WTI $75.58 +1.00, Brent $79.33 +$1.23, Diff $3.75 +23c, NG $4.49 +12c
So, lets establish the rules for next week ahead of the Opec meeting shall we? Firstly as someone amusingly once said, in this fight there are no rules, this applies to Opec meetings as much, if not more, than a Saturday night brawl outside a pub. Next week the one thing that can be guaranteed is that everyone with any sort of interest in the oil price will either say something positive or find someone who can. Positions will be taken ahead of the meeting so lets stick with the golden rule that it is almost always wrong to believe anything that anyone says, this applies as much, if not more to Oil Ministers or Secretary Generals. Secondly, dont believe any conspiracy theories, I have been saying for months that most of these participants aren’t smart enough to think about them, let alone put them into practice. Finally, remember that what we say and what we do are two completely different things, this is particularly important when listening to the press conference afterwards…
On that basis the oil price has rallied on the back of comments by a number of Opec participants most notably the Venezuelan Foreign Minister who said that his country would be prepared to ‘reduce oil output if other members would share the burden’. It is worth noting that Venezuela has the biggest reason of anyone in Opec to get the price back up and this comment probably comes into all three categories above.
Economic news of course is not malleable so the Philadelphia Manufacturing survey that was the best for 21 years and the jobless claims in the US remaining below 300/- must have helped bolster the price of oil as well.
Finally, the news from the Iran nuclear talks is not good, with the deadline approaching the vibes are that an extension until early next year may be the best possible outcome. There are so many conflicting aspects to the talks its hardly surprising that agreement is tough and the situation in Iraq, the intransigence of Mr Putin and the rise of the Republicans muddy the waters. At least it would mean that the Iranian Minister will not have that extra 1m b/d in his back pocket in Vienna. (NB Marcus)
Ophir/Salamander- As Elvis would have said, surrender…
Some stories are so implacable that they come under the heading of ‘you couldnt make it up’ and the Salamander story over the last few months has been just that. The company has gone from wanting to sell part of an asset, to possibly being in play, to reverting to its asset sale and now seeing a reasonable bid go up in smoke, leaving the Ophir bid to be the only game in town. Questions need to be asked, if I was a Salamander shareholder I would want to know how last Friday was such a mess and how the 121p plus a contingent value right disappeared over the weekend, also given that the SONA deal was apparently still on the cards, how come that is now not preferable to the bid from Ophir which is worth 96.2p at this moment. Anyway they say one should always play with the hands you are dealt with and now, assuming that there isnt another bidder in the wings, Salamander shareholders must look at being part of Ophir.
The new company will range from Africa to Asia and one has to think that the Salamander assets may well be worked harder and more efficiently than before, Ophir will provide expertise in all areas to complement the relationships that Salamander has developed and for example there may be some discretionary spend achieved in Thailand as well. Overall this is not the result that Salamander shareholders wanted or expected, it appears that just when the board decided to cash out most of the options had mysteriously disappeared. But those holders who opt to remain as part of Ophir should benefit in the longer term and I suspect that there will be more consolidation in the sector, remember, not all Ophirs are Lounge Lizards…
A very quick word on Parkmead as results aren’t usually that important for E&P stocks mainly as they so rarely make profits. Parkmead has turned in its first ever profit and this completes what has been a very good year by any standards for the company. One look at the share price chart shows you that the sector is still following the oil price down and even the good stocks, as Warren Buffet would say, have been performing badly. Parkmead has done good deals, raised money and participated in two licence round adding value along the way, although it is of little help right now I think that holders will be rewarded in the long term in these hands.
President updated the market earlier on in the week and I for one felt that the market gave them an unfair kicking. I managed to have a long chat with John Hamilton who also believed that the reaction was a bit harsh to put it mildly. President promised to update the market in mid-November after it made an oil discovery above this target and this is it, they are in the middle of the zone which I am expecting, if successful, to be liquids-rich gas. At this stage there is no reason at all to be discouraged, there have been no logs, no porosity or other checks and whatever the result will be, now is too early to lose confidence. President is operating in a frontier area which comes with it the usual uncertainties but investors should stay with the company as it feels its way around what may well be a very promising prospect.
Technip has been knocked back in its bid for CGG but there is probably a deal to be done there, never forget the influence of the Government especially in France… A bigger thought is that with the Halliburton/Baker Hughes situation going on this is unlikely to be the last bit of corporate activity in the sector that is gagging for cost synergies as we learnt at the Oil Council this week.
Slipped out under the wires earlier this week as well was the news from Lansdowne that it had farmed-out 80% of its Midleton stake to Petronas. They will fund one exploration well at a cost of $30m and up to $12.5m worth of testing which frees up Lansdowne and franks some potential value whilst removing costs. Near the Kinsale Head gas field the prospect and many others in the Celtic Sea are going to be most interesting in the next couple of years so its time to dust off those maps…
A big weekend of sport with Football coming home, rugby everywhere, boxing, cricket,motor racing and some great jump racing too.
The big game in the Prem is the mid table clash between the Gooners and the Red Devils whilst Swansea will be full of confidence at MiddleEastlands and the Eagles will remember their game against the HubCap Stealers from last year. Chelski have the Baggies and the happy Hammers go to the Toffees. In the cup last night Maidstone United got through to round two beating Stevenage.
Rugby sees England playing Samoa but the big game is Ireland v Australia elsewhere Wales host the All Blacks, in the last 25 games between these two sides Wales are, as they say in the States 0 and 25…In the Prem the standout fixture is Sarries v the Saints, who can forget the final last year, oh for the same result this time…Quins play Sale and Exeter host Wasps.
Boxing sees the Cleverly Bellew rematch and in Liverpool which may even it up a bit but the former I am told is slightly the favourite.
England have started their tour of Sri Lanka with an easy win today against Sri Lanka A, it will get harder…
And what will happen in Abu Dhabi what with the double points fiasco? Anything other than a win for Lewis will see Bernie run out of town and any signs of skulduggery will be investigated by everyone.
No doubt that the BetFred chase tomorrow will be fantastic with Silviniaco Conti taking on Cue Card, Dynaste and Menorah and after that in the hurdle we have the reappearance of The New One, very exciting….
I may have forgotten something and I hope to have the American results back on Monday!
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