Oil & Gas Daily Flow – Bahamas Petroleum and Hague and London Oil

Market Update: Tuesday 9 June 2020 

Bahamas Petroleum (): Award of petroleum licence offshore Uruguay

Hague and London Oil (): FY19 represented a challenging year

Energy Prices         

Brent Oil US$40.1/bbl vs US$42.7/bbl yesterday

WTI Oil US$37.3/bbl vs US$39.9bbl yesterday

Natural Gas US$1.82/mmbtu vs US$1.77/mmbtu yesterday

Oil Price News

Oil prices are off slightly this morning, despite the weekend announcement by OPEC+ that historic production cuts of 9.6MMbopd across the group would continue through July as the coronavirus pandemic continues to weigh on demand  

The move spurred hopeful talk of a recovery for oil prices, which are down about 30% year-to-date after a 56% recovery for Brent in of May

However, we note that data from refineries across several regions shows weak margins, or “crack spreads” — the difference between the price of crude that refiners buy versus the price that the market is paying for the refined products

Higher crude costs without increased returns for the products refineries are selling suggests demand growth is not in line with the growth in prices, and could force refineries to buy lower crude volumes, translating into lower crude prices 

and have also issued bearish commodity forecasts today, adding further negative sentiment to outlook

Gas Price News

Natural gas prices are up on news that Baker Hughes has reported that the number of natural gas rigs declined by 1 in the latest week

This compares to a 16-rig decline in oil

The weather is expected to be cooler than normal over the next two weeks through the mid-west of the country

US jobs numbers surged higher last week buoying riskier asset, but this failed to buoy natural gas prices

Company News

Bahamas Petroleum (): Award of petroleum licence offshore Uruguay

Share price: 3p, Market Cap: £76m

BPC has announced that in its efforts to expand the Company’s portfolio options, it has been awarded the AREA OFF-1 petroleum licence offshore Uruguay.

Management estimate that the licence could contain up to 1bnboe, based on current mapping from multiple exploration plays and leads in relatively shallow waters with ‘significant running room’.

Management also believes the OFF-1 licence play system is directly analogous to the Cretaceous turbidite discoveries currently being evaluated/developed offshore Guyana and Suriname.

OFF-1 has an initial 4-year exploration period, with a work obligation limited to reprocessing and reinterpretation of selected historical 2D seismic data – there is no drilling obligation, and the licence includes staged no-cost exit points at BPC’s sole election.

OFF-1 is thus comparable to the “low cost option” represented by BPC’s licences in The Bahamas when they were first awarded – a modest work commitment over 4 years that secures a sizeable, technically high quality, frontier play, with…