WTI $97.38 +19c, Brent $106.25 +47c, Diff $8.87 +28c, NG $5.03 -34c
We stay in the narrow band for both crudes, a bit of bad weather in the North Eastern US keeping WTI up and hauling down distillates stocks in last nights EIA stats by 2.4m barrels against a forecast of 1.1m. East coast distillate stocks are at a low not seen since April 2003 whilst crude built by 440/- barrels compared with analysts expectations of 2.3m, oh well try again next week guys.
Another article with a flashy headline about how much water fraccing uses on the front page of the FT today, at least right at the end it reminds readers that extracting coal uses 10x as much and making ethanol from corn 1000x as much. (And it doesn’t take food from babies mouths in the process.) Fraccing uses less than 1% of US water demand even in Texas and over there they use more water on golf course than down gas wells.
Its been a busy old morning for conference calls and webcasts, I listened to the Premier call for nearly two hours, thank goodness I wasn’t invited to the meeting…
The webcast was the usual guff from Premier and you only had to listen to it to know that it has rarely worth being a shareholder here recently. It also made you think that the two hours was effectively a bit of a waste of time as although it was good to hear how much Catcher and Sea Lion were going to cost, the current management team will hear from the new external CEO who is going to own those projects. I say that as both of them might be farmed down, I say might as Sea Lion is going to be diluted but at the meeting the company said that no formal process would be started for a while (so 1-2 years then) and Catcher isn’t for sale but they would ‘listen to offers’. $5.2bn is a big number and although no bigger than expected I would want that process under way.
Elsewhere the finances are apparently sound, good to hear that the company is ‘on the edge of investment grade’ according to the CFO and that production guidance remains at 58-63/- boe/d. At $105 the oil price is kind to Premier and the team are very confident up here and down to $85 which would also be comfortable although I’m not sure what the city would say at that level.
The shares have been awful for a while but have very recently traded up, todays news has made no difference, it remains a stock not to hold except for traders when the occasional fall makes a punt look appealing. Its going to depend a fair amount on the new CEO, obviously it must be an outsider and although there are plenty of talented people around I think the head-hunters may earn their fee on this one.
Another stock that has disappointed the market enough times since the peak in 2011, it seems like a distant memory and at the moment there are few signs of a decent rally. Todays update confirmed the disappointment on production as last years 6,059 boe/d is to be followed by 4-6/- this year. Of the two recent wells Snilehorn looks a good find but Novus is uncommercial unless they find something nearby. The exploration programme has some appeal with four high impact wells upcoming with two on Butch one on Pil and one on Solberg and the company have acquired or received extensions to other acreage. All in all quite an important few months coming up, I shall be watching from the sides to start with.
Regulars will know that I have followed President with some interest for a long time and it is also one of my strongest buy recommendations at the moment. Accordingly I won’t go on about the assets save to say that the portfolio is most exciting. Today they are in the process of a pretty decent raise which could be over $50m, very much needed to ensure that they are not cash constrained in their exploration in the new province in Paraguay. I know that this will be considered to be an opportunistic raise but I think that may be a tad cynical in this case, I make it an opportunity for the company yes but also a way to expand the shareholder list and let the more entrepreneurial institutions get in. The stock price is down sharply as I speak but this is only a chance to forget that you didn’t buy at 15p last year and to climb aboard for a run that will go well into three figures, assuming he is still aboard I look forward to the company visit with Broughy!!
Be very careful of what you wish for is the phrase I hear as it looks like the largest Tangiers holders, advised by D J Carmichael have been responsible for removing the Chairman and one other executive director. According to the Daily Telegraph they have done so in order not to dilute themselves ahead of the upcoming Tarfaya well offshore Morocco, this may well come back to haunt them… I had been a big fan of the deal and the management for the combined vehicle but clearly it was not risky enough!
ECBGate rolls on as it transpires that there was no fight between KP and the manager on tour, indeed it looks like Prior called a meeting to try and set things straight, unlike his bat you may say. In an attempt to discredit the highest scorer on the tour and with 8/- test runs a few punters have thrown mud where they think it might stick and regrettably the ECB have fallen for it. I am reminded by an old friend, Gilbert Ellacombe, (very large fromage at Equity Development) , that he and I were at Lords when English Kev was on debut. On that day he received, as has remained the case through most of his career, very little support from his colleagues and in a low scoring defeat, scored a fifty in both innings. Gilbert is very true in saying that 2005 was a memorable summer with fine players on both sides and a generally high level of sportsmanship. (Not wholly displayed by the Aussies last winter.)
What on earth is going on at Leeds United? Apparently before sacking and reinstating their coach over the weekend they managed to borrow £1.5m from Mr Cellino but may now have to pay it back unless the powers that be (exceptionally talented as all administrators are…) accept that he is a fit and proper person…
No blog tomorrow as I will be heading for Edinburgh to attend the Scottish Oil Clubs Dinner which is always a marvellous affair and just full of great oil industry executives to chat to. If you are going to the dinner I look forward to seeing you. After that Murrayfield beckons and that is always a nervy error strewn game which doesn’t often go the way of the form book.