Oil price, Hunting, Trinity, Afren, Bahamas, Sundry-EOG-Tangiers-Wood Group-, And finally…

WTI $52.78 +$1.57, Brent $57.39 +34c, Diff $4.61 -23c, NG $2.80 +9c

Oil price

The Baker Hughes rig count almost went into three figures on Friday afternoon giving bulls a welcome run into the Holiday weekend. The US is shut today for Presidents Day, Happy Birthday Mr Washington. So, the rig count fell by 98 units, 84 of them being in oil and 56 in Texas which unsurprisingly taking the biggest hit numbers-wise.

I think that the bulls may be confusing the short-term oil market tightness, which is actually being caused by that bad weather in the Middle East, and the long-term likelihood of US production falling. The statistics, that never lie, tell us that US production hasn’t fallen at all yet and there are confusing estimates from the leading forecasters as to actually when and how much to expect, certainly not much and not yet.

Hunting

An eminently sensible statement by Hunting this morning in which it suggests that neither it nor the analysts who follow the stock are able to accurately predict or make guidance for 2015 earnings. Results due on March 5th will be in line with expectations but with the ‘rapidly evolving’ situation on the ground numbers for this year just cant be predicted, the 1st quarter of 2015 looks reasonable but operationally the company is expecting the negative feed through of the oil price to start in earnest in Q2. The pain is expected to hit well completion and construction worst with the situation in intervention less badly.

Hunting does however come into this slow-down relatively well protected, it has very strong positions in the high margin kit still being used in the long horizontal wells and an order book that whilst obviously being hit, has not been devastated like some. The company expects to continue its investment in new operations and machinery as it has done recently and will be very well placed for the recovery when it comes. Indeed the statement actually says that it is also ‘mindful of the long term strategic growth opportunities’ that this market will throw up.

The market has taken about 5% off the shares as I write but having recently plumbed the depths of below £4 a share and lately 548p, a shake was entirely likely. I concur with the fact that if the company cant tell the immediate future with any degree of certainty then neither will the market but I do know a good, well run company when I see one and Hunting fits that category to a t. So for investors it will be a bit of a bumpy ride, dependent on oil prices, rig counts and so on, even whether the CFO of GE is sharpening his pencil or not. If I had to make a cautious gamble I would say that in a year’s time Hunting would have weathered the storm, invested through the cycle and come out ahead of the pack, not a risk-free call but then when are they ever?

Trinity Exploration & Production

An update from Trinity this morning comes out of the blue, you may remember that I never did get my meeting with the company although it was within touching distance. The company says that is on target to take the operating break-even price to below $40 which I suppose is good and they are disposing of non-core assets and trimming overheads. Key blocks 1a and 1b are on schedule with development approval and GSA’s imminent and they should complete in this quarter. I have always had a soft spot for Trinity and although it is pretty gruelling they are definitely doing as much as they can to stay alive at $50 oil, more I hope if I ever get to chat to the management.

Bahamas Petroleum

One of the stocks that contributes most to my post bag especially if I have written or chatted on it in the media. Today’s announcement puts together a fair bit of good news including up to date legislation promise and further well re-engineering. On the latter, a combination of more work and reduced rig rates amongst others, brings the cost down to $50-60m, much lower than I remember. Add to that the new field size for economic development being nearer 200m barrels than the billion or more previously envisaged then one can get quite excited which i’m sure shareholders will be. With cash of only $10m, it has always been a requirement to gain a strategic partner to fund the exploration, something that must be as tricky as ever in this environment but with such a great prize someone will surely turn up. When that happens, and when an actual time-frame for drilling that well emerges it may be time to ring the bell and clamber aboard, until that time I will wait on the jetty…

Afren

It was quite interesting reading the announcements and speculation on Friday about Afren, our fallen child. I have been saying throughout this process that Seplat had offered what was considered by the Afren board to be of a derisory nature and this was proved correct on Friday. The company intends to continue discussions with its bondholders as well as ‘new third-party investors’ aimed at securing the business. Now obviously we dont know who they are but they must be more than men of straw for Afren to turn away a bird in the hand if I can mix my metaphors. Afren has to ensure that it doesnt cross the line of default as to do so would certainly render the company worthless, I think we know upon which foot the boot is on here…

Sundry

Europa Oil & Gas has done what a lot of analysts thought might not be possible and that is to farm-out its Tarbes permit in France. Vermilion Energy, always the most likely candidate has finally come good which is a big plus for EOG. The news for the company lately has been generally good but of course the biggest carrot is quite a long way out, as I understand it Kosmos has not yet decided when to include EOG in its plans for exploration drilling in Ireland…

When I saw the announcement that Tangiers Petroleum were looking to raise even more money I couldnt help but try to strangle a small guffaw. In a raise that hopes to withdraw A$6m from the wallets of international investors it is hard not to think back to previous times when TP has taken poor investors money and how you say-departed- failing to make a return of any nature. I’m not sure what is the best expression, throwing good money after bad has happened here before, either way you have been warned…

No blog first thing tomorrow as its the Wood Group analysts meeting which should be interesting…

And finally…

It was indeed a sport filled weekend which must fill the oil purists with dread but I will be brief. In the cricket one awoke on Saturday morning to the familiar words of Morgan is out for a duck. My man Taylor gallantly tried to restore pride and were it not for an umpiring howler at least he would have got his ton. What would have happened if he had batted at three I wonder? More recently Ireland last night turned over the Windies and will have high hopes of actually getting to the next round which is sometime next year…

The FA Cup saw easy wins for the Gooners, the HubCap Stealers and surprisingly the Baggies whilst for the first time I can say something nice about Villa. MK you must be well pleased and although had a slight jitter at the end Sherwood has started on the right note. (If that doesnt get me a quote I dont know what will). Division 1 Bradford did it again seeing off the Maccams and Reading beat Derby whilst Blackburn came from a goal behind to beat Stoke 4-1. The draw and Man Who at Preston tonight…

I saw that Johnny Sutton commented that Scotland were cheated out of a victory by Glen Jackson who might have been Glenda with dodgy timekeeping but if the guy who kicked the conversion had taken less time the controversy would never have happened. England saw off Italy but with some equally dodgy defensive tackling which cost two slack tries. Ireland beat France and set up quite a game for March 1st.

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