Shell, BP, Kentz, Northern Petroleum, and Altima Resources

WTI $102.20 -67c ; Brent $109.27 -12c; B/WTI Diff – $7.07 +52c; Natural Gas $3.55 -4c

Good morning

As the US Government shuts down a number of key agencies shut their doors and lay off their staff. In oil its mainly things like onshore permitting and LNG export permits which will not be handled, elsewhere there will be no traffic wardens to ticket the automobiles!

The best possible result of this is that the Capitol Hill’s Twitter feed is to shut down.

The EIA have said that they can run until about the 11th October so we will get inventory stats at least this week and next.

Oil Price – Iran’s ‘new era’

Having made it our big call for this year the ongoing rapport between Iran and the west is proving most pleasing. It has been announced that further talks will be held between the group of six and the Iranian delegation on the 15th/16th October to discuss their nuclear programme, remember where you heard it first.

It is interesting that although the oil price is drifting, it could be a lot worse, or better, depending on your view. We have so far taken out a couple of support levels but the chart below shows that there are more to come. In the physical market supply is ample, Libya has picked up, Iraq has started to complete its maintenance and of course Saudi is pumping flat to the boards, even Nigeria has upped its production a bit so September production from OPEC is thought to be in excess of 31m b/d.

It would be wrong to try and guess at what Iran would produce if they lifted sanctions tomorrow, an initial target may be 2m b/d and a longer term wish of twice that would require investment at a level way beyond Iran’s ability, at least at present. Also it should be remembered that Iran has a substantial stockpile built up, rumoured to be around 100m barrels waiting to come to market. Accordingly its anyone’s guess as to what the price would do, perceived wisdom appears to be a correction of about $20 a barrel…………..

Shell

Shell has said that following a strategic review of its US shale portfolio it intends to sell its Eagle Ford shale field in Texas, 600,000 acres of the Mississippi Lime formation in Kansas and a shale oil research project in Colorado. Reasons given were that the properties ‘do not meet our global targets for materiality and scale’ but do offer ‘ a valuable growth opportunity for another operator’.

I copy below the Shell chart, to me it is most interesting, if you are a specialist you can tell me but this chart looks a bit suspect with falling highs and lows, a fall through the green line would be potentially quite dangerous although there is longer term support at 2038p.

BP

It is not my intention to write about BP every day of the trial, if there are specific bits that are worthwhile then maybe but not all the time. Yesterday was all about how unprepared BP were, coupled with bad decisions made after the explosion meant that the spill lasted months longer than it need have done.

Kentz

Kentz has won an Instrumentation and Electrical Support Services contract for a Canadian SAGD operation with Bantrel Co. The value of the contract is not given, but it is significant as it marks the company’s first contract with Bantrel, part of the Bechtel Group. The fact that Kentz are still winning contracts in Canada is not to be dismissed, with over $200m gained in the country this year they are showing that there is demand in an area other peers think is slowing down.

Northern Petroleum

Northern has announced the sale of its Netherlands subsidiary to Vermilion Oil & Gas for C$27.5m in cash plus a net profit interest in the Papekop Production Licence and any future production from unconventional reservoirs. The sale of the Netherlands subsidiary has been on for a while, the company has decided that the high level of capital needed to get production to more material levels and have thus sold. It is not appropriate to try and judge whether this is a fair price for the assets, if Northern had not sold them then the seismic work in Italy and the investment in Canada would not be able to go ahead.

After last week’s figures I said that the next few weeks were crucial and so it will prove. The sale has been made and a new Chairman appointed, now is the time for the board to step up and deliver from Italy and Canada, their chosen areas to rebuild NOP, all yours chaps, were all watching……

Altima Resources

– From Daily Flow Test – DY/JS

The company has stated construction of a new 3.78km pipeline to connect the COPOL HZ 14-15-41-11 W5M well to the ConocoPhillips compressor facilities. Via a participation agreement with Acumen Energy Partners and Altima, Acumen will acquire a 5% working interest in Altima’s 30% working interest in this well. The pipeline is expected to be completed in October.

Altima continues to make good operational progress across its development portfolio and once this latest well is brought on-stream the revenue profile will continue to increase. The company is now looking to survey and licence two additional offset wells which could be tied into production via already constructed infrastructure. Another positive update from the company and we have good visibility on how short term production will ramp up.

And finally…

Very best of luck to David Gray, a former colleague who starts as Chairman of Ofgem today, good week to start David…!

Read yesterday that Clough had been sacked at Derby and Man United had been beaten by West Brom, thought I had woken up in the seventies…

And that David Moyes has spent the last ten years trying to get Everton above Man United in the table, he’s just done it in less than ten weeks………….

Celtic take on Barcelona tonight at Celtic Park, without Messi they are definitely weaker but they are no Greenock Morton………………

Arsenal take on Napoli and Chelski go to Steaua Bucharest as well, the chosen one was the angry one yesterday wasn’t he?

The wally with the brolly is named Derby manager, yet again how do these guys do it……….?