BG Group, Centrica/Cuadrilla, and Leyshon Resources

WTI $94.66 +92c; Brent $103.19 +58c; Natural Gas $3.85 -15c

Good morning

Another quiet day in sunny London town but all hell will be let loose at 13.30 if the non-farm payroll is bad, with consensus of 167,000 and after a series of good numbers and upgrades the banana skin is waiting for say, 130,000.

Venezuela’s oil minister has announced that the country has secured $4bn of funding for its oil field development from China. As per my recent report this will add to the significant credit lines already in place between the two countries.

Oil Price

Again, quiet but slightly more positive on the back of the weak dollar. Initial jobless claims in the US were in line with expectations but the worry that the Fed will start ‘tapering’ down QE3 has spooked the market, maybe the jobs data will knock that on the head.

BG Group

The company has announced the start of production from their third FPSO vessel in the Santos Basin offshore Brazil. The Cidade de Paraty has capacity of 120,000 bn/d of oil and 176 mcf/d achievable when full gas reinjection is under way in the second half of 2014. The FPSO was delivered on time and on budget and is the 3rd of 15 to be commissioned with the first phase of the project scheduled to deliver a net 500,000 boe/d by 2020 rising to 600,000 in due course.

This news is positive but not unexpected and marks another step for BG in passing milestones and delivering on promises, I remain very positive under new management.

Centrica/Cuadrilla

The FT reports this morning that Centrica is in talks with Cuadrilla Resources to buy a stake in its licences in the Bowland shale in Lancashire. You will remember where you heard this first, in the blog of the 8th January I attempted to get my head round the potential for investing in the unconventional sector and I attach that note today. Suffice it to say that regarding Centrica I still feel that given their long term commitment to the power sector in the UK an investment in a shale play would be a cheap option especially as there are limited investment opportunities. If this story turns out to be accurate then Centrica could buy a stake in Cuadrilla from either Riverstone or AJ Lucas or some from both parties. Other opportunities could include IGas, Alkane or even Dart albeit quoted in Australia but astonishingly cheap and an entrepreneurial investor might buy the whole company for option money.

Leyshon Resources

One of my recent favourites has been Leyshon Resources and last night Managing Director Paul Atherley spoke at a conference in London. Leyshon has recently been drilling gas wells in China and from a standing start has done pretty well. I suspect Paul has been more than pleased with the overall results although he did describe his most recent well last night as being ‘challenging’ which I suspect has something to do with flow rates but all the same it’s been a great start to the project.

And finally…

The Bilderberg Group has been holding an ultra-secret meeting of US and European leaders in the UK yesterday and today, tonight DavCam is due to attend, that’s that secret cat out of the bag then…

Who could also believe that Foxtons is coming back to the market, short memories some people….

Day two of the Champions Trophy and time to welcome the West Indies, with names like Chris Gayle, Bravo and Keiron Pollard we could be in for an explosive time.

Tomorrow England play Australia and Aussie captain Michael Clarke is still out injured, hope the rest finish their homework before bedtime……

In Paris it’s the semi-final of the French Open and with Djokovic playing Nadal that too should be a great match…..

Usain Bolt lost to Justin Gatlin last night in the Diamond League meeting in Rome but he said afterwards that with a bit more motivation he can be in top form for the World Championships in Moscow in August

And Frankie Dettori gets his first winner after a long suspension at Sandown last night.

It’s the London Gin Festival this afternoon so amble down to the Chelsea Physic Garden and forget the rest of the weekend!

Kind regards and enjoy the weekend

Malcolm