WTI $99.60 +14c, Brent $106.81 -11c, Diff $7.21 -25c, NG $4.28  -4c

Oil price

Still fairly subdued in the oil markets although the usual geopolitical ghosts are wailing quietly in the background. For choice my traders tell me that crude is offered, with few buyers committing themselves at the moment.

There is one thing that I need to share regarding the regular chat about Europe’s dependence on gas imports from Russia and via the Ukraine pipeline. As is often the case energy policy is rarely thought through and it is at time such as this that tend to highlight the issues not previously considered appropriate. A few months ago I wrote my only ever letter to the FT, although this letter was about the fraccing debate in the UK I was at pains to point out to another reader that we could not forever rely on Norway, Russia or Qatar for our gas imports, however friendly they were. It may have been apposite but it should lead Europe in general and Germany in particular to think about that energy dependence.

Things to do for all of us should include a few of the following, if that is, they want to keep energy demand at current levels.Germany should rapidly revisit its shutting down of its nuclear capability as the danger of such power supply may not be as bad as it seemed put into context. Europe should gear up massively for importing LNG and in that process should open up discussions with those potential suppliers of an energy source that is both transportable and apolitical. With an abundance of supplies from East and West Africa, Brazil, Australia, Qatar, Iran, Iraq and even potentially the USA, deals should be cut to arbitrage ones energy needs. After all, when Fukushama happened in Japan they had to go to other energy sources due to a different but equally pressing supply crisis. With concerns that some of these major LNG investments might be at risk due to demand pressure, the massive gas discoveries offshore East Africa for example could be brought on-stream to handle the continuing demand from Japan, China and Korea in the east as well as Europe to the north. You never know it may just nudge the Shermans into re-thinking their own hydrocarbon export policy..

Faroe Petroleum

It has been good to see Faroe making discoveries again after a difficult couple of years and particularly with the Snilehorn find coming at the end of the year. With 2P reserves up 35% and contingent resources up 32% the company is confident that with a number of exploration and appraisal wells drilling either now or imminently things are looking up. Unfortunately the share price is still a bit in the doldrums but interestingly matches the production. With 6,900 b/d in 2012, 6/- in 2013 and guidance for this year falling to 4-6/- b/d, the emphasis is undoubtedly going to have to be on drill bit success for shareholders to keep interested. I look forward to meeting with the company to see how things are unfolding and will look at the webcast later today, I’m sure it will be a very long meeting.

Caza Oil & Gas

Final results from Caza and it seems only a few days ago I was commenting on another successful discovery on the Bone Springs which has been a significant success for the company. Last year revenues were up 67% but to emphasise quite how well the company accelerated away in the second half, the 4th quarter increase was 114% year on year. This has continued this year and production in March has been 45% up on the December figure which is very positive. With 1P up 83.3%, 2P up 79.2% and 3P up 39% the company is looking in an increasingly strong position.

Like the last time, it is also difficult to understand why the share price is still not significantly higher although Caza is not alone in the sector asking this question. Previously I had been led to believe that there had been a big seller around but apart from the odd day recently the high volumes from the 4th quarter of 2013 have fallen back again. There is no doubt that Caza is another stock that is exhibiting signs of being ripe for the picking, as at 8p I think it is seriously below any sensible valuation given the speed of the pick up in production and reserves that has happened in the last year.


Time for some good news as Gulf Keystone has finally been admitted to the main market and celebrated with a modest rise, at 104p I cant help feeling that this stock is being given away.

The Kentz meeting yesterday was if anything more positive than I had been expecting, I see significant growth going forward and although the rating has indeed improved still feel that it will continue to deliver and is still excellent value.

Finally another modest order today for Plexus from Centrica, one of its best clients.

Also worth keeping an eye on is a report I saw recently from the leading law firm, Hogan Lovells whom I hadn’t seen much in the energy space from before. The report, Evolution : Energy and Reigniting the Global Economy, discusses the prospects for investment and merger activity in the energy sector and is worth a look at if you can get a copy.

And finally…

A big night tonight as its the Manchester derby although not as important as it was, Man Who desperately trying to throw it to avoid Thursday night football next year…

Forest sack Billy Davies and immediately try to get Neil Warnock, what is it about these managers who repeatedly fail yet keep getting massively paid jobs somewhere else?

And Leeds in hock to Cellino who was finally banned by the authorities but now planning an appeal, you couldn’t make it up…..