We’re seeing some air coming out of the US markets, with the DOW...

We’re seeing some air coming out of the US markets, with the DOW down 1.5%.

inflation pressures are starting to mount which will be on everyone’s mind.

Considering WPL Scarborough FID due this year has fixed price construction contracts as per recent announcements, there are some potential issues with the construction:

- wage inflation
- increased manufacturing costs due to high energy and material costs
- covid travel restrictions making FIFO labour much more expensive. Barrow island has 2 weeks quarantine in a golf resort for all FIFO workers at 75% pay. So productivity is 2 weeks work, 2 weeks quarantine, 1 week at home.

These contracts are signed, but from what I understand the contractors are wearing all the risks, so there are some potential issues to be flushed out for Scarborough post-FID.

These additional costs will overall increase CAPEX for all new developments, potentially leading to sustained higher prices of energy.

So while there is some additional risks in Scarborough, having BHP’s developed production is going to put WPL+ In an amazing position for what I see as ongoing high oil prices. WTI is much higher than S-curve proces too!