Oil markets are going through a period of extraordinary change, as the United States is boosting the expansion of oil supplies on a global level. Its crude oil tends to be light and of sweet grades.
Moreover, a shift in demand is being witnessed from developed countries and transportation fuels to the Asian region and petrochemicals. Over the coming years, demand is expected to continue to grow at a robust pace, on the back of a number of factors including growing airline fleet and increasing income levels in developing economies. Moreover, thanks to IMO-2020 regulations the US crude oil demand is anticipated to see an uptick.
The pressure from both the demand and supply side factors influences the price of crude oil. Oil prices have been volatile, owing to several other factors such as ramping up of production by the United States, the unwillingness of OPEC to lower the output, and volatility in the Dollar value.
Brent crude oil spot prices are currently trading at USD 65.96 per barrel as on 18 December 2019, up USD 9.27 per barrel from October 2019 low price of USD 56.69.
As we are nearing the end of the year, global agencies and authorities are coming up with oil price forecasts. Recently on 10 December 2019, the Energy Information Administration (EIA) released short-term energy outlook, according to which Brent spot prices are forecast to average USD 61 per barrel in 2020, down from the average of USD 64 per barrel in 2019, while West Texas Intermediate (WTI) prices are expected to average USD 5.50 per barrel less than Brent spot prices in 2020.
Moreover, when compared with 2019, prices of crude oil are expected to be lower on average in 2020, on account of a forecast increase in global oil inventories, mainly in H1 2020, as per EIA. However, price pressures would start easing and increasing in the second half of 2020.
Also, in Annual Energy Outlook 2019 released by the EIA in January 2019, the agency forecast the average price of Brent crude oil would increase to USD 81.73 per barrel by 2025, with prices expected to increase to USD 92.98, USD105.16 and USD 107.94 per barrel by 2030, 2040 and 2050, respectively.
The record-breaking IPO of Aramco was keenly anticipated by the crude oil stakeholders. The Saudi oil major, is now the most valued company in the world, trading at valuations surpassing USD 2 trillion. The shares have rallied over 15% since the listing, bringing the focus back on crude oil-related players.
Prominence Energy NL (ASX: PRM) – Engaged in Conventional Oil Development, Offshore Louisiana
Based in West Perth, Prominence Energy NL (ASX: PRM) is an ASX-listed oil & gas exploration and development company, which under the guidance of Chairman Ian McCubbing and Managing Director and CEO Alex Parks, is working on the Bowsprit Oil Project (a low capex, high margin, oil appraisal/development project) located in Breton Sound Area, Louisiana. The company holds 100% working interest in 1,154 acres leased in the area, inland shallow waters offshore Louisiana.
According to the company, the new oil project looks very promising. Bowsprit is a field re-development project, as part of which the company would initially target, vertical well appraisal of prospective sands and development of proven oil sand, with a 1,200-1,500 feet horizontal completion, between three former oil production wells.
Prominence Energy has secured all the required permits to kick start the first well, Bowsprit-1. The well is estimated to involve a cost of USD 3.6 million, with first oil production through tie back expected approximately six weeks after drilling and the whole exercise is expected to be at very low cost.
The company is currently engaged in discussions regarding a farm-out deal concerning the project, to secure funding support for the drilling program. The prime focus of Prominence Energy is to progress the Bowsprit oil project to production in 2020.
Stock Price Information
In the last six months, the stock has delivered a return of 100%. The stock of the company last traded at AUD 0.002 on 19 December 2019, with a market cap of AUD 2.64 million.
Prominence Energy aims to create value for its shareholders by getting the Bowsprit oil project on to production as soon as possible as well as carefully identifying and securing additional follow up project leases.
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