My take out from today's call Stella timeline – gas commissioning will be completed on one well before bringing further wells on line, but a number of these wells expected online before year end (assuming
Dec 1st start, which I guess will be signalled by flaring). Timeline also supported by comments “weeks rather than months” and “2016 Stella output will be significant”
However, I wouldn’t expect any meaningful Stella production numbers until the 2017 outlook call in early January. The oil / gas ratio will be one to watch, expected range 60-70% oil – the higher the ratio the higher the total production rate will be.
Outside of the GSA hub, acquisitions of other North Sea assets are being considered.
Expect a long lead Cap Ex announcement early January to take advantage of current supply chain rates. I’m not expecting anything big but will be significant. My initial thought was Harrier, but comments suggested something else. Probably the Cook development but I hope for a surprise.
Development Cap Ex for 2017 will be $25m-$75m. Les seemed sanguine on the impact of the near term oil price so I’m expecting Cap Ex at the top end of the range and all of the anticipated projects to get the go ahead.
·Cook water injector adding to reserves and worth perhaps $240m cash flow over field life on $40 netback
·Dons infill, probably centred on Yithan
·Vorlich FDP
If the Cook and Dons developments go ahead then existing production guidance for 2017 may be similar to 2016 at 9,000 boepd and an operating cost of $25 maintained – not factoring Stella.
As to Stella production guidance, watch that oil / gas ratio number.
I like the additional hedging. As was pointed out on the LSE board while some will complain of some limitation to the upside (above $60), it’s a nice problem to have in the current climate.
Londoner7