WTI $99.50 +2c, Brent $107.06 -66c, Diff $7.56 -68c, NG $4.80 +11c
Its all a bit of a mix-up at the moment, partly due to the Ukraine which is holding prices higher than the physical market would indicate, but as we move seasons refinery maintenance is coming to an end in the US but offshore work in the North Sea starts soon. Traders tell me that Brent is structurally weak but holding as Libya is taking its time to build up and has caught some short sellers out and the Buzzard output reduction is lasting longer than expected. In the US the weakness was halted by the API inventory stats which again found out the analysts who got the sign wrong, consensus of a build of 1.5m barrels turned out to be a draw of 1.8m in crude might have been forecast, after all those west coast refineries are preparing for the driving season as mentioned here yesterday. Complementing that was a build in product which is quite normal at this time of year.
Weir Group/Rolls Royce
Two magnificent British companies have got together to take on the world of fraccing by developing a purpose built system for the process. If all goes well, Weir will supply its market leading pumps with Rolls’ legendary diesel engines and combined with a transmission system will provide an integrated product with cost and efficiency advantages. To be launched mid 2015, the product will be serviced and maintained by the partners, another lucrative area already covered in other products.
Another partnership, already announced between these two is confirmed today with all regulatory approvals and to be called EthosEnergy.
Alkane had its trading update at the end of last week but on a day I was away from my desk, I don’t want to miss out on making a comment, partly as the shares have drifted quite a long way back from the peak and I am still a big fan, this is an opportunity. With new pit, Maltby back on after planned maintenance, 50 GW hours is looking good and the power response business is scheduled to go from 20 to 50 megawatts of installed capacity. Market electricity prices booked at £53-54 for this year and most of next year are looking to pick up as the longer end of the curve is indicating £55-56 two years out. All in all a very positive backdrop for Alkane and with little mention of its shale potential, correctly being kept under wraps for the time being the upside potential is significant.
The Mongolia based company has announced various seismic operations on blocks 1v and v which seem to be pretty inconclusive at best. This is undrilled territory and the announcement doesn’t provide much comfort, small potential accumulations and some not even leads. With no farm-in partner and any progress on this front likely to be slow at best the management and directors have stopped taking salaries and fees in favour of share options. Not good news all round and the shares remain on the leave well alone list.
The FT points out today that BG shares are up 11% in the week since the CEO departed, this is fair appreciation as the new interim CEO and Chairman did put all the company’s assets up for sale post that move. Two things to comment on, firstly they had better do some deals as the price move has already taken some realisations into account and secondly whilst my SOTP valuation is still at 1800p per share, it doesn’t, as I have already mentioned, have to be sold off in one go, the company breaks easily into bite sized chunks.
Chesapeake results today and with DNO and Repsol tomorrow we should get an indication from an international perspective, from Kurdistan at least maybe more on oil sales.
A quiet night last night, Man U beat Hull Tigers 3-1 with the 18 year old Wilson scoring a brace on debut. With Van Gaal due to be revealed any time now it was Giggsy’s last home game, maybe ever as his playing days may be over. Tonight sees a big night for the noisy neighbours and a result against Villa will set them up for the last game well, having said that anything can happen and all is not yet lost for the Stealers…
Muzza has a tricky opening match tonight in the Madrid Open, not sure he will expect much on ze clay…