WTI $42.67 +$1.06, Brent $45.43 +93c, Diff -$2.76 -13c, NG $2.15 -2c

Oil price

US inventories fell across the board yesterday and the EIA came in with some helpful new predictions and current data which also backed up price rises. Weighing in on the positive side the EIA increased its world demand forecast numbers from a July number of 92.88m b/d to a 2020  average of 93.12m b/d.

Their own US production figures were interesting, stating that from December 2019 to May 2020 output has declined by 21.9% with the GoM down 18.2%, Alaska 16% and the Lower 48 ex North Dakota down 19.4%. North Dakota was the worst with production down 41.6% during the virus period. This led to expectations of 11.26m b/d, a fall that was predicted at 600,000 b/d last month is now 990,000.

The inventory stats showed a draw of 4.5m barrels well higher than forecast and with gasoline drawing 722,000 b’s and distillates down 2.3m meant that crude oil production was down 300,000 b/d at 10.7m b/d. Refinery utililisation was 81% up 1.4%  and continued healthy demand meant that production of gasoline was up to 9.6m b/d up 300,000 b/d.

Bahamas Petroleum

A highly detailed new corporate presentation from BPC today covering all the information from the combined portfolio of assets recently acquired. The company have divided their thoughts into vision and strategy including the Company’s intended work programme, as well as a clear statement of the Company’s goals and targets in the coming 18 months in terms of exploration activities, resource and reserve maturation, production growth and potential cash generation.

These thoughts are divided into the two thoughts as follows;

 ‘Vision: To be an Exploration and Production (E&P) business generating reliable, growing production and thus free cash-flows capable of supporting core exploration activities, which in combination creates significant value for all shareholders.

Strategy:A portfolio approach to asset ownership across the full life cycle of the hydrocarbons business that appropriately balances risk and reward, ensures access to capital on competitive terms, and effectively leverages core expertise and experience within the Company.’

The company are targeting production of 500 b/d by the end of 2020 rising to 2,500 b/d by the end of 2021, to be achieved by the usual technical and operational procedures in both Trinidad and Suriname.

BPC are also planning to get some idea of reserves in the combined group and as there are no current estimates have commissioned a CPR for the assets in the Bahamas, Trinidad, Suriname and Uruguay. BPC believes in portfolio-wide 2P reserve of 1 mmbbl net on conclusion of the report and thereafter ongoing maturation of resource and reserves is a ‘core business objective’. It is targeting a 2P reserve of some 10 mmbbl net at the end of 2021 and a longer-term of 50 mmbbl net. This would clearly be materially changed should any success happen at Perseverance…

Cash flow is a core business objective of the company in the future as production grows so a production of 2,500 b/d by the end of 2021 would result in revenues of $15m on an annual run rate basis. The plans here are clearly to be able to generate sufficient cash flow to cover all overhead and operating expenses and ‘potentially making considerable contribution to ongoing capital and exploration expenses.

As for exploration, the key are the large, meaningful opportunities and appraisal activities across the portfolio. Obviously starting with the Perseverance well and then the maturing of the Uruguay prospect inventory and then the ‘highly prospective’ South West Peninsula.

Commenting, Simon Potter, Chief Executive Officer of BPC, said:

“We are making rapid progress on familiarising ourselves with the potential of our recently expanded portfolio of assets. The publication today of our latest corporate presentation provides an initial view as to where we wish to take the portfolio, our targets and goals, and what our shareholders can anticipate as we get to grips with leveraging additional performance. We will expand these metrics as our confidence on delivery grows, but our strategic focus, as detailed in our new presentation, is simple and unwavering: to deliver shareholder value through a combination of high-impact exploration success and growing production cash flows. Already discrete teams are focused on delivering immediate objectives, though none more important than the dedicated drilling team’s total focus on the commencement of the Perseverance #1 well in The Bahamas later this year.

The BPC share price has fallen this morning which is pretty much inexplicable. This is a very smart, detailed presentation of what now is an exciting play with serious upside potential as well as production growth opportunities in Trinidad and Suriname.

The link to the presentation is here or on the BPC website.

KeyFacts Energy Industry Directory: Malcy's Blog