Malcy’s Blog – Oil price, Genel Energy, Gulf Keystone, Savannah & Victoria Oil & Gas

WTI $19.87 n/c, Brent $27.82 +13c, Diff -$7.95 +13c, NG $1.69 +9c

By Malcolm Graham-Wood

Oil price

There is a lot of bull written about the oil price at the moment but also about markets, yesterday the US had the Philly Index number, housing starts and jobless claims and commentators went bonkers, I mean what do you expect these numbers to look like? I know, I love the look at petrol at £1 a litre but I’m not going anywhere so it doesnt matter, I cant put petrol in the bath so my next fill up will likely be back to £1.25+…

The oil price and the recovery from the virus are likely to track each other, maybe pretty closely. The reason why oil isnt recovering yet is the physical market takes time to destock, with Opec+ cuts not kicking in quite yet the indigestion will remain, for the time being. Also with some oil prices in Midland, Texas and from Canada at $4 per barrel causing grief what do you expect when refiners ain’t taking anything because, you’ve guessed it no one is buying gas even at $1.85 a gallon or less.  Maybe WTI will discount to $10 until  the US restarts,  maybe imminently, things oil and economy will change on the same calendar.

Genel Energy

Genel has received payment for March oil sales from the KRG of $2.5m from Taq Taq net and $8.5m from Tawke. Under new proposals from the KRG during the current oil price situation they will pay monthly invoices 15 days into the following month but that the Tawke override payments will be suspended for at least nine months. The November 2019 – February 2020 payments will be deferred and at $50 oil and a programme of repayment will kick in.

The promise of consistent future payments offsets the deferral of invoices from a time of a higher oil price, providing clarity over Genel’s cash flows going forward. Genel’s strong balance sheet should see it end 2020 with a net cash position, a good position to be in, and the KRG has illustrated its ability to make good on receivables in the past, I see no reason why Genel will not receive everything it is owed in due course.

Savannah Petroleum

From now on for Savannah Petroleum read Savannah Energy with the catchy ticker of SAVE. This reflects ‘an increasingly diversified asset portfolio, a leading energy producer in Nigeria which currently provides gas to power stations accounting for over 10% of Nigeria’s power generation capacity.

In Niger the company is developing its ‘flagship assets’ with plans to deliver first oil in the near term after a hiatus in the last 18 months. CEO Andrew Knott comments “The name change to Savannah Energy is reflective of the asset portfolio and business model development that we have seen over the course of recent years. Savannah is now a major supplier of gas for domestic power projects in Nigeria and we expect to be able to strongly grow this business over the course of the coming years in a similar manner to our plans for our business in Niger.”

Victoria Oil & Gas

The new CEO and a smart NED appointment have their feet under the table and hopefully over the next few weeks and months the inevitable ‘strategic review’ will have been concluded. The first quarter saw 5.1 mmscf/d of gas and 1,656 bbls of condensate sold giving revenue of $5.3m. ENEO has arranged payments of 4 invoices value $2.9m to be paid by promissory notes as before.

Gulf Keystone Petroleum

As with other Kurdistan players some invoices have been paid by the KRG, $4.6m net received by GKP for Shaikan crude sales in March has been received along with proposals for payment timing of the November 19- February 2020 invoices.

Malcolm Graham-Wood

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Disclaimer: Malcy’s Blog is provided for general information about the international oil and gas industry and the companies that operate within it. It does not constitute investment advice and Malcy does not buy or sell shares, warrants or bonds in any company written about within the blog. Information is taken from publicly available sources and any comment is that of the author who does not take any third party comment in the publication.

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