20 Nov 2018 13:24
20 November 2018
Cabot Energy plc
("Cabot Energy", or "the Company")
Update on Edmonton Light Oil Benchmark Price
Cabot Energy (AIM: CAB), the AIM quoted oil and gas company creating predictable production growth in Canada balanced with high impact exploration in Italy, notes that the Edmonton Light Oil benchmark price ("Edmonton"), the crude oil contract price for the Company's Canadian revenues, has diverged significantly from the West Texas Intermediate ("WTI") benchmark price and closed at US$21.43/bbl on Friday 16 November 2018.
The Company has been advised by Macquarie Oil Services Canada Ltd ("Macquarie"), the Company's Canadian crude oil purchaser, that the divergence between the Edmonton and the WTI benchmark price is principally due to extended United States Mid-West refinery shut-ins for maintenance.
In the first six months of 2018, the actual price differential between WTI and Edmonton was consistent with historical differentials (Edmonton was 8%-10% below WTI on average), as reflected in the Company's Interim Results published on 28 September 2018. Since September 2018, in a gradually softening oil price environment, the differential has increased. According to a consensus view from industry expert GLJ Petroleum Consultants, an indicative forward sales price differential between WTI and Edmonton for December 2018 deliveries is US$35/bbl, narrowing to US$17/bbl in June 2019.
Whilst the exact impact on the Company cannot be quantified at this point, the current WTI-Edmonton benchmark price divergence could result in a fall in the average sale price per barrel of oil received by the Company in the second half of 2018 compared with the first half of 2018. Looking ahead, advice received from Macquarie suggests that the United States Mid-West refinery is expected to be back online early December and that the price differential is expected to return to normal levels in the near term.
Enquiries:
Cabot Energy Plc | +44 (0)20 7469 2900 |
Scott Aitken, CEO Petro Mychalkiw, CFO |
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SP Angel Corporate Finance LLP | +44 (0)20 3470 0470 |
Nominated Adviser and Joint Broker |
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Richard Morrison, Richard Hail, Richard Redmayne |
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GMP FirstEnergy | +44 (0)20 7448 0200 |
Joint Broker |
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Jonathan Wright, David van Erp |
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Luther Pendragon | +44 (0)20 7618 9100 |
Financial PR |
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Harry Chathli, Alexis Gore, Joe Quinlan |
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Note to Editors:
Cabot Energy (AIM: CAB), is an oil and gas company creating predictable production growth in Canada balanced with high impact exploration in Italy. Comprehensive information on Cabot Energy and its oil and gas operations, including press releases, annual reports and interim reports are available from Cabot Energy's website: www.cabot-energy.com