WTI $43.46 -42c, Brent $53.43 -1c, Diff $9.97 +41c, NG $2.86 +14c

Oil price

The oil price reaction since the API inventory stats has been quite muted, if the stock build is confirmed by the EIA numbers tonight I suspect it wont be such an easy ride. The API announced inventory build of 10.5m barrels of crude oil against consensus expectations of 3.8m and that means that it wont be long before the ‘tanks full’ signs go up at Cushing and elsewhere.

The budget is going on at the moment but the headline relief for the UK energy sector appear to be a cut in the supplementary tax rate and a cut in PRT from 50% to 35%, together the measures add up to about $1.3bn of assistance.


My positive stance on Cape, notwithstanding the current oil price environment, was vindicated by today’s results which came in better than I and the market had expected. Margins were up and the backlog is at a very healthy £746m. Although I never worried about the dividend some did, so the maintained 14p payment was a big relief and the yield is over 6%. What I like about Cape, apart from the excellent management, is that it throws off cash and that it is exposed to the maintenance side of the industry and therefore not as exposed to capital project cancellations and deferrals as other service companies. Today, again as opposed to others in the industry, Cape actually felt able to issue some earnings guidance for this year and the fact that 2015 looks like being about the same as 2014 will compare favourably.

Gulf Keystone

An operational update from GKP this morning was welcome good news as following the payment last month of $20.8m to the company they feel able to resume production from Shaikan. PF-1 and 2 will resume truck loading and the company will ramp up to 40/- b/d as soon as possible, expectations of a series of regular payments from the Government are made. Operationally the news is good from Shaikan-10 which shows excellent productivity and Shaikan-11 looks to have come in early, below budget and ‘potentially a prolific producer.

GKP is in the process of potential discussions regarding its sale process so we shouldn’t expect much meat in the statement but I am still hoping to at least have a conversation with the company before long, meanwhile I maintain a positive stance without being too much of a stale bull.

Thalassa Holdings

A brief statement from Thalassa today who have had a hard time lately as not only has the oil price hit it hard but sanctions against Russia hit part of its market. The company has seen a good level of order enquiries and it has even made two data sales this year worth $1.6m. The company says that trading is ‘challenging’ but that they are well positioned and should break even this year. There is the inevitable ‘comprehensive and cautious’ review of the carrying value of its assets and a cost savings programme that one might expect. Whilst it is hardly a good time for Thalassa the company still has state of the art kit and its markets will reappear. Long standing shareholders will be pleased to know that the company still has $16.4m of cash which magically is almost exactly the same as the market cap of the company leaving some room for optimism.

And finally…

The Gooners fought hard to overcome the disaster that was the first leg but eventually succumbed in Monaco, tonight the Noisy Neighbours try to overcome a smaller deficit but in the slightly more challenging surroundings of the Camp Nou…

As forecast here a while ago Jonathan Trott is recalled to the England test squad which proves that decent batsmen really can be recalled even when you thought that their careers were over…Assuming Gary Ballance retains the no 3 spot then JT is going to have to open the innings…

At the CWC South Africa cruised past Sri Lanka knocking off a tiny SL score in less time than it takes for a T20 match, and to think that the losers scored 312-1 against England!