WTI $106.11 +14c , Brent $109.00 +1.19 , B/WTI Diff – $1.71 -89c , Natural Gas $3.31 +8c
Those US stats start tonight with the retail sales figures, the way the figures pan out will affect tapering and maybe the oil price.
The Libyan situation is not helping matters in the oil markets, yesterday the 2 main oil terminals opened after an agreement with the unions but after only a matter of hours they were all closed down again. Cue, Brent to pick up sharply and technically it is quite important to break the $109.50 level if it is to break out. (See chart)
The maintenance season is also still under way making the market very tight in places, as the September contract expires on Thursday its pretty well bid, but the market is already selling the end September rolls and the October contract so other news such as Libya are causing pressure on Brent.
Add to that the maintenance of the southern hub in Iraq in September and you have a recipe for more spikes and mayhem!
API stats tonight, analysts fraternity going for a draw of 1.5m bbls.
Remember where you heard it first as the FT today follows up on our analysis on Somalia and Soma Oil & Gas Exploration from yesterday’s blog. One of the problems for any company venturing into the Horn of Africa is going to be title, either by another Government (Somaliland or Puntland) or by previous licence holders (Exxon, Shell, BP, Total maybe?) but Soma has said that it will not impinge on such areas.
We have mentioned Genel and Ophir who are in Somaliland and Africa Oil are in Puntland, we are putting together a list of companies exposed in this area, map below.
I have mentioned Mexico quite a lot lately and today it gets more publicity as the President has confirmed that he hopes to change the law to encourage foreign investors to bring in new investment in the domestic oil industry. This won’t be easy as there is much opposition to privatisation but as I see it he is not going the full production sharing contract route but a more watered down profit-sharing contract.
We have also noted that Petrofac are one of the first movers in Mexico through their JV with Schlumberger which might give them a head start in the region. No map here as I assume you all know where Mexico is!
The participants in the offshore French Guiana prospect have announced that the final well of four has been spudded by Shell as operator. Others in the syndicate are Total, Tullow, Northern Petroleum and Wessex Exploration, the last two being more geared than the others to any success. After initial success, this programme has rather disappointed, the fans aren’t quite what they expected, hopefully this well will restore confidence in the play.
Sefton has announced an update of production in California, in July they produced 171 barrels a day which believe me for them is worth getting the bunting out for. Dr Ali reported findings on the thermal simulation study which provided insights into the Tapioca reservoir and steam simulation appears to be doing the trick. The chart does not show the benefits of the stimulation of the new non-exec quality now aboard but surely it’s only a matter of time.
Ithaca reports Q2 and interim results this morning. H1 production was broadly in line with consensus at 14,300 boepd and Q2 net earnings came in some way above at US$52m. Q2 Operating cashflow was up a solid c300% to US$65m following the acquisition of Valiant Petroleum in April. However, the company is now guiding that H2 production could be at the lower end of the annual guidance range of 14,000-16,000 boepd due to technical challenges at the Causeway, Cook and Athena fields.
Despite production looking flat for the rest of the year, there are still some positives in this announcement. The Valiant integration is offering potential for US$20m of overhead savings pa and the company is sensibly looking to cut expenditure commitments, such as through the farm out with Shell. With a producing asset base of 11 fields we view Ithaca as a cheap, diversified North Sea producer.
So, if it were ever in any doubt……………..England won the fourth test match against Australia to go 3-0 up in the series, I believe the expression is dormy one. Bring on The Oval next week, see you there.
A fantastic performance by Christine Ohuruogu at the World Championships yesterday as she won the 400m in a record British time, becoming the first British woman to win two Championship titles.
In football Crystal Place have signed Marouane Chamakh from Arsenal one a one year deal. Chamakh has scored only three goals in the last two seasons for the Gooners who will be pleased that someone has taken him off their hands.
And my friends over at Thames Water have asked Ofwat for an 8% price rise for next year on top of the agreed rise. Many excuses as to why they don’t have enough money without bleeding the customers but the CEO getting a salary of £425,000 plus a bonus of £418,359 plus tips is probably the place for Ofwat to start. Excuse the pun but these guys couldn’t run a bath………………..it’s a water business, not rocket science.