WTI $40.80 -$1.82, Brent $47.16 -$1.63, Diff $6.36 +17c, NG $2.72 +1c
Oil price
Another short blog today, I am visiting the Vauxhall office later but a couple of things to point out. Crude fell sharply on the EIA inventory numbers, analysts had been predicting a stock draw but got the sign wrong and the build of 2.6m barrels spooked the market. While I have been saying for a while that stock draws are important at this time of the year maybe the refinery outages have not been taken into consideration. Either way its bad news and no real chance of it getting better, a WTI price starting with a 3 is pretty inevitable but I am looking for signs of capitulation which might signal that the worst is over.
Premier Oil
What a day to have to deliver a set of results and especially when under the miserable circumstances these numbers are actually pretty impressive. Production over 60/- with guidance remaining at 55/- is good and an increase in operating cash flows shows excellent efficiency and significant cost reduction. Operating costs are down sharply and at $14 a barrel with hedging helping the cause Prems should be congratulated in such a difficult market. As we have heard Solan is on target for first hydrocarbons in this year's 4Q and Catcher in 2017 and even Vette and Sea Lion are seeing massive cost falls. With the announcement that the debt covenants are extended until mid 2017 the company has greater flexibility and able to cope better than most in current conditions.
I can't see the market giving Tony Durrant and the team any credit for this performance at the moment and at $47 oil you would be surprised if it did, but in the long run the actions that have been taken and the strong position the company is in under the circumstances should be recognised. The E&P sector is no place for the faint hearted and in an ideal world you wouldn't start from here but now is probably not the time to jump ship, especially Premier which is coping, as I say, better than most.
And finally…
It's the start of the final test of the Ashes today at The Oval and whatever happens the little Urn is on its way back to Lords, or Little Chartham if you are Ben Gregory…
In the Boropa Cup The Saints take on FC Midtjylland…
