Ophir Energy, Fraccing, Consilience Energy Advisory Group

WTI $106.99 +16c , Brent $110.04 +74c , B/WTI Diff – $3.05 +24c , Natural Gas $3.35 +6c

Good morning

Another quiet day today with few announcements, peak of the holiday season looking at the amount of out of office replies I am getting!

Oil Price

The oil price has continued to strengthen as last week’s bad news is chip paper and this week’s good news is in the ascendant. No change really, Libya, North Sea maintenance, Egypt creating geopolitical tension and the forthcoming shutdowns in Iraq which will take 500,000 b/d off the market for a month.

The September Brent contract expires today, buying of October and later months in the market will support the current strong-ish trend, the proof of the pudding as they say, will be if the buyers come in.

Now to the EIA inventory stats which showed a 2.8m drawdown in crude stocks, with analysts’ consensus of 1.5m, only 87% out this time lads. Gasoline built up 1.2m barrels and interestingly distillates were up 2m barrels as they start preparing for the heating season.

Ophir Energy

Interim results out this morning report a loss of US$19.37m and cash on the balance sheet of US$486m following significant fundraises in the period. This otherwise doesn’t contain a great deal of new information and management lead the announcement with the 100% success rate at Blocks 1,3 and 4 in Tanzania and a corresponding increase in recoverable resources to 15Tcf. We expect Tanzania to be at the forefront of LNG developments in Africa, certainly ahead of Mozambique and probably Equatorial Guinea too as a site appears to have been selected for a multi-train project.

Despite the fund raising in London we think that the company is still considering farming out some of its Tanzania position as they see the development and therefore associated costs accelerating.

Regarding Equatorial Guinea this may be slowing up, the statement suggests an ‘in principle agreement’ with the Government to ‘review commercialisation’ for block R gas including floating LNG which suggests to us that it is maybe struggling on time and commerciality. I suspect the market won’t like this bit, I was at the big analysts presentation and clearly got a more bullish message on EG than this.

Dougie has a target price of 710p and a BUY on Ophir which still looks sound but it may be a bumpy ride for the time being.

In a separate release the company announces that it has appointed Vivien Gibney, formerly of Mobil and Enterprise Oil, as a non-executive director. This is an excellent appointment and will add gravitas and experience to the board.

Fraccing

Sometimes you have to admit that somebody does things better than you and today is one of those days! The opinion section in today’s Times carries an article by Matt Ridley entitled ” Let’s shatter these five myths about fracking” which should not only be mandatory reading for all involved in the unconventional space but also used by companies PR departments as they try to win over the public. It should all be read by any MP’s who are likely to be involved in the process, that’s assuming they have not gone off on their massively long holidays already, they might learn something.

Consilience Energy Advisory Group – Trading Crude Oil

Many readers will know of Consilience and their CEO Liz Bossley, a highly respected author, consultant and expert witness in the area of oil, gas and emissions trading. So when the book “Trading Crude Oil – The Consilience guide” landed on my desk with a thud recently I was immediately interested to see what they had to say and if David Hobbs and Joe Stanislaw give it glowing references it too is mandatory reading for those interested in oil trading.

Although a good deal of it is way above my head it will surely become the standard reference work on the subject and anyone interested should invest in a copy.

And finally…

Its A-level results day today and I hope any of you involved have a peaceful day, remember its never as bad as it may seem!

So, the England – Scotland match was a lively, hard fought affair with, as one might expect and given the season hasn’t started yet quite well paced. Scotland challenged every inch of the way and led twice but in the end new boy Rickie Lambert scored on a dream debut that could have seen him get a hatrick. Having said that there were some dire performances, the Scotland opening goal was a Hart shocker and the second saw Cahill turned by someone years older which doesn’t bode well.

Finally without upsetting all my Jock readers, how irritating must it be when your team turns it on like this but only ever against England?

Crystal Palace manager Ian Holloway vented big time as he thought he had signed Darren Bent until he realised Bent was going to Fulham!