Riverstone Energy Fund, Statoil, Faroe Petroleum, Fortune Oil, and Tullow Oil

WTI $102.25 -88c ; Brent $108.69 -82c ; B/WTI Diff – $6.44 +27c ; Natural Gas $3.50 +1c

Good morning

Oil Price

The oil price drifted again yesterday as President Rohani of Iran suggested that his country could be compliant with the west’s demands in “3 to 6 months”. His Foreign Secretary is meeting in New York today with John Kerry and a delegation of the other five international powers, Great Britain, France, Russia, China and Germany.

The inventory stats from the EIA managed to fox the analysts in New York coming in with a stock build of 2.64m barrels against a forecast of a draw of 710,000 barrels, the first major draw for a while. The highly paid Wall Street analysts didn’t even manage to get the sign right this time……

Incidentally, net product exports from the USA were the highest on record at 3.4m b/d, up 17.5% showing US refineries at near to peak capacity.

Riverstone Energy Fund

Rolled over from yesterday due to the crowded schedule, the announcement of this fund confirmed existing market gossip. Lord Browne, formerly CEO of BP and now a partner of Riverstone and Chairman of Cuadrilla joins the board of REF which will be chaired by former BG Chairman Sir Robert Wilson. A number of high profile investors are committing £550m and they will raise up to £950m in the IPO due anytime.

Statoil

We reported recently about a Statoil discovery offshore Newfoundland, today the company has reported the results of the well and the side-track it has now completed. The discovery is about 600m barrels and is 34⁰ API oil which is an excellent find.

Faroe Petroleum

Faroe has recently been giving the impression of being in the last chance saloon, having been the poster boy of exploration success it has had a bad run and not at a good time, the market is desirous of exploration success. Accordingly our target price was reduced by DY recently from 255p to 175p so the damage has already been inflicted so the six exploration wells in Norway coming up are more crucial than ever.

The stock has fallen again today though as the production guidance is significantly lower than we, or the market expected. Previous guidance of ‘the lower end of the 7,000-9,000 boe/d range is now 5,500-6,500 not something the market wanted to hear.

These exploration wells are going to have to deliver or the downward pressure on the share price is bound to continue.

Fortune Oil- JS

Fortune reported that all resolutions were approved at its General Meeting yesterday. This included the purchase of First Marvel Investment from Fortune Dynasty Holdings and the payment of a special dividend of 2.36p per ordinary share.

This means that Fortune will now secure Wilmar’s right to acquire US$60m for the disposal of Fortune Gas Investment Holdings (FGIH), half of which will most likely be taken in shares in China Gas Investment Holdings Limited.

In addition, as a consequence of the concert party (Daniel Chiu and Vitol) increasing their holdings in Fortune, they will now be able to acquire shares in the market, which they were previously unable to do under the UK Takeover Code.

The timing of the special dividend has not yet been determined, but is expected to be paid by the end of October 2013.

Tullow Oil – JS

The Ekales-1 wildcat well (Tullow: 50%) in Block 13T Northern Kenya is a discovery, with initial results indicating net oil pay of between 60 and 100m. The well is located between the Ngamia-1 and Twiga South-1 discoveries and the reservoir properties appear similar. The rig will move to drill the Amosing-1 prospect south of Ngamia-1 once work is complete.

This appears to be a good discovery which corroborates Kenya’s promising exploration potential and should see a positive response from the market. Our model attributes a 1.44p/share risked value for this prospect (5.76p/share unrisked). The key share price driver continues to be the TEN farm down and its timing. We maintain our HOLD recommendation.

And finally…

I did tell you to watch the sailing last night and it was definitely worth it as the greatest fight back of all time was completed as having been 1-8 down in a race to 9 points the Shermans won 9-8……………………No choking gas tho………….

The result at Old Trafford where Man U 2’s played the HubCap Stealers was a solid win for the home team………..

And Stephen Lee has been banned from snooker for 12 years, that equates to about three matches………………….

And the worst part of the and finally as one has to do occasionally………………….

I’m sure I will see some of you this afternoon when we will attend the memorial service for my old Capels colleague, Matthew Tyler. It is at St Botolph without Bishopsgate at 3pm