WTI $106.91 +38c, Brent $113.41 +39c, Diff $6.50 +1c, NG $4.74 -2c
The Middle East seems to get worse and [comments about Tony Blair removed!] markets are understandably jittery. Although the Brent price is off a little this morning, the July contract having expired on Friday, WTI is actually a little higher at $107.32. The White House has said that they are in ‘dialog’ with Iran which is interesting and shows just how complicated the whole situation is. It must be particularly galling to see all those arms they gave to the Iraqi forces being handed over to ISIS without actually being used…
Looking at the situation vis-à-vis the flow of oil ( George Bush jnr would say ‘what a shame the French don’t have a saying for vis-à-vis….) nothing has changed since my comments last week as the South of Iraq is still producing and exporting oil as usual and in the North the KRG is actually, at least at present, coming out of this more strongly if anything. There are two things to remember about the oil price this summer, firstly if Iraqi production is hit in any substantive way all bets are off as you would expect. Losing 2.5m b/d would put the system under serious pressure and although there are remedies, the short-term price reaction would probably be substantially upwards. Secondly I reiterate my view that the oil market is already looking quite tight over the summer and a report out from the IEA this morning seems to back that up. I am always very worried when the IEA agree with my thoughts as they get so much wrong but they have increased their number for call on Opec crude to 30.9m b/d in the second half of this year which in the absence of Libya and Iran let alone Iraq gives an underpinning to the oil price I have explained before. If by any chance you are able to read the comments of David Hufton at PVM you should do, his work, especially this morning, is a brilliant analysis of the situation in the Middle East.
Interesting times for President as they spud the Jacaranda well in Paraguay and also announce the results of the audit of the Lapacho prospect in the Chaco region of the country. With gross mean unrisked prospective resources of 5.2 TCF of gas and 157m barrels of condensate the area has put itself up the list of places to drill and will be one of those three wells this year. The company now has three independent petroleum systems each potentially containing a giant field so it really is going to be an interesting couple of years.
Gulf Keystone Petroleum
With the AGM coming up on the 17th July it has been announced that CFO Ewen Ainsworth is leaving ‘to pursue other interests’ as they say. I have a lot of respect for Ewen and he has been at GKP for a decent stint and having been core to the fundraisings that have enabled GKP to get to where they are now deserves a change of scenery. The company tell me that the nominations committee are preparing a brief in order to hire a new CFO but an announcement will not be imminent.
The company has announced this morning that it has raised $140m in order to refinance the current $80m of debt as well as to continue the Bentley development work and for ‘general corporate purposes’. The market has given the company the benefit of the doubt so far, probably as the previous debt was due in December of this year and the closer they got to that date the more nervous they would be. The bad news is that although the new debt appears to have a lower rate of 12% it also has a 3% payment in kind add-on and is issued at a 10% discount, this is expensive money. With the strike price of 68.5p looking fair enough the shares are sitting at 69p this morning giving a touch of protection but at the moment although I believe there is value in Bentley longer term, at the moment I am happy to remain on the side-lines.
I keep saying that I am writing on Range again but at the moment the company are releasing new news almost every day. Today’s announcement is an increase in reserves and production in Trinidad which is further good news for the company. The assets, which are now the core for the company, have grown from 20.2m barrels proved and probable to 22.1m barrels on their onshore licences of Beach Marcelle, Mome Diablo and South Quarry and the development well on the latter has been the star leading to an 18% increase in production. Readers will know that I have picked up this exciting recovery play recently and although it has tripled from the sloughs of despond this is I feel, only the start of something big and there should be a lot to go for from here.
Chevron has announced the completion of its sale of interests in Chad to the Republic of Chad for $1.3bn.
Faroe has scheduled a conference call for 1130 this morning to tell us about the recent placing etc, they seem to be having timing issues at Faroe at the moment but all will be revealed later!
And news just in and only just as I go to press, Petroceltic has announced that it has come to an agreement with Worldview Capital management ( who own 20% of the stock) who will now vote in favour of the recently announced $100m placing. Extensive changes will be made to the board and the EGM will now be delayed until new board members can assess the prospectus, in addition Robert Adair’s company is no longer obliged to vote with the board. I recently spent a fair bit of time with Tom Hickey and Brian O’Cathain and now this is sorted I will be able to write something decent for the blog, more later…
This report could be longer than the rest of the blog so I will have to be brief, there is so much sport going on.
In the World Cup England lost to Italy making it the usual white knuckle, nail-biting ride in the next two group games… In our group Uruguay surprisingly lost to Costa Rica. Elsewhere the big result was the demolition of Spain by the Netherlands whilst Argentina won last night thanks to one L Messi esq. Switzerland came from behind to beat Ecuador and France beat Honduras who played as they left-off against England by trying quite successfully to kick the French to pieces, abysmal ref who is another who shouldn’t get another game…Tonight the stand-out game is Germany v Portugal with Ronaldo fit I understand.
In the US Open Martin Kaymer stuck to his task and won easily enough with little competition.
More from the US….
The San Antonio Spurs have beaten the Miami Heat to win their fifth NBA Championship. Kawhi Leonard was the series MVP. They ended the Heat’s reign as Champions with a 104-87 victory.
The LA Kings beat the New York Rangers to claim their second Stanley Cup in three years.
In the men’s hockey Championship, England were playing Argentina for the bronze medal and lost although one thought they might have been awarded it after the Argies played for some of the game with 12 players, something even two refs couldn’t spot, better go to Specsavers…
The test match is quite interesting if one can say that… Having racked up around 1,000 runs between the teams in the first innings, England then started to perfect the famous collapse technique and without Gary Ballance (scoring a century on debut at Lords in a test match) might have been in much trouble.
And although losing 28-27 against the All Blacks was maybe a bit flattering to England it is nevertheless cause for some optimism ahead of next years World Cup, at home.