Verbier delivers after sidetrack
Statoil’s sidetracked Verbier well has discovered oil after the main wellbore found water filled sand. The company was targeting oil in an updip location on the structure together with joint venture partner Jersey Oil & Gas (JOG). Statoil believes that the 20/05b-13z well has proven a minimum recoverable resource of 25mmbbls, and that the upside could be as much as 130mmbbls. The JV has not at this stage provided details of the discovery such as sand quality and thickness, or of the location of the sidetrack. Appraisal wells will now be planned to assess the commerciality of Verbier, and to mature further prospectivity in the P2170 licence including the Cortina prospect and Meribel lead.
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Economic data surprising to the upside in Q3
Strong PMI indices add weight to the case for tighter monetary policy
While valuation concerns for equity markets remain in place, recent economic data in the US and eurozone also points to something of a mini-surge in economic momentum over the last 3 months. PMI data has been coming in ahead of expectations and economic surprise indices have turned higher in all regions. During 2017, investors have had to balance their longer-term valuation concerns with generally robust profits growth and improving economic sentiment. While soft data such as PMI indices should not significantly shift portfolio asset allocations, a hiccup before the end of the year is now looking less likely.
Read more...Revealing Big Oil hurdle rates
Pemex farm-outs indicate lower end of returns appetite
Our analysis on cost of capital tends to focus on small/mid cap E&Ps as these are companies we traditionally model and where the deals are material enough to investors that get good visibility on deal metrics. The analysis indicates that costs of capital (as implied by buyers’ IRRs) are perhaps higher than many would expect - in the range of 15-20%.
These deals are often characterised by a capital-constrained seller and therefore often a buyer’ market. How the deals stack up when deals are made with other large companies or NOCs are probably different and should illustrate the lower end of returns that the buyers are willing to accept.
Read more...It is difficult to see how Dyson will compete effectively in this market
Vacuum cleaner maker Dyson has announced that it will be producing an electric vehicle that has more hallmarks of the Sinclair C5 than the Model S. Dyson intends to produce a fully electric vehicle by 2020 which will feature solid state batteries, which is one of the holy grails for battery technology as lithium batteries can be extremely dangerous when exposed to physical trauma, overcharging or excess heat, and has been a focus of Dyson for some time (but whether it has cracked this thorny problem remains to be seen); electric motors, which given Dyson’s history with household products, would seem a natural progression into electric vehicles and a premium price - Dyson is sticking to what it knows in positioning its vehicle at the high end but in this segment, it will face fearsome competition.
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