WE HAVE TIME FOR A SHORT BLOG TODAY, BUT OTHERWISE NORMAL SERVICES ARE STILL LIKELY TO BE INTERRUPTED FOR A FEW WEEKS
Oil patch giant Exxon is the whipping boy for every US regulator and prosecutor who wants to be a hero for finding the next tobacco industry style cover-up. The firm’s say-nothing style, which everyone in the industry knows well – but ameliorates with grudging respect for its capabilities – makes it an easier target than its peers.
The latest “attack Exxon” line is coming from the SEC – it is looking into the company’s accounting for reserves – and hence carrying value of assets – in light of the lower oil price environment since 2014.
We expect they have picked the wrong target there. No-one in the industry would expect Exxon to behave like a wild-eyed optimistic junior (or indeed Shell a few years ago) when it comes to reserves bookings and building in conservative commodity price expectations.
But the attacks will still keep coming.
So far this week has remained a positive one for crude prices. Last night saw Brent close up ~1.4% at US$47.65 and WTI finish at US$46.32. The last two days have seen the market responding positively to a third week in a row of US crude inventory draws – with the EIA reporting on Wednesday that crude stocks were down a hefty 6.2 mmbbls, with gasoline also down by 3.2 mmbbls (but with distillate up by 2.2 mmbbls).
If this trend continues, we think that will do far more for oil prices than the smoking of any amount of OPEC Ice in the lead up to the next meeting of the dysfunctional cartel in Algeria.
Henry Hub in the meantime has been volatile, with a fall overnight back to US$3.
LNG and international gas
Just when PNG is increasingly recognised as the hottest spot on the planet for LNG developments, its Government decides to do what Governments often do – try and stuff things up. The head of the country’s NOC, Kumul Petroleum, has recently said that the nation would like to see two separate LNG projects – the existing Exxon led PNG LNG – and a new one led by Total.
What could possibly go wrong!
Governments, fracking, etc
The Australian media has recently reported that BP’s worse case scenario for the environmental planning for its upcoming Great Australian Bight deep-water drilling program is worse than their worse fears (and they have pretty bad worse fears).
One would almost think that BP did not want to conduct a very expensive and very high risk exploration program…..force majeure….please!
Company news – Carnarvon Petroleum (CVN)
CVN is one of those very rare E&P companies at present – one that is actually doing some “E”ing. Today it reported a gas/condensate discovery in WA’s Carnarvon Basin – and the magical words “production testing” were present in their announcement (its partner is a hard nosed private equity company not driven by news-flow, so we take this as pretty good news).
Market reaction – yawn.
Company news – Maverick Oil and Drilling (MAD)
MAD has just put away a A$15M placement, which seems good going for a junior in this market. Especially for a company that other unkind souls – not us naturally! – have said carries certain characteristics of a “lifestyle company”.
Will MAD’s CEO, “Chuck” Yeager, ex-head of BHP Petroleum, now finally deliver upon the company’s previous large promises about “reserves”, “deals at the bottom of the market”, etc?
Quote(s) of the day
One from the real Chuck Yeager – US test pilot hero and the first to break the sound barrier – describing meeting a Nazi jet when flying his Mustang:
“The first time I ever saw a jet, I shot it down.”
“Rules are made for people who aren’t willing to make up their own.”