WTI $101.06 -1.35 ; Brent $109.78 -1.08 ; B/WTI Diff – $8.72 -5c ; Natural Gas $3.81 -1c
Good morning – “Message” in a bottle
Apparently the latest tactic is for the office of the House Speaker Boehner to send to the office of the Senate Majority Leader Reid a “message” to speed the procedural process of getting a debt limit and government funding bill. This means that the process is shortened and there is less opportunity for Republican filibuster tactics. This is Boehner trying to get across as much to his own party as the American public that he will hold his promise of not letting the US default………………..
Meanwhile Fitch Ratings placed the USA’s AAA rating on negative watch yesterday, a move some politicians described as being irresponsible, now the words pot and kettle come to mind.
Unsurprisingly, as the fools on the Hill continue to play their little games, markets, who hate uncertainty, fell and oil was no exception. Few long term long positions are open at present and although the oil price fell last night if a deal was agreed tonight I’m sure that it would reverse the fall and rally.
Northern/Wessex – Running on empty………………
Wessex has revealed that it will not be paying its equal share of the latest monthly cash call in the JV with Northern in French Guiana and will not be contributing for the next £1.5m either. Under the rules of the agreement with Northern this means that NP have to fund the shortfall to avoid defaulting on the permit, in return they get an increase in the equity in the JV and thus the licence. So NP now own 56% of the JV and Wessex 44% giving stakes in the field of 1.4% (1.25) and 1.1% (1.25) respectively.
Whilst Wessex still has some cash on the balance sheet (End June £4.4m) a sum that is only slightly less than the market cap, it has clearly hit the panic button as in the event of any extra costs or unexpected bills from Shell there wouldn’t be enough in the cookie jar, letting NP take up the slack is painful but the only realistic option. The interesting surmise is what might happen should the well come in, a help for Wessex but a bigger gain for Northern who can afford to run this either way, cost are likely to be minimal as the testing and appraisal process goes on. The likely outcome is probably for the ‘new Northern’ as one might call it, to put Wessex out of its misery and buy the rest of the JV out lock stock and smoking barrels.
Another albeit modest, contract win for Plexus, a firm favourite here. The contract is with BG, this time in Egypt where Plexus are to supply its POS-GRIP wellhead technology and services for offshore oil drilling activities in the country. The contract is worth £350,000 and expected to start producing revenues in the second quarter of 2014.
As I said, this is a modest win in its own right but an important win for a major existing client and a continuing vote of confidence from the industry. We recently had CEO Ben Van Bilderbeek in the office and there is much more in the pipeline if that’s not too much of a pun and if you haven’t already you should take a good look at Plexus.
After long periods of rumour the company has announced today that it is in negotiations to settle the legal action against Messrs Winnifrith and Levi, something that must not only be incredibly painful but acutely embarrassing.
In the process of this lawsuit the Chairman and CEO, Jim Ellerton was asked by the board to step down and also as CEO. At the time the board then hired Mr Ellerton as a consultant which then as now, struck me as quite extraordinary behaviour.
The chart says it all………………………………
The England side delivered to goods last night as required and are through to Brazil 2014……Scotland did get their debut home win in the qualifiers.
Poland and Croatia both sacked their managers who might look to Gillingham for their next jobs.
I wasn’t sure that Glasgow Rangers had any directors left to lose as two more left today. CEO Craig Mather and non-exec Bryan Smart resigned following the departure of Ian Hart and Chairman Walter Smith recently, what a joke……………
Thanks to a nod from a friendly client who reminded me that my hero from Weir Group days, Mark Selway, has reappeared as CEO designate of IMI, a great stock, about to do even better methinks………………..
And also one can’t not mention the departure of Neil Woodford from Invesco, watch out for a massive move of funds from the stable and as holders follow him massive sell-offs of his stocks are inevitable.