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Keeping a close eye on what the banks are saying
https://oilprice.com/Latest-Energy-News/World-News/Morgan-Stanley-Jumps-On-The-100-Oil-Bandwagon.html
No, that’s not true at all. At all. They had a slide somewhere on their PSC with Egypt. First off it is more like 42% plus a cost recovery pool for both opex and Capex and secondly all taxes and royalties are included in the PSC. Those companies whom you used for comparison will often have to pay taxes and royalties. What United simply need to do is to get production up which hopefully with these big targets this year they will be doing so.
Thoughts on averaging down Toady?
For now, OPEC+ members that are able to raise output may agree to “pick up the slack” of other states and lift production enough to bring prices closer to BCA Research’s 2022 $80 forecast average for Brent, Ryan says. That forecast is contingent on Saudi Arabia, Iraq, the U.A.E., and Kuwait raising output by an average of roughly 3.34 million barrels a day this year, and 2.76 million barrels a day next year, he says.
Still, BCA Research has noted for some time that there is a lack of capital expenditure going into oil and natural-gas production globally, Ryan says. If policies aren’t developed to encourage needed production increases over the next decade or two, these excursions to $90 or $100 will become more frequent, and price levels will move higher in an “increasingly volatile fashion.”
Talk of $100-a-barrel oil has intensified in recent days, but triple-digit prices may pose a disadvantage for major oil-producing nations that are set to meet next week to decide the best course of action on production levels.
“It isn’t in OPEC+’s best interest to see prices go through $90 [a barrel] this year and move higher,” says Bob Ryan, chief commodity and energy strategist at BCA Research. “The potential for demand destruction is high at these levels, especially if the [U.S. dollar] remains strong,” he adds, as local currency costs will become “prohibitive,” especially in emerging market economies.
BCA Research expects Brent oil to average $80 this year and $81 in 2023, but “demand destruction,” either from high prices or widespread omicron-induced lockdowns, is the biggest risk to that forecast, Ryan says. OPEC+, which refers to the Organization of the Petroleum Exporting Countries and its allies, would need to increase production, and U.S. shale-oil output would have to climb to keep prices from finding a new “equilibrium” above $90.
On Wednesday, U.S. and global benchmark oil prices settled at their highest prices since October 2014, with front-month West Texas Intermediate crude futures CL.1, -0.73% CLH22, -0.73% CL00, -0.73% settling at $87.35 and Brent BRN00, -0.56% BRNH22, -0.53% at $89.96 a barrel. That year also marked the last time prices topped $100.
Oil prices at $100 are a “distinct possibility this year, driven by both strong demand and minimal gains on the supply side,” says Bill Fitzpatrick, managing director and portfolio manager at Logan Capital. While OPEC would love to see oil hover at $80 to $100, prices above the top end of that range will probably see demand destruction, with consumers forced to reduce consumption, and that is the last thing OPEC wants, he says.
Fitzpatrick says OPEC+ is expected to stick to its current agreement to raise monthly production by 400,000 barrels at the Feb. 2 meeting to “increase revenues, while putting only minimal pressure on oil prices.” However, OPEC+ should “consider holding off on the production hikes…to be better positioned in the event oil prices spike higher,” he says.
BCA’s Ryan believes that OPEC+ faces three key problems, the biggest being that there are only four members—Saudi Arabia, Iraq, the United Arab Emirates, and Kuwait—with the capacity to increase production and sustain it.
There is also no assurance that the omicron variant of the coronavirus will be relatively mild, and the Federal Reserve signaled that interest rates will start to rise in March, which adds uncertainty to what happens to the U.S. dollar—and dollar-denominated oil prices.
Meanwhile, the Russia-Ukraine standoff is important to oil because if Russia cuts off natural-gas exports to Europe, that may “force more gas-to-oil substitution,” says Ryan, and if Russia invades Ukraine and the West imposes more oil-related sanctions, oil production could take a hit.
Good price if you can buy them back cheaper, is the disposal cash that necessary do you think - just need to drill bigger wells
“The two exploration wells in the 2022 programme will be targeting a potential of more than 10mmbbls of gross mean recoverable resources, with the potential to provide a step up in production levels during a time of significantly increased commodity prices.”
Elsewhere in United’s portfolio, in Jamaica, an amendment to a Production Sharing Agreement has received final signature from government officials and will now be extended to January 2024.
The company has divested non-core assets in UK and Italy.
Larkin added: “We have a low-cost producing asset base significantly leveraged to the rising oil price and continue to evaluate new opportunities to grow the business in line with our strategy.
“We look forward to the coming year and growing the business via our existing portfolio and potential new acquisitions."
"United and its JV partners had a 100% success rate for the five exploration and development wells in the 2021 drilling campaign in Egypt,” said chief executive Brian Larkin.
United Oil & Gas PLC (AIM:UOG) told investors that full-year production for 2021 was slightly above guidance, whilst highlighted that new wells added in the year quickly added revenue to the company.
Production averaged 2,327 boepd in the year, versus a guidance range of 2,100 to 2,300 boepd, the company noted in an update ahead of financial results due in April.
Revenue for the year was approximately US$19mln, with the average sale price marked at US$68.90 per barrel (equating to a US$1.85 discount to Brent during the period). United said it collected some US$17.3mln of cash, had US$5.5mln of capital spending and as of January 3 had a US$1.2mln cash balance.
A total of five wells came online for production in the company’s 22% owned Abu Sennan asset, operated by Kuwait Energy, and United noted that all five are expected to achieve ‘pay back’ between three to twelve months of coming online.
"United and its JV partners had a 100% success rate for the five exploration and development wells in the 2021 drilling campaign in Egypt,” said chief executive Brian Larkin.
“Our fully funded 2022 Egypt drilling programme has commenced with the ASD-2 development well which has spud.
"Targeting large volumes of oil in 2022"
It won't be this cheap for long, the upside is there for them to take in a high oil price environment, they are a profitable company able to full fund their own wells. I noticed reference to much bigger targets in the upcoming drilling campaign. Lots to talk about on the call later.
Yes 6p reiterated, bring it on !
Glad I averaged up
Got my email this morning and thought more realistic and pragmatic. Look forward to the lease renewal and think interest will gather then.
Said that we should get a result over Christmas, I think they often over estimate the numbers of days
Absolutely Rover, when does the financing get confirmed, I think that the market is a little worried about that. It is early next week I think. Let's get it done and move on, probably a few worrying unnecessarily. There is a mine being built now and no meet to come back to the market !
I would say that we should probably always assume they are talking about average production
The decline is already factored in when they announced the Ash field decline
Regardless of your thoughts Canetoad, as a holder better address your dialogue to the company than spook others. Their habit is to give quarterly average results only. The history has been to replace production quicker than it declines and they have good success at that. The new well result is expected from the end of this week which as a development well one would hope would be interesting