WTI S20.37 -$6.58, Brent $24.88 -$3.81, Diff -$4.51 +$2.73, NG $1.60 -12c
The news that G Sachs had panicked and gone low on oil prices cheered me up no end and whilst at present I dont disagree with their thoughts it gives hope for us all. Yesterday it was the ECB’s turn and they announced a package worth $820bn into an untrusting market, it don’t make no difference intervention.
Ironically the inventory stats werent too bad with crude building only 2 million barrels but with gasoline drawing 6.2m and distillates 2.9m.
If one had seen these results, particularly the numbers from the Lancaster EPS a year ago you might have guessed that the shares would be rocketing, as with well over six months of production and top end guidance being met, the project seems to be more than delivering on its promises. And it is, this is a very positive set of figures from Hurricane indeed, with revenues of $170m, profit after tax of $58.7m and a clean profit of $30m.
Indeed Lancaster has been ‘an unqualified success’ of the data acquisition proving exceptional and remaining above guidance with the well rate tests accurate. Such has been the success that 7 cargoes were sold last year at an average price of $59.30 giving a cash production cost of $21.8 pb and giving an unrestricted cash position of $155.6m at the year end. Guidance for this year is 18/- b/with cash opex costs of $17pb but the company is aware that further well rate tests will be made. It is a key fact that HUR is able to control capex very closely and this year will be a perfect example.
GWA has had ‘additional headwinds’ but the campaign was drilled on budget and with Hurricane carried by Spirit drilled two mixed result Warwick wells and a successful Lincoln Crestal well. We will know more about plans next week after the Capital Markets Day but ‘optionality will be positioned when Covid-19 and the state of the macro market gets better’. Overall this is a very strong position for Hurricane, very low opex under the circumstances at Lancaster and a positive operational cash flow at such an early stage of development of the Rona Ridge assets should bode well for the future, only the market has disappointed them so far.
I wrote about Genel yesterday and a few of my expectations were in today’s results but you didn’t need to be Einstein to know that the company are in a strong cash position with significant free cash flow giving them massive flexibility to choose what to spend it on. Production was 36,250 b/d and free cash flow was $99m before the divvi and they have declared an unchanged divvi of 10c again which as the CEO says puts them on a yield of 20% whilst ‘managing the downside risks’.
Managing the risks as well as setting the strategy for the current environment is how Genel are playing things right now and with the highest netback despite waiting for some delayed KRG payments are very well placed to do so. Plans for this year are to bring on Sarta which has come on very swiftly since our visit and still may be the biggest field in the area while the company are keen to press ahead with Bina Bawi if only the Government would clear the paperwork. Qara Dagh-2 which was scheduled for 2Q 2020 will now also be waiting in the starting blocks all ready to go when the conditions are appropriate.
As I said yesterday this control of the situation is not ‘by chance’, it is a strategy for the current environment and with operating costs per barrel and cash on hand the company has elected to maintain the dividend at a 20% yield which shows enormous confidence and strength. Emissions of 7kg CO2/bbl mean that the company is ‘a socially responsible contributor’ and ticks yet another box. They have acknowledged that they are two months behind on payments but ‘they expect the Government to deliver on this promise’. Overall, holders of Genel can be as happy as is possible at the moment that the company are managing their high quality asset base as well as possible and that includes the downside risk, with plenty more to come with any uptick the 20% yield shows incredible strength.
A good update from RKH this morning under the circumstances, the Navitas farm-in to the Sea Lion project is still ‘making good progress’ as the parties head from HOT to a full deal and all involved remain committed to the process. In Italy where the portfolio is now modest things are unaffected with all the necessary contingency measures in place.
Rockhopper has $23m of cash and no debt in the balance sheet and with 2019 G&A of $5.3m the company is set fair for the time being.
In their capex review Jadestone have rather fallen on their feet, they have not yet received Vietnamese Government approval of the FDP for the Nam Du and U Minh gas field developments, and have accordingly decided to delay the project.
At a stroke the decision takes away 50% or $90m of the capex leaving $85-90 most of which is infill drilling on Montara and Stag but more importantly entirely discretionary spending. With the company currently cash flow positive at $30 and with a strong balance sheet, even in this horrible market Jadestone looks good, give me a lucky General…