WTI $82.20 +78c, Brent $87.12 +$1.09, Diff $4.92 +31c, NG $3.73 +8c
Another small rally yesterday albeit slightly lost this morning on the back of a strong dollar. Traders tell me that the feel of the market stayed quite good yesterday and rallied again after the EIA stats which showed a build of 2.1m barrels, less than the 3.4m consensus. The FOMC was exactly as expected and today sees the US GDP figures which we assume they will have taken into account.
Opec Secretary General Abdalla El-Badri spoke at a conference in London yesterday and his words were a classic example of how to try and talk your own book. Whilst telling the market not to panic about crude prices and that there was no change to the fundamental supply and demand situation, he also slipped in a couple of complete fairy stories. He suggested that 50% of tight oil in the world is at risk at $85 oil which I dont agree with, neither do my former colleagues at WoodMack I understand. He also predicted that there would be no change in Opec output in 2015 and that all would be just fine, words like ‘wake up’ and ‘smell the coffee’ come to mind although one must remember that he is just the messenger…
The results season is in full swing and Shell’s 3Q numbers just beat the whisper coming in at 32c, with CCS profits at $5.3bn and cash flow of $12.8bn Shell more than matched the other majors to report. It is clear that the BvB initiatives are working well and net capex is falling improving returns. Upstream Shell brought on new, higher margin production and for once had lower exploration expenses and integrated gas was good despite the falling oil price and lower volumes. Downstream like everybody else they reported an improvement in refining, increased operating performance and better in trading. As usual a more considered dividend increase which I believe is intelligent rather than parsimonious, unlike BP who are lighting their Cohibas with £50 notes…Chevron and Exxon tomorrow will complete the jigsaw.
An IMS from Cairn today which like others, adds very little to our combined knowledge nor should it in an age where all operational information is released as it generated. I mean, who would hold back information about a well or similar until a Capital Markets Day…? The situation at Cairn is most interesting and I am really hoping to get a one on one with the company before long. I know that most shares in the sector are at or around their lows but Cairn seems particularly friendless and i’m not sure they should be. I would like an idea of the company’s strategy and an idea of how things fit and in what timescale. For example how does the North Sea fit in at the moment, what about Ireland and most interestingly what is the plan for Africa? I see the Senegal well as being most interesting and whilst it is very early days I would like to know the plans as it may be big and with interesting farm-ins on the continent i wonder what the thought process is. I am compiling a sector bucket list at the moment and Cairn is right at the top of candidates as it demonstrates plenty of positive characteristics and the price does not reflect its potential, subject of course to management.
I should really give in with GKP as it sometimes makes me bang my head against the wall with infuriation! Having been consistently over bullish recently, albeit along with the sector it makes back almost all the recent fall by posting a 22% rise yesterday and so far 14% today. I have to assume that when word got out that they were postponing their IMS due to ‘constructive discussions with the MNR in Kurdistan’ that I should have worked out that something like this was imminent and acted accordingly.
The fact that Akri-Bijeel has received KRG approval is a rather mixed blessing for GKP for a number of reasons. Firstly the existing drilling programme on AB is under way and in the GKP budget so there is no panic that they will have to come up with more money unexpectedly. However there is no long-term budget for the block agreed between the partners and when that happens GKP will need to find more money to drill an area in which the CPR is unhelpful and GKP are less than committed to. I say that because as I understand it this asset is for sale but according to the company this morning that is no longer the case and a pathetic ‘all options are being reviewed’ statement has been issued. I like GKP and have nailed my colours to the mast before and I still believe that in Shaikan they have a very valuable asset even if it takes someone else to deliver it but my goodness they dont make it easy for themselves! Now there is a fortnights wait until the IMS and on the same day as Genel, apparently to show solidarity, hide behind them more like!
A quick look at the Eni results and they look to have beaten the whisper quite comfortably with €1.17bn, up 2.5% y/y.
An IMS from Afren but we really dont need to hear anything more from them for the time being. Full year guidance is unchanged at 32-36/- b/d but the reality is whether someone comes in for them down here or has a go at one of the assets, if not it will be a long haul for the company even though it is very cheap.
An interesting update from NTOG where i spot a production increase which i wasn’t expecting! The story here is all about next year and drilling on the recent acquisition but it is a positive move.
More from the Clueless Cup where the Noisy Neighbours lost at MiddleEastlands to the Magpies who now go to Spurs, Bournemouth’s win gets them a home tie against the HubCap Stealers, Derby get Chelski at home at Sheffield Utd get the Saints.
The San Francisco Giants are celebrating their 3rd World Series victory in 5 years after they beat the Royals 3-2 in Kansas. Madison Bumgarner was the series MVP as he threw five scoreless innings in the decider.