WTI $31.73 +23c, Brent $33.85 +63c, Diff -$2.12 +3c, NG $1.87 +3c

Oil price

The Fed cut rates to zero and injected $700bn or more, other world banks did the same including $112bn from the ECB but European markets are carnage again this morning between 8-10% off, Wall Street will be a blood bath. Worth looking at Occidental where the acquisition of Anadarko last year will go down as the worst piece of M&A ever done, indeed having paid $57bn for the company Chevron (who only bid $50bn..) could buy the whole bang shoot of Oxy which was down 72% on the month to a market cap of $13bn, until Friday when Carl Icahn bought 10% of the stock.

Crude is also down 10% this morning as Aramco was again active in the tanker market having hired as many as 50 VLCC’s in recent days, at up to 2m barrels per ship to offer to clients of Russia or the USA (who are brazenly/ironically buying crude for their SPR. )

Jersey Oil & Gas

JOG has established and will lead, the Greater Buchan Area Joint Integrated Studies Agreement between neighbouring field operators to undertake and complete technical and commercial evaluation studies for a collaborative development of the wider Greater Buchan Area, which contains discovered oil and gas resources in excess of 200 million barrels of oil equivalent.

The key objective is to is to see if a collaborative development would lead to a ‘reduction in development costs and an increase in value for all parties including a new production hub in the area’, potentially including electrification in line with the Oil & Gas Authority’s  Maximising Economic Recovery  strategy for the UKCS and reducing CO2 emissions.

The agreement covers JOG fields such as Buchan, J2, Glenn (all 100%) Equinor via 70% of Verbier (subject) with JOG 18% and CIECO 12%, the Avalon field with operator Ping 50% and Summit 50% and Zennor who own and operate 100% of Leverett. It has been a wise move by JOG and the other owners in the GBA, obviously envisioned by the OGA when putting together the offer in the 31st Supplementary round last year. It puts JOG in a very strong position, a good quality management team, with no debt nor current production which makes them pretty risk averse in this market.

Gulf Keystone Petroleum

GKP has announced that its $25m buy back is now complete making $50m in total. Also today the company has announced that the SH-13 well will be suspended for safety reasons re the Covid-19 virus. The Shaikan production rate remains at 38/- bopd unaffected by the virus but construction has been halted on the expansion to 55/- bopd until things improve. Accordingly the 55/- target for Q3 2020 and current guidance of 48/- bopd is probably best temporarily suspended.