WTI $103.74 +34c, Brent $107.33 -13c, Diff $3.59 -47c, NG $4.62 -4c
Trying to delay the blog a bit this morning in the hope that something may emerge but company news is a bit thin on the ground. As usual on a Monday morning the prices above, being Fridays close are a bit out of date, think $104.37 for WTI and $108.20 for Brent as the situation in the Ukraine heats up again. There is no doubt that whilst the West handled the Crimea situation very badly it does look like phase two is heading in the same direction. If the protesters occupying buildings in Donetsk and other places are even possibly Russian military in mufti, and then should Mr Putin complain about Ukrainian force in evicting them, a violation by him
of international law has taken place. The whole situation appears to be the thin end of the wedge and 50,000 Russian soldiers on the border hardly calms the nerves.
Elsewhere with Brent close to expiry, the differential is down to $3.59 and still falling, with Libya providing more Brent-like crude and demand still strong in the US it looks like it may make an assault on parity, watch this space.
China GDP is due on Wednesday and whilst it may be a number randomly selected by Beijing I am still happy to be of the view that the Chinese economy is not going with all hands and that oil demand will remain strong even at growth rates well below those currently forecast. Whilst in the East, I notice that my story of some weeks ago that Japan would return to nuclear power was ratified by the Abe cabinet on Friday and although a return to previous levels of generating capacity provided by the fuel is impossible in the short term, it is an appropriate start. Purchases of LNG have been high and despite efforts to try and rebase the international pricing towards gas rather than the current oil based tariff they have largely failed so pragmatism has resulted. Its a pity that the German cabinet are not able to consider energy policy with such an open mind. On the subject of energy policy the UN came out at the weekend with another long term view regarding energy use and climate change which was a bit akin to dressing up as Julie Andrews and singing my favourite things. Whilst it is laudable to consider the planet, covering it with wind farms and hoping the sun comes out 25 hours a day not only smacks of head burial in the sand but also signals the end of the international bird population, already being decimated by those friendly wind turbines.
I was on Sky news on Saturday lunchtime, unusual for me but as the SNP conference debated independence the station wanted to hear what oil companies thought about the possible breakaway. Having said that every oil company who has iterated on the subject is against the split, it was reassuring that the SNP guy on the interview declared them all to be wrong, after all what do they know?
So, the marriage vows between San Leon and Alpay Energy have not been consummated as predicted a few months ago and the SPA will lapse accordingly. There are a number of reasons for this and with an optimistic SL hat on one can make a decent case for not going ahead with the deal. Firstly, the recent deals with Baker Hughes and Transatlantic give the company scope to achieve the short term cash flow that the Alpay deal was supposed to provide and give significant upside into the bargain. Secondly it does seem that the key well, Hamman-1 was overproduced early and then produced far too much water which led to what may be euphemistically described as naffed-off customers. The only thing that remains is to consider the placing that occurred at the time of the deal, if my memory serves me correctly, the raise was around $30m for a $5m purchase which effectively meant that the balance was destined for Poland, at least now the proportion of the money destined for Turkey can be paid back to shareholders…Finally this is not the first time that Alpay has got to the alter and either been jilted or the dowry has not been forthcoming, maybe its time to say that whatever those fancy CPR’s said a few years ago there just isn’t enough gas there to make it a worthwhile deal.
The story at Centrica is like a repeating record, will he stay or will he go? I am of course referring to big Sam Laidlaw who is obviously desperate to go but has to join the queue of departing executives as each major position holder on the board has left or tried to leave in the last year or so. Two things come to mind, firstly although I know that being CEO at Centrica is a bit of a pain especially now all the fun has gone out of it but that was probably a given for a job such as this. No, I am interested in what he will do next, will it be in the oil and gas industry from whence he came maybe? It would have to be a big job so the Premier head-hunters need not apply but I would love to see him at BG for example or even BP but of course neither of those jobs are available…The second thing is who might replace him at Centrica, there have been a number of names in the frame, most consistently Iain Conn who runs downstream at BP but I would be surprised if the remuneration committee at Centrica have the fire power to lure anyone from the BP board who have all recently been paid huge sums for their troubles.
Essar, the story goes legal as word on the street is that the minority shareholders have taken advice and appointed lawyers to represent them against the Ruia family who are trying to buy them out on the cheap.
Sound Oil has announced that the Casa Tiberi gas field civil works had commenced and the good news is that first gas will commence in the first half of 2014, not long now then!
Over at Pantheon it is good to see that CEO Jay Cheatham has been buying stock PA and at 17.75p a share it is certainly cheap, just like most other shares in the oil sector at the moment. But mostly I’m hoping that soon he wont be allowed to as that would mean that there was a well drilling, which is going to be very interesting after all this time.
Deadlock has now been partially broken in the Premier League with the HubCap Stealers winning against the noisy neighbours yesterday. With four games to go this is still very close and both they and Chelsea have a win in their gift, either side winning all their games would clinch the title and with City breathing down their necks no game will be easy. As for the relegation fight it is also all to play for but it may be for just one place with Cardiff and the Maccams looking precarious. The way that the Baggies surrender leads is quite fun, they need to be about five up with two minutes to go to be sure of a win.
The Gooners will play Hull City -not Tigers yet-, in the Cup Final and will be nailed on winners but the way that Hull score five yesterday will not have gone unnoticed at the Emirates. When I saw the 5-3 score I assumed it had gone to pens!!
In Scotland it was a very interesting weekend. My commentator up there, the legendary Craig Yeaman had not liked my reference to Raith Rovers last week and predicted more misery on Saturday, it turned out he was right as they fell to Dundee United in the first semi-final and at home too. Huge joy for us tiny band of Saint Johnstone fans then as they came from behind to beat Aberdeen and reach the Cup Final for the first time in my memory.
The Masters was won by Bubba Watson which we all should have figured really…
And in the London Marathon Mo Farah did very well and narrowly beat Peter Reilly of Vigo Communications who sped round the course like a whippet after enjoying the carb loading part of his training rather too much he told me, well done Peter!