WTI $76.51 +66c, Brent $80.36 +$1.03, Diff $3.85 +10c, NG $4.27 -22c
Opec week dawns and the feature writers had a field day in the weekend papers, some writing better than others. Today sees the last day of the Iranian nuclear weapons talks, also being held in Vienna but as I write it looks like going into extra time. Even with the Saudi Foreign Minister flying in for last minute talks with John Kerry it looks like an extension until the spring is the likely outcome.
Friday’s rise in the oil price was mainly down to the Chinese interest rate fall although traders have detected a bit of short covering occurring before Thursday, never good to be too exposed at these times. This is particularly the case as depending on how long the meeting goes on for, markets may be shut thus creating the conditions for wild fluctuations.
They say that profit warnings come in threes and this was indeed the third in 12 months for Petrofac. The company has said that this years number will be at the low end of the admittedly narrow guidance, so expect $580m or so but it is next years figures which are being chopped. The company thinks that consensus was $675m and are now guiding to nearer $500m which for a number of analysts on the conference call was a bridge too far. Of the missing $175m, $115m comes from IES, $45m from ECOM and $15m in ‘central items’ like interest we are told. There are some specific problems such as the low oil price which the company can do nothing about and this counts for $45m of the void but elsewhere there are other problems in IES and in ECOM. In IES there are delays at Teclen and at Greater Stella whilst migrating to new contracts in Mexico is creating some uncertainty. The problem child in ECOM remains Laggan- Tormore which has been beset by bad weather and labour union problems but overall it has just proved to be a nightmare and whilst the company are still in talks with Total it is hard to see this project making any money.
With a very strong order intake so far this year of $10bn and maybe more to come, the backlog is up to $21bn+ which is a record for Petrofac and ironically secures revenue for several years down the line but the market isnt concentrating on that right now. The problems in IES are repeatedly worrying and if you add to that the L-T debacle and some worries about the offshore boat build it may be a while before the shares recover. Talking of the shares they have fallen 300p or 25% this morning and the market cap is a symmetrical £3bn but although its quite tempting to buy for a rally some investors may wait until February when the results and capital markets day come along.
Another contract today for Plexus, this time a £1.9m well order from a long standing major client for an exploration well in the UKCS. As you know I think that Plexus is likely to be less troubled than most in the industry at the moment being at the forefront of equipment in the safety conscious industry.
Ophir and Salamander duly announced the terms of the takeover this morning which were as suggested on Friday. Whether or not someone else comes out of the woodwork at this stage is debatable and the exit price looks like being around 96p..
Sound Oil announced a hostile ‘intended’ bid for Antrim Energy which I have written about in a flash blog earlier this morning. This could be a well timed move by Sound and seems to me to offer something to Antrim holders with very little downside to Sound.
And I noticed that Genel announced that their Jacare-1 exploration well in Angola was plugged and abandoned which concludes the company’s commitments and they have no further plans in the area.
It was indeed a big weekend for sport and good to see Lewis winning in Abu Dhabi.
In the Prem there were some interesting results, the Eagles doing the HubCap Stealers 3-1 would have made their day and Newcastle winning again put them into the Champions League spots for a couple of hours. That was taken the Man U who beat the Gooners 1-2 having had very little of the game, indeed I was reminded this morning that it was one nil to Man U having not had a shot on target.. Spurs won against the Tigers and there were wins for Chels, Noisy Neighbours, Burnley and the Toffees who were a bit lucky against West Ham.
In the rugby the result of the day was probably Ireland who beat Australia, that form will be interesting next Saturday. England beat Samoa, as they should and Wales went to 0-26 against New Zealand 2’s.
Bellew beat Cleverly and Anthony Joshua still hasn’t got many rounds under his belt with another easy win.
In the NFL….
The Packers edge out the Vikings 24-21 to move to 8-3. Tom Brady leads the Patriots to an easy win over the Lions. The Pats extend their winning streak to 7.
The Eagles remain unbeaten at home after beating the Titans. The Seahawks and the 49ers keep their playoff hopes alive after both teams won their ‘must win’ games!
Peyton Manning threw for 257 yards and 4 touchdowns as the Broncos sneak past the Dolphins 39-36.
Tonight sees the Jets face the Bills and the Ravens travel to New Orleans to face the Saints.