image004WTI $98.91 -41c, Brent $111.56 -21c, Differential $12.65 +20c, NG $4.46 +4c

Oil price

We arrive at Christmas with the oil price remarkably stable, although the year has, like most years provided big ups and downs. When I look at the years averages early next year I will have a better idea but the year end stats are very interesting, particularly for Brent. To give you an idea, in 2011 Brent averaged $111.26, in 2012 it was $111.67 and today it is $111.56 and I would hazard a guess that the average wont be much different. For WTI, 2011 averaged $94.88, 2012 was $94.05 and today it stands at $98.91 having had the handicap of a glut of crude at Cushing which is already easing the price differential with Brent and helping refiners except of course those in the Mid-West.

Today’s prices are helped for Brent by an accumulation of issues as already well documented but Nigeria, Libya and now South Sudan are probably holding around 1.5m barrels a day off the market.

Tullow Oil

Tullow will be going home for Christmas praying that 2014 will be better than 2013, on Christmas Eve last year Tullow’s share price stood at 1255p, today it is 839p, full of promise and to me value, but Africa, particularly Kenya and Spring have to live up to expectations.

Today the shares are down again as the Mantra wildcat well 31/3-4 offshore Norway has delivered reservoir quality sands but water wet, after logging the well will be plugged and abandoned.

Northern Petroleum

It has been a ‘funny old year’ for Northern as well and the new management are coming to terms with the hand that has been dealt to them. No more so than in todays announcement regarding the size and classification of their reserves in the Adriatic. The report from ERCE has not only downgraded the reserves from 2P to 2C but has only allowed 30.2m barrels whereas Northern have 53.3m barrels of 2P in the book. The company say that it ‘will allow new management to build value through a credible appraisal and development programme’ but here again they have had the ground rather removed from below their feet – again. In addition, not wanting the company to enjoy Christmas any more, the Italian Environment Minister has requested further information from the ministry technical committee before allowing 3D seismic programmes to begin although this does not relate to Northern alone.

The shares which were at 55p last Christmas Eve are now 30p, down nearly 10% today and over 50% on the year. The management with whom I have much sympathy and not a little confidence have a plan,  from here they have every chance in their own words to ‘build value’. Regulars will know of my significant concerns about investing shareholders money in Italy, this has been proved today and time and time again and doesn’t look like changing much as I look into the future, diversify out of the country or the market may not forgive you.

And finally…

Last night saw a bore draw between the Gooners and Chelski, very similar to the way the Man U vs Chelski fixture played out, the chosen one is slowly revealing his hand…

Lots of footy over the Christmas period and I hope you enjoy it, also lots of American football which I hope to comment on as well as the Christmas meeting at Kempton and of course the 4th Ashes test at the MCG.

That just leaves me to wish you all a very Happy Christmas and I hope that you have a relaxing and wonderful time over the festive period.

Malcy