WTI $100.06 +18c, Brent $108.63 -94c, Diff $8.57 -$1.12, NG $4.58 -20c
The differential has narrowed to below $9 as WTI has continued to be boosted by increased demand in the cold weather. When the natural gas prices went through $5 electricity generators were quick to switch to oil and now the reversal can be clearly seen. NG is back to $4.58, 80 cents off the high of only last week.
API stats tonight and the EIA numbers tomorrow are expected to show further inventory falls in distillates but a rise in crude oil. News that the Indonesian Government has given a mass of incentives for a 300,000 b/d new oil refinery will hardly please local companies in an already difficult market.
I speculated only a few days ago that Mark Abbott at Egdon should and would take the opportunity to raise some money after the price rise following the Total deal. Confirmation today that he has done just that with a placing of 12 million shares at 25p to raise £3m. This is eminently sensible and following some very smart farm-outs sets Egdon up as a genuine candidate to be just outside the top three in the UK shale play, stick with it.
Malcy’s current faves
As I mentioned yesterday a few people have been asking for a run-down of my favourite stocks. I have put together a list which isn’t totally exclusive, some stocks drift in and out of being cheap or expensive at any one time and the reasons for holding them and the degree of beta is different in each stock. However they all display qualities I like and in some cases will depend on a drilling campaign or a play to be proved up. As always it isn’t an exclusive list, just stocks that have been favourites or recently added.
In South America I have been a fan of President Energy for a while and after last weeks financing is sound enough to play in Paraguay. I also like Andes Energia particularly for its exposure to the Vaca Muerta unconventional play as well as plenty of other attractions on the continent. Apart from its recent duster I still think that Trinity E&P looks good in Trinidad as well.
I am still of the view that Kurdistan will work and the early de-riskers will benefit but this has needed patience, Gulf Keystone will I’m sure repay investors faith and at this level is discounting everyone going home, target here a lot higher, by a factor. Genel was one of my shares of last year and rose 40%+, the recent wobble gives people a long awaited second chance, both these stocks should benefit from moving to the big board this year.
In the UK I am happy to stay keen on the few players you can invest in for the shale gas play, so IGas and Egdon in London and Dart although currently quoted in Australia only, would be a good addition if they go for a dual listing. One other stock I am wild about is Alkane Energy, a coal mine methane play taking advantage of the strong demand from the grid, Alkane has no value in the price for its interesting shale portfolio which I expect to see more of this year. Offshore I continue to rate Tom Cross and he also has raised recently so Parkmead stays on the list along with long time favourite Ithaca and new boy to the market Hurricane.
In Africa I stay with Afren who remain very positive about Nigeria and think that Ophir is too cheap and will do an asset deal this year. Morocco will be hot this year and not just on the beach, look to play through Fastnet who also have exposure offshore Ireland and the farm-out before Christmas was better than the market thought. Kenya will be important especially to Tullow which is for the first time for a long time looking cheap!
Elsewhere I remain totally happy with my addiction to SOCO and think it will go from strength to strength. In the US my feeling that Caza is sitting on something big grows although the shares have remained far too cheap, maybe some corporate action here might stir things up a bit. For most of last year I waited for Providence and Lansdowne to get the farm-out done and the delay is starting to look ignominious, both these stocks are very cheap and I will run them but if it looks like bad news will be a cut.
Finally a number of stocks need deals like the above to seal some value, Sound Oil in Italy look very undervalued but if it makes one or maybe two good deals it might be a big result, watch very carefully. I am also waiting for something from Mediterranean Oil and Gas.
I have many other stocks that I like, these are just a few and some need special situations, for example Cairn has been taken down recently by the Cairn India investigation/scandal but if there is no wrongdoing you are buying this stock too cheaply, I would dip my toe in.
Excellent news that English Kev has signed up again to play for Surrey this summer and his many fans will be able to see him score a lot of runs in the county, one day and T20 formats. Don’t expect to see the hierarchy of the ECB down at The Oval but a game against Middlesex at Lords will be interesting…
The chosen one was rightfully flabbergasted about the FA letting Toure off after his indiscretions at the weekend, one rule for us etc… And the Hammers have sold Upton Park for use as a housing and retail development. Very sad but inevitable news so ‘come on you irons’!!
Off to do TipTV which I mentioned recently, this is an internet ‘footsie to footy’ sport and shares channel which might be quite interesting, good luck to the team and I will be doing a few slots for them as they start up.