Oil price, Gulf Keystone/Genel, Afren, Sundry-PetroMatad-Amerisur, And finally…

WTI $52.14 +$3.00, Brent $58.12 +$3.17, Diff $5.98 +17c, NG $2.65 -6c

Oil price

Five days is a long time in oil price terms and this Easter much has happened, causing wild fluctuations in the crude price. The Iran nuclear accord and the Saudi pricing schedules between them have meant at least for Brent, the swing was at one stage over five dollars in less than two working days. Cast your mind back to last Thursday when the Lausanne talks were on the brink of ending without agreement, a final push over the line and agreement from the Supreme Leader (Iranian, not American) meant that a framework deal was possible. Cutting a deal on centrifuges and redesigning the heavy-water reactor, in addition to regular, visible inspections by the IAEA has ensured that the parties have until June 30th to draft a comprehensive nuclear agreement. This is by no means the end of it all although it may be the beginning of the end, amongst those wishing to scupper the agreement include Bibi and of course the newly in majority, Republicans in the US Senate. Having said that the deal stands more than a 50% chance of success which is why the oil price tanked on thursday although Brent did actually bounce around a dollar off the bottom to end up down only $2.15.

There will be much speculation about how much oil and how quickly Iran will get back onto international markets and whilst that shouldn’t be under-estimated it will take time. The June 5th Opec meeting probably comes a little too early but expect some fiery discussions about Tehran regaining market share. Realistically, the sanctions will not be lifted in one go thus ensuring that Iran cant just flood the market, although there is the small matter of around 30m barrels of stocks to distribute. Going from the current production of around 2.8m b/d to, say, 4m b/d will take some time but long term with modern kit and backed by majors experienced in-country it should not be dismissed. Having said that I suspect that the Oil Ministry are going to have to make life a bit easier for the companies, maybe giving a bit of equity this time.

With one mighty leap the oil price went from depression to happy days after Saudi Aramco announced that it was increasing its prices to Asian refiners for May liftings thus making people believe that the worst was over. With the Saudis producing a little over 10m b/d it is indeed encouraging especially as they like to produce, and export, as much as possible before the summer comes and with it significantly increased domestic demand. One might think that the slack during the summer might even it out a bit and so it should but we have further to go before we reach the promised land..

In all this the BH rig count and the non-farm payrolls appeared to be largely ignored although the holiday probably had something to do with it. Down only 20 rigs to 1028 was a real slowing from previous weeks although obv, it cant keep falling in a straight line. Bear in mind that oil rigs, down only 11 at 802 is still almost exactly 50% down from the October peak. The NFP missed the whisper by a distance, at 126/- was half expectations leading to worries about US growth but it certainly put back rate hike time a little which pleased markets.

Gulf Keystone

With the arrival this morning of another 85.9m new shares in the company being a stockholder of GKP doesnt make one part of an endangered species, you are one of nearly a billion, 978m to be precise. But, as I said last week there are grounds for optimism as I believe (as does Tony Hayward, see below) that payments from the Government are likely to become more regular and GKP might expect around $15m a month which is a start at least. Also, again as I mentioned last week, I am convinced that something corporate is going on and although I sound like a broken record I think the risk here is not being involved.

Genel Energy- Its not an Exodus just a movement of the people…

I replied to a reader of the blog last week who had expressed concern about high level departures at Genel, that despite it appearing to look like a mad dash for the exit it was mostly pre-planned and that Tony Hayward was going to be staying for the ‘foreseeable’ future. With Julian Metherell having announced his departure to spend more time on his farms and the press speculating that Dawn Summers was off to pastures new outside of Kurdistan, the Tony Hayward interview with Bloomberg has created some excitement in the last few days. The interview was very upbeat and as mentioned above TH was positive about payments, saying that ‘over the course of the year the payments will become more regularised’ and he expects the next payment ‘in a month or two’. Also Genel expects to reduce its reliance on less lucrative domestic sales in due course.

The interviewer managed to get more out of TH about his exit from Genel than most have recently with the -time to leave- bomb being well and truly set off. This is what he said verbatim in the interview “I have been the CEO for four years; I created it and got it up and running,” he said. “Now it’s time to move on but not move out and continue my involvement in a less operational manner.” I suspect that having said that he would step down as CEO ‘within a year’ according to Bloomberg, the best comment is that he will ‘continue my involvement in a less operational manner’ and thus I would like to think that he will take over as Executive Chairman before long and remain in charge of shaping and implementing strategy and of course continue to be market facing as well.

Finally there were some other nuggets in the interview that shareholders might like to see, looking at the way forward it seems as if one path is through strong growth and the other is if the company received an offer ‘they could not refuse’ both of which are equally likely apparently. I am convinced that Genel will be taken over at some stage and that there will be a serious consolidation of assets in Kurdistan as demonstrated by the activities mentioned above by GKP, at 476p Genel is significantly undervalued especially if Tony isnt going anywhere in a hurry.

Afren- Its not Paul Daniels…

According to the Sunday Times the next CEO of Afren is to be Alan Linn, formerly CEO of Roc Oil which was taken over last November and apparently he is already on board as a consultant. It is difficult to know quite what he or indeed anybody can do at this stage, the shares having lost almost all of their value and the only way forward is to manage the exit gracefully…

Sundry

I had really hoped that I had heard the last of PetroMatad as I was sure that it had expired somehow since the roller coaster ride it put shareholders through some years ago. In fact when I saw that BG of all people had farmed in to their acreage I checked to make sure it wasnt April Fools Day. It’s not, so for a few lucky punters its time to take the share certificates off the bathroom wall…

Tomorrow sees results from Amerisur Resources which disappointed the market last week with a reserves and resources update at Platanillo and concerns that the pipeline is being delayed again. Amerisur is a favourite of the blog and it is in the bucket list and very much remains there. I think the fall is well overdone, the company is fully funded and has been hit partly through conservative management actions, there is considerable upside from both production and when the pipeline comes onstream, as it will, it will see a massive reduction in costs, truly transformational for this company.

And finally…

Not a good weekend to be a Noisy Neighbour, i’m not sure what is worse, seeing Chelski win and go almost out of sight in the table or to have Man Who squeeze above you into the bargain. With the Gooners destroying the HubCap Stealers they too are above the Champions although catching  Chels is probably too much to ask Arsene’s boys. It’s total mayhem at the bottom with Leicester and the Super Hoops both winning, most relegation spots are still up for grabs, tonight its Villa v QPR not for the faint hearted..

Fantastic to hear fan humour is alive and well especially in the singing, Birmingham City in all sorts of trouble had been leading Bournemouth 2-0 but went down 4-2 in the end. As they left and to the tune of Sloop John B they were heard to sing ‘We want to stay here, we want to stay here, Bournemouth is lovely, we want to stay here’…

And Wigan sack Malky Mackay after just 138 days which is about 137 days too many, record was 19 points from a possible 72 and has seen the club on the way to the third division…

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