WTI $99.88 +$2.04, Brent $109.57 +$2.38, Diff $9.69, NG $4.78 -16c
The oil price took off on Friday for no particular reason and this morning a bit of vertigo has set in and profit takers have worked their magic and taken some money off the table. Traders tell me that the market was getting a bit short with one national player taking out a few long positions leaving the market exposed to a bit of covering. Fridays jobs data certainly didn’t provide much help, the NFP was disappointing which I suppose might mean that policy will remain loose but the unemployment rate, like here, is falling. The interesting thing is product demand, although the data is shrouded by the extreme weather conditions, the call on products is exceptionally high and should be watched. So both WTI and Brent bounced off the support and particularly in the former are looking at resistance at the higher level. For WTI this is $100.50 so quite close, for Brent its nearer $112.56 so a bit of headroom, again, watch this space.
Regular readers will know that I am a big fan of Statoil and looked carefully at the figures and the consequent share price rise, jealous CEO’s around the sector as well. The figures weren’t quite up to expectations but to me the company is delivering on an operational level and is up there with Chevron on a reserves replacement basis. Like all the rest of the club they are cutting capex as they concentrate on capital efficiency but with so much to work on and I’m sure most of those CEO’s are envious of their position. This is a super major with the wind behind it and the chart should be carefully observed.
Someone at Premier or Rockhopper has really upset Danny Fortson at the Sunday Times if his recent spiels are anything to go by. Admittedly its an easy bandwagon to hitch up to and creates many opportunities for adverse copy, but the question is, does he make any points in his articles suggesting that Sea Lion will not go ahead that have any credibility. True, Simon Lockett set the cat amongst the proverbials last week but I’m not sure whether that the timing was his call, the writing was on the wall from a little while back.
I am waiting for a chat with Sam Moody at Rockhopper to determine the situation so I will comment more later but I would be surprised if the development didn’t happen, ok, because its the Falklands you have fewer potential partners especially at a time of huge capital discipline restraints but a billion barrels is still a billion barrels…
My recent excitement about South America continues, you will know how much I like President and have been a strong supporter of Andes since I first met them last year. Friday saw an announcement about their Las Varillas x-1 well in the Neuquén basin, South Mendoza Province in Argentina, to you and me its an important well in the Vaca Muerta formation. This well result looks like another cracker with 410 feet of gross pay and ‘persistent’ oil shows which will now be fracced and tested. Without getting over excited this looks highly prospective for Andes who have 170/- acres in the vicinity and a lot of exciting prospects elsewhere in South America as well. I always add a small caveat on my recommendations for companies operating in Argentina but with elections due next year I feel the risk is acceptable compared with political risk that exist elsewhere. I reiterate my view on Andes who I have now met again, that the risk for those who want to make money in an energy portfolio is not being in the stock.
Never a stock to let you down on the contracts front, Plexus has announced a three year renewal of its contract in the Dutch North Sea with Wintershall. A long time favourite services play I remain 100% convinced, even if the shares have been a bit pedestrian since the sharp rally last summer. To be fair that rally came after a period when a prolonged drift had put the rather exotic rating in some question, order has since been restored. The rating is high, mainly down to a significant lack of free float but I don’t expect big Ben to start selling now, he’s never offered me any shares in the past and if you can bear it you should look away from the multiple and lock away this high quality stock.
Well, where does one start? I travelled to Scotland on Friday to attend the Annual Dinner of the Scottish Oil Club, an event that brings together nearly 800 guests from all over the industry and geographically diverse as well. Given that number I managed to speak to many people, old friends and new but wished that one could have had more time…! The list of dinner guests is like a bible of executives and I will be studying it for weeks to come as I will be reminiscing about the stories, only a few will make it to the blog…
As I was already there and had an invitation I stayed for the rugby and saw, on a dreadful pitch, a professional display by England, ( not often you beat an international side 0-20 and come away thinking it might have been 50?) and a dismal one for home fans to suffer. Ireland looked sharp and Wales are definitely suffering from a combination of post Lions tiredness and no plan B. Italy looked a bit out of their class although you know what its like with Les Bleus, make them look good and they blossom!
The football was quite interesting, hearing the score come through from Anfield it sounded like a mullering, watching the highlights, the Hubcap Stealers might easily have gone into double figures. As could Man Who who had about a hundred shots on target but nearly lost at the Theatre of nightmares to Fulham, a disgrace.. With the noisy neighbours also dropping points the Chosen One led Chelski to the top of the table, we don’t believe this ‘we cant win the league’ from you I’m afraid my friend..
The most exciting sporting occasion for ages was watching England’s Jenny Jones win the first ever Olympic medal on snow for her country. In a nail biting finish she set a high hurdle then had to wait for about 20 other contestants get past her, fortunately only two did and she is the proud owner of a bronze Olympic medal.
Back in flooded England, EnvironmentAgencyGate continues and as any farmer could tell you, rivers run to the sea and if you let them block up you get floods. How Lord Smith of somewhere in London is still picking up his monthly wallet warmer is an amazing thought, not sure even now he knows where Somerset even is…
A number of people have asked about whether I was going to specifically write up my favourite stocks as mentioned in the last few months. Given I have mentioned most of them here or on Independent/Proactive Investors and will start tomorrow a short run as a guest presenter on the new TipTV, I plan to run a list tomorrow if time permits.