It's going to be an interesting seeing Oilies earnings19 Feb 2021 15:25
after this past year; many have fallen; lots of write downs, lots of cutting back outgoings and overheads to the bone. PMO in particular ran a pretty tight efficient ship, it was the debt that brought it down, I could sort of see what Tony was doing, bumping up production, this time last year (what were they £0.90-£1 ?) was seemed to be the start of the up cycle, but alas Covid, a black swan event put pay to that, to Harbours gain. Last year PMO said $35 a barrel average for 2020 would keep them pretty neutral now with $60+ they are are making oodles of cash.
So I am pretty much expecting some bumper earnings all around, but will that filter in to exploration? I still feel in the current climate the big and mid cap players will be steering clear of the uber large developments. This has to be good for us and Harbour. Buying production becomes more expensive for a start; anything deep water also has to be lower down the pecking order. Work-overs, tie backs and exploration around current producing assets has to be the focus for many, but in the North Sea it would just be extending the production level plato a bit longer, not really adding a hefty amount.
There also has to be a great opportunity to see what service companies will do to get some work. I'm not saying do them over, but there must be a lot of oil rigs suitable for the Falklands either idle or becoming idle in the next year or so, with no-one wanting to book anything longer term until we see where oil is going. Everything is still knee jerk reaction and all these professional analysts change their predictions like the UK weather! Just look at the weekly reporting in the US, they are consistently way off the mark! My concern is that we head for a supply crunch and Russian and Saudi slack is taken up in and instant, where else is there an odd 1m to 2m capacity waiting to come on stream so quickly.
My personal view is everyone is underestimating the boom once things start a semblance of normality. Yes there are redundancies, jobs lost, it's happened to people I know; my work has suffered quite a bit too, but human beings are resilient, we pick ourselves up; dust ourselves down and forge ahead once more. Like a tree falling down in a forest; the gap it leaves doesn't stay empty for ever, no the light that touches the forest floor that couldn't before starts a chain reaction of nature taking advantage of things. The aftermath of this epidemic will be no different, people will be heading back out (possibly running or even galloping) with heads high, spending again; holidaying; eating out and seeing friends again, this will inevitably create growth, jobs and hopefully a rising tide to lift all boats.
Lets hope Harbour's incoming tide lifts this old boat! Lets hope Harbour can cause a tsunami!
LTT