WTI $94.65 -1.73, Brent $105.63 -3.26, B/WTI Diff – $10.98 -1.65, Natural Gas $3.52 -6c
Good morning
After the hectic week of US majors reporting (Chevron finished up on Friday with predictably lower downstream margins but good production growth upstream) it will be quieter this week, key fixture is the Iran nuclear talks which resume in Geneva on Wednesday.
Oil Price
Things aren’t looking too clever for the oil price, WTI has no support until $92, after that it is $88, see chart. For Brent it’s on a knife-edge just now, on Friday it broke down through its resistance of $106.28 but this morning it’s trying to hold above it, if it doesn’t hold then $100 here we come……
Another downward force on the oil price is the Libyan situation which at present is pushing down as output creeps back up, the last number I saw was 400,000 b/d.
Also Opec exports are increasing, the October number was 30.621 b/d up moderately on September.
Anadarko
I’m seeing reports that Anadarko has put its China oil and gas assets up for sale, apparently it is retrenching back home like some others seen recently and hope to get around $1bn for its projects over there.
Amec
Amec has announced that it has acquired Automated Engineering Services of Naperville Illinois, a professional design engineering nuclear services company. AES has revenues of over $30m and Amec are paying $29m in cash for the business. I see this as an interesting but not game changing deal for Amec and doesn’t affect the picture overall. However I do feel that the share price is taking all potentially good news into account and accordingly I am ringing the bell to a certain extent even though we should hear news on the buyback any time now. This acquisition doesn’t make inroads into the cash pile and I would expect to hear that the company is to launch a £400-500m buy back sometime soon. Whilst this will create downside protection it means that the company has failed to find any acquisitions of any scale and is ‘buying’ EPS growth by buying back shares to cancel. Take a look at both charts, the one year is pretty positive, it is just about breaking through the high and seems pretty positive
whilst the 2 Year chart also shows it at a high but a fragile one, any failure to consolidate above current highs would leave the stock price looking very exposed……………
Weir Group
A disappointing IMS from Weir Group which has had a hard effect on the shares this morning, obviously again proving that the most shorted stock in the market place can go down as well as up. The chart is most interesting, having tried to break through the 2500p mark a few times, after today’s announcement the best holders can hope for is that it doesn’t break down through the twenty quid resistance level.
The conference call was quite positive but I read into the comments that 3Q was disappointing as the minerals markets remained subdued and the oil and gas sector was under pressure as the rig count didn’t improve. With the fourth quarter historically difficult to predict with regard to holidays starting with Thanksgiving the onus is on the management to prove that 2014 is going to be significantly better which I’m guessing it will be.
If that is the case then with the shares off 7.5% today I would expect a bounce, not least as those mystical shorters close their bear positions but if they don’t and the £20 resistance is broken then the downside could be substantial, at this point I don’t think that will happen and the market has just overdone the bearishness in the statement.
SOCO
– Going SOCO down in Congo Brazzaville……..
Being the mad fan of SOCO that I am, even I sometimes think that there is nothing more that Vietnam in the portfolio. Today the company has announced a farm-in and operatorship in Congo (Brazzaville) acquiring 60% of the Mer Profunde Sud permit, not including the Azurite field. The move is entirely sensible adding acreage in an area the company knows well and is already targeting and for a reasonable cost.
I remain very positive about SOCO and consider this to be a good quality if reasonably modest use of cash from the mountain!
President Energy
President moves on apace in Paraguay, toady announcing a contract with Schlumberger for the provision of project management and integrated drilling and completion services in the country. With a big seismic acquisition completed and more on the way there isn’t much more left to buy and if the early results are proved correct the last years CPR might be very conservative indeed.
Regular readers know that I have been going on about President for ages, to start with I really was ‘going’ into the wind as they say but now, well-funded and in a most exciting area, things are looking very positive and the political risk of Argentina has been mitigated. Please don’t think that the story is over, the one year chart is a bit scary but the two year one shows that the high then leaves lots of scope on the upside, this one has, as they say, legs……
Energy Policy
The good news is that we appear to have one although it has lain unnoticed for years. In his annual energy statement Secretary of State Davey announced a number of measures to restore confidence rather than have the policy described as ‘alphabet soup’ by the FT on Thursday. All sorts of things are now expected, annual reviews of competition, profits, prices and barriers to entry. Consultation on criminal sanctions for manipulating markets and forcing companies to making switching suppliers more easy.
In addition we should expect Gideon to announce in the autumn statement, usually held in winter just to confuse everybody, that the green subsidies will be taken out of the equation, as I keep saying, you can have green energy or cheap energy but not both.
Finally Ofgem won’t be left out, its job appears to be to force more transparency and to get more info from the companies about trading, hopefully to include a crackdown on the wholesale side of the equation.
All in all almost everything I asked for in the blog a few days ago, someone clearly is listening out there!!
And finally…
Firstly it’s good news from Ted Williams who many have been asking after, Ted is out of hospital and recovering at home, I’m not sure the racing channel can handle it!
Tennis comes to London with the ATP World finals at the 02 Arena and as its sponsored by a bank they probably already know the winner!!
Two gold medals for Laura Trott out of four for England in the cycling World Cup in Manchester……………………….
Lewis Hamilton is ‘mystified’ by the lack of competitiveness in his Mercedes but his team-mate Nico Rosberg managed third. The usual suspect won but until they all get to drive similar cars his comparisons to the worlds greats are highly premature………….
The football was good especially if you were at St James’s Park watching Newcastle beat Chelski, Jose not a happy teddy… Gooners wiped out the Stealers and the noisy neighbours ecstatic as they beat the canaries 7-0, Man Who easily beat Fulham but the tackle on Januzaj was pretty awful.
England’s women won the cricket in the West Indies with a 2-0 victory against the hosts in the one-day series
And England saw off the aussies at Twickenham on Saturday with a very strong performance by the scrum and back three, all we need now is to sort out the centres as it won’t all be as easy as playing Australia………………..
American football resume tomorrow I hope!!
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