Weather, Aubrey watch, Wood Group/US shale, Amerisur, and FOGL

WTI $93.73 +42c; Brent $102.52 -54c; Natural Gas $4.00 n/c

Good morning

Another quiet day but with the ECB and the BoE holding meetings the markets, having fallen sharply yesterday are cautious. The final swansong for Governor Mervyn King today but the market will be more interest in the press conference from super Mario more I think.

Countries feature in the news today as Gabon seem to be taking assets back from three international companies, including Sinopec, immediately before starting a big offshore round, don’t say you haven’t been warned!

Poland also get a feature in the FT, UK investors will probably have skimmed that page as investments have not, as of yet, lived up to earlier promise. With several majors having left the country and the Polish authorities displaying a concerning, DECC-like sleeping on the job mentality all does not augur well but if anyone

Oil Price

It was all about WTI yesterday as the EIA inventory data surprised the market even though a small tip-off had been given by the API stats the night before. Crude oil drew by 6.3m barrels versus consensus analysts’ forecasts/guesses of 400,000 barrels and WTI gained despite the weaker US factory orders particularly in energy products. Brent fell as the maintenance season looms large and I get the impression that traders are not sure of which way prices are going, maybe big bets against the price carry extra risk at the moment with us being only 8 days away from the Iranian elections.

Weather

After my comments on the hurricane season earlier this week we now have our first Tropical Storm, named Andrea. Swirling around the Gulf off Alabama the storm is expected to head for the Florida panhandle before making its way up the Atlantic coast by Saturday.

Aubrey watch

The word in the market is that Aubrey McClendon has started the process of raising around $1bn for his new venture. Private equity and even Sovereign wealth funds have been named but surely a $bill is only pocket change for him and his mates, they would have saved that in airline fares whilst he was at Chesapeake……..

Wood Group

Wood have announced a contract with Dow Chemical , 140 miles of ethane, ethylene, propane and propylene pipelines plus interconnectors and station modifications between Dow Texas operations in Freeport and Mt Belvieu. Whilst this is a good contract for Wood I find it more interesting coming from the big picture on a US shale gas situation.

Dow Chemical said this in their announcement “the pipelines and station upgrades are part of construction for a world-class ethylene unit, as part of Dow’s comprehensive plan to further connect its US operations with cost -advantaged feedstocks available from increasing supplies of US shale gas”.

Further proof that US industry is not only poised to gain from the shale gas revolution but actually putting the building bricks in place to do so.

Amerisur Resources – From DFT – JS

Amerisur reports that the Platanillo-11 well in Columbia has been completed and is now producing at c1,100bopd. The Platanillo-12 well has also now spudded and is currently at 2,662ft and in addition a rig is being moved to sidetrack the Platanillo-2 well, which should take about 40 days to drill and log. Total production from the Platanillo field is currently around 7,100bopd vs calculated potential of 8,500bopd.

Elsewhere in Columbia, interpretation of 2d seismic continues at the Fenix block, with an exploration well expected later this year, and a gravity survey has also been initiated at the company’s western Paraguayan blocks.

It’s been a great 12 months for the company and while there have been some logistical issues at Platanillo it seems these are being gradually ironed out. We’ve always viewed management and the story positively, but based on current corporate activity in the area we think the stock could be close to a fair value at the present time.

Falkland Oil & Gas

A 1,018km2 3D seismic survey has been completed in the Southern Area licences to the north of the Darwin discovery. Processing of the data for prospect mapping and selection of well locations is expected to be completed in Q4. The JV is also expecting to award a contract for a third 3D seismic survey to commence in Q4.

And finally…

In the Welsh and Irish Lions game yesterday Cian Healy was injured and picked up a biting citing into the bargain, be afraid, very afraid….

The Champions Trophy is under way, possibly more exciting than the world cup as it’s all over in a fortnight or so and no room for mistakes. Let’s hope this glorious weather holds and I’m sure we will see some fantastic exhibitions of cricket in the next few days, also Ravi Bo Peep is in the house….

Lost the NZ series but at least back to winning ways for England cricket yesterday, however we will not beat sides if we are as pedestrian at the beginning as we were yesterday…………………however the likes of Jos Buttler and Joe Root are fantastic let’s hope they are allowed to flourish.

England Under-21’s lost last night to Italy so Norway and Israel, the host nation are must win games. I don’t often agree with Stuart Pearce but when he said ‘we were awful’ you had to concur. What a surprise, a dominant England team race through the qualifiers, unbeaten in nine games and fall to pieces in the real thing. Pearce said afterwards “that’s tournament football, its unforgiving”, yup…………………………

So, the season is upon us with cricket on the go, rugby in Australia, football in Israel and lots more, I have even started hearing of Wimbledon tickets being offered round, not to me though although a small service company is entertaining in SW19…………………………….