The Oil Man: Oil price, BP, Solo Oil

WTI $51.06 +$1.62, Brent $53.94 +$2.10, Diff -$2.86 +$1.85, NG $3.51 +15c

I always think that it is rather nice when the market appears to be thinking with one voice, particularly if G Sucks is on the other side.

The feedback from the OPEC meeting is overwhelmingly cynical, with most so-called experts writing the obituary of the whole organisation, let alone this agreement.

Indeed, everyone from Zak Mir to a visiting professor and chair of the Kings Policy Institute in London has written it off.

The missing piece in the jigsaw is what GS has to say but, as ongoing bears of the oil price, it is coming from a position of weakness.

Disregarding all that, it seems that the telephone conversation that I mentioned earlier in the week between Presidents Putin and Rouhani may have swung things towards an agreement.

Apparently, this call took the heat out of the Saudi-Iran negotiations and may have sealed the deal - who knows? I have a healthy degree of cynicism myself but can believe anything on the right day.

Recording of exports and production is better and more transparent than it used to be, so I guess that, come the new year, we shall see who is and who isn't playing ball.

In the meantime, if the agreement lasts only a while, we shall see the inevitable continued rise in the rig count, something that will be welcomed by the US service companies as well as the likes of Hunting…

Finally in his first piece of policy in the energy sector it seems that President elect Trump has formally the Dakota Access pipeline as mentioned here after his election.

BP

It's almost as if BP was waiting for the meeting to finish, as it has announced that it has approved the spend of $9 billion (£7.1 billion) on the new platform for Mad Dog 2 in the Gulf of Mexico.

The platform will produce 140/- barrels per day (b/d) and will come onstream in 2021.

Oil price-wise, this is the interesting bit, as I have been banging on for a long time about capital expenditure (capex) reductions causing a degree of tightness in the oil market; an approval now still means a five-year wait, by which time anything might have happened.

Reasons for being more positive between then and now are summed up by the $1.5 trillion loss of capex projects worldwide, which cannot be magicked back on to the market.

Finally back to my point about costs: this platform, which is budgeted at around $9 billion, would have been $20 billion two years ago.

Solo Oil

I was fortunate to meet up the other day with CEO of Solo Neil Ritson and new financial director Dan Maling. I have historically only had exposure in that part of Tanzania through Aminex but meetings with Solo and Wentworth in recent days is fast expanding my database.

For Solo, Tanzania is the primary source of value, as it prepares to spud Ntorya-2 in the Ruvuma basin, swiftly followed by the Ntorya-3 well, should this be a success.

With 1-1.5 trillion cubic feet of gas, it would dwarf Kiliwani North, but if my maths are correct Solo has enough cash to spare to drill this well; the N-3 well might need some funding.

Kiliwani North pays the day-to-day general and administrative spend, but at 15-20 scuffs a day looks disappointing; I'm sure I saw numbers nearer 30 doing the rounds.

One can't talk about Solo with mentioning Horse Hill, where the company is awaiting planning approval which might get through early next year; any further success here would be relatively modest to the share price but no less welcome.

Finally, I would expect more corporate activity from Solo, which is a small but interesting team working in a specifically value enhancing area; Ntorya-2, when it spuds very shortly, will be most important to the company.

And finally…

The autumn season of rugby internationals comes to a halt, with England hosting the Wallabies at Twickenham - get the shopping done early tomorrow…

In the football it might be the "winner takes it all" game, as the Noisy Neighbours host Chelski in the top-of-the-table clash.

With Spurs hosting the Swans and the HubCap Stealers at the Cherries, it leaves the London derby at the London stadium, where the happy Hammers take on the Gooners.

In mid-table misery, there is the sight of the Red Devils going to the Toffees.

And more great NH racing, with the Welsh Grand National at Chepstow and a great card at Aintree featuring the Becher Chase.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.