WTI $102.64 -2c, Brent $108.40 -42c, Diff $5.76 -40c, NG $4.64 +1c
So lots of meetings going on and all in Europe as the G7 meet in Brussels (was G8 but Putin still ni although ironically he is nearby as all are gathering ahead of the D-Day anniversaire demain) to talk about Ukraine etc. Interestingly I note that Germany has decided that they really do need some of that domestic gas under the ground and the ban on fraccing may be lifted next year. As I have said many times if they lifted the ban on nuclear as well they wouldn’t need to kow tow to Gazprom to keep the factories open and its cheaper…
Elsewhere on the meeting front its the ECB and everyone is asking, what is Super Mario going to do? As ever if you get a chance to read the blog of Marcus Ashworth at Espirito Santo he has a great take on it but we wait with bated breath. In the UK it’s the Newark by-election today where UKIP is hoping to turn over the tory majority, as it’s a mid-term vote I suppose anything could happen (this seat was labour in 1997) so watch out for Farage downing a pint somewhere in the paper tomorrow.
The EIA stats were a bunch of numbers I found quite difficult to interpret, there was a crude draw of 3.4m barrels which was twice the API number and 20 times the scribblers guesses as imports fell and refinery rates rose. The product number was most odd and very ‘counter seasonal’ as the Shermans put it, distillate yields were up whilst gasoline yields were cut and weekly demand was actually down in gas which is a tad bearish if it wasn’t for the fact that year on year is still in positive territory. If you can make any sense out of all that you are a better man than I Gunga Din.
My friendly traders are still slightly bearish, although spot is ok they are seeing a few sellers of Brent and worry about the $7.50 support, even WTI isn’t that firm as having been a dollar higher during the day ended up flat despite the stock stats although vs Brent is back down to $5.76 and falling.
Finally check out the weather forecast for Riyadh at the weekend………….43°c and rising, remember what I said about the Saudi’s switching on the aircon and using up lots of oil normally destined for export.
An operational update from DNO today (no gags about getting my companies mixed up please) who are on their best form as the Executive Chairman states ‘we are focused like a laser on the scale and speed of delivery). He isn’t far wrong either as Tawke production got up to 120,021 b/d in May and is being sold 60:40 local and export through the pipeline to Fish Khabur. Plans to increase production to 200,000 b/d by the end of this year are on schedule and even the gas from Summail to the Dohuk power station is already at 60 mcf/d, 20% ahead of plans. Sounds like the laser is working eh?
The great Salamander summer sale continues as they have announced the sell-off of 40% of Greater Bualuang to SONA for $280m. Cue calculators whizzing all over the industry as we work out how much the rest of it is worth as we are told that the formal sale process continues in parallel to this transaction. Certainly the possibility exists that this deal may smoke out a bidder for the whole bang shoot but if not where does the price go? The GB sale is reasonable enough and justifies the current price, bulls who tell me that the company is worth 200p a share are still confident but maybe not quite so sure as before, I think that 160 plus a bit of change would swing it, this deal may be plan B.
It is worth considering the effect on Genel on the read through from the DNO statement because clearly the market isn’t. With their other bits and pieces the production is getting significantly worthwhile and one must at some stage assume that oil is actually being sold for real money, not something all analysts seem to want to hear. Genel is still very cheap on my numbers and even if you discount for the political risk I get a number not far short of twice the current share price. My spies tell me that a couple of the big boys have done the numbers on Genel and virtually have the offer documents drawn up, so far it has been waiting for politics, as that risk diminishes the chance of a bid increases significantly, Genel is not a stock to be short of at the moment.
Pemex have unsurprisingly, and as reported here in the blog, cashed in their chips by selling the Repsol stake, an unhappy relationship which both are better out of.
Caza have drawn down another $10m of the Apollo money and historically the question would be, with only $5m of this tranche to go where will they go next for cash? Well now the boot is slightly on the other foot as well results for Caza go from strength to strength and on my reckoning it wont be long before the cash flow will cover their drilling costs. I am hoping to see the guys from Caza soon, the grape vine tells me that they are over this month and with such an exciting story to tell I expect shouting from the rooftops, this stock is still very cheap.
Chariot have their AGM today and the statement reads very positively, indeed having seen the company a few months ago I am surprised that the shares have come back so much. The picture for Chariot is very clear, the new management has got Chariot into a very strong position and it is ready to take advantage of the situation, the upside is substantial and the risks have been spread and reduced, at 19p this stock is far too cheap.
Finally a quick word on Hunting, I have had the chance in the last week to hear the latest presentation and speak to the top guys there and all is going very well, no sign of capital discipline affecting the order book here and in fact there is a lot of business around. Expect the heavy capital investment in recent years to pay off and the stock is in my view very attractive at these levels.
I couldn’t help but smile, saw that Deutsche Bank re-enforced their buy recommendation on BG this morning with a target price of 1250p, with the stock currently trading at 1223p I make that upside of around 2% which is a bit meagre as buy tips go…
Muzza got through all right yesterday but it went to five sets which I was surprised about as I had assumed he had had it pretty much tied up earlier on, Rafa next, on clay so I guess its on to Queens for the Stella or whatever its called now.
England B played Ecuador last night which proved very little except that we can still get red cards and that Frank Lampard must be sponsored by Saga and Weight Watchers……
London Welsh have been promoted back to the Premiership of rugby union at the expense of Bristol who have been building a squad and a stadium, another years wait I’m afraid…
And Big Dave, who writes the US sports stories here is off to Epsom tomorrow for the Oaks, Diomed and Princess Elizabeth Stakes so please forward any tips you have asap as they are going to be better than anything I can come up with.
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