Scotland, IGas Energy and Dart Energy

WTI $94.17 -67c; Brent $111.85 +38c; B/WTI Diff – $17.68 + 3.05 ; Natural Gas $3.79 +3c

Good morning

The most interesting follow up to the Geneva accord to me is the backing of former President Rafsanjani who in a ‘rare interview’ (they always are with ex-presidents) with the FT has backed the deal and hopes that a full nuclear deal could be achieved ‘within a year’.

Oil Price

So the prices you see above are pretty much the same as Fridays close, take Brent for example, the Asian markets marked it down about $2.50 first thing and from then on only saw buyers, albeit modest in size. After that there was short closing that pushed the price back up to previous levels but although Iran is restricted to 1m b/d, the countries already importing their crude will have less scrutiny from now on.

For most commentators, including myself, I think that the process will ease in over the next few months and whilst a million barrels a day isn’t going to change the equation much it is another item to add to the supply side and may grow as trust in the deal increases. Indeed longer term there may be another 1- 1.5m up the tube waiting to hit the market plus stored crude. In the ‘Insight’ column of the FT today, the author feels that the outlook for the oil price is very ‘worrying’ on the upside but I think he has made the fatal mistake of believing the IEA numbers and never assured to come out right!

All in all in the absence of another geopolitical rumpus I think the market is quite well supplied for the foreseeable future.

Scotland

Scottish First Minister Alex Salmond has announced that he would set up an oil wealth fund and take control of 90% of all the current assets in the UK North Sea if Scotland becomes an independent nation.

IGas Energy

Interims today from IGas which have no bearing whatsoever on the story for the company at the moment but day-to-day production of mainly oil, goes on and they have many initiatives in place to deliver increments and further potential from existing assets.

With regards to this the acquisition of Caithness Oil from Premier should be mentioned, it has significant potential to increase production, in addition it will hopefully successfully develop the mini LNG plant to monetise the associated gas. The deal is fiscally attractive as well and more than washes its face from day one. Of course the excitement for IGas is the shale gas acreage and having seen two farm-ins from Centrica and GDF Suez this year at attractive valuations in adjacent acreage expectations are high.

The Barton exploration well is underway and after completion next month will then see core and log analysis which I expect to take 3-6 months before prognosis.

It is clear that the most exciting time in the company’s history is about to start. The move by the Treasury in the last autumn statement, still less than a year ago, to permit fraccing, has brought forward the great move into unconventional plays particularly in the Bowland shale where IGas have spectacular acreage.

As they and their competitors start the process of drilling out these prospects the next 18 months will almost certainly prove or disprove the commerciality. The valuation is therefore difficult but made easier by the deals announced by Centrica and GDF Suez and on that see-through basis I remain with a target price of 250p.

Dart Energy

Dart has announced that shareholders have approved changes to the company’s board. Along with the announcement, the new directors are currently undertaking a detailed review of the company in consultation with the executive team.

The GDF deal announced recently is clearly a ground-breaking deal and gives them a blue chip partner in the UK, the company’s most exciting prospects. Combine that with the recent raise and rights issue, leaves the company very well placed to explore its CBM and shale acreage over here.

And finally…

Back to the cricket and I see that the City of Brisbane has banned yoghurt, they discovered it contained culture…..

And another piece of good news is that Billy Bowden has been reinstated to the Elite Panel of umpires having been dropped in June…

Back to the Champions League where Chelsea are at Basel, Arsenal host Marseille and Celtic host Milan.