WTI $46.07 -$2.29, Brent $47.43 -$2.68, Diff $1.36 -39c, NG $2.80 -15c
Rather like yesterday the prices above, from last night US close are unrepresentative of realité as this morning has seen another bear raid and as I write WTI is $44.40 and Brent $45.59. The crucial support level for technical analysts that I mentioned the other day of $45 for WTI, being below the 200 day moving average is in danger of being breached and there is no sign of support on fundamentals. On the straw clutching front the numbers have come through on Chinese imports in December that I mentioned last week and at 7.15m b/d the number is indeed high, what would happen to crude oil without them? Interestingly I also mention that in pricing equations the Middle East countries, whilst keeping prices low to Europe and North America are increasing them to the Far East buyers. Secondly there are growing signs that net long positions from financial institutions are growing whilst shorts are reducing, however after a few days like this they may decide to abandon ship.
Talking of ships, a number of commentators are noting that tanker rates are going up as with prompts low and a contango offering profits down the line, even the ugly old tankers that cant fetch $80,000 a day are being used for storage at the moment…
If it’s Tuesday it’s retail gasoline price day and this week it has fallen by another 7.5c a gallon to $2.13, any bets on when gas in the States costs less than a Big Mac? (Actually I have to admit I dont know what a big mac costs…)
After the stunning success of the Senegal drilling last year it comes as no surprise that a multi-well evaluation programme of evaluation and exploration in the area is planned for this year. Pleasingly Cairn are fully funded as are its partners to go ahead with this straight away and one hopes that the costs are coming down a bit. The cash position is +$869m and would be greater if the Indian tax dispute wasn’t still going on but this strong position and the find on the Atlantic margin make Cairn one of the most exciting plays in the sector. There is no need for the company to dilute its position and nor should it, its partners appear to be as keen as I am. Elsewhere both Catcher and Kraken are on track for first oil in 2017, again the financial strength of the company enables them to proceed with these developments. Without doubt, Cairn is at the top of the list of stocks going on the bucket list.
Sound has announced that it has withdrawn its intended bid for Antrim Energy this morning, citing the deterioration in the oil price and reduced appetite for global deep water exploration. Antrim holders may well regret that its highly remunerated management on the other side of the pond made a hasty decision to reject Sound’s advances. With Skellig now possibly pushing back to 2017 and the share price in free fall Sound must have felt that it could do better from its strong position than to buy the Antrim cash and to proceed with other targets that it undoubtedly has. As probably the most interesting play in the medium size E&P companies, Sound has serious claims for investors savings, whereas Antrim holders are in a far less distinguished position now.
My comment about Petroceltic slipped through the net yesterday, fortunately Peter Reilly of Vigo was the only person who spotted it and reported back to me. The point I wanted to make was that last week Worldview requested an EGM of the company to get rid of CEO Brian O’Cathain for failing to complete the Dragon takeover and in some quarters it was suggested that he had also received a substantial bonus. I now understand that this was not a cash bonus but a company-wide share participation scheme offered to all employees. As the only executive director, since Worldview sacked the others (including two truly independent non-execs) the CEO was the only one which was made public. The fact that Worldview approved the share issue, which is standard within the industry seems to have gone unnoticed……
Northern Petroleum has announced an update this morning but nothing has changed although for choice I would suggest that things are looking up a bit if that is possible in this industry at the moment. The company are drilling a single well at the moment targeting a different reef as the asset starts to open up to them. It is good to see that on December 27th the company produced over 500 b/d a level promised but that some industry speculators hadn’t believed possible. Northern has $12m in cash and is spending it wisely and the new production guidance is 400-550 b/d which bodes well.
Amec Foster Wheeler have confirmed the rumours that they have been given notice that the Sellafield contract will be finished early in Q1 2016. This is pretty small beer for Amec and they will probably end up doing decent business for the Government for many years to come. Readers will know that I took all bets off the table in Amec some time ago, the Foster Wheeler acquisition to me was expensive and badly timed and may be a significant cause for regret as it beds down in this difficult market.
A traumatic week for Gulfsands is getting more difficult as the EGM called for today has been called off by the lawyers but will happen soon enough. My calls to the IR firm responsible have not been returned this morning so it must be all hands to the pump round there. This one smacks of all sorts of incompetence and if it wasn’t so funny it would be tragic.
And Leyshon Energy has reported that it is going to leave the Aim market and return cash to shareholders. More after I have spoken to the company, but poor flow rates and a lack of partners on their Chinese project, coupled with funding issues for new projects have meant that this is probably the best bet for now. Dont write this team off though as pound for pound it has one of the most experienced groups of industry guys I have seen for a while…
Robert Sarver has walked away from Rangers, he must think that the situation up there is totally mad and he would be right….
Sir Ben Ainslie, international sailor extraordinaire, got into a pickle and has had to be rescued by Sir Richard Branson after getting into difficulties sailing off Necker Island along with his new wife. Who’d have thought eh….?
And its FA Cup replay night with the pick of the ties being the Hammers hosting the Toffees and Wolves playing Fulham.
And in the ‘you couldnt make it up category’ when England coach Woy Hodgson voted in last nights Ballon d’Or he put neither Ronaldo nor Messi in his top three of world players of the year………..says it all doesn’t it?