Today’s Blog – Thursday 8th September 2016

This week blogging services may be intermittent due to travel commitments and today we only have time for a  shorter “flash” blog

Editorial

Yesterday we quoted Shell’s CEO, Ben van Beurden, on what he has called the increased “weaponisation” of finance when it comes to the fossil fuel extractive industries.

Later in the day we then saw news that one of the largest investors in the world, Norway’s ~US$1 trillion sovereign wealth fund, had decided against investing in large (and previously respectable we had thought) US energy company, Duke Energy, given concerns about some aspects of the environmental management of its coal-fired power stations.

We in the oil and gas industry might say – “well, that’s Norway and well, that’s coal – nothing to do with us, move on please”.  However, the more cautious might be concerned that such investor activism could easily extend to say: tar sands, companies with extensive abandonment liabilities, high CO2 venting operations (Moomba anyone?), etc, – and beyond.

This weaponisation process will IMHO get worse – for the white collar controllers of the investment funds (and the surrounding industry of advisers, etc) it is a cost-free virtue signalling exercise.

Commodity prices

Crude prices had a decent run up in London overnight, closing up ~1.4% at US$47.98 – basically as the dealers in Brent continued to smoke the OPEC Ice of freeze rumours.

Then later in the day in New York, WTI had a big jump of nearly 3% to close at US$46.14 – with the driver here being a big “number” on the inventory front.  This was not the weekly EIA numbers – they are a day late due to Monday’s public holiday – but the less official API numbers – and these showed a whopping and totally unexpected crude draw of 12 mmbbls.

If the EIA number comes out similar to this overnight – then hopefully we can sit back and light the touch paper under the market.

Henry Hub closed down ~1% at US$2.69.

LNG and international gas

A day or so ago Canadian pipeline giant Enbridge announced a takeover offer for US pipeline company Spectra – for a cool US$28B.

Bloomberg has since concluded that this deal could spark-off a merger frenzy in the pipeline sector akin to the coming together of the current Super-Majors in the late 1990s.

Whether any such development would scare off – or encourage – the likes of Australia’s APA Group to follow up on its recent CEO musings about looking at the US for deals remains to be seen.  We think it unlikely that APA itself would become a target – its metrics are far more expensive on just about every front than equivalent North American companies (which the cynical might conclude as providing succour to the view that they receive oligopolistic returns).

However, stranger things have happened, and there has been a recurring history of boisterous US investors coming to and from Australia’s pleasant shores over the decades.

Company news – Beach Energy (BPT)

BPT released its monthly drilling report yesterday – it is about the only ASX company who does this at present given the paucity of activity in the sector.  Some delineation wells in Cooper oil and Cooper gas came on basically as they should have.  No exploration wells were drilled.

Quote of the day

Looking for a Vision Statement for our blog, we were recently inspired by the following quote from 18th Century Scottish philosopher David Hume, who when refusing to write another volume of his History series noted that he was now:

“Too old, too fat, too lazy and too rich.”

 

 

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