Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
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Not sure why it takes 5 months to prepare and audit accounts for such a relatively small company ?
I would appreciate any views on what to expect with the results and the chances of them being better than market expectations. Even if they were the impact on the sp would be likely to be muted for obvious reasons. However if the results RNS confirms we are being paid in full for gas, includes increased sales, includes some positive information on Niger perhaps we might see the low teens. As I have previously stated expect there is a serious risk the market might drop back as the full impacts become clear but the good news is that my record of being g wrong is second to none.
This market is all about surviving a few months of possibly very low oil prices and/or maybe $30 - $35 for rest of year.
Demand destruction has been phenomenal but at current oil prices, supply is going to fall off a cliff. The calculation is OPEC/G20 have slowed the rate of fill of storage capacity but everything hinges on demand slowly recovering at same time as supply destruction begins to kick in. Needs to balance before we hit full capacity. I suspect further cuts will be required. Important to remember that actual price achievable is at a very significant price to the dated price on our screens. And in certain locations where storage near capacity the price could be sub $10.
The great thing about SAVP is that revenues mainly gas so we just need to get paid! Or be reassured that World Bank Guarantee still our safety net. It’s possible that Nigeria will benefit from G7/IMF debt relief and SAVP waiting on this.
In summary Paul in your opinion do you consider SAVP is worth a gamble at the current SP? It looks like they are still being paid although I would have preferred the tweet to say paid in full. That was my main worry aside from further falls in the market in general.
Paul, i posted this on ad v f n today in reference to an earlier post of mine re demand/supply expectations.
'The IEA have just released their demand for 2020 - Expects demand to be down 9m bopd for the year - which for the year is around 3.285 billion bls drop against 100m bls/day (36.5 billion for the year). Their graph shows the biggest months for loss are March when the lock downs mostly kicked in mid to late of that month, April, May, June as i was expecting.
It shows the balancing effect i mentioned in my post 1578 of 3rd April for my expectation then and why the cuts wouldn't immediately match the deficit but rather balance it over time and not too dissimilar to todays update - graph here = https://twitter.com/IEABirol/status/1250333302268940289
Also SA expects IEA to announce 200 mmbls of oil buying over next 2 months which is about 3m+ bopd in another cut (see Energy Intel).
In addition Texas Railroad commission vote yesterday will be announced by 21st April re voluntary cuts or not.
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ZENGAS - 03 Apr 2020 - 12:01:18 - 1578 of 1799 PetroTal - Growing oil production - PTAL
Maybe some countries can add further to strategic reserves.
Maybe in real terms the cut doesn't have to be as severe if that happens.
Consumption could be down 20-25m day against 100m demand.
If consumption is down this much for 4 months that's about 2.5 billion bls lost demand.
If demand is down 4m/day average for another 8 months that's 1 billion bls lost.
In total that's maybe 3.5 billion bls/yr they might need to balance in supply cuts or just under 10m bopd.
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Brent Oil was last at $27-$28 barrel in Jan 2016. Savp pressed on by acquiring 2 additional blocks in Niger so obviously a low price didn't hinder longer terms outlooks so i would think this period will be similar. Will take time for all the cuts to right the deman picture over time.
I beleive oil will return to circa $50+/b over the next 12-18 months and that must be something that any farminee takes onboard. Goldman on the back of the cuts have also estimated that price range/timescale. Never guaranteed, but severe cuts have begun, expensive production will dry up some and some balance will return just as it did in 2008, and 2015-16.
I would expect Niger to still be on the cards as it's production is still someway down the road. China still needs to get their oil out so i beleive its still an attractive farm out option for those companies that are looking ahead and not just at the here and now. In addition it's a strategic stream of revenue for the countrys government to capture so they need this even if not as lucrative as before. Hopefully costs will be trimmed, renegotiated in such an environment. Delays to activity/farmout more than possible/likely is my expectation. Niger government still needs critical oil investment so perhaps extensions in ongoing negotitaion. Last we heard was that Niger was setting up some kind of national entity for oil so need partners who might be in short supply so i would logically think, need us as much as ever as there are only 3-4 players max.
Whatever the hold up for an update remains to be seen and i certainly would have loved to have gotten a comprehensive update by now. Any negotiations might now be hampered to some degree by lock-ins/movement etc including refinancing.
For Nigeria, If they were not getting paid for their gas and any guarantee had to be called upon for payment, I would have thought that would be a material event and definitely needing an RNS. As for payment terms/time to settle that's something we don't know if it's taking x amount of months but i would have thought even if there was a rolling back log of overdue payments say for 4-6 months always outstanding, we could still be being paid monthly while always being 4-6 months behind - something i honestly don't know but maybe these are acceptable credit terms if thats what AK meant in stabilising the business going forward from the transaction completion ? Also there was to be some gas well drilling and workover activity.
The results may come anytime. Last year was later as they went to late May. Maybe this gives them time to add some material news. Other than that, nothing more i can add until they englighten us.