BG, BP, Gulf Keystone, IGas/Trap, and Fortune

Technical problem this morning, apologies should have gone at 1130

WTI $110.15 +1.73, Brent $115.97 +90c , B/WTI Diff – $5.82 -83c , Natural Gas $3.55 -3c

Good morning – Taper tantrums…………………..

The non-farm payroll slightly disappointed but as predicted the previous data was revised down a touch leaving the quarterly average in line with expectations. Probably a slight delay to tapering but it’s not if but when guys.

The market was assessing this news when Putin announced that he would continue to supply weapons to the Syrian leadership if Barry took military action. Tonight the matter goes to Congress for a vote and tomorrow the President is due to address the nation…………………………….

Chinese exports rose 7.2% higher than consensus of 5.5% and higher than July which was +5.1%, with imports lower at 7% the trade surplus stayed at $28bn.

Oil Price

A quiet start in Europe and actually a bit lower in early trading but all will hinge on Congress and Putin. Fundamentals a bit mixed but still a bit of a shortage of Brent down to Libya mainly but the Saudis are producing at well over 10m b/d which will start coming on to the market as domestic demand edges down after the summer.

BG

A slightly puzzling statement from BG this morning as it prepares for its Capital Markets Day this afternoon. The statement starts with the simple sentence “all guidance for 2013 remains unchanged”. ” Delivery of all our 2013 production milestones remains on track with seven already delivered”.

The QCLNG project in Australia remains on schedule and in Brazil the second and third FPSO’s came on-stream as planned and work continues on further well hook-ups”.

So it’s the 2014 milestones that have put the cat among the pigeons. Delays will occur in Egypt, unsurprisingly due to the current instability and there is also a four month delay in the Knarr project in Norway into the second half of 2014. In addition to this, the company expects to continue to operate fewer rigs in the USA which will reduce volumes by approximately 17,000 boepd.

The combined production miss for next year is expected to be approximately 47,000 barrels of oil equivalent per day. There is no knock on hit for 2015 at the moment but future events in Egypt may still cause grief and in the statement they bring up the need for ‘ a recovery in natural gas prices in the USA’.

The market has unsurprisingly been spooked by this statement but some if not all of this should have been expected and I don’t think that BG will be affected in any significant way as it was this time last year.

BP

A number of bits and pieces from BP over the weekend, mostly to do with Macondo and litigation which is no surprise at the moment. The Freeh report into the allegations of misconduct in the claims process post the disaster contained good news and bad news. The bad news is that payments won’t be suspended, BP’s biggest claim but the good news is that Freeh concluded that there had been improper and unethical conduct at the office administrating compensation payments. So its back to square one as BP have to continue paying out the payments and to try and sort out the hooky payments in the process.

Much better news on the exploration front today as the company has announced a significant gas discovery in the East Nile Delta. The discovery is potentially very substantial as it is in the centre of a 50 km long structure and with a hydrocarbon column of ‘in excess of 180 metres’ it increases the confidence in the deep Oligocene play in the East Nile Delta.

Gulf Keystone Petroleum

So, the day of judgement is upon us with the English Commercial Court judgement in the Excalibur case due to be handed down tomorrow at 1030. The company believes that as the decision is to be read out in open court the shares should be suspended from 0730 hours until the company releases an RNS, expected to be the same day.

At long last this judgement will be made and a millstone around the neck of the company can be released. As Dougie says’ it will remove the key uncertainty in the stock and is a completely binary situation, either take profits now in the hope it goes down on bad news or strap in and take your chances’.

With the opportunity to appeal it may not be that simple but I have a feeling that there is not that much downside except for a kneejerk reaction if the company lose. If that happens then they are going to be a huge buy on the fall as underlying the value is still there.

IGas/Trap

IGas is buying Caithness Oil for £8.95m which is, in a knock-on deal, buying out Trap Oil’s holdings in the blocks it owns. For IGas they gain blocks in the Inner Moray Firth containing Lybster and Knockinnon, a bunch of onshore blocks in production licence 158 as well as £50m worth of tax losses and an NPV of £25m. The company is paying through the allotment of 7.8m shares, of which around 2.3m shares are locked up for a minimum of three months after which an orderly market agreement will be in place. (More on IGas tomorrow about its current drilling programme)

For Trap it ties up a few loose ends and gives them a bit of cash and also, unfortunately create a net impairment charge of £9.2m reflecting their aggregate carrying value at the moment of £14m. But given that Trap are at present looking to restructure its portfolio as well as its Balance sheet, this deal makes a lot of sense and may keep its major shareholders happy, at least for a while.

Fortune Oil – From Daily Flow Test – DY

The company has dispatched the circular relating to the proposed acquisition, loan settlement and special dividend. The General Meeting will now be held at 11am on the 25th September. We expect the vote to go in favour of all of the proposals.

And finally…

Expect a cracking US Open final tonight as Rafael Nadal takes on Novak Djokovic in the men’s final, this could be an amazing match

Who will Ferrari pick to join Alonso next year, assuming the seat is empty? Looks like Kimi is the favourite but some prefer Hulkenburg others feel the time is right for Paul Di Resta who is almost Italian!

England didn’t need to do much to beat Moldova at Wembley on Friday night but it’s a different ball game tomorrow night in the Ukraine, a point a minimum I suspect….

You may not have noticed a one day series going on between England and Australia at the moment but the Aussies won yesterday to put them 1-0 up, it’s not the Ashes though…………..

And some great rugby at the weekend as the Premiership returned, good for those of us with BT Broadband who now get the rugby offering live and for free!