WTI $92.59, Brent $106.39 -36c, Differential $13.80, NG $4.37 +9c
More of the same, traders report Brent ‘grinding lower’ with smaller rallies and bigger dips, $106 is still seen as the key support level. It looks like Iran is the word on everyone’s lips for two reasons, firstly the date of the 20th Jan for the start of sanctions reduction is being heavily supported by Barry at the White House so it will probably stick. The second and unsurprising matter is the fly in the ointment created by Russia who have allegedly tried to cut a 500/- b/d oil for food deal with Iran which would be outside the 1m b/d sanctions, clearly not doable as Russia are part of the G+5 but not a surprise that they are trying it on.
Bring on the statement of intent from Ben van Beurden I say as every analyst and journalist in the sector is now having their two pennyworth about what he might do. As far as I am concerned I am sticking to my view from several months ago, viz he will sell more (Nigeria, Woodside, US gas, smaller field positions in the North Sea and elsewhere) and have cut capex and have a realistic view on distribution going forward. Despite the shares being 3 quid off the bottom I am still very happy and feel that for differing reasons the majors have a fair bit to offer this year, for them the world has changed and at long last they have realised it.
Another story I am getting a bit tired of as the bulls and bears fight it out to decide which way the stock is going. Fair enough the bears have it at the moment and understandably, not only have the company had too many dusters lately but they add insult to injury by banging in an exploration write off of $405m for last year and $325m for previous years, do they think we were born yesterday? However I am at this stage of the view that if Tullow don’t deliver in Africa and Norway this year than somebody else will do it for them, honest. They need to deliver, at least, 200m boe this year and if its not too much trouble get TEN and jubilee sorted into the bargain.
Readers will know that I have been tedious in my support for Genel and begged investors to buy it at 650p when the company didn’t have a friend in the world. Now those jeremiahs are all clambering aboard with valuations of 22 and 23 quid a share and trying to claim all the glory, well it doesn’t fool me, you didn’t spot it then and you are bandstanding now. Although the story for 2014 is a bit different for Genel its attractions don’t go away and it remains firmly on my buy list for this year. Why, you ask? Well at least half of the upside is still there, Kurdistan production will rise indefatigably through this year in oil and gas as the recent Gas Sales Agreement shows, another thing we got early and right if my memory serves me correctly. Despite assorted and not owned up to disasters, such as fires and ‘pricing sensibilities’ (whatever next, at least GKP had the conjones to call it flat pricing) guidance isn’t a disaster and what with an exciting four well high impact programme in Africa the upside is still at least £10 a share.
The nugget still being monitored is the main market issue, it would be funny if they and GKP arrived at main marketsville at the same time but it will be an interesting race, one where there are only winners…
Briefly on Ithaca, another favourite, they have successfully achieved guidance of 13/- b/d for last year but I think that the market might have been expecting a bit more than 11-13/- b/d for this year, the GSA will come in right at the end of this year and hike up production to at least 16/- b/d so ’15 should be good. Happy to stay a big fan of Ithaca and look forward to a proper catch up with the company which may not be until results time.
Egdon Resources etc
After the Total deal on Monday I got a bit of a tease from some readers about my alleged ‘over optimism’ on possible share price movements, particularly for Egdon. To those bears I repeat, it doesn’t matter if this thing works or not, there will be times in the next few months that it will look like it will and accordingly the few quoted vehicles will go up, a lot. The translation of the value ascribed to this acreage by Total dwarfs the market caps and although my targets might appear high they are not and don’t forget, for these companies they have done the hard deals, as from now they are not forced sellers, they can be much more choosy on who they farm-out to and for how much..You were warned.
Three cheers for Kidderminster for winning against the Posh and getting through to the next round, pity they didn’t get a ‘glamour’ tie to reward them for it! (Sorry David, it was too easy!)
Finn gets sent home from Australia about two months too late, the King of Spain took one look at his bowling and said that it was bowling but not as we know it.
English Kev is in the T20 England World Cup squad which is most pleasing and no more that how it should be, can you imagine the tournament without him? And get a grip Mr Flower, less crying off to Nobby Downton just because he doesn’t always do as you ask him…
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