iranian delegation met with the Iraqi delegation and the former spent most of the meeting on the phone, likely receiving instructions. Iraq has been more amenable deal-wise, Iran less so I understand.
As has almost always been the case, the bottom line is totally dependent on what the Saudis want, after all the weight of any cuts which are ‘agreed' will fall on their shoulders. Dont forget that the corporate finance department of the KSA will be whispering in their ears about how much easier the Aramco IPO will go at $60…..
If the statement starts off something like this ‘we are all confident that the oil market is re-balancing satisfactorily on its own', head for the hills.
There are fewer more interesting sights in the oil industry than watching the good Doctor Trice on the move when he spots an opportunity. After an incredibly busy few weeks in which Lancaster has gone from being a mere discovery to what might be a West of Shetlands hub, with wells on Lincoln underway and Halifax as of yesterday confirmed with the Transocean Spitsbergen next, what more might come out? Of course, how silly of me not to think that with all this going on and an imminent FID on Lancaster and first oil due in 2019, HUR would need an FPSO. Cue this mornings announcement, whereby the company announced that they had hired the BES Aoka Mizu FPSO for the Lancaster EPS and up to ten years more if signed by this time next year. That of course means that first oil in 2019 is more likely, assuming that Lancaster gets the go-ahead next year, would we ever doubt it. Oh yes and in the middle of all that they raised £75m just to be going on with…Mind you, with all this drilling, head office will be quiet over Christmas…
An operational update this morning but one which should never have been, at least not right now. The company has a bunch of meetings slated with its shareholders and I suspect that the Nomad or other advisors felt that they should go ahead even if it meant that the operational news is made to look distinctly second rate.
The announcement says that the VOBM#3 well flow testing is ongoing and that the data so far is ‘inconclusive' with 1,500 mcf/d of natural gas and 274-740 b/d of 51º API oil but the ratio of gas to liquids needs stabilising and more work needs to be done. Frac fluids from a one-ff are only 60% recovered and it needs to be cleaned up and needs diagnostics. The company are saying that the well will be a commercial well but maybe just not as good as the VOBM#1 well to the East. Indeed, there is every likelihood that they have just found themselves right on the edge of the reservoir and that's it. With gas processing, probably now by a third party and the third option in terms of selection next spring will see production and netbacks improved should this option be chosen.
The market has made its decision and PANR are off a short 20% today and to be frank that's probably about right. The final knowledge about the well is a way off and it's much easier to mark down than hope that all will be ok. The next few weeks now become more crucial, this well needs cleaning up big time and the VOBM#4 will be on us like Christmas in Texas. The more I look at this the more I think that although it was important to meet shareholders I would have done it later, if the story has legs, which I still believe it does then they will understand. This has been compounded by the last fiasco and why I can understand what they have done today, make no mistake I am still a believer, I think that they have cracked the code and that Jay and the operating team are onto something here and it will be worthwhile. Shame about the messaging though.
Sound has announced this morning that they have confirmed the previous MOU with Pergemine and contracted a rig for the Badile exploration well. The rig is in Italy and will mobilise in January and be available for spudding 1Q 2017.
This week's podcast is below, I start with some thoughts about Opec then talk about momentous moves from Sound Energy (mins 6.40) and Ithaca Energy (mins 9.50)
India are now 2-0 up in the test series with two to play and the English players have been told that they can go on holiday before the next test. They are already on **** holiday staying in 5 star luxury and playing their favourite game. Maybe they should have been told that the nets was as good a place in the sun to be until the next test…
Its the Michael Mouse Cup again tonight and the draw has put up the Hull City Tigers against the Magpies and the HubCap Stealers against the Peacocks, enjoy….
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