WTI $38.56 -$1.29, Brent $40.46 -$1.31, Diff -$1.90 -2c, NG $3.02 +5c

Oil price

Oil fell yesterday as noted mainly due to virus related worries across all markets. Also oil was singled out after Opec Secretary Barkindo, answering the question regarding a possible change of strategy from the cartel answered that he was hopeful of a recovery in 2H 2020 but growth in demand ‘remains anaemic’ due to the virus. He added ‘we are determined to stay the course’ and indicated strongly as did President Putin last week that action would be taken if necessary.

Yet another tropical storm is on the way, Zeta is the 27th named of the season and is heading for the Yucatan Peninsula and overnight is some 175km south of Cozumel in Mexico. BP, Chevron, Shell and Equinor are amongst those companies to confirm they are airlifting staff from the GoM as a precaution.

Predator Oil & Gas

In an operational Update this morning PRD has announced that the Ministry of Energy and Energy Industries in Trinidad has given a WO1 Approval Notification for the restoration, by means of a well workover, of the AT-5X CO2 injection well to oil production. Approval has also been granted by the MEEI to commence injecting CO2 into the AT-13 well in the AT-4 Block in the Inniss-Trinity field. 

As announced previously, approval has also been granted by the MEEI for the commissioning and use of Predator’s dedicated CO2 Recovery system at the FRAM Exploration Gathering Station #4 in the Inniss-Trinity field.

Paul Griffiths, Chief Executive of Predator, commented:
“The announcement today completes the approval procedures necessary for entering into the extended phase of CO2 injection and simultaneous oil production for the Pilot CO2 EOR Project. We are pleased to have progressed matters to completion despite the COVID-19 constraints. We are demonstrating our ability to work together with our excellent in-country team of partners to maintain operational progress through adversity to deliver results.” 

This is further excellent news from Predator who continue, despite COVID headwinds, to deliver continuous progress in Trinidad with the Pilot CO2 EOR project.

President Energy

A drilling update this morning from the EVN-x1 exploration well near the Estancia Vieja field in the Rio Negro Province. The well successfully drilled to target depth of 2,000 metres and cased on time and budget. Both full suite electric logs and mud logs show clear moveable live gas and oil pay with good pressure, porosity and permeability.

‘The results so far support pre-drill P50 projections of of production of 60,000 m3/d (353 boepd) of gas and 188 bopd which can only be verified on testing due to the fact that this is a previously undrilled structure with no direct analogue as to production performance subject to testing in due course. Accordingly, until successful testing, it is too early to come to any conclusions as to actual producibility and size of the respective reservoirs for gas and oil. Testing will be made of each individual interval which will not be co-mingled’.

Peter Levine, Chairman commented,
“It is always good to see clear evidence of moveable live gas and oil in an exploration well being drilled in a new structure, however, it is precisely because of that and the lack of analogue evidence that one must prudently reserve judgement and be cautious until the well is tested within the next two months once the workover rig finishes other pre-planned work in our fields.

In the meantime, as previously announced, we are looking to materially increase our gas production around the end November bringing on line two/three new contributors, also putting back on line certain oil wells in Rio Negro which have been out of commission for several months requiring repair”.

This is continued good news from President who are again to delivering the goods in Argentina and even though they are not counting any chickens yet, it seems that they are on a roll with the drill bit which must in due course be reflected in the share price.

Hunting

A Q3 2020 trading update today which is a real curates egg but in my view probably a bit better than I may have expected. YTD EBITDA was c.$28m with Q3 being ‘broadly break even’ and with a strong cash position of c.$69m as working capital improves the company continues to generate cash.

Inventory levels at the end of the quarter were c.$315m, reflecting a reduction from the 2019 year-end position. Capital investment continues to be low compared to the prior period, with year-to-date expenditure totalling c.$13m.

Titan’s trading results have improved reflecting some stability in the US onshore market as well as some better news from international markets with increasing sales into the Middle East and Asia Pacific, in particular China, where US-style hydraulic fracturing procedures continue to gain traction.

Hunting’s US businesses have reported positive EBITDA in the quarter despite the decline in revenue noted above, with the segment’s Premium Connections and Subsea businesses reporting modest activity levels and profits. Oil and gas equipment sales have declined within the Advanced Manufacturing Group, however, non-oil and gas opportunities have seen good stability, with medical, space, and aviation customers supporting order flow through the period. The segment’s Drilling Tools and Speciality businesses continue to report subdued results given the low US onshore rig count.

In the not so good box Hunting’s EMEA segment reports a continuing decline in activity within the North Sea, leading to widening losses in the period, this comes as no surprise.  The segment’s well intervention business unit also has seen a decline in revenue as activity levels in Europe and the Middle East continue to weaken.

Jim Johnson, Chief Executive of Hunting, commented:
“In the most challenging environment ever faced in our industry decisive actions to resize the Group have been successful leading to a broadly break-even EBITDA result, a continued strengthening of our balance sheet, and an ongoing commitment to deliver industry leading service and technology to our customers.

Our efforts to resize the Group in response to prevailing market conditions have resulted in annualised cash savings totalling c.$74m, with the global workforce reducing by c.30% from the 2019 year-end.

“Our strong balance sheet and improved net cash position also allows the Group optionality to explore further bolt-on acquisition opportunities. The growth of our subsea segment over the past 14 months demonstrates the success and rationale of this strategy.

This was always going to be a particularly difficult year for Hunting, indeed with the oil price fall leading to US onshore becoming somewhat less than competitive it is a much better number than I thought they might achieve at one stage. Whilst there will be quite a long haul in its recovery I think that the excellent Jim Johnson and his team are restructuring Hunting to be a more nimble, resilient company in this unique space which whatever happens on Nov 3 or thereafter…

KeyFacts Energy Industry Directory: Malcy's Blog