WTI $92.72 +$1.06, Brent $107.25 +86c, Differential $14.53 -20c, NG $4.05 +5c
A small bounce on Friday after the Non Farm Payroll figure came out worse than expected giving some support to the oil market. However, the announcement that the Iran talks had been successful and that the International deal on sanctions lifting was due to start on January 20th has eased the market a bit today.
A downgrade in guidance from BH on Friday as the company warned that business in Iraq coupled with bad weather in the US and the North Sea had reduced earnings by a few cents. EPS guidance now 78-80 cents having previously seen consensus of 83c.
After a number of court victories lately BP came down to earth with a bump as the United States appeals court turned over their previous win whereby they thought that they had contained some of the alleged undeserved claimants. The $7.8bn has already gone up to $9.2bn and it may now have to be raised at the next set of results.
Amec- Foster Wheeler -Possibly the worst kept secret in the industry?
Amec has announced that it is going to buy Foster Wheeler after all for $3.3bn out of cash and debt 50/50. This deal has been mooted for a long time and one should be a touch suspicious why it has happened now. Apparently the companies were in talks last year whereby they agreed that the fit was perfect but FW didn’t like the Amec price put upon them. It seems that out of the blue the FW board suddenly thought that it was after all a generous price even though it was only at a modest premium, I wonder what made them reconsider such a low offer all of a sudden? According to Amec the deal will be ‘double digit earnings enhancing within a year of completion’ (i.e. summer 2015) which sound good and there are a lot of costs to take out of the combined businesses. Some costs will be incurred as the company are listing in the US which will involve quarterly reporting etc. with all the costs that involves.
There is also a small profit warning with this deal or ‘lowering of guidance’ as the company calls it, there wont be 100p of earnings this year due to £10m of negative currency effects not already in analysts forecasts. Amec say that there wont be disposals in this takeover but my guess is that it will be too tempting to do so if good bids are received for the less Amec like parts of FW. CEO Samir Brikho says that this is a perfect fit for Amec’s low risk business model but the FW profit record is patchy at best and other firms have looked it over and walked away which might explain why they reappeared with such enthusiasm recently. Remember although they work mainly on reimbursable contracts, around 30% of FW profits come from fixed price contracts, finally there is an asbestos liability which the CFO says has been addressed properly.
As is usual on these occasions the proof of the pudding will be in the eating, having carelessly lost a number of senior executives recently Amec will have quite a job on its hands and are taking no executive management on board in this process. Despite this on face value with such confident revenue and earnings forecasts the deal should be a success, watch this space.
The news that Andy Inglis was leaving Petrofac has come as little surprise, partly because his new position (Chairman and Chief Executive of Kosmos Energy) is right up his strasa and partly as he probably thinks that any further upwards movement at PFC is rather limited. It may also be because with a number of the IES structures in place there are other fun and games to be enjoyed elsewhere in the industry. The share price of Petrofac is up on the news which tells one a good deal, no man is bigger than the company, especially this one. I remain positive on PFC and expect a good recovery from here.
Soma Oil & Gas
I wrote about Soma a few months ago, partly as I saw a few companies entering the Horn of Africa and partly because it is a sizeable risk in political as well as exploration terms particularly offshore Somalia. The news that the company, founded by Basil Shiblaq and chaired by former tory leader Michael Howard has raised $50m is most interesting. The new large shareholder, Winter Sky, is apparently the vehicle of Alexander Djaparidze founder of Eurasia Drilling and he will appoint executives to the board, if I remember rightly currently run by a former BP senior director. Whatever it is noteworthy and most interesting to make such a raise in a difficult place to work.
The footy was quite predictable at the weekend although Man U and West Ham winning was an interesting across the board beating of the Welsh. Another 5 by the Hubcap Stealers notable and now the manager says they are in contention for the title, I wonder…
England’s women won the test match as part of their Ashes fight with the aussies, this puts them in a strong position to retain the series. In the men’s game there was another beating but when you spill four chances in the first hour you may as well go back to bed, or possibly, just possibly, get a bit more practice in?
This weekend in the NFL playoffs…
Last night saw the San Francisco 49ers win their eighth straight game to set up an NFC Title finale with the Seattle Seahawks. The 49ers beat the Panthers 23-10 in a feisty encounter with plenty of ‘handbags’…
Seattle go into that game having beaten the Saints 15-23. Marshawn Lynch carried 28 times for 140 yards and two touchdowns.
Last night also saw Peyton Manning lead the Denver Broncos to victory over the San Diego Chargers. The Broncos built an unassailable 17-0 lead by the 4th quarter.
They will face the New England Patriots in the AFC Title game. Tom Brady will come up against the man who broke his record for most passing yards in a NFL season. The 15th meeting between the two…
And even more finally, after the announcement of the Total deal, Dave C was seen earlier today in the Gainsborough Trough, but who was the guy with the black velvet jacket with him…?
You can see this mornings flash blog on the deal at the website www.malcysblog.com under archives.