Iranian elections…, Premier Oil, Ithaca Energy, Caza Oil & Gas, BG Group, and Wood Group

WTI $95.93 -46c; Brent $103.54 -66c; Natural Gas $3.90 -8c

Good morning

Iranian election

We have held the view since the end of last year that the most dangerous time for the oil price this year would be the second half of June as the Iranian elections take place. The fact that former President Rafsanjani registered for the election at the last minute can only intensify the concern facing Ayatollah Khamenei as he tries to ensure that a loyal fundamentalist wins the poll. Either way, the possibility of a more moderate candidate being elected is growing and with that a more west-facing President being elected. If that happens, or even if the market thinks it might happen Brent is not above $100….

It was good to see Lord Brown on the Andrew Marr show yesterday morning. As ever, the erudite and well-reasoned former head of BP made the fraccing debate sound straightforward. Shale gas he said was ‘an answer’ but no one has a magic bullet to solve the worlds energy needs and fraccing is good, safe and clean, and not new either. With ‘plenty’ of gas locked up in shale, how much can be retrieved remains to be seen but he thinks ‘probably quite a lot. Link to a short clip of the interview here.

http://www.bbc.co.uk/go/em/fr/-/news/uk-politics-22499891

Oil Price

Under pressure, again, as Opec confirm on Friday that production in April was 30.46m b/d up from 30.18m b/d in March. With tongue firmly in cheek I suspect, Saudi Oil Minister Ali Al-Naimi welcomed ‘additional supplies from other producers that may help to stabilise prices’. Ahead of the Brent rollover the price weakens, Friday nights close was weak and is at $102.77 this morning looking very tatty. The differential between it and WTI is $7.80 this morning.

Whisper it very quietly but the rig-count is slowly picking up….

Premier Oil

Premier has announced the results of the testing of their Matang gas discovery on Block A Aceh in Indonesia. The discovery in the Upper Bampo Limestone formation, was tested at 7,785 ft TVD to 7,853 ft TVD and flowed gas at a rate of 25 mmscfd through a 52/64 inch choke which is a good rate. The statement also says that the initial sampling indicates that the gas contains approximately 15% carbon dioxide. The gross resource estimate remains unchanged at 100-400 BCF.

Good discovery even with the high CO2 content.

Ithaca Energy

Ithaca has announced that it has executed a farm-out with Shell that has ‘substantially reduced its exposure to all remaining firm UK well expenditure commitments as part of the Valiant acquisition’. Ithaca has now reduced its net exploration expenditure by over $45m, leaving approximately $30m of committed expenditure mainly consisting of the Handcross well.

Finally on operations, the company has announced that it has spudded an appraisal well on the Norvarg discovery in the Norwegian sector of the Barents Sea, part of the Valiant acquisition as well.

Ithaca has also released 1st quarter results to 31st March 2013 which don’t include the Valiant acquisition although they are included for illustrative purposes. The process of the integration of Valiant’s activities is going well and cost synergies are being made ‘though removal of operational and administrative overlaps’. This includes Valiant’s UK office which is being closed w.e.f July 2013 and activities are being transferred to Aberdeen.

Caza Oil & Gas

First quarter results out this morning: Oil and natural gas liquids (NGL) production is up 18% YoY to 13,820 bbls, but down 15% relative to Q4 2012. Natural gas production was down 60% YoY to 39,742Mcf and the company states that natural gas declines will likely continue at its historic wells as it continues to focus on oil and NGL, but this trend will eventually be reversed as new oil and liquids-rich wells come online with associated gas. Gas sales have also been impacted by mechanical issues at a third party processing facility which has now been restored.

Total revenues declined 8% YoY to US$1.28m, giving a net loss of US$1.3m (2012: US$3.7m loss) and cash at the end of the period of US$6m.

We are now expecting an improvement in production figures going forward with the gas production facility back online and the installation of a submersible pump at the Caza Ridge well. In addition, the key Bone Spring play wells provide an opportunity for some sizeable uplift, with completion underway on the Lennox well and drilling commenced at the Roja and Madera properties.

BG

Just a reminder that the BG Group annual strategy presentation is tomorrow lunchtime as Chris Finlayson opens his shoulders and tells the world what he has planned for the group.

If these plans are anything substantial I would expect an announcement first thing, this might include any disposals, special dividends or suchlike so be on your toes… I am still very positive and would not rule anything out.

Wood Group

Wood Group has announced that it has won a subsea FLNG project in Australia from GDF SUEZ on the Bonaparte LNG project. This is a pre-FEED subsea concept definition study for what is a major new project in emerging subsea technology for FLNG. This is a new client for Wood and the work will be done from Perth, WA, it is interesting to note that this floating plant may well become the norm if projects such as Browse fail to get the OK on economic grounds.

And finally…

As SirrrAlex leaves the Theatre of dreams with another title, gossip moves on to whether Henry Mancini is still going to be manager over at the noisy neighbours, rumour is that Pellegrini is the water of choice at Middle Eastlands….

The few issues left can now be settled tomorrow night as Wigan need another miracle to stay up, impressive win on Saturday though!

Is it only me that thinks that the FA Cup Final should be at 3pm on the last day of the season? Not that the FA ever did anything in the interests of the fans….

The Watford Leicester game was great fun, if you count a missed pen in 90+6 for Leicester and a winning goal in 90+7 by Watford fun that is!

Talking about misses, spot Garcia giving $1m to the Tiger by putting not one but two balls in the wet stuff at the 17th at Sawgrass, reminded me of myself at the 18th at Milford!

And give me a break, at the BAFTA awards they only gave an award to Made in Chelsea… are you kidding?

Kind regards

Malcolm