Repsol, Premier Oil and Alkane Energy

WTI $92.37 -1.31 ; Brent $112.36 +41c; B/WTI Diff – $19.99 +1.52 ; Natural Gas $3.91 +9c

Good morning

Happy Thanksgiving if that’s your bag, just seen the turkey being saved by the President although Harry Reid and a number of Republican Senators have tried to call for a vote on the turkeys future, Tea Party not sure what to do as they have been accused of being Turkeys voting for Thanksgiving……………………..

Oil Price

I have now had to underline and put in red the WTI/Brent differential which is now at $20, surely it can’t go any higher? Maybe I’m missing something really stupid but if not one of these prices is at the wrong level, probably Brent which is being held up mainly by the situation in Libya where armed militia are blockading the oilfields and keeping production to a minimum. One of the reasons for the dispute is that they are not being paid and they can’t be paid until the oil starts flowing, a catch 22 situation if ever there was one. If Libya came back there could be 250/- b/d up to 1m b/d which would more than fill the market.#

The Saudis are pumping flat to the boards and as internal demand dies down after the summer those grades are falling as well, stand by for exports of 9m b/d.

The WTI price has seen a fall as the combination of high domestic production, (8m b/d, highest since 1989) lower imports (exports exceed imports first time for over 20 years) and higher stockpiles. So to the inventory stats, if you are a Wall Street analyst look away now, the EIA stock data showed a crude build of nearly 3m barrels, the analysts’ consensus…………………………423,000, oops!

Repsol

I have avoided talking about Repsol lately until I thought we were close to a final deal, it appears that this is imminent. The idea that we ask for $10bn, they offer $5bn and provided it is in real money (ie greenbacks not pesos or moose pasture) then the time has come to take the money and run. In a way both sides win a bit, Repsol has got something out of it and it has been worth fighting for, they can put this behind them and carry on with the restructuring, for Argentina they get the monkey off their back of being uninvestable.

I have said before that I like the Repsol strategy, it is putting money down upstream and creating an enviable growth and reserve replacement regime, a veritable success story. Interestingly, although the market has tended to prefer companies that cut back capex and pay back money to shareholders the Repsol performance has been good, I expect it to continue to be so.

Premier Oil

No one saw that coming then………………………………….Premier announced this morning in a production update that guidance for 2013 remains unchanged. In Vietnam, the repairs to the Chim Sáo gas export pipeline have been completed and oil and gas production is returning to normal. In the UK, Huntingdon is back up to 20/- b/d and with restrictions being removed will to full rates in due course. This should mean that production will average 55-57/- b/d with end-year rate of 65/- b/d.

The chart on Premier doesn’t look at all clever, both the one and two year charts show the price breaking down through resistance levels but for once I am of the view that this is an opportunity and that this looks like a good place to be a trading buyer.

Alkane Energy

I detect a bit of a pick-up in the Alkane share price, this as you know is one of my favourite stocks. After the raise at 27p the shares have had a decent breather and this probably reflects the market as well as a little indigestion, right now it’s getting colder and buyers should be returning to the shares, I would expect the shares to hit 50p sooner rather than later.

And finally…

To the Champions League where it was a good night for the reds as Man U demolished Bayer Leverkusen 0-5 away from home with an electrifying display reminiscent of former glory nights. The noisy neighbours also won scoring 4 and should mean that all the English clubs reach the next round.

The future of Andre Villas-Boas is already in the balance which is totally ludicrous, we have all had a beating from the blues………………but he did make the fateful statement ‘my board have faith in me’…….All he has to do is beat Man U on Sunday…………..

In the cricket, Tim Bresnan had a very good warm-up game on return from injury and took four wickets, this is very good for England as although the other bowlers are out there Bresnan gives a good cover in a number of areas.

Why are the Aussies so good at batting in cricket?

It’s the only game they could master wearing handcuffs……………..

Tomorrow will be the last blog I do for VSA, I am moving to work in a new advisory vehicle, more tomorrow but the blog will continue on its own website, you shouldn’t notice the difference but if after a few days you aren’t getting it the website will be www.malcysblog.com