Oil price, Longboat, Jadestone, BPC - And finally...

Thursday, 28th November 2019 12:26 - by Malcy

WTI $58.11 -30c, Brent $64.06 -21c, Diff -$5.95 +9c, NG $2.50 -3c

Oil price

A very happy Thanksgiving to our American readers, I hope that you enjoy the holiday weekend but wish you hadn’t sent us Black Friday! Actually what I was recently saying about distillates is about to happen, the first flush of really cold weather is hitting some parts of the US, ironically over Thanksgiving. Now the EIA inventory stats yesterday were a mixed bunch, there was a crude build but at only 1.6m barrels it was better than the API. Refiners have been greedy, with gasoline demand up at over 10m b/d still (!) refinery utilisation has been up at 89.3% and they are pushing out gasoline ahead of the holiday.

The resultant rise yesterday in gasoline stocks of 5.1m b’s therefore was not needed and with a cold snap the stock won’t be drawn down and gasoline storage is 4% above the 5 year average. Take a look at distillates though and the picture is much more risky, with a long warm autumn refiners have played roulette and not switched enough to heating oil etc leaving a massive draw yesterday of 5.1m barrels which is now 12% below the five year average. Any long cold snaps and distillate is suddenly going to be hard to find whilst gasoline stocks mount.

Elsewhere the beta is rising, more disturbances in Iraq which are getting worse and fighting in Libya has again shut in two fields overnight. With the rig count down again and money managers increasing exposure, next week, with the Opec+ meeting don’t forget might get quite spicy…

Longboat Energy

Longboat arrives on AIM this morning with the ticker LBE, I’m sure most investors will be delighted to see the return of Graham, Helge and Jon plus what seems like most of the Faroe team. Having raised the £10m they are now ready to go and I’m sure they haven’t been idle all summer so have a few deals waiting on ice. The shareholders are Kushti from Blackrock downwards and all know to have the cheque books out ready. This is indeed the very model of a  modern major oil company in the making…

Jadestone Energy

3Q figures from Jadestone this morning which the market took badly, one reason might have been the numbers which looked light but only due to a delayed shipment which hasn’t gone away. Secondly I thought that CEO Paul Blakeley was just a tad bearish in his macro remarks on the con call this morning. Probably just a glass half empty man but at 64 bucks for Brent I wouldnt be crying in my beer.

Because everything is going very well, Montara and Stag continue to perform very well, the former where the acquisition metrics look strong and is on track to ‘deliver value of up to 3X’ the acquisition cost. For Stag the plan remains to deliver excellent operational performance, grow reserves, reduce costs and thus add value. In Vietnam Nam Du/U Minh progresses well with the FDP submitted and is expected to be signed and returned shortly. Finally the most recent acquisition, Maari is ‘the perfect fit’ according to Blakeley and could unlock significant value.

All in all this was a strong operational performance with production guidance maintained and adjusted  EBITDAX of $29.6m and growing like topsy.  The mantra is to be chasing barrels, cutting costs and continuing with selected M&A opportunities backed by a strong balance sheet still well capable of paying dividends next year. Jadestone has a fine portfolio, a good management and what seems like plenty of opportunities, well worth taking a look at.

Bahamas Petroleum

It’s going to be an exciting winter for BPC shareholders as they look forward to the eventual drilling of an exploration well next spring. Today they announce an initiative to allow the locals to be able to buy into the dream, imagine if it comes in, 390,000 Bahamians with stetsons and cowboy boots…

The company also announces details of the Environmental Authorisation progress as this, along with a number of other important Government permits will be needed between now and March. With the raise done and the shares sitting just below 2p timing is going to be the most important skill for shareholders as we run down the clock to when the drill bit spins.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.