Transocean, Chesapeake/Anadarko, BP, Salamander, Xcite, and Sefton

WTI $95.94 +78c; Brent $104.63 +71c ; Natural Gas $4.06 +13c

Good morning

In an interview with the FT this morning, Paolo Scaroni, CEO of Eni tends to see the oil price in a similar way as us, i.e. that on a two to five year view the price was ‘more likely to go down than up’. Scaroni believes that both the differential between natural gas prices in the states and Asia as well as that between natural gas and oil will narrow over the next two years.

Whilst saying that Eni ‘can live with’ oil at $45 he believes that exploration is the best way to protect profits in the event of lower oil prices. Finally, he believes that Asia is his prime exploration target although they will remain big in Africa, and Vietnam, Indonesia, Myanmar and Pakistan are his prime target so watch out for SOCO and maybe Salamander both of whom, interestingly have had positive statements in the last week and both of whom I like a lot.

Oil Price

A bit dull at the moment, Opec data from March confirms that the West African nations exported slightly more crude than in February whilst Saudi, Kuwait and Venezuela were down a touch.

Freeport LNG announced that the Department of Energy had authorised them to export domestic LNG to non FTA agreement partners. Whilst only 1.4 BCF/D for 20 years this is a small step towards more LNG exports from the USA.

Transocean

The long-awaited votes at the Transocean AGM went ahead on Friday and appeared to go different ways. Whilst the Chairman was voted out of office by the Icahn camp, their attempt to hike up the dividend was rejected. The board’s recommendation was $2.24 against the $4 demanded by Icahn but shareholders interestingly voted for the smaller pay-out.

Chesapeake/Anadarko

Oil newswires are running a story that Chesapeake have found the replacement for Aubrey McClendon, at Anadarko. Robert Lawler is currently Senior VP of international and deep-water operations at Anadarko having been a lifer at Kerr-McGee when it was taken over by Anadarko in 2006.

BP

Texas has joined the four other US states that have filed law suits against BP saying that the companies “engaged in wilful and wanton misconduct” for their role in the Deepwater horizon oil spill.

Salamander Energy- From Daily Flow Test

IMS out for the year to 17 May. Group production averaged 14,100boepd to April 30th; with an increase to an average 17,100boepd in May. The company is maintaining its annual average daily production forecast at 12,500 – 15,500boepd.

The bulk of this is from continued development of the Bualuang field which is performing ahead of expectations so far. This is forming a decent production base for the company and the South Kecapi oil discovery and North Kendang wet gas discovery show that previously disappointing exploration results could be about to turn.

In Thailand, the Atwood Mako jack-up rig is now to leave platform in June to begin G4/50 exploration drilling while in Indonesia preparations for drilling are ongoing for at the West Kerendan and Sungai Lahei prospects, with c.900bcf targeted.

A positive IMS today, with good guidance coming from the production side of the business. The company still a significant exploration programme in 2013, but needs to prove to the market that it can have success given the mixed results last year.

Xcite Energy – From Daily Flow Test – DY

The company has entered into a non-exclusive agreement for the sale of technical data relating to the Bentley field to an undisclosed party for a sum of US$15m. A further US$1m will be paid once regulatory milestones are achieved by the purchaser.

In a separate quarterly announcement, Xcite stated that it has £20.4m in cash of which £12.3m is being held in escrow of which £11.6m now having been released.

This is a positive step for the company’s discussions to farm down its interest in the Bentley field. Whilst it is still a very early first step in the process it does show that there is interest from industry in this asset, however, it is no guarantee that a farm out will occur in the longer term. Xcite needs to address the funding issue for this project through a combination of debt, project finance as well as attracting a partner.

Positive news this morning and we expect the share price to strengthen.

Sefton Resources

Sefton have come in with profits of $0.02m (2011: $0.24m) on sales up 3.6% to $4.3m. The Chairman’s statement alludes to a strengthening of the board (true, Keith Morris top notch) and revenue sources and reserves added. The company, interestingly, states that by owning and operating its assets 100% it controls its own destiny. That’s one way of putting it, eggs and baskets come to mind!

And finally…

The cricket finished in explosive fashion with New Zealand being bowled out for 68 yesterday.

The football was mad as Arsenal had a few minutes to hang on and got the Champions league spot, wither Spurs and of course Bale?

Beach football as the baggies drew 5-5 with the champions, word has it that keen West Brom fan Andrew ‘Benners’ Benbow left early and missed the fun……………..

Frank Lampard signs a one year contract at Chelsea and says, ‘ I am looking forward to working with the next two or three managers next season’.

Kind regards

Malcolm