20th Nov 2018 18:17
LONDON (Alliance News) - Cabot Energy PLC said Tuesday the Edmonton Light Oil benchmark, the crude oil contract price for the firm's Canadian revenue, has "diverged significantly" from the West Texas Intermediate benchmark price.
On Friday, the Edmonton Light Oil benchmark closed at USD21.43 a barrel compared to USD56.92 for the WTI. The company said the divergence in price is due to extended US Midwest refinery shut-ins for maintenance.
The oil & gas company said the price differential between the two benchmarks in the first six months of 2018 was "consistent with historical differentials", where Edmonton is about 8% to 10% lower than WTI on average.
Since September, however, Cabot said, "in a gradually softening oil price environment", the differential has increased. Consensus view from industry experts an indicative forward sales price differential between WTI and Edmonton for December deliveries is USD35 per barrel, narrowing to USD17 per barrel in June 2019.
Cabot said the "exact impact" on the company "cannot be quantified at this point".
The company does believe, though, that the divergence could result in a fall in the average sale price per barrel of oil received by Cabot in the second half of 2018 compared to the first half.
The US Midwest refinery is expected to be back online in early December and the price differential is expected to return to "normal levels" in the near term.
Shares in Cabot Energy closed down 6.7% at 1.40 pence each.
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