Energy: Freedom beat the oil market in the March quarter
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Freedom Oil and Gas (ASX:FDM) was getting $US3-5 a barrel more than the usual price for its oil in the March quarter, after betting in February that prices would average $US67 this year.
The US-focused oil company said it got an average of $US58.57 per barrel of oil for the quarter, having hedged a portion of its production at $US59-63 a barrel.
The US benchmark, West Texas Intermediate (WTI), averaged around $US53 for those three months.
In February, Freedom bet that 20 large banks were right with WTI price forecasts around $US67 in 2019 through to 2022, when it valued its 2P oil reserves at $US340.4m.
‘Reserves’ refer to oil or gas discoveries that are commercially recoverable using existing technology while a resource is an initial, untested estimate. A 2P means it’s proven and probable, while a 3P includes ‘possible’.
In the March quarter, Freedom sold 115,678 barrels of oil and 331,921 thousand cubic feet of natural gas in the quarter, working out at revenue for the oil of about $US6m.
Spending hit $US18.1 million and it had cash left in the bank of $US4.1m at the end of March.
In the quarter, WTI prices came off a bottom of $US44.84 in the opening days of January to a high of $US60.20 on the last trading day of the month.
The price rise, which has also included the North Sea benchmark price Brent as well, has risen off lows touched in December on the back of falling production from Venezuela, turmoil in Libya, and more recently US President Donald Trump’s insistence there will be no more exemptions for countries wanting to buy Iranian oil anymore.
As justification for the end of exemptions, the US State Department said the global oil market is well supplied right now by overflowing stocks from the US, and they expect Saudi Arabia and the UAE to curb OPEC production cuts to keep prices steady.
However, the main buyers of Iranian oil are China and India, which make up nearly 55 per cent of global oil demand growth, according to RBC Capital Markets.
RBC oil and gas analyst Ben Wilson said in a research note earlier this week that US crude inventories have fallen to 455 million barrels, down 2 per cent for this time of year, and Chinese GPD rose 6.4 per cent in the March quarter.
“Emerging Asia represents about 65 per cent of global oil demand growth, highlighting the importance of strong Chinese GDP numbers to realising oil demand,” he wrote.
Lakes Oil (ASX:LKO) is waiting on a date for its appeal against a decision by the Victorian Supreme Court rejecting its claims that the Victorian Government’s state‐wide moratorium on on‐shore gas exploration was unlawful or ineffective.
Lakes spent $80m on gas exploration in Victoria prior to the ban, which expires in June 2020, and says its paperwork is ready to go for the appeal hearing.
Italy-focused oil and gas explorer Po Valley (ASX:PVE) has issued a maiden resource of 106m barrels for its onshore Torre del Moro field, and 54.5m barrels for the Bagnolo SW oil prospect. It also increased the 2C contingent resources for the neighbouring Bagnolo and Ravizza oil discoveries by 334 per cent, to 27.3m barrels and 16.1m barrels respectively.
Melbana (ASX:MAY) has sold out of a New Zealand oil licence for $100,000 but has also cancelled a farm-out, or sale, process for its Cuban venture after the buyer, Chinese owned Anhui Modestinner Energy, failed to fulfill the conditions of the deal.
JOGMEC has approved a $1.05m budget for Deep Yellow’s (ASX:DYL) Namibian uranium adventure NOVA, of which it can earn a 39.5 per cent interest after spending $4.5m over four years.