Shale, BG, Repsol, HRT/Namibia, and Gulf Keystone

‹ See you in court……………………

WTI $108.97 -1.56, Brent $113,33 -2.30 , B/WTI Diff – $4.36 -1.46 , Natural Gas $3.61 +8c

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

With the world’s number of economists still in over-supply, Bloomberg have surveyed them and found out that they believe that Fed will start tapering in September when it meets on 17th/18th of the month.

In London, Chancellor George Osborne didn’t miss the opportunity of an open goal as he nodded past Ed Balls into an empty net as more economists agreed that Plan A appears to be working, even uber bear Allister Heath had to agree through clenched teeth that things are looking up.

Oil Price

News from Syria, or rather Moscow, late yesterday changed the game, at least temporarily in the Middle East. Barry announced that US action might be averted if Russia can convince Syria to stockpile its chemical weapons. The vote in Congress was pulled although the President is still going to address the nation tonight.

Accordingly the oil price fell in late trading as above and has fallen another 50 cents this morning in light trading.

Shale

Introducing a Government report on shale and carbon emissions, Ed Davey energy secretary said yesterday that fraccing for shale gas in the UK “will not have any effect on gas prices”. This comment, along with that of David Kennedy, head of the Climate Change Committee as well as Lord Stern last week appear to be not necessarily wrong but more like premature, especially as comments such as “there isn’t enough shale gas in the UK and Europe to change the European gas market” are low grade. What do they think would happen to world gas prices if Europe became self-sufficient in gas? Anyway as we have always said, at the moment its only about seeing whether the thousands of TCF’s of gas in the UK are deliverable, safely, lets worry about the price after that eh?

Finally it was truly excellent to hear shale gas emissions being “significantly less” than those for coal and also lower than imported LNG. According to Mr Davey as our cleanest fossil fuel it will be ” a bridge in our transition to a green future” amazing coming from someone who thought the country’s power would be supplied by sunlight, wind or cyclists in hamster cages.

BG

A quick word on BG after what seemed like a mammoth analysts briefing yesterday afternoon. I thought that it was a pretty good analysis and for me nothing changes in their key Brazilian and Australian projects which are running on time and budget and the LNG business looks set fair for the longer term. This is where the Lex Column completely misses the point, especially when they question whether the group’s strategy of moving from exploration to production is correct.

Where BG has gone off the rails in the last year or so is in its contact with the city and its guidance and conveyance of information, the new IR head has a lot to answer for by letting relatively modest bad news flow obfuscate the underlying good story. Accordingly we are happy to remain positive for the longer term and it should be noted that in our recent resources quarterly it also comes out top in the M&A potential bid targets despite its market cap.

Repsol

The company has appointed advisors to investigate the possibility of selling its 30% stake in Gas Natural, currently valued at around €4.4bn. Although the company has made clear it doesn’t need the money, it has also said that it would prefer the flexibility to spend the money in other areas of the business, probably in E&P.

HRT/Namibia

HRT announced yesterday in Rio that the Moosehead-1 well, its third offshore well in Namibia was a dry hole. The company said that its first drilling campaign in Namibia has ended with no pay zones this time and that both the Orange and Walvis basins are oil or gas prone and that new exploration efforts will bring hydrocarbon discoveries.

According to Dougie, Chariot, Tower and BP will all find this bad news and that ” the point being, its expensive, its vastly underexplored and the geology might look like offshore Brazil, but time to start thinking ‘looks like’ just isn’t enough to warrant further activity…”

Gulf Keystone

I’ve been holding back the blog as we waited for the judgement from the English Commercial Court in London and whilst we will have comments later after the company’s RNS it seems that GKP have won on all counts and that Excalibur has no valid claim against GKP or TKI.

Expect the share price to go mad as there should be decent upside, this has after all been hanging over it for a long time and whilst there will be a fair bit of profit taking from existing holders the underlying upside is substantial, our target price of 480p stays and now with just the full listing to come I remain very bullish about the prospects for GKP.

And finally…

A huge game for England tonight in the Ukraine, at least a point is vital………………………..Scotland are in Macedonia, Wales host Serbia and Northern Ireland travel to Luxembourg.

Rafael Nadal despatched Djokovic last night to win his second US Open and his 13th Grand Slam

Notts beat Somerset in the YB 4O semi-final and will meet Glamorgan in the final at Lords on 21st September.

And after being found in a pile of rubbish in a skip and sold blind, the James Bond Lotus Esprit from The Spy Who Loved Me reappeared at auction last night and sold for £550,000…………..