Headlines
Company |
Reason for Inclusion |
Snapshot |
Valuation |
Impact |
Ascent Resources |
Operating update |
The watering out of one of its |
- |
↓ |
iGas Energy |
Operating update |
The portfolio rationalisation |
- |
↑ |
Commodities
Oil
Brent |
WTI |
Forwards |
$76.9/bbl +$1.03/bbl (1.36%) |
$69.1/bbl -$1.67/bbl (-2.36%) |
- |
($/bbl) |
($/bbl) |
($/bbl) |
The oil markets have responded to the US’ re-imposition of sanctions, which has provided buyers 180 days to reduce purchases from Iran. While there is ample supply to “backfill,” as highlighted by Saudi Arabia’s promise to mitigate the impact, recent oil price rises have responded more to the fact that in the medium to longer term, there is uncertainty to what will happen vis-a-vis regional stability. Despite this, the longer term outlook, as indicated by the forward curve, appears to remain unphased, or its potentially a reflection of the diversity of supply. |
Gas
Henry Hub |
NBP |
Thermal Equivalence |
$2.7/mcf $0.01/mcf (0.22%) |
53.0p/therm 0.25p/therm (0.47%) |
- |
($/mm btu) |
(p/therm) |
($/boe) |
Nowhere has the difference between the demand models between the US and European gas markets been more effectively demonstrated than by their respective responses to the prospect of warmer than usual seasonal temperatures. US gas prices have strengthened, as demand for AC units peaks in the summer months, while European gas prices have declined. |
News
- Ascent Resources (AST LN – 0.98p) – Down, But Not Out: It just doesn’t seem fair that after so much time and energy has been invested in being allowed to valorise the asset that they are legitimately allowed to develop that one of the wells should water out, or rather, preferentially produce water. Still, we have no doubt that Messers Carver and Hutchinson will tackle the issue and resolve it so as to achieve the best outcome for the shareholders. The one positive is that there appears to be a strong aquifer, which means if it’s from a single horizon, that it will be easier to identify and seal off, or if it’s water breakthrough, that the completion can be re-engineered. The latter will also be a positive for recoverability too. While this is unfortunate, we have no doubt that the solution will be found and the development will be back on track.
- iGas Energy (IGAS LN – 82p) – Action Focuses on Long-Term Portfolio: Today’s announcement is a timely reminder if any were needed, that iGas’ portfolio extends beyond its producing properties. While the current production portfolio and more importantly control of the opex, are key to the company’s immediate future, made acuter by the debt restructuring, if it can survive the near to medium term the longer-term portfolio remains a bright spot. We believe that the next 6 - 12 months will be key to whether iGas can unlock the benefits of its long-term portfolio, or whether it will need to sell off (fully or partially) some of its Crown Jewels, especially the ~$240mm of carry. In this respect, targeting selective disposals, albeit relatively small, could have a much more pronounced effect in the longer term, potentially even allowing the company high impact and growth assets to be relatively untouched. While time will tell, that management is continuing to focus on these factors is a significant positive.