WTI $92.41 -66c, Brent $98.39 +69c, Diff $5.98 +$1.68, NG $3.84 -7c
All sorts of influences on the oil price at the moment and in a number of different directions. On the demand side, tomorrows manufacturing numbers from China will be closely watched, the EU continues to look distinctly groggy and the G20 meeting in Sydney yesterday described those economies as being in ‘stagnation’, super Mario speaks later today. On the supply side most numbers point to plenty of crude around but Libya is still around 150/- b/d off its recent peak at about 710/- b/d.
The technical side of things is looking slightly better with half decent support being established at around these levels but don’t forget that WTI expires tonight and as usual, anything might happen. However the CFTC figures on Friday showed that the speculators were upping their long positions, this time by 24/- lots after 16/- last week making the first indication of trying to find the bottom. The news from Exxon about Arctic drilling (below) may have just got one or two crude bulls excited after a bad quarter.
Exxon -Its all over baby blue..
It looks like Exxon has been forced to wind down its drilling campaign in the Russian Arctic at the Kara Sea well. The new sanctions go somewhat further than before and for the time being the JV with Rosneft will be put on ice, so to speak. Not good news for BP who have a rather larger commitment by being 20% equity holders in Rosneft…
After some weeks of market rumours, Siemens has made an agreed cash bid of $83 per share for Dresser Rand. The bid values it at $7.6bn, nearly 30% higher than a few months ago when Siemens thought it too dear. With Sulzer and GE watching in the wings, holders might just wait for a little while in case this goes further but the price looks pretty rich to me.
Chariot Oil & Gas
As is usual on these occasions interim results rarely add anything and today’s numbers from Chariot are no exception. It gives the company a chance to explain what’s been going on lately, namely farm-outs in Morocco and Brazil and the re-award of the Central licences in Namibia.
Whilst the market has not exactly been in raptures about everything they have done it is probably fair to say that Chariot have done a pretty good job given where the relatively new management started from. With cash at the end of June at $37.5m, boosted by $15m from the placing and with $13m to come in early 2015 it looks as if the strategy is falling into place. Honeymoon periods are remarkably short, even for new management teams who display encouraging signs, so 2015 will need to show that the plans are coming together, mainly with the drill bit at someone else’s expense. For the time being I am happy to give Larry and the team the benefit of the doubt but am aware that the pent-up excitement in the industry about Morocco will have to be proved by the wells being spudded there in the next year or so and Namibia still has much to prove…
News this morning that Faroe has sold its 10% stake in Glenlivet to Total for £10m is very welcome, costs to Faroe for developing the area would have been high and will be better spent on the exciting portfolio. This is another stock that the market is uncertain about, maybe because it too has raised money this year. Having said that it is well financed and in a good position to take advantage of the exciting wells on the cards for next year. An upcoming trip to Norway will give analysts the chance to up their numbers on things like Pil and Bue so I remain of the view that FPM is very good value at 111p.
A very quick comment on Velocys as I have met the company twice lately and am in the process of writing some inaugural words. Today they have announced that their client, Red Rock Biofuels, has been awarded a $70m grant to build a biomass to liquids plant using Velocys technology. More later on this stock but from what I have seen so far it has significant promise.
It would be difficult, nay impossible not to mention the article in the Sunday Times yesterday about oil company bosses’ pay but even I might not be quite as hard as Danny Fortson. Saying that ‘Chief Executives taking home big wads of cash while investors get nothing is endemic in London’s oil and gas industry’ and that an unnerving proportion of them are ‘lifestyle’ companies raising only enough cash to pay themselves well but not much more is brutal, fair or not.
Saturdays cricket final was as always, been down to the toss and with Durham bowling out Warwickshire cheaply it looked like game over but the lads made hard work of it but got through in the end.
Weekend football was quite astonishing, the highlight of Man U folding up was incredible but other stories were equally unthinkable, I mean the Baggies going to White Hart Lane and taking the points as did Palace at Goodison. With The happy Hammers turning over the HubCap Stealers it left the final piece of theatre to Frank Lampard in a script you couldn’t make up, scoring the last gasp equaliser against his old mates…
In Scotland Dundee Utd are top of the table as Celtic slip up again and Super Cale beat the Saints…
In Singapore it was a DNF for Nico which stirs things up quite nicely as the caravan moves to Japan where for once the excitement should be right up there…
This weekend in the NFL,
The biggest game of the evening came as the Denver Broncos travelled to Seattle hoping to recover some pride after the thrashing they received in last years Super Bowl. Peyton Manning took them close but the Seahawks managed to win in overtime.
In the first televised game, the Lions managed to keep Aaron Rodgers quiet as they beat the Packers 19-7.
The Cardinals remain unbeaten as they beat the 49ers who now slip to 1-2.
The Colts, who hadn’t won yet this season, put 44 points on the Jaguars.
There was a brawl in Philadelphia as Jason Peters took exception to a late hit on his quarterback from Redskins defensive lineman Chris Baker. The Eagles just managed to hold on 37-34.
Other results included wins for the Chargers, Cowboys, Ravens and Steelers.
Tonight sees the Bears in New York to face the Jets.