WTI $98.08 +43c, Brent $104.68 -34c, Diff $6.60 -77c, NG $3.96 n/c

Oil price

Weakness in the oil price persists, especially in Brent crude which fell yesterday and this morning has dropped below $104, traders yesterday saw it in the $104.40-105.40 range, but the support just isn’t there. There is no doubt that supply is trumping geopolitics at the moment and for those looking for a breakout, such as at IG where I talked last week, the downside has the upper hand. Market fundamentals are in the IEA monthly report out this morning, in July, Opec production was at a five month high of 30.44m b/d and Saudi Arabia was up at 10m b/d so even with high summer domestic demand it was filling those gaps. The Iraqi Oil Ministry announced that exports are unchanged and forecast August numbers to be at 2.5m b/d.  Worse news was in the IEA demand numbers, particularly for next year as they followed the Opec research by calling them down despite still having positive GDP forecasts which is not a given.

Politically, Iraq is now supposedly in the process of changing Prime Ministers with al-Maliki being replaced by Haider al Abadi as the President’s (and the USA…) choice of leader. Abadi is meant to be a much safer pair of hands as he apparently appeals to a broader spectrum of citizens if that is possible but Maliki is not showing signs of going quietly.

Mexico

Readers who have been paying attention for what seems an age will know that I have been watching the situation in Mexico for some time, I feel that there is so much to go for in the country and if it is managed carefully will be a huge bonus for the country and those companies prepared to invest in its oil and gas industry. Yesterday President Pena Nieto signed into law the opening of state run oil, gas and electricity industries to foreign and private companies. In addition he announced that tomorrow it will be announced which blocks are to be opened up for bidding, at least a month ahead of expectations. Whilst it is early days, the companies likely to gain appear to be the service companies with the US big boys already on the case as well as Petrofac. One small play listed over here is MX Oil which has a partner lined up in Geo Estratos a local oil services company and may be very handily placed although other liaisons may be less attractive.

Ithaca Energy 

2Q results this morning from Ithaca, one of the blog long term favourites. The figures at the top line look fine with good revenues and earnings but the market has picked up on a couple of things which were maybe not quite so good. The unit opex cost per barrel soared to $47 from $40 mainly as Sullom Voe terminal costs increased although it should come back down after this year. Also on the worry list is the timing of the FPF-1 delivery, already delayed as Petrofac messed up on the construction but there was some disconcerting equivocation as to the sailaway date, surely it cant miss next spring..? Apart from that Greater Stella still looks in very good shape, the 4th well is under way and then the rig, post a short re-certification, will drill the 5th well later this year, with the delay that should become a producer on time with the rest. With the $300m bond issue sorted the company is well financed but the board is likely to be pretty selective about acquisitions but anything in or around the GSA hub area will be fair game.

I stick with the positive stance, delays and cost overruns have been a pain but should be ‘en passant’ and long term the value should out, unless the shares fall through the 130p level I would target a return to nearer the 160 level, watch out for Petrofac’s statement on the 26th though…

Trap Oil

With a close eye on costs, Trap has decided that it cannot carry on as it is and the board are first to go. Chairman Simon Bragg resigns with immediate effect and co-founders CEO Mark Groves Gidney and COO Paul Collins are also leaving in a couple of months time. They have also let the farm-in of the Alfa well go although they remain operators of Romeo, doesn’t quite sound the same does it? They have also cut the GE Financial Services facility and all together say that G&A costs will be down by around £1m pa. he shares fell 10% initially but have recovered some of that, at present they are down by 3%. Despite this, although it looked like they were going to create some value from the portfolio it looks like that is at the moment as far away as ever and it looks like being an uphill task.

Lamprell

Lamprell has announced that the debt refinancing announced in May has been finally completed. I wouldn’t normally mention this but for Lamprell it is extremely important. The rights issue and subsequent refinancing of the debt is crucial to the way the company operate and with this now in place the company has formally opened up a whole new vista of Tier One clients with whom it can do business with. Figures from Lamprell the week after next, I hope to see them but they have chosen to go out on the same day as Hunting and at the moment there is no sign of a meeting, either way all seems set fair for their prospects which are very good.

And finally…

The European Athletics Championships start today in Zurich with the UK team hoping to do better than the last shambles. It appears that Mo Farah will be running after he withdrew from the C Games as it was not an injury more a toothache or similar which he thought was a heart attack.

Full on football already, its ludicrous……….the Clueless Cup started last night and has a full programme tonight and in Cardiff, yes Cardiff, its the European Super Cup between Real Madrid and Sevilla. At least Gareth will be able to show the ‘Los Galácticos’ around the City…

The noisy neighbours have got the cheque book out again paying £32m for defender Mangala from Porto, hey, Louis don’t forget your wedge…

And Glenn  Hoddle has been appointed first team coach at QPR, might just make a difference ‘Arry…