Politics

Oil price, IGas, Lamprell. And finally…

WTI $41.90 -2c, Brent $44.29 -3c, Diff -$2.39 -1c, NG $1.68 +1c

Oil price

Most so-called experts in the sector are just guessing as was proved yesterday when the inventory stats came out, they were a different sign than forecast by the teenage scribblers. Expecting a draw of 2.1m barrels the actual number was a build of 4.9m not dissimilar to the sign on the API numbers the night before.

Perhaps more importantly, the gasoline number was a draw of 1.8m barrels on a lower refining capacity utilisation of 77.9%. With a slight imbalance between gasoline production and demand, 9.1m b/d plays 8.6m b/d, there will inevitably be a build in gasoline stocks if driving slows down due to the virus.

Many other gurus on the sector are also regularly wide of the mark often going for headline numbers. One really good guy is Ed Morse at Citi, who gave a great interview on CNBC a few days ago. Finally the ongoing weakness in the greenback, partly due to the EU handouts and of course partly due to states like Texas appearing to back Biden, see my recent piece on Turkeys voting for Thanksgiving….

IGas Energy

IGas has announced a Waterflood projects update despite considerable challenges related to the Covid-19 pandemic and that they have commenced water injection at their Scampton North C-site on schedule and on budget.

As well as increasing oil production, the in-field pipeline and a new Separation facility at the Scampton North C-Site will provide greater efficiency and environmental improvements by reducing venting, the need to truck water to the Welton Gathering Centre, as well as increasing the amount of gas available for power generation.

D&M give the company 180 Mbbl of incremental 2P reserves and the Companys mid case economics for the project have an IRR of over 40% and an NPV of £2.5m at a l/t $55 pb. There is also more to come at the Welton field late summer 2020 where the companys estimated base-case project economics have an IRR of over 100% and a NPV10 of c.£7.0 million again at $55.

CEO Steve Bowler commented This is an excellent operational achievement by the team against a difficult backdrop and is a material advancement in developing our 2P reserves. Projects such as these provide strong economic returns even at these low oil prices, with environmental benefits, and continue to demonstrate the value of our producing and development assets.

Lamprell

Whats this good news from the east? A trading update from Lamps where a strong operational performance is announced with EBITDA H1 breakeven, net cash of $71.4m as at end June, a backlog of $580m (was $470m at end Dec) and a bid pipeline of $5.5bn at the end of June.

The success is put down to the companys 3rd offshore wind project, digital aspirations have been advanced with partner Injazat and they have submitted a number of proposals for Read More – Source

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