Mediterranean Oil & Gas, Northern Petroleum, Nighthawk Energy, and Gulf Keystone

WTI $104.63 -1.89, Brent $107.48 -45c, B/WTI Diff $2.85 +$1.18, Natural Gas $3.61 -7c

Good morning

Oil Price

You wait ages for a report on 2014 oil and gas supply and demand then two come along together. Yesterday, after Opec on Wednesday, it was the turn of the IEA to hand out their forecasts and the two were not wildly different. The IEA expect to see demand growing by 1.2m b/d with the usual caveats about Chinese growth and the strength of western economies. On the supply side they see a substantial rise in non-Opec production mainly from the USA,offset by sundry shortages in places such as Libya, Nigeria and even Russia which has kept the market tight this year. The underlying increase in production creates a lowering of the call on Opec which we still consider will have to be addressed by the cartel at some stage.

Mediterranean Oil & Gas – Ombrina Mare delayed……………………..

Another of my pet hates is, as you all know, the time it takes to do business in Italy, it’s as if they don’t give a monkeys and the money doesn’t matter to them.

Now, whilst Italy isn’t the worst basket case in Europe, it is hardly the shining light of prosperity and broad sunlit uplands, as Winston Churchill might have said and today MOG have run into Italian bureaucracy at its finest. I won’t go into the announcement in detail, it’s too painful, but suffice it to say that approval for Ombrina Mare has been delayed again despite having received a positive recommendation in April.

MOG has said that it is ‘reviewing its options’ which is fair enough but is caught between telling the Ministry to take a hike and keeping hold of a valuable asset. In a recent presentation from the company they indicated that drilling would happen on the prospect in the first half of 2014, somehow that now seems a tad optimistic.

One final point, I think that there are elections upcoming in this region and if one wanted to think laterally one might suspect that a bit of potential buck passing is going on here and a decision will be forthcoming after the election…………………..

I am showing the 2 year chart as it shows that the share price has given back a lot after the bright start under new management last year. I recently had a meeting with CEO Bill Higgs who is very impressive but this delay to Ombrina Mare confirms my view that whilst the asset base is good and the shares are at this level very attractive, it is a painfully drawn out experience.

Northern Petroleum

Wednesday saw the announcement that Northern Petroleum had rung the changes in the boardroom and That the Chairman and Managing Director were both retiring from the board. MD Derek Musgrove, despite retiring from the board is staying on in a new ‘commercial/new business role’ so some continuity will remain.

The new MD is to be Keith Bush who is the existing COO so to be frank little has changed as the Chairman was a non-executive and Keith has been working with the company for over a year already.

Now, I am looking forward to a formal meeting with Keith and I hope he has plans as I’m afraid that the recent adding to the Italian part of the portfolio is, as you might have read above is not what I wanted to hear! Also I feel that the recent investment in Alberta is hardly going to tear up any trees, at least not enough to move the needle and therefore I can’t see why I would want to change my bearish stance at least until I have seen the company.

Nighthawk Energy

I received the following production update from Nighthawk this morning but can only comment on a bit of it, you may be able to help! The bits I can read tell me that June was a record month, the second quarter was 100% better than the first quarter and that total production is currently over 1,400 b/d.

As for points 2,3 and 4 its all Greek to me………………….! (All those advisors too!)

Highlights

• Average gross oil production in June 2013 of 1,029 barrels per day (“bbls/day”), a record monthly production level for the projects
• Average gross oil production in second quarter 2013 of 631 bbls/day, a 100% uplift on the first quarter 2013
• Silverton 16-10 well commenced production in early July 2013
• Four wells now in production on Arikaree Creek oil-field
• Testing currently underway on the Snowbird 9-15 well on the Arikaree Creek field
• Total production is currently running at over 1,400 bbls/day

Gulf Keystone Petroleum

This afternoon is the time and the place for the meeting/showdown between Gulf Keystone and the M&G Recovery Fund to discuss the four candidates proposed by M&G as directors of the company. I have not a clue what the outcome might be but the company have held back giving their advice to shareholders until after this meeting but no later than Monday afternoon. Standby for an announcement on Monday morning then and maybe two of the candidates will still be on the slate….

And finally…

What a couple of days cricket huh? Lots more wickets and it’s a shame that it was rather spoiled by a monumental blunder by Marais Erasmus amongst other awful calls during the day. The next couple of days play will be most exciting and with a hot weekend forecast in England (up to 33⁰c) a result is how you say, extremely likely.

Elsewhere hats off to Ricky Ponting who played his last first class match yesterday and ended up scoring 169 not out for Surrey at the Oval.

In football, the highlight is that England kick-off their campaign in the Women’s European Championships tonight as they play Spain at 1930 hrs.

Wayne Rooney is returning to Manchester after he did his hamstring in a training session and will be out for a month, the Community Shield is on the 11th of August.