Oil price, BP, Plexus, Sundry results round-up, And finally…


WTI $100.84 +24c, Brent $108.12 -$1.46, Diff $7.28 -$1.70, NG $4.80 +15c

Oil price

After holding up manfully on the back of the Ukraine, Brent slipped back yesterday, albeit on limited volumes, my trading contacts tell me. News that Zueitina port in Libya was finally opening, mentioned here yesterday and before, brought the differential back down a touch as well. Inventory stats in the US tonight are expected to show a further build, consensus at the moment is +1.9m barrels.

I monitor retail gasoline and diesel prices in the US as you know and they serve two useful purposes as a rule. A strong trend in either direction can give a clue to economic health one way or another, although one has to ensure that short-term fluctuations are ironed out due to seasonal refinery requirements and markets demands. None is more interesting than the run-up to the driving season which commences on Memorial Day, this year the 26th May. With Gasoline at $3.71 a gallon and diesel at $3.98 the current trend is pretty positive and gives me a fairly good feeling about the US economy but in a fairly modest way. Worth watching over the next month and of course with the FOMC tomorrow and jobs data on Friday could be a lead indicator.


First quarter results from BP today and they came in a smidge over market expectations at the earnings level and the dividend was up 8.3% as expected. Both upstream and downstream were sharply down on 1Q 2013 with higher non-cash costs in the former and weaker refining margins in the latter. A negative was the Rosneft contribution although this is attributed to the weak Rouble/$ something that is likely to remain the case for some considerable time to come. BP, like other investors in Russia, maintain their support for their Soviet investments but appear to have little choice now the money is down, so to speak. The company also confirmed that they had nearly completed the distribution of the $8bn of the TNK proceeds and will now distribute until the end of 2015 as and when disposal proceeds come in. As a keen watcher of the daily share transactions the level of support for the shares has dwindled in recent months and as the amount to be paid to shareholders is dependent on asset sales the buy back rate may be somewhat erratic over the period. This downsizing of the company will continue although operationally some investments continue, they are for example the high bidder in a number of Gulf of Mexico leases now they are allowed to participate. The Macondo payments have totalled $42.7 bn so far but there are still unsettled business claims and the third phase of the court case has been scheduled for January 2015. Whilst the shares have significant protection afforded by the rather generous distributions, the very nature of the process trims the potential upside assuming that neither the Russian problem nor the US court case go away.

Plexus Holdings

The good thing about being a holder of Plexus is that there is an unremitting flow of orders, albeit of a modest size, to maintain confidence in the company. Today it is another order from Centrica in the Norwegian North Sea under an existing contract but they all count. At 276p the rating is still high and as ever the free float is small but this is too good a stock to ignore and one day will break through big time.


Sinopec missed consensus estimates coming in at RMB 0.12 against expectations of 0.14 primarily due to downstream, mainly chemicals losses.

Statoil produced a superb set of results and were firing on most cylinders in the  first quarter. In addition to higher prices the company did well in its US gas value chain and expect a 2% increase in organic production in 2014.

Galp saw a 5% year on year increase in EBITDA at 265m Euros with increased production in the E&P division and stronger LNG and trading. These offset a weaker downstream performance as expected.

I did get a fair bit of feedback after my comments on BG yesterday and looking at the press and other comments this morning I can only conclude that the board are either in possession of much bad news or that they are not the sharpest knives in the drawer, either bodes badly for shareholders. If they got rid of CF because strategy is badly awry then shareholders should know about it, if strategy is still delivering as per the last update then why has he gone? These and other questions should be answered at the results briefing on Thursday but I bet they aren’t and I suspect that 2015 guidance may well be in short supply as well. All is not well at BG and I remain hugely concerned that things may get worse before they get better.

If you looked at the results from Union Jack then you shouldn’t be, even looking is a yellow card offence…

And finally…

A quiet night as the Gooners almost rubber stamped Champions League football for next season but a win against Newcastle isn’t what it used to be. Giving a poor manager a ten year contract carries its own health warning although the fact that he is so badly behaved he isn’t often allowed in the ground has its attractions…

Tonight the Bayern-Real second semi should be classic material although will the Germans get 72% possession but no goals again?

I wish…. it is the famous Punchestown Festival and a better two or three days I cant imagine, be lucky as they say…And on racing I see that Paul Nicholls has appointed Sam Twiston-Davies  as no 1 stable jockey.


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