Nuclear, Brazil, Trap Oil, Hydrodec Group, and Sefton Resources

WTI $100.85 +16c ; Brent $110.44 +83c ; B/WTI Diff – $9.61 -10c ; Natural Gas $3.76 n/c

Good morning

Taper-thin time as rather as predicted last week, consensus appears to be that tapering is unlikely to be back on the menu until at least next spring.

A backlog of data is heading for the markets as Washington and its sponsored agencies bring the news that couldn’t be released during the closure.

Oil Price

I think we get inventory data later today which will compare with the API stat of a build of 5.94m last week then back to business as usual for the rest of the week. There is no doubt that the approach to a ten dollar differential between WTI and Brent has made people think that at that level the grades should trade at is preferably less than that, today Brent has eased a dollar and WTI is testing $100.My market spies are nervous about crude, they see front end selling of the butterfly and the spreads look awful leading them to be very nervous at the moment about the short term.

Nuclear

The much leaked (ooops!) nuclear power station story has been confirmed this morning by Secretary of State for Energy Ed Davey, the only thing that could make that title sound better would be the word former put in front of it….announcing it he said that “for the first time, a nuclear power station in this country will not have been built with money from the British taxpayer” after which he should have added, but it will be paid for by the British power consumer and lining the pockets of the French and Chinese who have been attracted by the terms on offer.

Just a shame domestic companies weren’t tempted by the offer, either way we need the nuclear part of the equation and it’s cheaper than most of the green alternatives………….I wonder, if one could strip out of the power bills the non-fossil fuel part and maybe the pass on of wholesale part that might make life easier and then if you said that the utilities margins were less than the food retailers they wouldn’t be quite such a furore………….?

Brazil

Today sees the start of the auction process that has seen very limited interest from overseas oil companies and a strike of Petrobras employees who don’t want the process to happen either. They may get their way as the Mining and Energy Minister Edison Lobao said that he didn’t know how many consortiums were going to participate ” but what’s important is that we have more than one” Attaboy minister no fooling you huh?

Trap Oil Group

– From DFT DY/JS

Trapoil has been informed that Noreco no longer intends to drill the Crazy Horse well, which was scheduled for 2014. The legal arrangements between Trapoil and Noreco are therefore being revised.

Noreco will now, on behalf of Trapoil, pay all costs for acquisition and processing of seismic on the Homer licence (estimated to be c£1.5m) and will provide Trapoil with a carry of 10% on the first well, replacing the previous 5% carry. In addition, Noreco will assign to Trapoil its entire 10% working interest in the Romeo licence and will extinguish the existing 3.125% carry it provided.

It is disappointing to see that Noreco will not be drilling the Crazy Horse well. However, our biggest concern for Trapoil is its ability to fund its ongoing exploration commitments. The company estimates that, following the expiry of the Crazy Horse licence, Trapoil’s outstanding commitments to third parties have now been reduced to c£3m which helps the company’s financial position in the short term. Crazy Horse was to be one of Trap’s key exploration wells and it is disappointing that there is uncertainty as to whether or not it will now be drilled. We expect a negative market response this morning.

Hydrodec Group

I have been watching this stock rise sharply lately, ahead of today’s announcement of a placing etc, the market seemed happy to fund the recent acquisitions at what is an amazing price given the recent movement. ( Note the 2 year chart below, it’s one of the strangest you will see, spooky how those rises happened so quickly…)

The operational update shows strong current trading and a ‘positive Group EBITDA run-rate for September’ and the raise of £20m going up to £24m, is to strengthen the balance sheet and provide expansion capital. There is also a payment down of debt through the issue of shares leaving the company debt free.

Before the deal the shares were very tightly held, possibly why the strange chart, it will be interesting to look at the list after the placing and further open offer.

One to watch, it’s on the radar as is the chart…..

Sefton Resources

Never has the world written so much about Sefton but today should complete the recent disastrous litigation as the company has agreed to make undisclosed settlements to the parties concerned. The only interesting thing that remains is what is going to happen to the company’s former Executive Chairman, who stepped down from the Board whilst the investigation was under way although he was immediately hired as a consultant…..

And finally…

Rugby and in particular the Heineken Cup, has lit up the last two sporting weekends with exciting fixtures and unlikely results. Funny how that happens when a cup is about to shut down as the big boys take their ball away…

In football there were few surprises, Gooners look pretty good but so did Tottenham yesterday afternoon, Andros back in the first team as if he had never been away ( at 9 clubs on loan that is). At Villa one of the linesmen was hit by a flare thrown from the crowd, not the first time this season although the last time Villa were also playing….

Champions day at Ascot was just that, a series of fantastic races but lots of outsiders so although the bookies made out like bandits, not all the time.

And as we always cover the World Series in baseball, if only as apart from the odd year it is almost exclusively played between American teams, this year will be even more exciting than usual. For the first time since 1999, the teams with the best records in the American and National leagues, the Boston Red Sox and the St Louis Cardinals will fight it out starting Wednesday.

Round up of the American football tomorrow, although I watched Cincinnati beat Detroit with only four seconds left on the clock.