Oil & Gas Daily Flow
Non-Independent Research; Marketing & Sales Commentary - MiFID II exempt information – see disclaimer below
Market Update: Wednesday 6 October 2021
President Energy (LON:PPC): £102k converted from debt to equity
Energy Prices
Brent Oil US$83.0/bbl vs US$81.6/bbl yesterday
WTI Oil US$79.3/bbl vs US$77.8/bbl yesterday
Natural Gas US$6.56/mmbtu vs US$5.98/mmbtu yesterday
Oil Price News
Oil prices continue to tick up following news from OPEC+ that the group will stick to its current output policy
OPEC+ agreed in July to boost output by 400,000bopd each month until at least April 2022 to phase out 5.8MMbopd of existing production cuts
Demand for coal and natural gas has exceeded pre-pandemic highs with oil closely trailing, according to the EIA
OPEC+ has faced pressure from some countries to add back more barrels to the market as demand has recovered faster than expected in some parts of the world
Elsewhere, the American Petroleum Institute (API) reported another surprise build in crude oil inventories of 951,000bbls for the week ending 1 October
This compares to analyst expectations for a loss of 300,000bbls for the week
It is the second week in a row that estimates were on the wrong side of zero
On the supply side, Hurricane Ida disrupted production in the US Gulf of Mexico, and some OPEC+ members are struggling to pump to the full capacity of their quotas
In addition, US shale producers have shown remarkable discipline in drilling activity despite the fact that WTI has been trading above US$60/bbl for nearly six months
Many analysts and oil companies see global oil demand returning to the pre-crisis levels of 2019 as early as the start of next year, if not earlier, by the end of 2021
Oil demand worldwide is expected to hit 100MMbopd by the end of this year or in early 2022, whilst demand next year is set to rise to 102MMbopd
Gas Price News
Natural gas futures jumped to the highest settlement price in 12 years in New York as global gas supply shortages stoke concerns for US shortages
As the northern hemisphere heads into winter-heating season, low US auxiliary supplies have sparked concerns about potential shortages as demand for the furnace fuel ramps up
Gas futures rose 9.5% to close settle at $6.312/mmbtu units on the New York Mercantile Exchange, the highest close since December 2008
Gas prices in Europe and Asia are trading four times over US gas due to demand for the fuel in Asia and low stockpiles in Europe ahead of the winter heating season, when demand peaks
The UK’s NBP virtual trading hub for natural gas also hit a record-high price, with front-month contracts reaching an all-time high yesterday afternoon
The surge in natural gas prices is also due to a massive supply shortage in Europe, a situation that is quickly spilling over into other countries and other markets, including the coal and oil markets as demand for power exceeds supply
The natural gas crisis is set to intensify as winter heating season approaches, with supplies insufficient to keep up with current demand, let alone build stockpiles for what will be increased demand in the cold season
Europe’s natural gas crisis has prompted European fertilizer producers to curb output, which could send food prices soaring along with the natural gas prices
It has also sparked warnings of blackouts and factory shutdowns
If the winter is colder than normal, natural gas supplies could run even shorter, leaving Europeans and possibly other countries, especially those that can barely afford current energy prices, in the cold
Company News
President Energy (LON:PPC): £102k converted from debt to equity
Share Price: 1.7p, Market Cap: £35.3m
President has announced a conversion of debt into equity.
In January 2018 the Company entered into a loan agreement with IYA Global whereby IYA provided a loan facility up to US$20.5m to the Company, the balance of this loan as at 1 August 2021 was US$11.4m and is due for repayment by 31 December 2024.
IYA has agreed to convert £102k being part of the debt owed to it under the Loan Agreement into 6m new ordinary shares in the Company at 1.7p/share.
Following the Conversion, Peter Levine through his investment vehicles will hold 29.38% of the entire issued share capital of the Company.
Our take: President continues to make strong operational progress and investors will welcome the news that operations are progressing at Salta in particular. With current prices there comparable to Rio Negro and fixed opex already covered by existing production, the incremental production additions to output will be immediately profitable. Consideration is also being given to complement the contemplated drilling by acquiring 3D seismic data over the formerly producing Canada Grande and currently producing Puesto Guardian fields as well as some additional 2D data in the Ocultar exploration block with the seismic grid having already been determined.
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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