Genel Energy, Kentz Corp, and Lamprell

WTI $101.81 -1.20 ; Brent $110.96 -62c ; B/WTI Diff – $9.15 +39c ; Natural Gas $3.78 +6c

Good morning

Tomorrow signals the start of serious discussions between Iran and the six world powers over the nuclear programme that has caused the international sanctions over the last 18 months. Whilst we have been signalling for a while that this change of attitude from Tehran would happen even we don’t believe that policy can change overnight from either camp. There will be need for give and take from both sides and as we have seen in the last few days, intransigence is not something that the Americans are unfamiliar with. Accordingly, the months ahead will inevitably have ups and downs but both John Kerry and Hassan Rohani have political agendas that require some sort of settlement of this issue.

Its Columbus Day today, a federal holiday but how will we tell the difference? Both the Senate and the House have said that they will forego their holiday and go into session tonight but so far that hasn’t led to much……………..

Oil Price

From the U.S. Energy Information Administration at the end of last week…………..

EIA is closed due to a lapse in appropriations. EIA will not update its website until the agency reopens.

See our notice, “Impact of the federal government shutdown on EIA,” for more details.

So, in the absence of the EIA, the market will listen to other sources of information on the oil technicals but it will mean that there will be no inventory stats except those from the API which are not as statistically complete as the EIA ones. Cue general euphoria from Wall Street analysts as they can only be massively wrong one day a week now.

The FT carries a leading article about the Gulf states increasing their share of Opec exports whilst Iran, Iraq, Nigeria and Libya are short for a mixture of reasons. All of this is old news and has been in the blog for weeks if not months, indeed my views about Saudi acting as swing producer are as old as the hills. Probably a more interesting factor is that the Chinese import number for September was a record at 6.25m b/d which is up 28% year on year as refineries come back on stream after recent maintenance.

It is worth noting that the differential between Brent and WTI has widened again and is nearly $10 a barrel, excluding the unexpected I would think that this is not sustainable although in the absence of genuine data until America goes back to work one might expect to see some unusual movements in commodity prices.

Genel Energy

More good news today from one of the blogs favourites of the year and one that remains stormingly cheap despite being at a virtually all time high. The company has announced results from the second horizontal well in the Tawke field ( Genel 25%) Tawke-23 which flowed at a new record of 32,500 b/d which by any means is a significant result. With the well only costing $12m to drill, complete and test, the payback is remarkably is astonishly quick.

With Tawke-21 and 22 wells underway and slated for completion by the end of the year the future is very rosy. Sometimes it astounds me that investors can be so short-sighted as to not be able to see a bargain in front of their noses as Genel has been for the last few months and will remain so for at least another £5 a share. We are still introducing the company to investors to the company and I am going to write up these recent visits in the next few days, but rest assured, the meetings never fail to impress and surely it can’t be long before a large corporate is going to realise that there is free money on the table here.

I put the 2 year chart here as it puts into perspective where we are since the float, despite the fact that we are entering new territory there is still much upside.

Kentz Corp

The contract machine at Kentz keeps rolling on, today it’s an award from Qatar Shell GTL for EPCm services on the GRVE Integrity Improvement Program, at the Pearl Gas-to Liquids plant at Ras Laffan, Qatar.

Work on this project proves that when on-site Kentz just keeps on winning business, indeed when I visited this site some time ago Kentz had a very strong presence on the ground, clearly it hasn’t stopped and this contract lasts until 2016, ten years since they won the first one.

Value of the contract is commercially sensitive but reasonably predictable, my guess would be around $25m, maybe a bit more.

Although the stock has bounced a bit in recent days it is not enough to reflect what is a very respectable flow of orders and Kentz has continued to do as it said at the time of AmecGate, viz keep delivering more orders in differing areas with a specific preference for EPC work. Accordingly it deserves a rating much higher than at the present time.

Just seen Lamprell who are walking round with new CFO Joanne Curin as she replaces Frank Nelson who has seen the company through its recent traumas. All seems to be going well and with a number of contract opportunities and still some cost cutting to be done I’m happy with my positive view on the company

And finally…

The greed of the FA knows no ends but I suppose if the England fans don’t fill Wembley then who can blame them for selling another 10,000 tickets to the Poles…….

After success on Friday, a workmanlike win is probably the best way to describe it, a win tomorrow night will mean that England qualify for Brazil, heavens to Murgatroyd!

The team will be unchanged I assume except for the usual disciplinary withdrawals and Ashley Cole will be left back, as in left back in the dressing room after a fine performance from Leighton Baines, warming up for the transfer window I hope…………….

F1 continues to be boring with the screeching of baby Vettel, it would be interesting to see him in a car other than one that beats everything on autopilot….

In the darts Phil ‘the power’ Taylor cruised rather embarrassingly home against someone called ‘Chizzy’ who must have been brought in from the Dog and Fox 2nds to play the world champion who didn’t lose a set and at one stage might not have lost a leg in winning 6-0.

It will be a shame to see the back of the Heineken Cup, especially after some incredible games at the weekend. There were a few scalps taken, Harlequins, Leicester but some spirited performances, more next weekend….

And Surrey have appointed experienced coach Graham Ford as head coach for next three years, at present he is the Sri Lanka boss.

In the NFL it was mostly tight, the Packers won, just, away at Baltimore and in our featured match the Chiefs beat the Raiders 24-7. Elsewhere the Patriots beat the Saints and the 49’ers beat the Cardinals.