WTI $52.69 -58c, Brent $56.42 -91c, Diff $3.73 -33c, NG $3.00 +11c
A very Happy New Year to everybody and had we known this time last year what was in store for the oil price I wonder if we would have believed it! For reference purposes only, it is worth looking back to the first blog of last year when Brent was $110.80 and WTI $98.42, last week’s year end close prices were $57.33 and $53.27 giving falls of 48.26% and 45.87% respectively on the year.
And as we enter the new year there is no sign that the fall is going to be arrested any time soon, we do see signs of some ‘flattening out’ but there is no magical safety net nor any reason to construct one. On Friday statistics for December showed that Iraq exported 2.94m b/d, its highest since 1980 and Russia was up too, albeit modestly but still at a post Soviet high of 10.667m b/d. These two figures alone are enough to worry exporters and companies alike but also serve to prove that not only is there no discipline but that price is not an issue, at least for the time being. With a stealthy increase in US exports via the condensate route and abundant natural gas often as a by-product of drilling for liquids, there is little obvious production cessation over there and there will need to be some big falls in the BH rig count to make a dent in North American production of gas or liquids.
In common with other E&P companies GKP shared the pain last year, indeed the share price fell by a good deal more that the oil price, at one stage being 77% down on the years high. The June ‘invasion’ by ISIS led to justifiable worries about any production at all as the Peshmerga defended Erbil and some installations were shut-in.
But given those most dire of times, the situation facing all the companies operating in Kurdistan has become much more optimistic with agreements between the KRG and central Iraqi Government paving the way for acceptable exports through Turkey and better still, likely payments to the companies involved.
So, todays announcement from Gulf Keystone that it reached its milestone target of 40/- b/d on December 27th is very promising indeed and to my mind most importantly establishes Shaikan as a material producer in Kurdistan. Having spent time looking over most of the wells and facilities at Shaikan and in the company of the CEO it always looked as if the province was indeed rich in oil but equally as tricky to deliver. It now seems that with this landmark achieved the company can go on to setting and delivering on higher and sustainable targets.
The only question that remains to be answered is that of payment, a pretty crucial one I know but the only remaining area where trust is the key to the process. Although I didn’t attend the London Conference in December I did read the speech made by Dr Ashti, in which he promised utmost commitment to ensuring that the companies operating in the area would be paid in full, a commitment I expect to be adhered to. Accordingly, with GKP fully expecting to receive payment I am confident that 2015 will be a major turning point for the company and whilst it may seem foolish to be recommending oil shares after the piece above about the oil price, and that much remains to be fixed I agree, if the market doesn’t appreciate it a company might….
Rockhopper has announced that it has been awarded a 40% interest in offshore Block 9, Croatia. ENI are the Operator with 60% and the block is in relatively shallow water in the Northern Adriatic. Having acquired MOG last year, this is in line with Rockhopper’s plans to build a position in its second core area of the greater Mediterranean.
Probably of more imminent interest is the commencement of the next drilling programme in the North Falkland basin which is expected to get underway at the beginning of March and will drill prospects such as Zebedee, Isabel and Elaine. Again the shares have joined the sector under-performance but success during the spring and summer of this year would cause investors to become more positive and the shares are not expensive.
With no blog on Friday Spurs fans will feel that they missed their day in the spotlight after they took down Chelsea 5-3 at the Lane, another dodgy non-award of a pen which would have put Chelski 2-0 up and sealed the result according to the Chosen One…
There were no surprises in the FA Cup and in that I include QPR losing but this weekend is a rather long and drawn out Cup session with the Hammers and Everton not playing until tomorrow night and some played their ties on Friday. The draw for the next round is at 7.30 tonight and all the big names will be in there with Cambridge…
Up in Glasgow there is apparently another ‘bid’ for Rangers with US entrepreneur ( I only used that word to be able to do the old gag when George Dubya Bush allegedly once said ‘the trouble with the French is they don’t have a word for entrepreneur’…) Robert Sarver, owner of the Phoenix Suns basketball team joining other Shermans wanting to link up the franchises. With Rangers borrowing £500/- off the Chairman today for ‘working capital purposes over the next few days‘ (!) and Mike Ashley on the prowl, not to mention all sorts of shareholder groups and factions I hope he knows what he is letting himself in for…
And couldnt help mentioning football in Spain at the weekend as David Moyes popped up with a win for his Real Sociedad against Barca and with Valencia beating Real into the bargain it was a rare weekend with both the big boys losing at the same time.
Phil ‘The Power’ Taylor couldnt quite pull it off and win British title no 17 and lost to Gary Anderson in a very close darts final last night.
And the rugby game of the weekend must have been the 17-8 win by Leicester over Bath which made up for a previous beating I suspect.
We are getting to the vinegar strokes of the American Football season and I will have an up-to-date report on that tomorrow I hope.