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20x oversubscribed???

WTI $103.60 +57c ; Brent $110.28 +45c ; B/WTI Diff – $6.68 -3c ; Natural Gas $3.73 +10c

Good morning

Markets and lenders are getting increasingly hacked off with the junior behaviour in Washington, being taught a lesson by the Shermans in the future won’t carry so much weight after this kindergarten behaviour.

Oil Price

Staying relatively firm under the circumstances, markets are not liking US SNAFU but oil is happily positive and appreciates the weak greenback. There appears to be a big Asian buyer of Brent in the market at the moment and the IMF have given a worst case upside scenario of $150 a barrel if there is further unrest in the Middle East. Against that Saudi output is now firmly over 10m b/d, the highest for a long time and now summer is over they are exporting a lot of it which has seen Mideast crudes well offered in the market.

API inventory data last night showed another bigger than expected rise with crude building by 2.8m barrels versus analyst forecasts of 1.5m, a bit of a success by their standards….


Unsurprisingly Apache has decided to exit Kenya after their only asset, a 50% stake in block L-08 proved to be a disappointment on its only well drilled last year. Apache plan to relinquish the block which gives a headache for Tullow and Pancontinental.


It seems that Sabic is the latest in a long line of companies looking to invest in plant to take advantage of the cheap gas price in the USA. We have discussed here before plans by Sasol and Shell to provide petrochemical products but there are many US and foreign firms looking which is one reason we strongly believe that the US shouldn’t export cheap gas abroad.

Wood Group

Wood Group has announced that it has formed a joint venture with Siemens to create a global integrated rotating equipment service provider. It has to be good with a name like that! The JV will consist of the maintenance and power solutions businesses of Wood Group GTS ( Not including Rolls WG,TransCanada Turbines and Sulzer Wood JV’s) and Siemens’ Turbocare business unit.

All the usual guff about improving future performance and complementary strengths are mentioned and of course synergies to Wood of $15m pa by year three.

Essentially what we have got here is an opportunity to get rid of GTS and on what looks like pretty reasonable terms, Wood get 51% of the JV and $70m from the JV, also it will be run by Mark Dobler, current GTS CEO. This business, which will have circa $1bn of revenue, could be grown or quite possibly be a target for other, larger players……………

Wood Group is currently engaged in a strategic review and undoubtedly this will help all around, for starters there will be fewer if any questions at analysts meetings about GTS, although it and all other turbine activities will report to WG PSN.

Taking a look at the Chart it’s a bit more challenging than I was expecting, showing the fall since the guidance warning recently taking the shine off a good year for the company. The rating, as I said at the time, allowed nothing for disappointment which is what the company delivered in August and I believe that down here and having got to grips with GTS, Wood will get back on the growth trail so I would be nibbling away and not wanting any falls through that 759p line…….

John Wood Group 1 Year chart

John Wood Group 1 Year chart

Fortune Oil

At the risk of banging on about Fortune I must point out that the performance is beginning to become, how you say, compelling. Today it has gone ex dividend 2.36p and as I write the stock is up nearly 7% at 8p and heading towards our 12.5p target and don’t forget to do your sums as the DRIP makes for forced buyers in the marche……………………………………

And finally…

Stephen Lee has appealed against his 12 year ban for match fixing in snooker, I wouldn’t bet on the outcome of that if I was you…………………………..

In a typically cavalier move the Premier League has turned down a role on the commission set up by Greg Dyke, FA Chairman. Everybody else is on the committee but the PL Chairman declined over concerns of the make-up of the rest of the panel, you couldn’t make it up but the Mr Dyke didn’t even go to England’s last formal international, citing a previous commitment……………………..

In the ‘a picture paints a thousand words’ category Craig Bellamy has come out of international retirement to play for ‘the best Welsh team since 1958’.

Do my eyes deceive me………………………?


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