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Morning Squif, we still have the important Novak meeting with Russian producers today.... and then the possible flight of the Saudi Minister to Russia if it's worth his while. Important week.. Massive pressure on everyone.. Even if we had an agreement last week, Brent would have gone up to $55 and then got sold down to $50 due to expanding Corona issues. But the market is currently ignoring China coming back and just focusing on the Saudi extra production headlines. All those extra tankers can be cancelled or re-routed if Saudi cut April production back to the original deal.

Target Brent $45 (sp 15p), and then lets see how genuine US shale cuts backs are. What amazes me watching US TV is how US commentators are so protective about US Shale jobs.. Almost to the point where it's ok to keep the jobs, even if the company is going bust. Even the Goldman Energy Man said it's fine because you can always go into bankruptcy and sell the land/shale rock and keep US production going and growing to 15m bopd. The whole culture is almost aggressive and ignores equity.

SP now 12.77p so doesn't look good if Novak comes back empty.

I'm sure like Enquest, all Oilers are in the middle of various projects.. Our Western Flank is quite expensive , so I'm also thinking capex maintenance mode thereafter, in order to save all cash and target the reduction of the 2021 RCF.

I'm inclined to cancel the extra Magnus and PM8 drills later this year and just defer till 2021.. I believe OPEC+ will agree to something which will lift Brent to $45, but thereafter, any gains are subject to seeing how genuine the Shale Cut backs are. If they reduce by 1m bopd by the end of 2020 and non-OPEC contributes another 1m, then that allows room for WTI to move to break even.. say $47.. That still leaves Brent at $52 , .. Sp target back to 18p then it's a bit of a wait for the super cycle higher prices. WTi can go much higher in the short term if the US banks genuinely tighten credit facilities and US production drops 200k bopd /month in late Q2.. Mark Gordon talked about inflection point in June/July.. / I think he might be spot on.

Glad he realises Shale is a ponzi scheme , salvage what you can if you have to rely on J P Morgan to act as the swing producer when prices are too low , Saudi should only act as a swing producer when prices are too high. Even Goldman are quite happy to throw the oil companies under a tanker, liquidate the company and sell the land free of debt to someone else. You don’t want to be a lender in the US unless you can fudge the WTi price higher by telling your clients to cut rigs straightaway or it’s history for the oil company and the bank.

J P Morgan is now the World swing producer .. the WTi price will go where it needs to be comfortable..

….. $50, .. expect massive lending cuts in the Shale sector.. .. ie large reduction in Rigs.

The US needs to block the Straits..

Trump doesn't want high oil prices, but he doesn't want too low prices either.. Those US banks are panicking...… cheap money for ever … to sustain Shale.. well not any more.

Hand Gel : out of stock. Surgical Mask: out of stock

Digital Thermometers: just about to go out of stock..

Confirmation our 40p target was realistic, if only Brent was higher, maybe the next accounts will add a few pence to the SP . Otherwise I can see some selling the equity at say 15p and buying the bond which is at half price , taking the interest and gain to redemption to double their money .

So that reversal should also add $350m to our Market cap sentiment : ie we previously dropped from 22p to 16p when they came out with their impairment , why not add 6p today just for that. It’s big news.

The US banks have massive loans extended to Shale , so big that if they default, it could mean some banks having to potentially recapitalise to some extent to keep ratios in check , far better to tell their Shale clients to immediately reduce rigs to take off supply and start the process of driving up prices , Corona and a no OPEC+deal is a double punch they can’t handle . Fear of another Lehman style crisis if they don’t act swiftly.

Seems like Russia is loosing a lot for just 300k less production, complete madness

Almost think they will announce a deal in the morning , but the article gives a 75% chance of a deal in June . Even with a deal Brent might only now get to $45, which still leaves WTi at $40, too low for Shale. US banks now panicking about their loans to Shale companies which bodes well going forward as Corona is with us for a while reducing demand. US rigs should reduce straightaway to avoid building up a glut.

Almost 15p now, Enquest is already into its deleveraging program , Brent back to $40 or even $45 by Friday would be excellent, Plenty of longs got stopped out of oil contracts and are now coming back in to support the oil price.

14p isn’t so bad considering the Brent price today , but our market cap of £250m looks solid , Should get a boost when the financials are released ,

Assuming no Opec action , I expect the US rig count to reduce by 100 over the next 3 months , boosting WTI to $40, and the same rig reduction again for Q3, which puts us at WTi $50/ Brent $55 in Q4, ,... $60 in Q1 2021 due to lack of worldwide investment capex and natural declines . SP back to 30p in a year , earlier if OPEC make a positive decision this quarter.

Iran being exempt from the cuts surely makes them the last to know Saudi intentions , but I believe a decent cut this week would repair a lot of damage .

Bloomberg just aired an interview with Iranian oil minister , from yesterday in Vienna.

Admitted it was a mistake to make the Opec+ suggested cuts conditional on Russia. Looking for a cut very soon to stabilise the market. Hoped a compromise could be reached with Russia, but if not, it seemed like he would prefer Opec to go ahead with a significant cut. The markets were oversupplied.

The next step for SAUDI while MBS is in a bad mood is to now wage war on Iran, boosting the oil price to fix the fiscal deficit and of course doing something the US have been talking about for quite a while. It's quite a good financial and political return for him. The pressure will build up and he'll either go with Opec + cuts or go to war. Doing nothing is not an option.

Saudi can't survive at $20. What's their fascination with gaining more market share to support just 35m people. A genius would step back and let others do all the hard work.. always produce slightly less than what's required to prop up prices, otherwise you get much lower prices which isn't so good if oil is your only economy.. Russia has say 150m people so you can understand why they produce more to support a bigger country.. At the end of day, Saudi got the oil for free, so why all the fuss.

All this fuss over a measly extra 300k bopd cut by Russia when the world uses 100m bopd. Otherwise it was all agreed.

Oil will bounce very hard once OPEC+ release a statement.. Give it a couple of weeks.. or much less if WTi trades in the high $20/ low $30 range tomorrow. Even people in Saudi must be in shock at the billions of wealth destruction over just 300k bopd. MBS : Madman or Genius.. Lets see how much they can all stomach with low oil prices. Has he taken inspiration from Trump.?

I noticed that too.. The Western Media have been pro OPEC cuts in every article for weeks.. to protect US Shale..
Even over the weekend.. nothing on consequences for Shale.. no OPEC Ministers trying to calm down the media either... just Twitter and the expected oil price collapse on Monday.. and Saudi slashing prices. .. It's almost weird.. are they paid just to bombard Twitter to somehow persuade and influence OPEC+ policy over the next few weeks.. ?

Back to Brent $50 by end of month with some sort of responsible action from OPEC excluding Russia , Same price for Q2 and Q3 and then Brent $60 in Q4 once we get confirmation Shale production is not growing / and is actually declining.

6 mths of WTi in the low $40s would use up the overdraft facilities very quickly leaving nothing in the Shale drilling budget later in the year.

Our annual capex maintanence budget is $50m , so we have plenty of room in 2021 to defer spend and allocate $190m to RCF repayment should the need arise, should our existing cash balances be a little light.

Hi E121, For political reasons I expect the gap to WTI $55 to be filled very quickly by some instructions from the White House. Definitely a case of keeping production as high as possible, but current prices of WTI $47.50 are too low to enable the policy to continue.

There is an under the table deal where banks lend and don't ask questions. The US state doesnt owe equity holders anything. They should be furious with chasing production for no return, but the Directors who run these companies are more than happy with their salaries and long life overdraft facilities that appear they can always just renew.