WTI $40.60 -59c, Brent $42.85 -49c, Diff -$2.25 +10c, NG $2.74 +11c
Oil was up about three and a half bucks last week, admittedly partly due to the Norwegian oil workers strike which was settled over the weekend and hurricane Delta which has moved away from the Gulf. Oil is down around 50 cents this morning as not only did those supports for the market disappear but in Libya after force majeure the Sharara field is now coming back onstream.
It is Columbus Day today and a holiday in the US although not all markets are closed, bonds certainly are although it’s hard to tell the difference there at the moment. The rig count on Friday showed a rise of 3 units overall to 269, in oil up 4 units to 193.
An operations update this morning from SQZ who yet again report upbeat information that offshore operations on the R3 Intervention project have commenced, the semi-sub drilling rig has arrived on location and is safely installed over the R3 well.
Rig operations are planned to last approximately 70 days and as an existing well R3 is already connected to the subsea production infrastructure and all being well production will commence in early 2021.
Over at Columbus, September saw the successful installation of the seabed tie-in structure and over the summer much infrastructure has been completed ahead of the development well which is planned for 1H 2021. With first production expected from Columbus in the second half of 2021 with expected production rates net to Serica of 3,500 – 4,000 boe/d to be achieved shortly thereafter.
Commodity prices, particularly in the crucial natural gas market, have risen sharply from the nadir in the Spring when lows of 10p/therm were encountered in the early days of Covid. In September the price averaged 29.5p/therm and in October to date the price has exceeded 35p/therm.
Mitch Flegg, Chief Executive of Serica Energy, commented:
“We are entering an exciting period of value-adding operations. The R3 Intervention project has the potential to add significant production volumes and can provide valuable optionality to the management of Rhum wells and reservoir. The Columbus development will add further production and diversity to our portfolio.
Serica’s net production levels remain strong despite the added complexities associated with operating remote installations in a socially distanced manner. Gas prices have recovered significantly and the gas futures price outlook is good. Our balance sheet remains robust with significant cash reserves, no debt and limited decommissioning liabilities. This will enable us to execute these projects whilst simultaneously continuing to look to take advantage of current market conditions by pursuing opportunities to further expand our portfolio.”
Serica is in a very strong position and with its 80% of its production being natural gas it makes for a highly profitable, well managed company. You only need to see what CEO Mitch Flegg says above they have a strong balance sheet able to fund continued growth, what’s not to like about Serica?
Petrofac has announced that Ayman Asfari is to retire as CEO at the end of this year and is to be replaced by Sami Iskander in that role. Ayman Asfari will continue as a Non-Executive Director to ‘provide stability and continuity’ but as a co-founder and indeed 19% shareholder it is way more important than that.
Sami Iskander comes into the company with a perfect CV and I am rather assuming that he, having been at BG before might know CFO Alastair Cochran which would make his assimilation into Petrofac that much easier.
I’m sure that Ayman would have preferred to step down after the ludicrous SFO investigation is concluded but he has decided now to watch from a non-exec seat at the board. I have known Ayman since the very beginnings of his time at Petrofac and have covered the company since the start. He is without any doubt a titan of the service sector and having travelled on a great many visits with him, mainly in the Middle East, respect for him from his customers and colleagues is immense. I would like to wish him a healthy and contented semi-retirement and success in his admirable philanthropic ventures.
Whatever this ‘Nations Cup’ might be it seems to take up an unholy amount of time but whatever, at the weekend England beat Belgium, Scotland beat Slovakia, Northern Ireland lost at home to Austria and Wales drew 0-0 against the ROI.
In the Basketball Championship the Lakers beat the heat with LeBron James again being the MVP.
Finally obviously Valterri didn’t like the sight of Lewis big in his mirrors and virtually let him through.