Oil & Gas Daily Flow
Non-Independent Research; Marketing & Sales Commentary - MiFID II exempt information – see disclaimer below
Market Update: Friday 27 November 2020
Bahamas Petroleum PLC (LON:BPC): Enhanced safety measures lead to uplift in drilling costs
Energy Prices
Brent Oil US$48.0/bbl vs US$47.9/bbl yesterday
WTI Oil US$45.6 /bbl vs US$45.0bbl yesterday
Natural Gas US$2.93/mmbtu vs US$2.93/mmbtu yesterday
Oil Price News
Brent Crude futures are currently trading up 0.4% at US$48.0/bbl and WTI up 0.1% to US$45.6/bbl
Prices are being bolstered by positive sentiment regarding vaccine efficacy trials and potential rollouts following regulatory approval
It now appears likely the FDA will grant approval for the Pfizer/BioNTech vaccine in mid-December (11/12), rollout could begin within days of this according to Moncef Slaoui, head of US Operation Warp Speed
Even with vaccines on the horizon, a recovery in oil demand faces obstacles with many European governments under pressure to tighten restrictions and curb the spread of the virus
Meanwhile, the shift toward working from home may have an overhang on gasoline demand, according to Federal Reserve Bank of Kansas City President Esther George
US figures remain high at around 110,000 cases per day while the proposed Hong Kong-Singapore travel bubble has been delayed due to rising case numbers in the region
This sentiment is currently outweighing negative news as the US has recorded 2.3m new infections in the last fortnight
Dollar weakness supported crude prices as gasoline demand fell by 128,000bopd to 8.13MMbpd, the lowest since June.
The US rig count has risen by 10 to 241, while the Canadian rig count rose by 1
Gas Price News
Natural gas prices rose on inventories draws in line with expectations, inventory levels were 3940Bcf on November 20th according to the EIA
This is a net decrease of 18Bcf from the previous week
Stocks had been 322Bcf greater than this time last year and 250Bcf above the five-year historical average
There has been an improvement in the 10-15 day weather forecast with colder weather expected for the first week of December in the US
The December Nymex contract has risen to $2.896/mmbtu, a 24.6c gain over the week
Yesterday's Risers and Fallers
Company News
Bahamas Petroleum PLC (LON:BPC): Enhanced safety measures lead to uplift in drilling costs
Share Price: 2.98p, Market Cap: £123m
BPC have confirmed that enhanced Covid-19 mitigation measures and associated operational impacts has led to an upwards revision in the cost estimate for Perseverance #1 by c.15%, to between US$24m to US$28m (from US$21m to US$25m).
In addition, the contingency element has been expanded to US$7m (from US$5m).
The Company has confirmed that to provide appropriate financial headroom, the Conditional Convertible Note facility has been increased by £4.75m (c.US$6.3m) to £15m (c.US$20m).
Our take: Given the significant curtailment of global rig spend, rates are falling as service providers scramble to secure contracts with E&Ps. Key elements of the BPC’s finance package have been rescheduled and the Company remains in a strong cash position and in the coming months will be seeking to redefine operational plans and major contractor arrangements consistent with the revised work programme timetable. Securing one of the most advanced drillships in the world, dynamically positioned and dual mast drillship designed specifically for safe and efficient operations in a wide variety of drilling conditions at a favourable rate is commendable, and the market will watch closely one of the anticipated exploration wells this year in our view.
Research – Oil & Gas
Sam Wahab - 0203 470 0473 / 0784 385 5037
sam.wahab@spangel.co.uk
Sales
Richard Parlons – 020 3470 0472
Abigail Wayne – 020 3470 0534
Rob Rees – 020 3470 0535
Grant Barker – 020 3470 0471
SP Angel
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Sources of commodity prices
Oil Brent, WTI
-ICE
Natural Gas
-NYMEX
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