Oil & Gas Daily Flow
Non-Independent Research; Marketing & Sales Commentary - MiFID II exempt information – see disclaimer below
Market Update: Monday 23 August 2021
I3 Energy (I3E LN): i3 closes Central Alberta asset acquisition from Cenovus
Energy Prices
Brent Oil US$66.4/bbl vs US$66.3/bbl on Friday
WTI Oil US$63.7/bbl vs US$63.5/bbl on Friday
Natural Gas US$3.89/mmbtu vs US$3.89/mmbtu on Friday
Oil Price News
The number of oil and gas rigs in the US rose by 3 last week, according to Baker Hughes, following an increase of 9 the previous week
The total rig count is now 503, up 249 from the same time last year, the highest rig count since April 2020, but still down sharply from the 790 active rigs in March 2020
The EIA’s estimate for oil production in the US rose by 100,000bopd for the third week in a row to an average of 11.4MMbopd
US crude inventories fell 3.2MMbbls last week to 435.5MMbbls, their lowest since January 2020, according to US Energy Department figures
Gasoline stocks, however, rose modestly, and gasoline product supplied to the market, a measure of demand, was 9.5MMbopd, just 1% below 2019 levels
Fuel demand in the world's top consumer has steadily increased throughout the year with the four-week average of overall US product supplied was 20.8MMbopd, in line with pre-coronavirus levels from 2019
That has come just as the OPEC+ agreed to raise output by 400,000bopd every month into next year, returning some of the supply the group has held back since early 2020
The IEA estimates that demand for oil is expected to increase at a slower rate over the rest of 2021 because of surging cases of the Delta variant
Also bearish for the markets in the longer term, a US offshore regulator yesterday said efforts to resume a federal oil and gas leasing program were underway and would soon bear results following a court decision ending a suspension
Gas Price News
Natural gas futures continue to trade within a range of US$3.8-US$3.9/mmbtu as production figures continued to fluctuate but generally remained firmly entrenched in the low 90s Bcf/d range.
Liquefied natural gas volumes also were stable near 11Bcf/d.
On the weather front, the latest models cooled a bit but remained in a pattern biased to the warmer side of normal, according to Bespoke.
The price action is pointing towards the current low storage levels, and elevated summer temperatures in the US and Europe
Carbon dioxide emissions from the energy sector will increase 7% to 4.9 billion mt in 2021 given growing economic activity, according to the EIA's Short-Term Energy Outlook
The sector's emissions fell 11% in 2020.
With summer heat nearing what traditionally is the peak period this month, weather forecasts have once again become a driving force for gas markets
The American and European data each saw a difference of less than 2 cooling degree days (CDD) for the coming 15 days
Company News
I3 Energy (AIM:I3E): i3 closes Central Alberta asset acquisition from Cenovus
Share Price: 11.2p, Market Cap: £122m
i3 has confirmed the closing of its Central Alberta asset acquisition from Cenovus Energy for a total consideration of CA$65m (US$53.7m).
It is also worth noting that the Company has also recently closed both the South Simonette and Wapiti acquisitions and commenced well reactivation programmes in both areas this year.
Its initial two-well drilling programme in the Company’s Marten Hills Clearwater acreage was completed on time and i3 also completed drilling the first of two wells in Elmworth Wapiti.
Q2 2021 average production was 8,905boepd based on net field sales estimates (excluding the production associated with i3’s Cenovus and Wapiti acquisitions, which closed subsequent to quarter end but were effective from 1 April 2021) with an average over the final week of July of 10,031boepd (excluding only volumes associated with i3’s Cenovus production acquisition).
Inclusive of i3’s current hedges, full-year 2021 net operating income (“NOI” = revenue minus royalties, opex, transportation and processing) is now forecast to be c.US$62.4m, and US$94.8m for the next twelve months from 1 August 2021.
Our take: The acquisition, within i3's Central Alberta core area, will boost the Company’s production profile and free cash flow position whilst adding operational synergies, and a reserve base with multi-year development opportunities. This acquisition more than doubles the Company’ proved plus probable reserves base to 133MMboe, in addition to materially increasing its prospective resource base.
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
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Sources of commodity prices
Oil Brent, WTI - ICE
Natural Gas - NYMEX
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