Ann: PDL 10 - Initiation of Arbitration Proceedings, page-29

Very disappointing and I sold the rest of my holding after this announcement.

GDN, you seem to know the process well and it sounds like there could be a good result at the end...but it feels like PNG know the value in this asset by wanting all of it and are holding firm on the cancellation. I'll continue to be about and be back in if arbitration proceedings go well!

Let's also hope some sensibility returns to the oil market! Some comments:
- Trump duped his Middle East allies on the Iran side and is causing chaos in financial markets with his tariffs and tweets. Amazing really. He mainly did this for political reasons but it didn't make a difference to his "referendum on his performance"!
- Shale has also spiked but pipeline capacity has impacted the WTI discount and meant NPV of a large number of wells is negative / value destructing. I'd expect production to continue, especially with the amount of DUCs waiting. The Capex is sunk and break even opex is still low at c$30 bbl I believe.
- Going forward, refineries are coming back out of maintenance season and crude draws will commence again.
- OPEC will definitely cut next month - Saudi Arabia still want to IPO Saudi Aramco in the medium term and want to show they can control the oil prices to minimise perceived investment risk and maximise sale price.
- Iran exports will rise on the waivers but will then begin to fall again as countries as countries that obtained waivers will pull away purchases.
- Canada will cut hundreds of thousands of bbls as they're selling crude at c. $15 a bbl currently (also due to pipeline capacity issues!).
- Global spare capacity is at historical lows. Saudi Arabia recently commented that all members are "pumping as much as they can"....you have to remember a lot of this will be "flush" production and not sustainable without further investment. It also does reservoir damage if it goes on too long...Saudi Arabia said they could pump 12.5m bbls but have only managed to export 11m bbls (still a record) in early November. I read they were drawing down on inventories to make this number...
- Investment is needed for the supply gap emerging within the next 3-5 years. IEA says another 10m bbls is needed.
All in all, it's hard to say what will happen short term but you have to think medium term (i.e over the next year) that we will see stronger oil prices than of late. In anycase, I didn't think they'd breach $70, so what do I know!!