WTI $42.93 -$1.28, Brent $45.81 -$1.63, Diff $2.88 -35c, NG $2.26 -6c
Oil price
Another weak day for the oil price yesterday as the market digests or waits for the monthly reports from the reporting agencies. The EIA who were first out of the blocks appeared to be a bit more positive with numbers indicating further cuts to Non-Opec production leaving the call on Opec at 30.78m b/d. Depending on the Opec number today and the IEA tomorrow there might be light at the end of the tunnel but in the meantime it’s the stock build, as evidenced by the API stats on Tuesday that concentrate the mind and may be accentuated by the delayed EIA inventory numbers tonight.
Premier Oil
Today's trading statement from Prems continues the theme of beating guidance, delivering projects on time and budget, whilst cutting costs in opex and G&A by a significant amount. Add to that ‘significant liquidity in cash and undrawn facilities of $1.2bn’ and at least $700m of covenant headroom and you would have thought that despite the pressures of the current low oil price scenario that management was doing a better than average job of running the company. Although the developments at Solan and Catcher are on track and on budget, Sea Lion has completed pre-FEED and the company has had a run of successes with the drill bit in the Falklands there are still a number of cynics out there not prepared to give the company the benefit of the doubt. Whilst I am sure that there are people who know much more than me about these projects and that they do carry project risk, it seems that Premier is being harshly treated by the market and although I am far from calling the turn, the company is looking well poised to take advantage of any such recovery.
Sundry/Catch up
Being out and about yesterday meant that one or two items didn't get the mention that maybe they should have. One such piece of news is that Anadarko has walked away from a potential bid for Apache after the company rejected out of hand an offer, allegedly worth a short $30bn. Looking at one or two pieces of work from analysts who do cover these stocks it seems that passing up on the offer, whilst showing commendable long term confidence in one’s company may have more to do with self preservation than the interests…
