Riverstone Holdings, Caza Oil & Gas, Genel, and Alkane Energy

WTI $103.84 -53c , Brent $106.44 -45c , B/WTI Diff – $2.60 -23c , Natural Gas $3.33 +8c

Good morning

My view that economists should be given a wide berth as a general rule was confirmed yesterday after the announcement from new BoE Governor Mark Carney showed that none of them appear to be able to reach a conclusion in an objective manner. You expect garbage from the Sentances, Heaths and Balls but the rubbish from the Westminster think tanks was worse than usual. Already Carney has shown more promise as Governor than anyone before him.

Oil Price

With the September Brent contract expiring next week I suspect we should see a modest rally after a week that has seen the price fall by around $3. Certainly the reasons Brent got up to its recent high of nearly $110 are still around, viz Libya promises more exports but is yet to deliver much, South Sudan is still embroiled in trouble, even Iraq is struggling to get to its Government targets at the moment. Actual shortages will dictate the short-term price movements rather than highfalutin thoughts of Iran returning, or the USA replacing the Middle East as a major provider of crude oil. China too added to what might be a rally as it showed better than expected commodity imports in July, one swallow and all that…..

Before I leave the oil price I had a complaint from an analyst who said that I didn’t give enough credit to the Wall Street scribblers who predict the inventory stats. Yesterday I said that ‘crude inventories fell by 1.32m bbls slightly more than the 927,000 consensus forecast’ but maybe I should have just said that the actual number was 42% higher than consensus forecasts which sums it all up, 42% out is deemed to be pretty good by their standards….

Riverstone Holdings

After a few days of rumours it seems that Riverstone is indeed setting up and floating an energy vehicle in London to be called Riverstone Energy. The fund plans to raise at least £500m to invest in oil and gas and renewable entities.

So, you say, just another energy fund to lose money in like all the others? Maybe not, the interesting fact here is that Lord Browne, former head of BP and now a partner of Riverstone is also Chairman of Cuadrilla Resources and is a leading expert in all things unconventional, so watch this space.

Caza Oil & Gas

Below are our comments from the Daily Flow Test by Dougie Youngson, since the opening the price has fallen a bit which is a bit odd as the statement points out that there is a lot of exciting drilling going on at Caza and the company is now fully financed for a long campaign. I suspect that the large volume traded indicate that there is a seller out there and with the stock down 4% it is definitely worth a look.

Finally the company are presenting at Proactive Investors on the 22nd August so senior management will be over in London, please call me if you would like to meet them.

Second quarter results show how the recent US$50m financing is already changing the company’s outlook. Cash has increased to US$19.1m with its working capital balance standing at US$11.2m. The company has already drawn US$20m of debt from the Apollo facility.

Production decreased by 19% to 20,330boe for the quarter compared to the same period last year. This reflects the sale of the San Jacinto asset last year. QoQ production was flat, but Q3 production is expected to increase.

The company is now funded to drill 12 oil and gas wells and two salt water disposal wells focusing on SE New Mexico. These wells will cost US$30m and will be drilled over the next 15 months, subject to certain performance and financial criteria.

Caza also provided an update on the rest of the drilling programme. We expect a result from Caza Ridge-14 4H in the short term and the West Copperline-29 1H well is expected to test in September.

Overall a very useful and positive update from the company today and we look forward to more positive results from the company as the drilling campaign progresses.

Finally a couple of small mentions;

Genel has broken through £10 a share today, don’t be tempted to sell as I saw in a rubbish brokers note yesterday, things can only get better for Genel…

Alkane Energy has broken through 40p which is fantastic but again, don’t be panicked out of them, there’s much more to go for in this little baby even if it is up 48% since the placing we did back in May

And finally…

The third test match in the Ashes series starts today in the most northerly stadium ever chosen for such a contest. My picture shows that dark clouds are a regular feature in this neck of the woods and the odds on a dry five days must be staggering, funny decision to build it so far from the tropics… England won the toss and will bat but curiously didn’t choose Onions on his home track, Pierce Bresnan just keeps his place for his night-watchman expertise I guess.

In T20 Essex got through despite Bo Peep running out his own team mate as soon as he got to the crease…..

In the Champions League draw for the play-off round Arsenal have drawn Fenerbahce who are technically barred from the tournament if my memory is correct.

Suarezgate continues with Hubcap Stealers owner Lennie Henry saying he is not for sale ‘at any cost’ so that’s that then and I’m sure Brendan Rodgers will get the best out of him after his tirade of abuse yesterday……………

In the golf, Scott and Furyk lead but Westwood is in choking distance only one under…

And Andy Murray lost in the third round of the Rogers Cup in Montreal, not a surprise after Wimbledon but he defends the US Open starting on Monday week.

I couldn’t resist this……….Going straight to the top of the list of most nauseating, creepy things you have ever seen is a half-page advert taken out today in the City AM newspaper. The advert says ” All at Strand Hanson wish Simon Raggett a very happy 40th birthday” and is signed by his loyal troops who one assumes paid for the advert out of their monster bonuses………………………Pass the sick bag……..