WTI $100.37 +43c, Brent $108.79 +11c, Diff $8.42 -32c, NG $4.82 n/c

Oil price

Oil prices remain reasonably strong without knocking the lights out, the Brent March contract expires tonight with the April contract slightly weaker at $108.07. There were two major influences yesterday, China and the inventory stats which yet again perplexed the market. China first where the January import stats showed a record figure of 6.65m b/d for a number of reasons such as new credit lines, 2 new refineries on-stream and stocking up ahead of the New Year and also into strategic reserves. The EIA data was a bit strange with overall stocks up 3.3m barrels but crude held at Cushing was down 2.67m barrels as the TransCanada pipeline  kicked in, I think that to a large extent at this stage it is only moving the problem from one place to another, sort of robbing Peter to pay Paul. At the moment I think that crude will remain range bound in the absence of any known unknowns if I can quote the Vice President.

Amec

A big day at Amec as they announce results, the Foster Wheeler acquisition and a contract renewal. The results were very much in line with expectations as they predictably showed revenue down 3%, pre-tax profit up 2% but EPS up 11% and a 15% hike in the divvi. With the share buy back accounting for the good bits in that line the confident pay-out was possible. Part of that confidence was enabled by the 13% increase in the order book to £4.1bn which is without doubt impressive. On the revenue side,  the oil and gas  business delivering a 4% increase managed to offset a 28% fall in the mining business and Australia was a total nightmare as was oil sands. The absence of a buy back this year will make the Foster Wheeler deal very important, if it can enhance earnings more than buying the shares all well and good, the jury is most definitely out. I watched the performance in the analysts presentation most carefully and as ever, if not more than ever, Samir was ebullient, confident and assured that the deal was a peach, if so and without trying to imagine unnecessary hurdles then it will create the conditions for Amec to get to the next base. I think the market which has today taken all the news very well and given the team the benefit of the doubt will think that Amec have got a bargain which may well be the case but I wouldn’t chase the shares too high until the can has been fully opened.

Petrofac

Interestingly, I nearly wrote about the contract announced yesterday in the blog on Tuesday as I had heard through the grapevine that they had won a ‘big one’. I was out yesterday so apologies for no blog but I am putting one or two comments on yesterdays news. The contract for PFC was good, the British/US/Japanese consortium have won a $12bn order from KNPC to boost capacity at the Mina Abdulla refinery and to enhance the environmentally nature of it. Petrofac’s share is worth $3.8bn  and is of five years duration, another excellent piece of work and I remain positive on the shares.

Tullow Oil

Sometimes you can never get a stock right on any level and it is true to say that having had a long winning run in Tullow I am now looking at persistent failure to call the bottom in the shares. I can remember quite clearly when I thought they were good value as it was exactly a year ago when I had a long chat with Paul McDade who assured me that the change of strategy for the company was going to work. Now I still believe that is the case but at 770p, having halved in two years and down from 1220p a year ago my credibility is somewhat shot and one has to re-assess the situation. Coming at the recommendation from a standing start I still believe that I can get to a valuation of around £10 a share before any exploration upside so with the bullishness about Kenya and elsewhere it should be comfortable but it fills me with dread at the moment!

Ithaca 

I mention Ithaca for two reasons, one as it is one of my big long-term favourites and two as I have followed the Handcross well for what seems like an eternity. At 138p this stock is a massive pool of value and must be one of the strongest long term value plays in the sector, admittedly sometimes a bit bland but the new management have had a tough act to follow and I’m sure it will go well for them. I remember talking to Valiant about Handcross some years ago, I’m not trying to be clever but I said at the time that having such a large chunk of a long shot well seemed overly brave, taking on a rig to drill it going solo took the bet from brave to foolhardy in my view. When Ithaca took over  Valiant the smart thing was to, as quickly as possible, decrease the Handcross risk in the event of failure, this they did and got a full carry on the well. Yesterday it came in as a duster and the saga finally ends, my mistrust of Valiant has been confirmed and Ithaca got both sides of the deal, they bought all the good bits of valiant on the cheap and diluted out the dry hole, it doesn’t get much better than that…

Plexus Holdings 

Whilst on the subject of favourite stocks I am going to have another go at getting you to buy a few of these, helped by another order yesterday, this time a first timer for Maersk in the Danish North Sea. Just like a metronome, the orders come through to Plexus with almost monotonous regularity and build the order book and I’m sure that there is more to come. I always say that this is a service company that you cant judge on traditional valuation metrics otherwise you would never have bought a share but those who have taken the plunge have made out like bandits. Long term readers will know that I am a big chart watcher and you will share my sadness that so far, this new website is unable to put charts into the format, I am determined to make it work one way or another but in the meantime go find a chart, it will show that the price is knocking on the 294p all time high and should it go through that, then the world is, as they say, your lobster…

San Leon Energy

Tricky one this with all sorts of different pressures being exerted on it from all angles, it certainly stirs up strong views one way or another. I have to say that at the moment I am giving it the benefit of the doubt but the doubters of Poland think I am mad. Yesterdays deal with Baker Hughes seems eminently sensible and makes the development of the Siekierki gas field more likely with the money and the expertise from BH a significant aid. The fund raising from a while ago under the auspices of the Niche takeover has given them strength and a good breathing space and apparently Turkey should be cash positive this quarter. I have only one gripe which worries me when I think about the company’s costs, the market cap is only just over £100m yet they have 5 brokers and 3 relations (2 public, 1 investor) companies retained which is ludicrous and something I thought Oisin would be embarrassed to have at the bottom of every press release.

Petroceltic

Petroceltic has had a good run and it too is definitely on the favourites list even though last time I looked it too had a long list of expensive advisors! The company has announced that it has completed the long delayed farm-out of the Isarene PSC to Sonatrach. Good news indeed but the sex and violence in PCI for the next few months will all be around the two wells that they are drilling in Kurdistan, these will be most interesting indeed.

New Guinea Energy 

They used to say that ‘there’s value in them there hills’ and no more than in this little nugget where CEO Grant Worner has announced the sale of a single licence for more than twice the market cap of the whole company. With the $20m convertible now covered, gas assets monetised in an  area notorious for delays, upside intact and $10-15m cash in the bin the share price hasn’t moved much which looks funny to me…

And finally…

The Gooners seemed to have had the stuffing knocked out of them by the HubCap Stealers last weekend as they were listless against Man Who last night, contrarily the Stealers managed  a last minute pen to beat the Fulham Thrillers and push them more into the mire. Spurs had a good win at whatever St James’s park is called now and the night before, the best result was the happy Hammers getting another win putting them into the top half of the table, how quickly things change.

John Terry has been told that he will not be in the England squad for Brazil then, although management selections are sometimes difficult to read, taking him would have been particularly odd, shame, he will have to buy his own tickets now.

Nice to see that other do appreciate English Kev as he is signed up for a huge fee for the IPL, no sign of any worries from his captain in that tournament. Away from that I see that Simon Hughes has been appointed a selector for England, no sign of the Middlesex mafia cooing up to each other then…

And Gideon and Ed  have agreed to make it perfectly clear that there is no chance that should Scotland decide to go it alone that they cant use our pounds in the process, back to the drawing board Alex, you cant have your cake and eat it.