WTI $106.94 -95c, Brent $108.99 -34c, B/WTI Diff – $2.05 +33c , Natural Gas $3.34 -5c

Good morning

The non-farm payroll figures on Friday were ok, if a touch light and the rate at 7.4% also in line, Wall Street murmured its approval and the oil price fell a little.

I’ve been steering off the Balcombe/fraccing hotspot lately but when the front page of the Daily Telegraph headline is, Fracking is ‘spreading fear throughout the countryside’ then it may be time to say one or two things about the lack of or misinformation that is going around.

There is no doubt that there is fear around about drilling in general and fraccing specifically but this is down to a significant lack of understanding about the process, often aided by serious and incorrect propaganda.

The Government and the companies need to do more on information, at the moment people do not know the difference between drilling for oil, shale oil or shale gas, how it is done, what disruption will happen and over what timescale. Fraccing has got everybody going but it is hardly going to happen without serious protection from the appropriate authorities. The fact that there is a fully functioning oil well in Sussex, on Forestry Commission land and in an area of outstanding natural beauty that no one even locally knows anything about, means that providing the nation’s oil and gas need not be quite so traumatic. As Dan Yergin might say, it is the quest for the prize that must be carefully and honestly explained.

Oil Price

So, it looks like we might be back into the lower trading pattern for crude oil, the price has weakened this morning probably as the market digests the news from Iran where President Rohani was sworn in at the weekend. In an attempt to take ‘fundamental steps’ needed to get back on good relations with the US, the appointment of Mohammad Javad Zarif as Foreign Secretary has been seen as a positive move and both countries signalled a willingness to improve relationships. It’s not going to happen overnight but anything that means that the risk in the Middle East lessens and that the premium in the oil price starts to disappear will eventually put downward pressure on the oil price.

Elsewhere putting any upward pressure are the troubles in Libya where exports are now less than half capacity and of course with further damage to a pipeline in the Yemen that carries 125,000 b/d some loss of supplies in that region.

Brent crude oil 1 Year chart

Brent crude oil 1 Year chart


In a really interesting interview in today’s Daily Telegraph, Ed Daniels, Chairman of Shell UK says that he expects Shell to be major players in the North Sea for many years to come. He went on to say that as a province the North Sea has decades of activity ahead of it. Shell produce 14% of UK oil and are investing $2bn a year in the area.

Bahamas Petroleum

The Interim results from BPC brought with them some useful comments from the company about what has been going on lately. The chart below shows that investors, mainly retail but with a couple of institutions aboard, have been very patient but I think that they will have to continue to be so. I have asked for a meeting with the company as a number of key questions need to be asked, whether any of them can or will be answered I’m not sure. The company now have a timetable to drill, with the obligation to drill the first exploration well by April 2015 and the second by April 2017. The company say the ‘Proactive cost management means robust cash position is maintained’ although I would hardly consider that something to put in the highlights, some investors might consider it as taken as read rather than to shout it from the rooftops…On the subject of cash the company has $17.2m of balances which will clearly not be enough to fund the drilling programme if one can call it that, but ‘the team is fully engaged in the farm-out process in order to deliver on our desire to commence in 2014 the first exploration well since 1986’.

Verdict: Will need to either farm-out or raise money or both between now and the end of next year. Investors who have stayed this far are probably happy to remain aboard and as these milestones come and go the price should respond, failure to do either would be disconcerting but we don’t expect that, watch this space after our meeting with Simon Potter.

Bahamas Petroleum 1 Year chart

Bahamas Petroleum 1 Year chart

And finally…

As the exciting test match goes into a thrilling final day we saw yesterday Warner being caught by Joe Root, not for the first time this year that Joe Root has been on the receiving end of a hook from Warner…

Manchester United have turned down another bid for Wayne Rooney from Chelsea, I reckon that they are waiting for him to formally request a transfer so that he forfeits bonuses and a share of the transfer money…..

Scientists in the Netherlands have ‘grown’ a burger from a dead cow in a laboratory at a cost of £215,000, the Frankenburger as is it is to be called will be unveiled and eaten at a press conference today…..By tomorrow Tesco should have them in the freezer cabinets ‘grown’ from a horse………..maybe call it a Frankelburger?

And we have heard that Peter Capaldi has been announced as the new Doctor Who, at 55 he is as old as William Hartnoll was when he started but we should have known, as a colleague points out he was accurately cast in the movie World War Z as Peter Capaldi – W.H.O. Doctor…