Rosneft/ENEL, BP, Afren take profits, Northern Petroleum, and President Energy

WTI $103.41 -1.26 ; Brent $108.50 -1.69 ; B/WTI Diff – $5.09 -30c ; Natural Gas $3.60 -9c

Good morning

Another fairly quiet day as President Rohani arrives in New York planning to talk goodwill to all men. He is scheduled to meet Secretary of State John Kerry plus diplomats from 6 major world states. It is rumoured that he may get an audience with the Chief at the White House although it has been made obvious that this is not scheduled at the moment.

At the labour party conference yesterday, shadow Chancellor Balls outlined his policies including a rise in corporation tax and a tax and spend approach to life not inconsistent to life under Scottish Gordon.

Oil Price

More drift as at the moment news is all going that way, more crude from Libya, Iraq and of course Saudi Arabia as the summer ends and more jaw jaw not war, war.

The Greenpeace activists are being brought ashore at gunpoint by the Russian Coastguard and are allegedly to face criminal prosecution. Not for the first time they are reminded that they are in Russia now.

Rosneft/ENEL

Rosneft has shelled out $1.8bn to buy a 40% stake in Arctic Russia and thus a 19.6% stake in SeverEnergia from ENEL the Italian utility. The partners in the venture will therefore have licences in the Yamal-Nenets autonomous region of Russia and its giant gas fields.

BP

Another day, another day in court for the army of lawyers being kept in pay and rations by the board of BP as this time they tried again to file with the court to halt payments from the settlement, which they agreed. The company has said that all payments should be stopped until the claims administrator has put efficiency and accounting controls into place.

Afren

– From Daily Flow Test – A production warning and recommendation change…………..DY

Since the results we have been increasingly nervous regarding the production outlook for 2014 onwards as we had identified that the Ebok field will be exiting cost recovery. It was therefore interesting to note an interview with the CEO with Bloomberg today confirming that this is the case and effectively warning the market that production will be lower by the end of this year. No guidance was given for 2014.

We have already factored this into our modelling and our core NAV for the producing assets is 112p. Given the fact that the share price is now trading at a substantial premium we would suggest that investors take profits ahead of formal production guidance being given.

Northern Petroleum

There is a new team at Northern, with a sprinkling of old-timers thrown in and although we have already had a presentation in the office today was the first results meeting. There is much to be done at Northern and it’s probably like asking directions from an idiot and getting the reply, ‘I wouldn’t start here’.

The first thing that needs doing is selling off the Dutch subsidiary and as the new CFO said at the meeting it’s a buyers’ market…..Only when this is done can the 3D seismic be done on the Cygnus prospect in the Italian Southern Adriatic but given this is waiting on Ministry approval then there probably isn’t any mad rush. You know what I think about Italy and the time it takes to get things done but the company are refreshingly optimistic and there is a lot of oil in block F.R 39 as well as in F.R 40 both of which are available to farm-in to.

Whilst all that is going on it seems that the company is pleased with the new-ish oil redevelopment play in Alberta where the Keg River carbonate reef project appears to be proving an opportunity to provide ‘material core value and useful cash flow for the company. Elsewhere NP has a modest stake in the exploration offshore French Guiana which is drilling the final well in this programme at the moment, after which there will be a year of evaluation by the partners with NP being able to stay or go. Add to the geographical mix the UK and an unconventional shale oil play in southern Australia and you have most of the atlas covered, the air-miles tally will be sweet.

There is no doubt that there is much to do here and no sign that it is going to happen anytime soon, selling the Netherlands is crucial as Italy depends on it and 39 and 40 licences could be the jewel in the portfolio although as ever with Italy don’t hold your breath.

The shares have so far given Keith Bush the benefit of the doubt and there are upside kickers but it may be quite a long haul so one might want to monitor the situation before climbing aboard quite yet.

President Energy

My faith in the potential for President whether it be in Argentina or Paraguay (or even the cash cow in Louisiana) is slowly being vindicated but I do believe that there is much more to go for here and todays results and operational update back me up.

In Paraguay they have had significant success with the seismic showing an undrilled potential giant field, two proven play systems in Cretaceous and Paleozoic and at least 20 structural prospects and leads.

In Argentina the stimulation campaign has been deemed commercially successful , it may be continued next year, meantime current production is profitable.

It has been a bit hard going being a fan of President in the last couple of years and if I put the 2 year chart below you would see that recent strength doesn’t take you back to the highs, nevertheless at long last things are beginning to happen and this is no time to bail out, there’s more to go for.

Catch up on Amerisur, FOGL, Europa etc tomorrow, its already late, been at meetings this morning.

And finally…

The Haye/Fury fight which was called off at the weekend has been rescheduled for the 8th February which is a long wait but this bout needs to happen

First round proper of the clueless cup tonight with some quite tricky ties, notably Fulham v Everton, West Ham v Cardiff and Leicester v Derby in the East Midlands….

The Ashes squad was pretty much as predicted but Carberry deserves the place although Taylor must feel hard done by as Ballance just nicked his space, overall this is no time to be sub 6 foot………………………………

And I’ve been saying watch this sailing, another win by Oracle USA yesterday gets them to 6-8 in the first to 9 series, don’t forget they were 1-8 without a prayer until Ben Ainslie answered the call.