Today’s Blog – Thursday 25th August 2016

Travel commitments over the next week or so will render blogging services somewhat intermittent

Editorial

Sit down before reading this next part, gentle members of the Australian E&P community – yesterday we met with a Chinese oil and gas company, who, shock, horror, says it wants to actually invest in exploration!!

Haven’t they heard about “reducing costs/boe”, “increasing productivity”, “shrinking our way to growth” or our other far more advanced industry strategies adopted in the enlightened West?

Over the last decade it is fair to say that the Chinese NOCs have made a fair few dud investments (Arrow Energy anyone?).  However, now could be a time when that is balanced out by acquiring riskier assets when they are seriously cheap and the field of potential buyers is, shall we say, limited.

Commodity prices

Crude prices fell overnight, as “numbers” balanced out “OPEC whispers”.  Brent was down ~2% at US$49.07 whilst WTI fell even harder (~3%) to close at US$46.80.

The weekly EIA report was largely to blame.  It noted an unexpected crude inventory build of 2.5 mmbbls – only partly offset by no change in gasoline inventories and a small increase of 0.1 mmbbls in distillate stocks.

Henry Hub was up 1% at US$2.79.

LNG and international gas

Weekly LNG spot prices (a blend of prices for China, Japan, South Korea and Taiwan) remained steady at US$5.81 per mmbtu.

That’s A$7.64 – arguably less than firm gas supply pricing offers currently being made in Australia.

Company news – FAR Ltd (FAR)

Regular readers will have noted our keen interest in the ongoing matter of FAR’s pre-emptive rights over Conoco’s sale of Senegalese JV interests to Woodside Petroleum (WPL).

Although not the subject of any ASX announcement we have seen, some additional light has been thrown on the matter by a quote from a Conoco spokes-person in yesterday’s The Western Australian newspaper:

“None of the co-venturers elected to exercise their pre-emption right, so ConocoPhillips is continuing to progress the transition with the buyer, Woodside, by seeking approval from the Government of Senegal.  ConocoPhillips believes it has provided the information required in the preferential right notification, while honouring the joint operating agreement and confidentiality clauses from preceding agreements.”

Hopefully FAR’s technical legal argument to the contrary is stronger than one legal manoevure we can recall – over the lodgement of a s249D notice to remove some company Directors.  The service notice was considered invalid (by said Directors) because it had been “spoiled” by being stapled together.

Company news – AWE Ltd (AWE)

AWE issued its annual results today.

The most interesting thing about AWE’s short term future was omitted – the state of play over its partner Origin Energy’s sale process over its prime Waitsia asset – and how solid its pre-emptive rights might be (and who it might shepherd in at what premium) over any such sale.

Quote of the day

Continuing our Sherlock Holmes quotes, the following from The Red-Headed League appears in some ways to be aimed at your blogster:

“Beyond the obvious facts that he has at some time done manual labour, that he takes snuff, that he is a Freemason, that he has been in China, and that he has done a considerable amount of writing lately, I can deduce nothing else.”

 

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