WTI $98.09 -81c, Brent $108.54 -3c, Diff $10.46 +78c, NG $4.54 +11c
Ironically very quiet as things settle a bit in Crimea, Brent was drifty in low volumes yesterday, WTI came off ahead of API stats tonight.
The company confirmed what I thought last week, the oil service company is to be set up as a separately traded company to be called Seventy Seven Energy, ticker SSE.
The market is not impressed by the Cairn figures this morning and I have to say that I concur with this sentiment. There are a number of reasons for this disappointment, firstly for a results announcement you have to do a lot of digging to find out how much they made, or in this case lost. At $556m (+$73m) the loss was much more than expected, eps loss of 93c a share was way higher than consensus of 29c for a number of reasons although unsuccessful well exploration costs and huge impairment charges make up a lot of it. In addition to this, despite having $1.25bn of cash on the balance sheet, the company has suspended the buy back scheme, presumably they don’t expect the Indian tax enquiry to be resolved any time soon and are still having ‘interactions’ with the Indian tax department. The statement does however, in some detail, go through its current prospects and its drilling programme for this year which is quite substantial, I suspect that the ceasing of the buy back is to ensure that there are no cash worries as the source of funds for at least part of the drilling programme is from the sale of the Cairn India stake which is prohibited for the time being.
Having been very cautious on Cairn for some time I tentatively turned more positive recently when the shares fell below 200p, at that time I suggested that provided the Indian tax problem was a storm in a teacup, the shares were looking attractive enough dip ones toe in the water. That dip is proving to be a bit early and the bad news keeps on coming, but I am not convinced that this is the end of the world for Cairn and although the chart looks pretty grim and has broken through resistance, selling here is probably a mistake although I was clearly far too early in my optimism!
Having seen the company last week (don’t panic, a report on the way!) today there is even more good news from Morocco. The company has been awarded the Mohammedia offshore reconnaissance licence with 75%, ONHYM taking the remaining 25%. Along with the news that 3D seismic is coming up in April which will satisfy all Morocco commitments, the news from the company remains very positive and the mistakes of the past are behind them.
Tomorrows blog may be late or brief depending on announcements. I intend to go to the Lamprell meeting following their results as I have a lot of followers very interested in what is going on there. I have no reason to believe that things aren’t as I expect but there is a nagging fall in the share price which invariably precedes bad news. I am sticking my neck out here as I am still happy with fundamentals and the new management team but with some nervousness! As I have mentioned before, my pleas that analysts should be taken on a visit have fallen on deaf ears and I even heard an analyst saying last week that it may be because the yard isn’t as full as it might be, here’s hoping for a good meeting…
I am meeting Sound Oil today and hope to have a good chat with its new major investor, as you know I am more positive and hoping for good news in the medium term.
And in the ‘you couldn’t make it up’ category I see that Greenpeace are suing the Russian Government for compensation over the ‘Arctic 30’ activists arrested for protesting in Russian waters…
Quiet today, Ireland beat Zimbabwe in the World T20, not long before the big boys arrive..(sorry John, couldn’t help it after England’s ignominy last time!)
Was told yesterday that I hadn’t mentioned Aberdeen collecting silverware on Sunday, apologies
And an Aussie bowler has been suspended for defacing the wicket with lewd images, I think its a load of cock and bull myself…