I always think that it is rather nice when the market appears to be thinking with one voice, particularly if G Sucks is on the other side. The feedback from the Opec meeting is overwhelming cynical with most so called experts writing the obituary of the whole organisation let alone this agreement. Indeed everyone from Zak Mir to a visiting professor and chair of the Kings Policy Institute in London has written it off. The missing piece in the jigsaw is what GS has to say but as ongoing bears of the oil price they are coming from a position of weakness.
Disregarding all that, it seems that the telephone conversation that I mentioned earlier in the week between Presidents Putin and Rouhani may have swung things towards an agreement. Apparently this call took the heat out of the Saudi-Iran negotiations and may have sealed the deal, who knows, I have a healthy degree of cynicism myself but can believe anything on the right day. Recording of exports and production is better and more transparent than it used to be so I guess that come the new year we shall see who is and who isnt playing ball.
In the meantime if the agreement lasts only a while we shall see the inevitable continued rise in the rig count and something that will be welcomed by the US service companies as well as the likes of Hunting…
Finally in his first piece of policy in the energy sector it seems that President elect Trump has formally the Dakota Access pipeline as mentioned here after his election.
It’s almost as if BP were waiting for the meeting to finish as they have announced that they have approved the spend of $9bn on the new platform for Mad Dog 2 in the Gulf of Mexico. The platform will produce 140/- b/d and will come onstream in 2021, oil price wise this is the interesting bit as I have been banging on for a long time about capex reductions causing a degree of tightness in the oil market, an approval now still means a five year wait by which time anything might have happened. Reasons for being more positive between then and now are summed up by the $1.5tn loss of capex projects worldwide which, cannot be magicked back on to the market. Finally back to my point about costs, this platform which is budgeted at around $9bn would have been $20bn two years ago.
I was fortunate to meet up the other day with CEO of Solo Neil Ritson and new FD Dan Maling. I have historically only had exposure in that part of Tanzania through Aminex but meetings with Solo and Wentworth in recent days is fast expanding my database. For Solo, Tanzania is the primary source of value, as they prepare to spud Ntorya-2 in the Ruvuma basin swiftly followed by the Ntorya-3 well should this well be a success. With 1-1.5 TCF of gas it would dwarf Kiliwani North but if my maths are correct they have enough cash to spare to drill this well, the N-3 well might need some funding. Kiliwani North pays the day to day G&A spend but at 15-20 scuffs a day looks disappointing, I’m sure I saw numbers nearer 30 doing the rounds.
One cant talk about Solo with mentioning Horse Hill where the company are awaiting planning approval which might get through early next year, any further success here would be relatively modest to the share price but no less welcome. Finally, I would expect more corporate activity from Solo who are a small but interesting team working in a specifically value enhancing area, Ntorya-2 when it spuds very shortly will be most important to the company.
The autumn season of rugby internationals comes to a halt with England hosting the Wallabies at Twickenham, get the shopping done early tomorrow…
In the football it might be the winner takes it all game as the Noisy Neighbours host Chelski in the top of the table clash. With Spurs hosting the Swans and the HubCap Stealers at the Cherries it leaves the London derby at the London stadium where the happy Hammers take on the Gooners. In mid-table misery there is the sight of the Red Devils going to the Toffees.
And more great NH racing with the Welsh Grand National at Chepstow and a great card at Aintree featuring the Becher Chase.