WTI $93.86 +51c, Brent $102.50 -15c, Diff $8.64 -66c, NG $3.91 -3c
Brent crude broke upwards through $103 last night but couldn’t hold it and fell back to finish lower at $102.50. Brent is seriously range bound and I remain bearish for the time being with outside influences creating downward pressure. This will not last forever though and one should be considering when to start considering buying the contract again. WTI bounced a touch as the API inventory stats revealed a further draw, this time of 1.3m barrels, EIA numbers tonight may keep that slightly more buoyant feeling going.
Cape have produced interims this morning and the first half was in line with expectations. There are three themes that are running through the results season in the service companies which are, the adverse impact of foreign exchange, the sector is second half weighted and that order books are relatively strong. Cape is no exception to these factors. Just for background I was a noted bear of Cape pre- Joe Oatley (notes such as ‘four profit warnings and a funeral’ when the former CEO ‘left’) but wanted to see whether the company could be turned around. As with most of these things, Joe found many more black holes than were advertised and I’m sure that he considered walking at some stages of the process. I changed to be a buyer of Cape only back in March of this year when the Motherwell Bridge acquisition was announced, not because it was a good deal (it was) but because only then did I believe that Joe was going to stay.
Cape is responding well to the ministrations of the new management team, disciplined controls, new management processes and procedures at all levels and most importantly a cultural shift have made the company investible again. Some of its offerings are still at -how you say- the more basic level of oilfield service companies but elsewhere Cape Specialist Services encompasses Motherwell Bridge, Cape Environmental Services and York Linings. Whilst this strategy is in its early days it offers customers a broader, more added value range of specialist services in places such as the Middle East where the company see a large pool of so far untapped work. My positive view on Motherwell Bridge is stamped by the ability of Cape to start selling its products through the existing Cape structure.
Longer term, and provided Joe Oatley stays on board, I see good times for Cape, there should be geographical gains and margin expansion as they develop their specialist services and this combined with a refreshing view of what might be described at buying in business ( they aren’t going to do it-watch this space down-under) will serve them well.
Another day and another excellent well for Caza as it announces the results of the Gamma Ridge well. Coming in at 870b/d of oil equivalent which will be on sale almost immediately, the well also had very favourable log data in the Brushy Canyon, Avalon and 1st Bone Springs intervals which bodes very well for the companies strong acreage position. As before, the market is not taking any of this into account but Caza is pregnant with value and in my opinion has a value well in excess of the 17p quote at the moment. I will do more sums but its not 30p any more, nearer 50p+ at the very least.
Time and space does not permit a long catch up on PFC and my comments from yesterday still stand, I think that whatever its problems, most of them are behind Petrofac. This isn’t to say that by any means the model is fixed, the 2013 problem will take some fixing in the market place and the company will no longer be a hostage to fortunes in guestimating long term eps numbers…
The order book is indeed very full and at decent margins, the second half of this year will see the start of the profits recovery and there is enough confidence in that visibility to maintain the dividend at the interim and the final. The final being maintained is important, as without the confidence there is no way a 66 cent pay-out is possible under the terms of the old 35% pay out ratio arrangement. Much more on PFC like everything else this week but I am confident that Ayman is getting this sorted albeit taking much longer that he first thought.
A very brief comment on Plexus as its getting dark and its almost time to get up for the Lamprell conference call at 0730 hours tomorrow morning!
Yesterday Plexus had a pre-close update where it said that it was in-line with expectations at the revenue level but that profit after tax would be ‘materially ahead of market expectations’.
Today the company has announced yet another contract for $1m of work, this time for Den Norske (You see I can get it right sometime…) for an appraisal well offshore Norway.
Need I say any more………..?
Circle Oil appear to have found a bit of a barn-burner although the well almost fell in on them. BG are not commenting on the article in the Sunday Times about selling the Tanzania acreage, how many times do the company have to be told to get on and do stuff? The IGas/Dart takeover suffered a small setback yesterday but I don’t think its terminal, waiting to speak to company…
So much and so little time……..
Scottish football first as Celtic really did crash out of Europe last night, even manager Delia Smith said they were rubbish, not some thing that can be said for St Johnstone who beat Aberdeen on Saturday ( I had to get that in as I was in Aberdeen last week)
Man Utd are really starting slowly although it was obvious that LvG had said to them last night that he didn’t want to bother with the Clueless Cup, how else could Danny Welbeck be such pony????
The noisy neighbours cruised past the HubCap Stealers who played for just 40 mins when City played for 90…and Crystal Palace have signed Neil Warnock as the new manager, its bad enough for Palace fans but be careful what you wish for, it might have been Neil Lennon or even Ian Dowie…
The first cricket one dayer was washed out but play is on today, still no Vince or Taylor or even other specialist one day players actually.
And as for the Grand Prix it seems that for Mr Rosberg if the team cant get Lewis to slow down and let you pass then the only thing left is to take him off yourself which is lower than a snakes belly…..
Pip pip, only got results tomorrow from Lamprell, GMS, Hunting, SOCO, GKP, Salamander plus more I cant even remember!
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