Oil & Gas Flow – Empyrean Energy (AIM:EME): CNOOC grants one-year contract extension


Energy Prices         

Brent Oil US$40.0/bbl vs US$39.3/bbl yesterday

WTI Oil US$37.3/bbl vs US$36.2bbl yesterday

Natural Gas US$1.80/mmbtu vs US$1.76/mmbtu yesterday

Oil & Gas Daily Flow

Non-Independent Research; Marketing & Sales Commentary – MiFID II exempt information – see disclaimer below

 

Market Update: Wednesday 3 June 2020 

Empyrean Energy (): CNOOC grants one-year contract extension

 

Energy Prices         

Brent Oil US$40.0/bbl vs US$39.3/bbl yesterday

WTI Oil US$37.3/bbl vs US$36.2bbl yesterday

Natural Gas US$1.80/mmbtu vs US$1.76/mmbtu yesterday

 

Oil Price News

Oil prices have touched US$40/bbl for the first time since March on reports that OPEC+ is set to bring forward its meeting to this Thursday

Whilst US/China tensions continue to weigh on prices, an extension to the cartel’s production cuts will provide short term support

Market consensus suggests the group will extend the current output restrictions for one to three months

As it stands, without an extension the extraordinary cuts agreed upon in April – 9.7MMbopd will expire at the end of June

However, nothing has been agreed yet and there are conflicting signals over how unified the OPEC+ parties are on an extension

Saudi Arabia reportedly wants to extend the cuts until the end of the year, while Russia has characteristically shown reluctance

Russia may not want to extend beyond another month or two, which raises questions about what will occur later this year. At some point, there will be pressure to begin unwinding the production cuts

 

Gas Price News

Natural gas prices edged higher consolidating its recent decline after hitting a contract low on Monday

Demand was flat last week and despite a decline in the number of active rigs, prices continued to decline

The weather is expected to remain warmer than normal in the US mid-west and east coast for the next two weeks driving up cooling demand

A weaker than expected GDPNow growth forecast could put additional downward pressure on prices in our view

 

Company News

Empyrean Energy (): CNOOC grants one-year contract extension

Share price: 5p, Market Cap: 24m

Empyrean has confirmed that given the current climate and the resultant global control policies, the Company has proactively engaged with CNNOC and applied for a 12-month extension to the first phase of the exploration period for the petroleum contract for Block 29/11, China.

CNOOC has granted a 12-months extension to the first phase of exploration.

As a result, the first phase of the exploration period for the petroleum contract for Block 29/11 has been extended to 12 June 2022.

CNOOC has informed the company that the existing current contract will be suitably amended in due course.

Our take: The extension, whilst expected, allows Empyrean additional time to de-risk the prospect ahead of drilling what could be a transformational exploration well in a success case. It also highlights a positive relationship with CNOOC, with the Company not having to invoke its force majeure clause given recent unprecedented events.

 

Research – Oil & Gas

Sam Wahab – 0203 470 0473

[email protected]

Sales

Richard Parlons – 020 3470 0472

Abigail Wayne – 020 3470 0534

Rob Rees – 020 3470 0535  

 

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Sources of commodity prices

 

Oil Brent, WTI

ICE

Natural Gas

NYMEX

 

 

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