WTI $56.16 -45c, Brent $62.73 +65c, Diff $6.57 +75c, NG $2.61 +3c
Lets get the facts out of the way first, last night’s EIA inventory figures showed yet another build of crude oil stocks, this time by 5.3m barrels against consensus of 2.7m. This number is the highest since 1982 and the monthly figure is the highest since 1930. The interesting thing about these numbers was the refinery utilisation rate which fell 1.1%, this should not be happening at this time of the year and led to a fall in gasoline stocks of 2.1m barrels way above expectations. Indeed at this time of the year one expects refining to be running flat out and gasoline stocks building ahead of the driving season which is now only a month away. I think that this is a one-off and expect to see a reversal of the trend very soon, otherwise watch out for a sharp rise in gasoline prices. Finally, the EIA also said that US domestic crude production fell again last week, it was a miserly 18/- b/d to 9.37m b/d against the recent peak of 9.42m b/d but every little helps as they say.
From fact to not necessarily fiction but lets say opinion, the good thing about having not one but two major league oil conferences going on at the same time means that almost everyone with a vested interest has been on their hind legs in the last couple of days. Here is a brief selection of comments from the good and the great in no particular order from the CERA Annual shindig and the FT Commodities thrash in Lausanne.
Rex Tillerson, CEO of Exxon was more sanguine about oil prices saying that we might have to get used to lower oil prices and whilst not as bearish (he was bullish yesterday) Ian Taylor of Vitol said that there would likely be a dip in the 2nd quarter but that oil wouldnt go below the January lows of $46.
Others were more bullish, with Tony Hayward of Glencore and Genel Energy suggesting that oil prices would soon return to near $80 a barrel. His comment that ‘ action by companies to withdraw capital from the sector is sowing seeds for the next bull market’ I concur with but he may be going bullish a bit early. Elsewhere the CEO of Gunvor, Torjorn Tornqvist aid that ‘the low oil price is behind us’ whilst industry mouthpiece PIRA went further by saying that the price would ‘rise substantially’ in the coming months’. Add to that the legendary investment manager Mark Redway concluding that oil prices would rise in 2015 and industry professionals are at least on the face of it feeling a bit more upbeat at the moment.
Cape has announced a new, five year contract with Exxon for access, insulation and associated services to the Fawley refinery in the UK. Cape already work for Exxon supplying Fawley but this is now a single access and insulation contract and is another big step forward for Cape. Readers will know that I remain very positive on Cape and that key milestones such as the Motherwell Bridge acquisition and the holding of the dividend have showed that my confidence in Joe Oatley is undiminished.
Victoria Oil & Gas
Final news today that the Logbaba power station is online and delivering 30 MW of power to the grid. Along with Bassa that means that 50 MW are being delivered in line with expectations and pretty much on time. Average daily gas production is now 14.5 mmscf/d with a peak of 15.3 mmscf/d. The long term target is 10.4 mmscf/d bearing in mind volumes change due to the seasons. The shares are up again today and have doubled since the December low, whilst this is no mean feat it is not undeserved and the company will be profitable in 2015 with significant further opportunities in country. I remain resolutely positive on VOG despite the recent run.
More changes afoot at Sefton where Executive Chairman Dan Levi has left having been in the post for just 11 weeks. This is not quite as bad as it sounds as his appointment was always a temporary one and frankly a lot has been achieved in that short space of time. There are significant management changes happening, not least that CFO Raylene Whitford has been appointed to the board and there will be other executive and non-executive appointments to replace Levi and Clem Chambers who has also left. Daniel has presided over a big rise in the share price and accordingly his salary for those 11 weeks has risen from £1 to £50,000 also some change…
Although a leopard rarely changes its spots there was a lot of stable cleaning to do and sometimes this needs to be done in order to make substantial progress forwards. I hope to meet the CFO shortly and get an idea of how the company is planning to move forwards and obviously the identity of the new executives will also be crucial. Nothing more than a watch this space but worth keeping on the radar screen and it is also worth praising the non-execs who for the last year have pretty much held this company together, otherwise it would most certainly not be here.
The situation at Trap has been critical for a long time and todays results are pretty much the death knell for the company. A massive loss of £44.4m will consign the company to the history books of the UK E&P sector as the board say that ‘in the absence of additional funding the group has insufficient resources to continue beyond the short term and is highly likely to become insolvent’. Administration or liquidation looms for Trap which is a shame but even before the recent fall in the oil price the company was in all sorts of trouble and I feel most sorry for Scott Richardson Brown who has battled for a long time to save the company.
I notice that Petrobras have finally released results with a write-off that knocks Tesco into a cocked hat at $17bn including $2.1bn of bribery payments…
And Weatherford missed the whisper coming in at minus 4c against consensus of plus 4c.
For those of you who are interested below is the link to my interview on TipTV yesterday in which we discussed Cairn and Far Ltd, Genel, Amerisur and Rockhopper.
In the Champions League both Juve and Real Madrid scraped over the line winning by the odd goal over two legs, for Madrid it was MU loanee the little pea wot did it…
England are in a strong position in the cricket and should hammer home the advantage today against a weakened Windies bowling attack. Despite having given them 50 runs more than they needed to it is only day three so plenty of batting to be done.
And as the big day approaches I would like to yet again thank everyone for their magnificent and generous support of Netty for Sundays marathon, you are most kind and for those still asking how to donate the link is below and on the website.
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