WTI $45.72 +$1.76, Brent $55.32 +89c, Diff $9.60 -87c, NG $2.79 -3c
Crude prices were steady last week but very much greenback dictated, the $ strength on Monday clipped over $2 off the price and the weakness on Thursday and Friday reinstated it. WTI expired at $44.84 which could have been worse, the bad oil stock figures continue to be offset by the good rig count data. The difference is that whilst the inventory data is the here and now, the rig numbers are lagged and despite a near halving of the rigs since October US production is still 9.4m b/d and showing little sign of abating-yet. So, the actual Baker Hughes numbers were a fall of 56 rigs to 1069 overall, in oil it was down 41 units to 825, in Canada, like last week it looks like carnage with a fall of 80 to 140, oil was down 55 to 30…
Wood Mack added fuel the the flames by saying that the US Gulf of Mexico was ‘resilient’ to the oil price drop and will retain momentum ‘despite price challenges’, interestingly exactly what Dennis Proctor told me last week and I reported in my Hunting comments on Friday.
Saudi Minister Ali al-Naimi made some interesting comments at the weekend, none of which will help the price pick up at the moment. Suggesting that non-Opec countries ‘insisted’ that Opec carried the burden, he said that the cartel would refuse to bear that responsibility, going on to say that Opec only amounted to 30% of world oil production and the 70% must participate if they want to increase prices. All that sounds eminently sensible making it likely that the Opec meeting in June will be a short one. Finally, China confirmed my comments from last week that they had indeed upped their oil imports in February. At 25.55m tons, an increase of 10.8% y/y, it was a strong figure without being game changing but may have accounted for some of the price strength during the month.
Caza Oil & Gas
Caza has announced another really good well, the Marathon Road 15 Bone Spring well is flowing 1,203 boe/d being 1,037 of oil and 995 mcf of gas per day. The company describe the well as ‘excellent’ and will offer good returns even in the current low oil price environment. I mentioned last week that the significant upside that I hope for in Caza may be ‘postponed’ for a while by which I meant that for various reasons, some properties and licences may be held or not completed by Caza or their partners at the moment, for which I came in for some proper stick. I remain convinced that Caza has a very strong portfolio, much of which is held by production and that the management is taking the appropriate steps in the current environment to maintain value for shareholders, that this may take a little longer to achieve is only a short-term disappointment.
Europa and Egdon have announced that the Kiln Lane-1 well is plugged and abandoned as water wet although better news is that there were ‘significant’ oil and gas shows. Although clearly disappointing this is the first well on the licence and the operator has identified multiple leads which give grounds for optimism. Both EOG and Egdon have plenty of other things on the go not least the highly encouraging recent discovery at Wressle. For EOG there is also the upcoming CPR on its Irish licences in the South Porcupine Basin where Kosmos have indicated substantial grounds for optimism, whilst for EDR, in addition to the conventional drilling, there is of course plenty of unconventional appeal in the portfolio.
Victoria Oil & Gas
Readers will know that I have been very positive on VOG in recent months and this optimism is again justified by the company announcing today that it has hit another target in its operations in Cameroon. The Bassa power station is now supplying 20 MW to the grid using 4.5mmscf/d from Logbaba making sales from there of 8.5mmscf/d in total. All eyes are now on the Logbaba power station itself which will deliver 30 MW to the grid and should be up and running in April. At that stage GDC will be selling around 10.4mmscf/d or more depending on the season, where peak sales will be in excess of 13mmscf/d. This has been a well planned, delivered and executed project which will use gas from VOG’s Logbaba discovery for an economy that is highly dependent on power generation, further exploration discoveries can only add significant value for VOG, the recent price rises are no flash in the pan.
Afren, not content to have ‘flowed’ away most of its shareholder value have now found that they can add to that achievement – fiddling while Rome burns. Its legal advisors have found that ‘regarding the hire of an individual within its operations in 2012 and the payment of certain travel and accommodation expenses connected to Afren’s activities.’ It may be Greek to you and me (it’s certainly not English) but it is serious enough to tell both the bondholders committee and the Serious Fraud Office. Someone hasn’t been doing there job very well, as the Chairman says ‘The Company has taken steps to halt its previous practices in relation to such expenses payments.’ The words stable door and bolted come to mind, what did I say, what a mess? An understatement.
Halliburton and Baker Hughes have announced that they are to start selling $10bn worth of assets to complete the merger under the terms proscribed by the US Justice Department. Sales will apparently include Halliburton’s drill bits and directional drilling operations and Baker Hughes’ cementing division.
The rugby on Saturday was a magnificent spectacle and a feast of points, it even looked for a while that England might beat France by the required margin but Ireland were worthy winners and it bodes well for the Rugby World Cup in the autumn. Just a shame that a certain Johnny Sutton tipped Scotland to upset the apple-cart when it was the wooden spoon that they took home…
As for the football it was indeed the fixture at Anfield that took centre stage as predicted but maybe not for the reasons we expected. A Liverpool supporting reader of the blog sent this message to me this morning ‘ It took 37 seconds longer than usual for Steve Gerrard to prove he is totally brainless.’ Interestingly although Man Who ran out winners the HubCap Stealers played their best football from two nil down and with ten men…Next stop for them is an away fixture against the Gooners after the International break ugh! Other results went to form and the relegation issues are not settled as all of the bottom seven clubs lost, even the Maccams didnt score two goals robbing me of the opportunity to use the headline, an Avocado Pair…
Tomorrow sees the CWC really exploding as New Zealand take on South Africa and the Aussies face holders India in the semi’s, worth a sneaky peek I reckon…