UAE’s Topaz Energy eyes expansion, better growth in 2018

Rene Kofod-Olsen said Brent oil at $50 produces ‘positive cash flow’. (Topaz Energy and Marine)
Updated 18 August 2017
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UAE’s Topaz Energy eyes expansion, better growth in 2018

DUBAI: Topaz Energy and Marine expects to expand in Kazakhstan and the Middle East as the Dubai-based oil services company projects better growth for the industry next year with oil prices stabilising around $50 a barrel, its chief executive said.
A sharp drop in crude prices since mid-2014 has forced oil producing and service firms to re-evaluate projects worth billions of dollars and cut costs. Companies are looking at forming alliances to reduce risk.
“The industry is becoming smarter ... We are in most offshore fields today, in an environment where $50 Brent is actually giving positive cash flow,” Chief Executive Rene Kofod-Olsen said in an interview on Thursday.
“We believe that we are in a trough — we will enter an environment in which investments will start flowing ... While 2017 is a tough year, 2018 is probably going to be a significantly better year for the oil and gas service industry in general than the last two years have been.”
The company reported on Thursday a net loss of $13.4 million for the first half of this year, compared to a year-earlier profit of $800,000. Revenue fell 23 percent to $115.6 million.
Topaz, a unit of Oman’s Renaissance Services, operates in the Caspian Sea, the Middle East and West Africa. In the Gulf, it works with state oil giants such as Saudi Aramco and Abu Dhabi National Oil Co.
“I don’t believe that we have enough market share in Saudi Arabia — we can grow market share there. I believe that we should grow market share in the United Arab Emirates, and would like to participate in the newer exploration areas. Certainly it is something that we look at,” Kofod-Olsen said.
Topaz has been working at Kazakhstan’s Tengiz and Kashagan oilfields. The Kashagan offshore field in the Caspian Sea is set to ramp up output further in 2017 and more next year.
“We have historically been servicing the Kashagan field. Next year we believe they will have the next phase ... We will hopefully be considered for that as well.”
The company issued $375 million of five-year bonds at a yield of 9.125 percent in July. Kofod-Olsen said the company did not plan to refinance its existing bonds next year, “but if the whole world improves and so on, we could definitely refinance in two to three years for sure.”
Topaz does not have any imminent plans for an initial public offer of shares. It planned a London listing in 2011 but did not go through with the offer because of valuation concerns and regional unrest.
“We are seeking to run the company as close to a public company as possible, also because we have debt in the capital market,” said Kofod-Olsen.
“Right now we don’t have an imminent plan for doing an IPO but it is something we are following, of course.”


Oil prices fall on expected output rise after OPEC deal

Updated 25 June 2018
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Oil prices fall on expected output rise after OPEC deal

SINGAPORE: Brent crude oil prices fell over 1.5 percent on Monday as traders factored in an expected output increase that was agreed at the headquarters of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna on Friday.
Brent crude futures, the international benchmark for oil prices, were at $74.21 per barrel at 0343 GMT, down 1.8 percent from their last close.
US West Texas Intermediate (WTI) crude futures were at $68.40 a barrel, down 0.3 percent, supported more than Brent by a slight drop in US drilling activity.
Prices initially jumped after the deal was announced late last week as it was not seen boosting supply by as much as some had expected.
OPEC and non-OPEC partners including Russia have since 2017 cut output by 1.8 million barrels per day (bpd) to tighten the market and prop up prices.
Largely because of unplanned disruptions in places like Venezuela and Angola, the group’s output has been below the targeted cuts, which it now says will be reversed by supply rises especially from OPEC leader Saudi Arabia. Although analysts warn there is little space capacity for large-scale output increases.
“Several ministers suggested that (rises) would correspond to a 0.7 million bpd increase in production,” said US bank Goldman Sachs following the announcement of the agreement, although it added that were risks “that Iran production may be even lower than we assume” and that its output could fall further due to looming US sanctions.
Still, Britain’s Barclays bank said OPEC’s and Russia’s commitments would take “the market from a -0.2 million bpd deficit in H2 2018 to a 0.2 million bpd surplus.”
Energy consultancy Wood Mackenzie said the agreement “represents a compromise between responding to consumer pressure and the need for oil-producing countries to maintain oil prices and prevent harming their economies.”
In the United States, US energy companies last week cut one oil rig, the first reduction in 12 weeks, taking the total rig count to 862, Baker Hughes said on Friday.
That put the rig count on track for its smallest monthly gain since declining by two rigs in March with just three rigs added so far in June, although the overall level remains just one rig short of the March 2015 high from the previous week.