WTI $93.54 +$1.01, Brent $97.00 n/c, Diff $3.46 -$1.01, NG $3.98 +1c
This morning the oil price is down again, not much but around 70 cents which takes Brent nearer the recent lows, note that the differential is $3.46 at the bottom end of its range. WTI outperformance is partly due to the US GDP numbers last week but also the strength of the greenback and also the crude draw last week which caught the market by surprise.
Probably the biggest loser amongst the oil producing stakes when prices fall is Iran, which despite being under sanctions has a very high break even rate at the moment. Oil Minister Bijan Namdar Zanganeh spoke on Friday asking Opec to ‘work together’ to halt the slide in crude prices. Although there will be some negotiations going on behind the scenes the next Opec meeting is not until November 27th so it might be a tricky month or two.
The Sunday Times carried a detailed and quite refreshing interview with Jim Ratcliffe, the oft quoted ‘billionaire founder’ of Ineos yesterday. In it he suggested that the companies involved in drilling in the UK pay more out to landowners and local authorities than they have so far indicated they will. In a way of getting around the difficulty of owners not profiting from mineral rights, in the UK owned by the Crown, he suggests paying out 4% to landowners and 2% to local government. In an attempt to be more ‘upfront’ about drilling Ratcliffe says that ‘for six months drilling is disruptive and noisy and inconvenient but once that’s done what’s left is little green pipes delivering gas for the next 20 years’. Not far off what I was writing what seems like ages ago.
I asked IGas for their comments which I quote verbatim below;
“It is encouraging that one of the intensive users of gas, and a significant employer in the UK, is highly supportive of developing an indigenous shale industry. We will continue to work with all our partners on the most appropriate balance of community benefits as the industry develops. The contribution to the communities in which we operate is wider than a percentage of revenue and includes the economic benefit of jobs, investment in skills and apprenticeships, business rate retention for local councils and regeneration through inward investment.”
When the chips are down and you are on a deadline to complete a well before sanctions hit you its amazing how an exploration well can become an overnight discovery. For Exxon and Rosneft the Kara Sea well came good just as the powers that be were about to call it a day. Igor Sechin announced that the discovery was 338 bcm of gas and 100m tones of oil and that the Arctic discovery would be called the Pobeda field. The big question is, will Exxon be able to participate any further in this or other Arctic exploration as sanctions on the oil and gas industry start to bite?
It seems that I have picked up coverage of Velocys at just about the right time with much happening at the moment. My run through of the business is almost complete and I had a long session with CEO Roy Lipski a few days ago. Today sees the results and more importantly a raise of £52m via the issue of 23.1m shares at 225p. This is a very successful deal indeed as it was done at a slight premium to the market price and apparently significantly oversubscribed. The money raised will help to accelerate the adoption of the Velocys technology, strengthen the balance sheet and thus help the development of new projects. The conference call is at 11am and I will report back anything of note later via twitter or tomorrow.
Shell and BP are both in the running for a major Abu Dhabi oil deal according to the Daily Telegraph who say that they are amongst 11 companies bidding for rights to onshore fields where contracts are expiring.
Nighthawk have completed on their $100m RBL with the Commonwealth Bank of Australia announced a while ago. This also enables refinancing of existing debt and all sorts of changes to funding and warrants etc.
Union Jack announces in its half yearly report that all is looking good with the Wressle discovery positive and the £4m fund raise leaving them with £3.5m for future onshore activity…
And Borders & Southern has figures out today which are as usual irrelevant, for them its all about finding a partner to fund Darwin as the $21.5m of cash wont go very far on its own. I keep hearing stories of a farm-out but so far nothing doing, I am looking forward to catching up with the management before too long.
The captaincy of his club and country was meant to calm Wazza down but he saw red on Saturday and took an early bath. Despite that Man U clung on for a 2-1 win against the hammers. Most other results went as expected, the two derbies were drawn, Chelski, Noisy neighbours and surprise package the Saints all won. Yesterday The Baggies delivered another big blow to bottom of the table Burnley who’s manager still think its just like watching Brazil…
The rugby also went to form, Exeter Chiefs drilled Quins 36-13 and the Saints and Sarries also won.
To the Ryder Cup where the killer blows were delivered in the foursomes with Europe winning 7-1 overall. Yesterdays singles were exciting but it was too much of a mountain to climb and in the end it was a convincing victory for Europe. It was the final straw for Phil Mickelson, who, having texted Captain Tom Watson demanding to play on Saturday afternoon to no avail, then suggested that TW is no Paul Azinger… ouch!
Last night in the NFL,
Miami quarterback Ryan Tannehill was the star of the show at Wembley as the Dolphins eased to victory over the Raiders. Tannehill threw for 278 yards and two touchdowns. Aaron Rodgers threw four touchdowns as the Packers crushed the Bears in Chicago. The 49ers edged to a crucial win over the Eagles. Frank Gore with 24 carries for 119 yards. The Colts, Chargers and Cowboys also win. On Thursday, the Giants moved to 2-2 after a big win against the Redskins. Tonight sees the Patriots take on the Chiefs.
And finally farewell to Bill Goss, although Janus-bound we can never forget that he once said when trying to lecture the UK, ‘the UK economy lies on a bed of nitroglycerine’ when in 2010 singling out the UK as a ‘must avoid’ economy…
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