IGas, and Faroe

WTI $96.04 -58c; Brent $104.11 -37c; Natural Gas $3.97 n/c

Good morning

Another quiet day in oil market paradise although we are very busy and have a little deal on the go, what fun!

Oil Price

Still under some pressure and with traders reporting ‘amazing volatility’ as swings from bid to offer make a fool of the small risk premium offered by the market place. The US jobless claims fell to the lowest level for five years but the euphoria was short-lived as Chinese inflation numbers were above expectations. Further aggressive Israeli/Syrian activities notwithstanding, the oil price looks up with events at the moment.

IGas- Teachers and Coppers

The fact that the UK differs from the US in the fundamentals of minerals ownership means that resources companies who would over there pay a royalty to landowners must find a different way of rewarding local communities over here. Over the last few weeks as communities have started to cotton on to the fact that not only is exploration likely to happen but that it may be rewarding all sorts of ideas have been floated. Sports halls, community centres and even reduced energy bills have been mooted and slowly the idea is catching on.

Enter Andrew Austen, CEO of IGas who, speaking at a debate on the future of shale gas in Britain yesterday, came up with further ideas for rewarding communities, specifically on a local basis. His focus is around business rates paid by drilling companies which he believes should be spent ‘entirely’ by the local councils instead of going to central Government. He cited his own company’s policy of funding independently-administered community funds which could see money from companies contributing ‘directly, parish by parish’ to those communities in which they operate. The idea of companies being responsible for as he says ‘ as a consequence of shale gas development in this area…there are more bobbies on the beat and more teachers in local primary school’ makes a difference.

The process of licensing and drilling onshore in the UK for shale gas is in its infancy and it is important that companies realise that all the attendant benefits to communities as well as attendant safety and scrutiny is made clear and transparent.

I rang the bell for IGas a couple of weeks ago when I thought that at 70p the almost exact 50% retracement from 140p was a good buying opportunity and whilst the shares have bounced, I still consider the company to be the best UK shale play albeit for the long haul.

Faroe Petroleum

Faroe has announced that Jon Cooper has been appointed CFO and will take up the position on the 1st July 2013. I know Jon well and consider this an excellent appointment for Faroe as Jon is experienced in the sector and adds to the board significant industry knowledge.

Faroe isn’t quite in the ‘last chance saloon’ but having been a darling of the sector has now taken over the mantle of ‘ duster kings’ from Premier especially after the Uist disaster. The chart makes particularly grim reading and whilst we have stoically maintained a positive stance on the company any further disappointment would as Oscar Wilde might have paraphrased ” to drill one dry hole may be regarded as a misfortune; to drill more looks like carelessness”.

Anyway, must dash, I’ve got Ben van Bilderbeek, CEO of a favourite stock, Plexus Holdings coming in any minute now so I will write up that meeting on Monday….

And finally…

Man U finally revealed the worst kept secret of the week by giving a well-paid job to another son of Govan. The first job for the Moyesmaster will be to sort out for once and for all the case of the ever complaining Rooney, with no SirrrAlex to blame Shrek is going to have to, as they say in Bermondsey, Pi** or get off the po…..

The last Fergie joke which Peter Reilly will have seen yesterday and gripe about….

Brendan Rodgers was on the phone first thing this morning enquiring about the vacant manager’s job .

“Thank you for your interest but we are sorry we are looking for a manager who has more experience of managing a club as big as this one,” was the reply.

Which is a shame really as I think he would have done well at Wolves

No surprise to see Alonso fastest in first practise for the Spanish Grand Prix, they will be targeting this race along with Italy I guess…..

FA Cup final tomorrow, I may be watching some paint dry somewhere or maybe washing my hair….

Some good football although I hope Watford vs Leicester is better than last night’s first leg!

Andy Murray won with some difficulty in Madrid and Federer went out as had Djokovic earlier in the week, this set the scene for a Muzza vs Nadal on the assumption that Murray can beat Berdych which is no cert on current form….

And Prince Harry on the loose in New York, cancel all Police leave after his last visit To the US….

The news today about the death of Andrew “Bart” Simpson in a yachting accident in San Francisco is truly awful, Andrew attended Pangbourne College as did I and since his gold medal wins in Beijing he became a legend to many boys at the school as he visited regularly to encourage them, he will be sadly missed.

Kind regards and enjoy the weekend

Malcolm