Oil price, Baker Hughes, Soco, IGas, Sundry- Chesapeake-BG, And finally…

WTI $81.78 -6c, Brent $83.78 -$1.26, Diff $2.00 -$1.20, NG $3.80 -2c

Oil price

A late but short blog today as I have been out and about talking about the price of oil. Most frequent questions are usually about support levels, whether they be technical or physical and the ever increasing conspiracy theories being expounded. I have seen a lot of rubbish written in the last few days (the press missed the first 20% of the fall in the oil price btw) but the Lex Column today said that lower prices would effectively disincentivise shale production and, wait for it……stop Asia becoming more energy efficient. Two things come to mind, firstly US oil production  doesn’t have such a thing as a ‘viable’ price but if it did it would probably be less than the $75-80 being bandied around. Secondly the thought that only when oil goes over $100 a barrel will Asian consumers start to become energy efficient doesn’t quite work with me, no, the market is reading too much into all this on so many levels. Things probably only started to go wrong when the Saudis upped their production in June when they thought that it might be needed if Iraq succumbed to ISIS, since then they have probably received more credit than was due for the current situation. Having said that, seeing Russia and Iran struggling to make ends meet will be the talk of many a Riyadh soirée.

After hours, with the new Brent contract bedding down, the API inventory stats delivered another blow to oil prices  seeing a build of 10.2m barrels which dwarfed  Wall Street’s finest who’s guess this week was +2.8m. Gasoline stocks drew 3.1m barrels and we will see tonight what the EIA numbers look like. The result of this was that WTI fell by over a dollar this morning and Brent fell by nearer 75c. Brent has rallied a bit off that whilst WTI hasn’t and Brent  is now $83.46, back to the technical support mentioned above, $82.30 is the next long term level…

Baker Hughes

The results season is now under way and BH kicked off by missing the whisper, earnings of $1.02 where 11 cents shy of the consensus of $1.13. Revenue and profits were still up and in most areas, notably North America performance was good but Libya and Iraq unsurprisingly were poor and margins in the Europe/Africa/Russian region fell from 17% to 8%. Schlumberger tomorrow and Halliburton on Monday will give us a closer view on how current markets are effecting the service majors.

Soco

Soco announced this morning that their LXM – 101 well offshore Congo (Brazzaville) completed having found oil in the Djeno sand formation with drilling  shows indicating an approximate 50m gross interval. This is in line with the Litchendjili field on ENI’s adjacent block.  All will go quiet now with around three weeks testing. Even Soco has taken a pounding in the recent sector destruction and it is making a big plea to be in my upcoming bucket portfolio of hard done by stocks.

IGas

At long last IGas have completed the Dart acquisition, one which over the next few years will hopefully turn out to be an exceptionally wise move. I hope to get to see Andrew Austin before too long, this and other stuff has been keeping him too busy for oiks like me quite rightly but I am looking forward to seeing the grand plan. Notwithstanding the current aforementioned sector destruction, things are going to get exciting for IGas as they drill Ellesmere Port and with all the information being held up before the licencing round deadline being released should have much to tell us. I have a feeling that there might even be a Capital Market event in November too although no sign yet…

Sundry

I am seeing reports of Chesapeake selling $5.3bn worth of shale assets in West Virginia and Pennsylvania to Southwestern Energy, more details when I get them.

And BG have managed to get many column inches today following the hiring of Helge Lund from Statoil. I mentioned it briefly yesterday but the more I see of the hire the more I like it. The only trouble is that the next four months until he joins will feel like  a long time and by then QCLNG will be on-stream. However BG has needed someone like Lund for a very long time, arguably since before Sir Frank left as they have just not had anyone at the top who could handle the diversity and size of the projects and businesses that exist in the company, that is about to change, big time. Stavanger’s loss is Reading’s gain although news that he is a huge Gooner fan rather takes the gloss off the situation…

And finally…

It will be good to be back talking soccer tomorrow after the infernal break despite the good time the home nations have had in the last ten days.

Ferrari has confirmed that Alonso is to leave at the end of the season, allegedly to go to McLaren but we knew that when Vettel announced that he was joining the Tifosi last weekend. Mercedes look like they stay the same and so either Button or Magnusson will vacate the McLaren seat, it will be interesting to see how Vettel does, he has proved this year that he is not the wunderkind that the press petrol heads made him out to be…

And if you saw the Albania v Croatia game last night you will have got an understanding of local politics, not helped by drones flying in with national flags adorned with offensive slogans.. I don’t know which game Martin Atkinson has this weekend but it will feel like a holiday…

 

 

 

 

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