WTI $41.96 +$1.15, Brent $44.32 +$1.04, Diff -$2.36 -11c, NG $1.68 +4c
The reasons for the rise yesterday were in the blog, mainly the EU agreement which has ironically had a double positive effect of pushing down the dollar. News on the virus front was mixed, the vaccine mentioned is good news, obv, but still there are many new cases being discovered worldwide.
The API stats after the close were worse than expected, showing a build in crude of 7.5m barrels and gasoline and distillates continued to draw.
Predator Oil & Gas
Predator has announced that on the 14th of July it made an offer to acquire the entire outstanding issued share capital of FRAM exploration for $1.75m in cash, the offer to be valid for five days. That deadline has expired as Columbus, the parent company of FRAM, is in a proposed merger that prevents disposal of any material asset.
Predator will now wait for the merger between BPC and Columbus to complete before seeking to speak with the organisation again. Recent uncertainty, COVID-19, and market conditions, combined with the extraction of nearly 3 years’ worth of production since Predator first agreed to invest in the Inniss-Trinity field, has significantly changed the market value of the asset. In addition, Predator has contributed significant funds to the Pilot CO2 EOR Project which need to be taken into account in any final working capital adjustment.
Additional due diligence to determine any potential liabilities in FRAM during the last 3 years would also obviously need to be carried out. All of which is important for refining the project economics going forward at lower oil prices. It is clear that Predator are not going to pay anything like the currently ‘unrealistic price’ previously envisaged.
It appears that Predator are in a unique position whereby only they can take advantage of this particular situation owing to their ‘particular skill sets and proven track record in the countries where it operates’. It should also be borne in mind the unique deal with a CO2 supplier who have indicated that they would like to have the opportunity to participate in other opportunities available in Trinidad and elsewhere. There is currently a finite supply of surplus liquid CO2 supply in Trinidad that needs to be directed at potentially the most profitable projects. This just makes sound commercial sense.
Elsewhere, in Morocco, it is worth noting that a subsidiary of ConocoPhillips has been awarded on 12th June 2020, the Mesorif Reconnaissance Contract. This acreage adjoins the already awarded (in March 2019) the Predator Guercif licence and which is almost ready to drill when Covid conditions allow.
Predator are extremely confident of the prospectivity of the Guercif licence in Morocco, which has the size of structures that would be able to make a difference to the energy market in country and the arrival of ConocoPhillips is a serious boost to confidence and validation of the prospectivity of this area of Morocco.
Predator is fully financed for the first well at Guercif and although Morocco is still currently on lockdown the likelihood is for a spud later in the year. Indeed, it is possible that PRD might envisage using the LNG FSRU technology already considered in Ireland at Tangier which would be a ‘do-able solution with upside’ and plenty of industry synergy.
All this means that the arrival of ConocoPhillips may well trigger more industry interest and of course adds to Predators options in Morocco to expand the drilling whilst the rig is available if a joint venture partner can be secured who sees the same commercial opportunity that Predator moved last year to secure. Meanwhile once the corporate activity in Trinidad is settled a meaningful conversation should be able to be had with BPC.
Last night in the Prem it was the relegation special as the Hornets shipped 4 at home to the Noisy Neighbours putting them in real danger. If that was not enough, spurred on by that result the Villa went and beat the Gooners 1-0 setting up Sunday something rotten…
Tonight the spotlight switches to the top end of the Prem and the Champions League places. The Red Devils will be hoping that the Hammers are already on the beach and that De Gea is not butterfingers tonight. After that Chelski will want to carry their form from the FA Cup to fortress Anfield hoping that Liverpool are concentrating on receiving their silverware after the game…