WTI $102.82 +62c, Brent $110.64 +79c, Diff $7.82 +17c, NG $5.45 -69c
Still desperately quiet with few influences at the moment, its even warming up in the US so demand for distillates is coming back a bit. Expect the advent of March at the weekend to cue announcements of refinery maintenance after the cold winter but due to the cold snaps I suspect that will be held up for a week or two compared to normal.
Looking at the retail price of gasoline the chart is beginning to show a modest pick up, this week it was $3.44 a gallon, up 6.4 cents on the week but still 34 cents off the level this time last year. Its too early to suggest a pick up in demand leading the price and the wrong time of year but its definitely a lead indicator to be followed.
Chesapeake Energy Corp
It’s a while since I talked about CHK but a couple of interesting items have just appeared on the radar screen. Firstly the company has made it clear that intends to sell-off or divest to shareholders its oilfield services unit as part of the shake-up the new management is implementing. The business is meaningful, revenues of $2.2bn and with drilling, fraccing (9 fleets) and rig operations, (including 115 rigs) it is deemed to be more valuable as an external vehicle.
Secondly, the rise in the natural gas price appears to have refocused the management’s eyes on the giant 2008 discovery made in the Haynesville, it is certainly mobilising more rigs in the area, all they need now is the gas price to hold the higher levels…
More good news from Wood Group this morning although the market has shrugged it off as though it was a given! WG PSN has won a five year contract from Talisman Sinopec, with two two year extensions worth $500m, for engineering and modification services for 11 UK offshore assets. This is the first major contract in the North Sea this year for Wood and adds to a series of good orders announced in recent months.
Mediterranean Oil and Gas
This is always a difficult bit to write as although I have huge respect for Bill and his team, there is no doubt that life is particularly tough and 2013 was a night Mare as it were. I wont go on about my views regarding investing in Italy as it gets boring but the delays, reserve downgrades and general disappointments never seem to end. For MOG last year it was Guendalina and Ombrina Mare that caused grief with technical problems and production shortfalls. They did a good deal with Genel in Malta and the cash and carry will keep them afloat and with the prospect of a well this year some upside. They will also drill one onshore Italian well this year which they rate highly and as I said they have cash on the balance sheet.
Although I know Bill Higgs quite well, I am very much looking forward to sitting down with him for a proper update and to hear his plans which I know, after such a disappointing year, are interesting. After that I will revisit the recommendation which for the moment remains pretty cautious.
Not an order this time but an eighth member of the Joint Industry project to develop and commercialise a newer, safer subsea wellhead using POS-GRIP technology. Senergy has joined Total, Maersk, Shell, Wintershall, Tullow and Eni in the group which if successful would indeed be a company maker for Plexus. The shares keep shying off 300p but I remain a massive long term fan and have no doubt that an investment, despite the dizzy rating, will be rewarding.
Nothing much to go on but the company’s shares are in a trading halt standing by for a major announcement. Word on the street is that this is a big deal in PNG but who knows, if you want to look at a great deal in PNG go look at New Guinea Energy…
A bit quiet today after a mad weekend but the news of Billy Vunipola’s injury is a bitter disappointment although those who saw it may feel it did look terrible.
A couple of FA Cup replays last night where romance certainly died, Hull overcame plucky Brighton and even the possibility of a steel city derby was ruined by Charlton who beat Wednesday.
And sad to see the England Under 19 cricket team getting knocked out in the semi-final of the 50 over World Cup, not enough runs on the board but eventually they made quite a game of it.