Oil price, Petrofac, Hunting. And finally…

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WTI $55.69 +93c, Brent $58.46 +$1.00, Diff -$2.77 +7c, NG $2.79 -6c, UKNG 47p -0.49p

Oil price

Oil remains in demand following the Opec+ JMMC meeting yesterday in which they see no need to change oil output policy in a market that they optimistically consider to be ‘in a protracted recovery phase through 2021’. It seems that the vaccine situation gets better every day which means that short positions are not advised.

The EIA inventory stats were good, not as good as the API data but showed a draw of 1m barrels of crude with, more importantly a 1.5m draw at Cushing. With Refinery run capacity up again by 0.6 points to 82.3% gasoline saw a build of 4.5m b’s on unchanged production. There was no change in distillate numbers even after a big rise in production.

Petrofac

Petrofac has announced contracts in Oman worth around $300m through Petroleum Development Oman (PDO).

The first is a direct EPC contract for PDO’s Marmul Main Production Station (MMPS) – Gas Compression project. The scope of work for the 30-month, lump-sum turnkey contract includes engineering, procurement, construction, commissioning, start-up and initial operational support.

Located at Marmul in the South of Oman, approximately 800 kilometres from Muscat, the purpose of the new facility is to eliminate permanent flaring and manage associated gas. The work includes gas recovery and booster compressors, gas sweetening, dehydration and other units, utility systems and modification of existing facilities.

The second is a project delivery contract with Petrofac’s partner and main PDO contract holder Arabian Industries Projects LLC, for selected PDO concession areas in the North of Oman. The scope of this seven-year contract is for provision of reimbursable engineering services, integrated project support and management services, and has an option to extend for three years.

Elie Lahoud, Chief Operating Officer – Engineering & Construction, commented: “Petrofac has a significant track record in Oman and PDO are a longstanding client. We look forward to building on our strong relationship through these latest contract awards. Both will be delivered by our teams in the Sultanate, with the focus on safety, maximising local and sustainable delivery, and generating In-Country Value.”

It does not surprise me that PFC has made significant progress in Oman, when visiting with them a little while ago it is clear that PDO has immense respect for PFC from the top down. Despite the witch hunt by the SFO I expect the company to in due course win substantial new contracts which will dwarf the £400m market cap.

Hunting

Hunting today announces that it has agreed to provide Well Data Labs with $2.5 million in convertible capital financing, to support WDL significant growth ambitions in the onshore technical well data analytics market. This financing will provide working capital to WDL to support its current activities.

WDL has quickly emerged as an innovator in downhole data analytics and machine learning. In the US, approximately 50% of the wells fracked use WDL proprietary cloud-based software. The business offers data-driven well reporting and optimisation solutions enabling operators to increase efficiencies by simplifying multiple, complex data sources into actionable, easy to understand, real-time insights.

 Today, WDL has over 30 blue chip customers in the oil and gas industry providing data services for over 500,000 frac stages. With much of the research and development foundation already in place, Hunting is investing at a key point in the WDL growth cycle.

Under the alliance agreement, Hunting and WDL will seek to maximise the integration of the Hunting Titan perforating product line into WDL application set providing operators with the information needed to react and adjust the frac based on data obtained from previous stages. This is a step change in data availability eliminating the wait time associated with extracting the data after a completed job. 

 In return, WDL will benefit from Hunting’s distribution network and long standing position as a premium provider of perforating components with industry leading technology. 

Jim Johnson, Chief Executive of Hunting, commented:

 “The provision of this financing to Well Data Labs allows Hunting to access the key data analytics segment of the completions market. This is a critical area for many operators as the industry drives for higher efficiency drilling operations and faster well evaluation. This investment is an exciting opportunity for Hunting given the synergies with our onshore related products and services portfolio.”

This seems like a good deal for both sides but I would guess that it gives more margin enhancement to Hunting than drive to WDL. At 200p HTG is also cheap in an oilfield service sector that I suspect that has a good run in it in the next few months.

And finally…

Last night in the Prem the Noisy Neighbours beat Burnley, the Cottagers lost 0-2 to the Foxes whilst Leeds lost 1-2 to the Toffees. The Hammers beat the Villa 1-3 with Jesse Lingard from the Red Devils scoring twice on debut and when Coufal emptied his pockets before bed he found his keys, phone, wallet and Jack Grealish…

Tonight its the London derby in which Spurs host Chelski.

Cricket fans need to change their media preferences for the first test against India which starts tomorrow at 0400 hrs. The TV rights have gone to Channel 4 for a  modest amount and the radio has gone to Talk Sport. The fact that the BBC couldnt pitch for live TV at only £20m for the whole series nor use its expert TMS team on the radio is proof that its management is no longer fit for service to the corporation or country.

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