WTI $26.08 +$2.26, Brent $33.05 -$1.06, Diff -$6.97 +$1.20, NG $1.73 +11c

Oil price

Oil fell yesterday ahead of Thursday’s Opec+ meeting with caution regarding where the cuts are coming from or how big they would be. Others are now joining me in suggesting that the US can actually get round antitrust laws and restrict production.

Also the larger than life Fatih Birol of the IEA, rarely the most accurate of forecasters, is acting as front man for G20 and suggesting all parties get round a table to sort out the oil price, some chance…

Exxon has announced a 30% cut in capex and 15% in cash opex whilst maintaining its long term outlook for the super major. Definitely planning to maintain the dividend, Exxon stock rallied as did energy stocks on the Street, even if not all commentators thought it wise.

Premier Oil

The Charlie-1 well in Area A where Premier has a 60% stake on the North Slope of Alaska has proved the presence of gas condensate which is ‘more challenging to commercialise’  than the targeted light oil. As a result Premier has made the decision to exit Area A as soon as regulatory approvals have been received.

Probably good news for Prem shareholders who may have been concerned that the operational magic touch had departed with the move into Alaska, meantime this is awful for 88Energy and whilst Pantheon swiftly rushed out an RNS saying it’s nothing to do with us it’s 20 miles away, there may be some collateral concern.

Block Energy

Cost cutting at Block means a 40% reduction of cash expenditure, currently they have $3.4m and crude stocks worth $470,000 depending what time it is but it’s not for sale now. The company are shutting-in WR-16aZ and WR-382 to conserve gas reserves, again a wise move. Abandoning WR-51Z would have been a difficult call but there is nothing like this sort of market to sort the wheat from the chaff.

Overall Block is doing the right things, it is effectively going to a care and maintenance basis in Georgia but still continuing to ‘work tirelessly’ on the acquisition from Schlumberger which, should it complete will make significant growth for the future for Block. Along with the substantial reduction in its operating and administration base the company seems to have taken the hard decisions on behalf of shareholders.