Hunting, Kentz Corp and Gulf Keystone

WTI $95.08 +48c, Brent $105.95 +1.52, B/WTI Diff – $10.87 +93c, Natural Gas $3.57 +1c

Good morning

The on-off nature of the Iran nuclear talks took a turn for the better yesterday as the stalling point from the weekend was cleared up, Iran agreed to allow the United Nations to conduct additional inspections of their nuclear facilities, something that France had insisted upon. The IAEA now have the go-ahead to see much more of the infrastructure but on the negative side there are still sites off-limits to the IAEA that will need to be opened up.

Overall this is going to take time and concessions are going to have to be made, mainly from Iran but it is interesting to note that the US in particular are endeavouring to ensure that the process keeps going.

Oil Price

Brent rallied yesterday and took out the resistance at $105 but the news above has halted its steps to break through $106 this morning. The interesting information this week will obviously be the inventory figures but not just for crude oil, last week saw a big draw in gasoline and distillates stocks which has now been followed by a weakness in gasoline prices at the pumps. These figures will all be delayed as it was Veterans Day in the US yesterday and information is out late this week.

Hunting IMS

The Hunting IMS this morning has reported trading up year on year but a bit of a curates egg in terms of geographical performance. The shares have fallen first thing as the CEO reported that ” a number of the Group’s businesses continue to report mixed trading”. It seems that whilst North America was good both offshore and in shale activity onshore, Canada, which isn’t a huge part of the Hunting business ‘drifted away’ during the period although is expected to return.

The other areas to disappoint were the North Sea and Asia Pacific which itself had a cracking first half but saw a fall off due to stock draw in October. The North Sea is more puzzling, Hunting isn’t the only company to report stagnation in the province lately and we have first-hand evidence that for some, unexplained reason, the place is at a standstill. With the UK Government bending over backwards to create a favourable fiscal situation and Sir Ian Wood kicking some tail and suggesting a beefed up regulator I expect visibility to improve but at the moment the rig count is pretty dire.

Elsewhere, Hunting report favourable industry capex trends and a good medium term outlook in a number of areas specifically in premium connections, drilling tools and at Titan which is benefiting from ‘internationalisation’ of the Hunting Titan brand.

I’m expecting some of the top-end forecasts to come down this morning, there is little sign that Hunting can come with a late run and deliver a knock-out 4th quarter as occasionally it has done before so we may take 5% from our number for this year.

Having been near the peak for the year it is no surprise to see Hunting come off 5% this morning but any move to or below 800p should be treated as an opportunity ‘par excellence’ to buy the stock.

Kentz Corp

Not normally a company to hide their light under a bushel, Kentz has released -but only to the trade- the award of a five year contract in Kazakhstan for construction services for the support of the continued development of the Tengiz oilfield.

The reason for not announcing is that as a framework agreement it technically carries no value and accordingly the company might be accused of announcing anything that comes in, I personally consider that value or none, this is another string to their bow and they should be congratulated accordingly.

Kentz has continued to recover from AmecGate and I remain very positive for the longer term, don’t forget that if they don’t make an acquisition themselves I expect a distribution to shareholders………………..

Gulf Keystone Petroleum

Being short of time yesterday I didn’t write about the GKP announcement which I considered to be a pretty matter-of-fact, legally technical situation out of their control so when I saw market reports of discontent amongst shareholders and general whingeing my heart sank!

On the basis that it is hard to blame someone for events they have no control over, (ie promotion and increasingly difficult access to the judge) the new date for the handing down of full judgement has to be respected in terms of the move to the main market timing.

Although disappointing, the company has little or no choice with regard to this and whilst there is litigation risk it has surely been significantly reduced by the previous dismissal of the Excalibur claims.

Accordingly, I believe that recent falls in the price of Gulf Keystone have been significantly overdone and indeed the shorter-term holders have bailed out as the timescale stretches.

So for anyone who can appreciate the longer term opportunity and with the stock now offering change from 160p a share I feel that this is a great chance to make money, indeed the risk at the moment is probably not being in Gulf Keystone shares.

And finally…

Watched the tennis last night, fantastic stuff (on the TV unlike the Mick Pickups of this world!!) as Djokovic saw off Rafa in the World Tour Finals.

In the ‘you couldn’t make it up category’ the England under 21 team and the grown-ups have all moved out of the shiny new National football centre and are staying in hotels as a bug sweeps St Georges Park. Memo to the FA, it’s called Dettol and you can buy it at any shop……………………

It’s bad enough being a Hull City fan without your owner saying that he considers the word City to be “lousy” and “common” and in changing the name to the Hull Tigers says that ” a shorter club name will hopefully have a stronger, quicker marketing impact all over the world”. Was that ‘all over the world’???

Messi out until the new year with a hamstring injury………………

It looks like McClaren have, as tipped here, booted out Sergio Perez and have signed Kevin Magnussen to drive with Jensen Button next season.