WTI $102.88 +1.27 ; Brent $111.64 +2.70 ; B/WTI Diff – $8.76 +1.28 ; Natural Gas $3.73 +2.70
Washington appears to be slowly working out that the rest of the world hasn’t seen the funny side of the games they are playing on the Hill. World markets rallied sharply as the prospect of a return to work seemed favourable, maybe Monday but it is only a temporary respite after all.
The oil price also rallied, reaching $112 for Brent at one stage as markets and the dollar rose but at the close prices were just off the top, this morning those levels have remained about the same.
In the ‘you couldn’t make it up’ category the oil price jumped yesterday on news that Israel had bombed Syria, as it happened there was a tweet but it was from the Israel Defence Forces commemorating the Yom Kippur 40 years ago.
EU Fraccing ban
The fraccing argument, and the allied benefits that would be brought by potential discoveries in the UK are beginning to be understood, I even saw a poll this week that suggested that, properly regulated 65% of the electorate would be happy with the process.
Today the Telegraph has unearthed a report from the EU that suggests that the associated methane emissions from shale gas may be high enough to call into question the future of fraccing in Europe.
Chances of another fight between the EU and the UK are a possibility although the industry lobby within Europe are much better disposed towards fraccing and suggest that a ban would be ‘an industrial massacre and that you can’t sacrifice Europe’s industry for unrealistic climate goals’.
Oil majors – charts.
It’s looking a bit dodgy on the charts for some of the majors although they could all bounce from the positions below. Just worth keeping in your head as the results for these guys are all in the last week of October and Chevron has already given lowered guidance for downstream margins. Also bear in mind the BP performance is despite the $8bn buy-back in which the company are buying 3-5m shares back every day.
Trinity Exploration & Production
We had Trinity in yesterday as it’s a stock I really like but feel that it is not well known enough in the market place and deserves more coverage. Trinity are the leading Trinidad focused independent E&P company with a very strong, primarily local management team. Following the acquisition of Bayfield Energy and the $90m raise, the company is well funded for its exciting work programme which encompasses onshore, near shore and offshore prospects and assets. In addition to existing production the company has multiple low risk development opportunities as well as a high quality exploration portfolio.
The current production is 4,000 b/d which generate cash and the company has two exploration wells coming up soon.
Trinity ticks a lot of boxes for me, it is well managed and funded, it has cash flow and upside from modest as well as higher risk exploration in a proven world class basin and to me it is significantly undervalued.
We had Paul Atherley of Leyshon in for a chat on Wednesday as we wanted to hear all about the company, following the restructuring Paul will be the Managing Director of the Leyshon Energy side of the business. The diverging of the businesses is going on and the new management are already working flat out to put some deals together. The new management is very exciting indeed as it puts together along with Paul ,two of the most experienced, high quality oil and gas executives currently operating in the industry. John Manzoni who is to be Chairman is ex BP and Talisman whilst Kim Howell is ex ARCO and BG and both men have huge industry experience. I expect two further board appointments, one to be an operational executive.
Leyshon should be on your radar, watch out for the demerger, watch out for imminent deals and a significant financial restructuring if any of these happen concurrently you should be ready to invest, given the eastern nature of the business I expect a number of funds from that area to be closely involved.
From DFT – DY
The company made an announcement yesterday relating to its development and funding status.
Development 95% Complete
The operator, CNOOC, has now completed 95% of the development work at the LS36-1 Gas Field. All that remains is the commissioning of the facility and its final connection to the provincial gas infrastructure. This will be followed by a trial production phase ahead of full production, which is expected in early 2014.
Change to Funding Requirements
Primeline has decided not to proceed with the previously announced US$15m of convertible bonds, given the short timescale to first gas. These have been replaced by an interest-free working capital loan from the company’s Chairman, Mr Hwang.
Mr Hwang has agreed to convert US$5m (equivalent to C$5.2m at the agreed exchange rate of US$1/C$1.037) of his existing debt of US$7.8m into shares at C$0.55/share, which will result in the issue of 9,427,272 shares, and grant a new loan facility under which US$2.9m of the existing loan, which will not be converted, will remain outstanding. There will be an undrawn interest-free facility of US$2.14m under the new arrangement, which will be available until 31 July 2015. It will be repayable on demand after this date.
It is very encouraging to see the rate of progress at the development and the short timeframe to first gas. It is also prudent balance sheet management to take this new approach to short-term funding. We continue coverage with a BUY recommendation and C$0.86 target price.
Taipan has announced that Paul Logan has joined as exploration manager, he was previously Chief Geologist at Heritage Oil. Paul has had significant success in Uganda and Kurdistan and his experience will be extremely useful to Taipan in Kenya.
It’s a massive weekend for football fans as almost all the home international sides have crucial games. Biggest chance is for England but still they must win against Montenegro to be realistically in with a chance of getting into the finals.
It’s the Japanese Grand Prix at Suzuka which is often one of the most exciting tracks to race on, Hamilton fancies his chance here………..
Week 6 of the NFL has pitched together some good rivalries, none better than Kansas City Chiefs v the Oakland Raiders and the Cowboys v the Redskins……………..
And the Giants are 0 and 6 after losing to the Bears………….
And extra finally, Happy 21st Birthday to Dave, avid reader, joke provider and general top guy………………