Apache, BG/Ophir, Wood Group, and Caza

WTI $96.64 +1.02; Brent $104.43 +13c; Natural Gas $3.97 +5c

Good morning

Oil Price

So, what can we say now about the oil price? The first thing is that the WTI/Brent differential hit a recent low again last night at $7.79 and whilst there are people out there suggesting it should narrow more we would urge caution. The Brent price is indeed quite weak and is seeing technical and trade sellers around here whilst WTI has taken a modicum of support from a rather mixed bag of inventory stats this week. The analysts in New York as always got the inventory figure woefully wrong predicting a build of 2.1m bbls when the actual number came in at 230,000 bbls. However with at long last a proper pickup in refinery run rates to 87% and a fall in gasoline stocks of 910,000 bbls the market is slowly taking into account the driving season which is only two and a half weeks away now.

So I would say that with US production still rising and a record inventory at Cushing, a differential below $8 seems to be right at the bottom of the range.

Apache Corp

Three successful wells in Egypt for Apache were announced on Tuesday night, here yesterday morning. These wells are oil and gas and look pretty meaningful at first glance.

BG/Ophir Energy – DY/MG-W

The joint venture has elected to extend the contract for the Deep-sea Metro I rig for a further 18 months. The rig will be used for drilling operations in Tanzania and Kenya and is currently drilling the Nigisi-1 exploration well.

This announcement should give the market comfort that the drilling programme will now proceed as previously guided as there had been a relative amount of uncertainty previously.

Ophir’s share price has stagnated at c400p and at these levels we feel represent an ideal entry point into a company with a very active potentially high impact drilling programme. We have recently upgraded our numbers at Ophir and with a target price of 714p the shares offer meaningful reward at today’s price of 397p with the company fully funded for its programme, rigged up and ready to go.

Wood Group

Another contract win for Wood Group as today they have announced work for ConocoPhillips in Indonesia. The contract, worth ‘multi millions’ of dollars is for concept engineering, pre-front-end engineering and design FEED and detailed design services as well as related support work such as environmental and risk inspections. The work is for Conoco’s onshore and offshore pipelines and will last for three years.

Caza Oil & Gas

Following a disposal, Sercor Ltd and Northwestern Enterprises Ltd (a wholly-owned subsidiary of Sercor Ltd) now have an aggregate interest in 16,934,500 Common Shares in the Company, representing approximately 9.8% of the issued share capital.

And finally…

The world waits for the puff of blue smoke from the Chimney at Carrington as the Moyesmaster waits to be anointed….

Very sad to see that Stiliyan Petrov has retired from football at Aston Villa, he has been fighting against acute leukaemia since March of last year.

A late equaliser from Spurs last night kept them just about in the shake-up for a Chumpions League spot although if the Gooners win both their games they will secure the space and those two games are Wigan and Newcastle so you wouldn’t fancy Tottenham’s chances realistically….

And Graeme Smith returns home to South Africa to have surgery on an ankle injury, he may be out for the rest of the season… Surrey have signed Ricky Ponting but he may not be able to come earlier than contracted

Kind regards

Malcolm