Sachin Tendulkar

The little master’s final test

WTI $93.62 +58c ; Brent $107.91 +$2.00 ; B/WTI Diff – $14.29 +1.46 ; Natural Gas $3.57 -5c

Good morning

It’s time for Janet to appear in front of the Senate Banking Committee but her pre-prepared comments show that she feels that the Fed has ‘more to do to aid the economy’ proving her dovish nature.

Oil Price

So, the EIA are telling us that US crude production has exceeded imports for the first time since February 1995, 18 years ago! In the last five tears whilst domestic crude output has risen 50% to 7.7m b/d, imports have fallen 20% to 7.6m b/d.

Brent fell and then again buying from the east pushed it higher, reaching nearly $108 at one stage. Libyan supplies were hit again and with the Brent contract expiring the market saw a lot of roll activity.

WTI again struggled, look at that differential, now nearly $15 as the API stats showed a further stock build of 599/- barrels, market expecting 1m barrels build from the EIA stats tonight.

Ophir Energy

-From Daily Flow Test – Dougie Youngson

The company has farmed out a 20% interest in blocks 1, 3 and 4 in Tanzania to Pavilion Energy for a US$1.3bn consideration. Pavilion is a Singapore based LNG company which has taken the same approach as many Japanese LNG off takers by taking a stake in the upstream. The transaction is due to close in Q1 2014 and once complete Ophir will have a 20% interest in these blocks. The company currently has US$750m of cash.

This is very positive news for Ophir as the company has been taking about farming down assets for over a year. Ophir is now very well-funded for its future exploration programme and has now proven it can identify and complete a transaction. We expect the share price to strengthen today, target price 630p still.

Ophir Energy 1 Year Chart

Ophir Energy 1 Year Chart

Lamprell IMS

With trading updates left, right and centre there wasn’t very much for the company to add to recent results and contract awards. The order book is valued at $1.0bn and the bid pipeline is worth around $4.6bn which gives cause for optimism as I believe the company has a good conversion rate going forward. The backlog covers around 75% of 2014 earnings and around 15% for 2015 which is encouraging and I expect that to increase in due course.

The shares have not moved much today, indeed they have fallen slightly but probably due to previous guidance that 2014 will be down on 2013 was reiterated, the market is hoping for something to perk up that number for next year, I’m sure that it will not be disappointed.

Overall this was a solid trading statement which didn’t blow the doors off but it wasn’t expected to, the shares are consolidating and provided there is a steady trickle of contracts the shares are still too cheap.

Lamprell 1 Year chart

Lamprell 1 Year chart

Fastnet Oil & Gas

Probably more interesting for Morocco itself than Fastnet specifically, the fact that the company has secured a ‘preferred bidder’ for its Foum Assaka licence offshore the country. Plans for a farm-out to the unnamed potential partner are being processed and as usual past costs and a carry for Fastnet is expected, at present the new partner is unnamed, curiosity killed the cat………..

Fastnet Oil & Gas 1 Year chart

Fastnet Oil & Gas 1 Year chart

Andes Energia

Just doing a bit of work on this one as it sails across my South American radar screen with its interesting acreage particularly in Argentina. Today the company has announced a light oil discovery in the Mirador del Valle x-1 well on the El Manzano West block in the Neuquen basin, South Mendoza Province. The well provides 15 million barrels of conventional light oil, 6 million barrels net to Andes.

I am seeing the senior management shortly and have put this stock on the watch list as I am building up a better portfolio of E&P plays in South America.

Andes Energia 1 Year chart

Andes Energia 1 Year chart


The company has announced that the Cobalcescu South-1 exploration well offshore Romania is being plugged and abandoned having not found commercial quantities of hydrocarbons. As is usual in these cases the company says that it is ‘currently analysing the well data in conjunction with the high quality 3D seismic acquired in 2012 with a view to updating the regional geologic model to support planning for future activities on the block’. Usually this means that they are closing the file on this particular play.

Petroceltic International 1 Year chart

Petroceltic International 1 Year chart

Caza Oil & Gas

A significant increase in operational activity, mainly as a result of the Apollo facility giving added oomph to the drilling campaign. So, production goes up to 36,491 boe, up 66% vs same q 2012, revenue up 186% due to upped realisations and higher production. The move to liquids is now paying off handsomely (up 63% 1st 9m) and cash is $13.4m down from $13.4m in previous quarter.

Plenty more drilling to come as the Apollo facility funds the successful Bone Springs programme with 12 production wells and 2 water disposal wells.

The drilling programme is going well and success is as likely as almost anything in international exploration, the US is low risk, high reward and is showing that the move from gas to liquids was a brilliant management call.

So…………………..the share price was up 14% first thing and is now down 8%, one hell of a turn round. It is worth noting for managements here and in other companies thinking about SEDA’s, as well as shareholders, that if a company lends you money for shares they can rain on your parade by selling huge amounts of stock to lend back to you. Also, although companies think that it’s not wise to dilute by raising equity, they rarely take into account that the lenders can keep a lid on the share price by selling into any strength thus forcing companies back to borrow even more money. Maybe it would be better to raise equity at the ‘wrong’ price, pay off the loan and then at least the shares can find a genuine level at which to trade, following this great announcement Caza should be at 12p or much higher, not 8.5p.

Caza Oil & Gas 1 Year chart

Caza Oil & Gas 1 Year chart

Faroe Petroleum

Faroe has acquired the remaining 50% interest in the Lowlander oil discovery in the UK Central North Sea, giving the company a 100% interest in the undeveloped field. The intention is bring this to development together with the neighbouring Perth Field (FPM: 34.62%), as a joint project sharing the same production facilities. Both Perth and Lowland have been fully appraised and are estimate to contain Stock Tank Oil in Place of 270mmbbl, with 62mmbbls recoverable, of which 22mmbbl is attributable to Lowlander.

No value is given for this acquisition but this is a logical move as these developments help to de-risk the exploration side of the portfolio, where sentiment is changing after the recent Snilehorn discovery. We are also awaiting results from the Novus well (FPM: 30%). This has recently spudded and is targeting 50mmbbl net to Faroe with a 30% CoS. Good news today and we would expect a positive reaction to the share price.

Faroe Petroleum 1 Year chart

Faroe Petroleum 1 Year chart

And finally…

Dan Cole starts at tight head for England on Saturday but the long injury list means that our centres and wings are very average, let’s put this one down to experience, the scrum is good but the backs lack any talent except for Brown at 15.

Lance ‘drug cheat’ Armstrong continues to think that he can have his ban reduced and today new UCI President Brian Cookson has offered the drug cheat an olive branch suggesting his ban might be reduced to 8 years by USADA. The drug cheat can apparently offer them (USADA) ‘substantial assistance’ to look at whether they can offer him any reductions in the sanctions he’s currently got………………..

With only a day to go stand by for another bunch of withdrawals from the joke friendlies England are playing at Wembley tomorrow and next week, today its Gerrard and Walker.

The last warm-up for England’s cricketers is going well, Finn cleared up the tail and Cook, Trott and English Kev scored 50’s but Australia’s recent practice of not playing anyone any good in warm-up games doesn’t exactly test the guys.

And the Little Master goes into day two of his 200th and final test on 38no who would wish him anything other than a biggie…………….Funny that Prince Charles and DavCam are in India claiming to be heading to Sri Lanka for a Commonwealth Conference………………

And JP Morgan went on to Twitter to try and get some street cred with a Q&A session. They got this

Q; How many JP Morgan bankers does it take to change a light bulb?

A ; 1 to realise the light bulb had gone and then foreclose on the property.

One asked ” Did you have a specific number of people’s lives you needed to ruin before you considered your business model success?

And another ” How many puppies have you murdered today”

JP Morgan went on to say “Tomorrows Q&A is cancelled, bad idea, back to the drawing board”>