WTI $82.75 +5c, Brent $84.54 +7c, Diff $1.79 +2c, NG $3.77 -3c
There is a slightly better feel about the oil price this morning, US consumer sentiment appears better and it appears that China, as suggested here a number of times, has been buying for its strategic reserves. Elsewhere the Khafji oilfield in the Saudi/Kuwait territory has seen a production halt due to ‘environmental’ reasons which takes about 300/- b/d off the market, thank goodness for very small blessings. Iran has said that they will ‘take measures to stop oil prices falling’ which is all very well and good but of little help in realité. The prices above are week end ones, the small rally on Friday has continued this morning with WTI at $83.08 and Brent at $86.22 as I write.
President Energy- Oil in the Heart of America…
When President announced that the Jacaranda well had been unsuccessful a little while ago it was indeed a body blow to those of us who had felt that this was a potentially exciting new play in South America. I decided to go and see the company and had a meeting with John Hamilton and Richard Hubbard who allowed me to believe that Jacaranda was not only misunderstood but that Lapacho would confirm their on-going belief in the region. Imagine my excitement and relief this morning to see the headline of ‘first oil discovered in Paraguay’. The Lapacho well has come in even before it has reached the target Santa Rosa sands with a discovery of conventional light oil/condensate which is expected to be commercial subject of course to testing. Whilst this is probably a smallish discovery it underwrites the basin and proves up the model that President believed in. The company has found what it thought it was going to find with Jacaranda, an oil window with a goods liquids component and with the added excitement of the possibility of gas lower down.
There will be many ups and downs to come for President not least finding out how well the oil will flow, it has low-ish porosity like Bolivia but the discovery does take a lot of the risk off the table and the ride from here will be an exciting one. Not least in that ride will be going back to Jacaranda which after it was lined for future re-entry will be relatively inexpensive and where after complete devaluation President has found a very long interval of hydrocarbon saturation which ‘much increases the chance of success of finding liquids below 4,000 metres. Unsurprisingly the President share price has been all over the place, todays news only takes it back to the 31p level albeit up 82% and it has much work to do to get back to the highs of 47.75p earlier in the year. I was reminded this morning that at that time I said that if this programme discovered meaningful hydrocarbons it would be worth in excess of 100p a share, todays news makes that possibility still realistic although investors should be aware that such a journey will have both ups and downs, nevertheless its been a good day for the President.
Genel/San Leon/Serica- Down, sideways, up…
This morning San Leon and Serica announced that the Sid Moussa well, SM-1 had reached TD and had ‘encountered oil during drilling operations’. Genel then announced that whilst testing was indeed taking place it might be ‘premature’ to read too much into the news. The reasons for the different disclosures are because San Leon and Serica are Aim listed and Genel is not, the latter would probably have preferred not to have put anything out at all. However, Genel as operator are spending north of $20m on the testing so it must feel that it is at least worth the while doing it. Testing this will take 2-4 weeks and with a Capital Markets Day scheduled for the 13th of November, Genel has the perfect target for what might indeed be very good news. All eyes have been on offshore Morocco for some time now and with a couple of dusters so far success here would be a boost for all the players in the area. After the announcements the Genel price fell, San Leon’s remained unchanged whilst Serica’s rose 11%, try explaining that away…
This morning Egdon announced an operations update ahead of its results next month. It confirms that Wressle is indicating potential hydrocarbon bearing zones in three separate intervals and expect to start testing using a work over rig in November. Egdon has a busy schedule coming up with at least three operated conventional wells next year plus the Europa operated Kiln Lane which should start on site before the end of this year. As a participant in Wressle, Europa put out an announcement as well on the ‘news’. Egdon have been an active participant in the 14th licensing round which closes on the 28th October so expect plenty of news flow in coming months.
Range Resources has announced that Sir Sam Jonah is to retire as Chairman at the AGM in November to be replaced by Graham Lyon. Much has changed at Range this year and a lot of it has been down to some of the non-execs, specifically Graham, if anyone can make it work at Range it will be him.
Plenty of talk about Afren in the Sunday papers including one that had Tony Hayward doing the temporary CEO job (!) but most reflected on the hiring of Rothschild’s in case of an unwanted bid from SAP. Reading the reports of the skulduggery by the CEO and his mates was rather like watching an old episode of Dallas although I suspect that even JR Ewing wouldn’t have been quite so greedy…
Just seen the Halliburton numbers which have also beaten the whisper by 9 cents coming in at $1.19. Revenue was a record $8.7bn and big Dave is very confidant, in North America things are going very well and exit rate margins are over 20%. Elsewhere the Eastern Hemisphere continues to grow as does Latin America where operating income has more than doubled with Mexico showing good growth. The dividend is up 20% which mean that the quarterly dividend has doubled in two years. Maybe there is too much negative sentiment about these service companies…
An intriguing weekend of football and much more exciting that we might have expected. Straightforward wins for Chelski and the Noisy Neighbours whilst I’m afraid that even the Chairman of Ofgem couldn’t defend the abysmal Maccams scoring none in an 8 goal thriller… The last seven minutes at QPR saw four goals as the HubCap Stealers got lucky and won 2-3. The Gooners also got lucky and scored in the last minute to rescue a point against the Tigers while the Happy Hammers secured a 60th Birthday win for Big Sam at Burnley in the battle of the claret and blues. Tonight sees the Reds go to the Baggies who will fancy their chances after last season…
Andy Murray won in Austria and is now in line to get in to the end of season jamboree at the O2, more importantly he needs to get his seeding up for the Australian Open.
In the rugby the Saints lost at Racing Metro, Wasps lost to Leinster and the Quins beat Castres. Australia have never had a better chance to beat the All Blacks and were 28-22 up with a minute to go but ceded a last minute converted try to lose again.
A big weekend in the NFL as Peyton Manning breaks the NFL touchdown record, previously held by Brett Favre, as the Broncos thrash the 49ers in Denver. On Thursday, Tom Brady and the Patriots edged out the Jets 27-25.
The reigning Super Bowl Champions lost again this week. They move to 3-3 after a shocking win for the Rams in St. Louis. In other shocking NFL news, the Jaguars won. Beating the Browns 24-6.
The Colts win their 5th straight game as they defeat the Bengals 27-0. The Cowboys win their 6th straight game as they beat the Giants 31-21.
Elsewhere, there were wins for the Packers and Lions. The Dolphins also won in Chicago.
Tonight’s game sees the Texans take on the Steelers.
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