WTI $57.15 -59c, Brent $65.28 +43c, Diff $8.13 +$1.02, NG $2.53 n/c
Last week saw a slight shift in favour of Brent over WTI, the former ending up gaining $1.83 and the latter losing 17c over the period. It pushed the differential back over $8 mainly due to another set of poor inventory stats which showed yet another build at a time when the market might have expected some relief from the refiners. Remember that it is only a month today until the US driving season starts and we should expect a significant pick-up in demand for gasoline.
The weekly rig count helped a bit with the overall number falling by 22 units to 932, making it the 20th consecutive fall and in oil, rig numbers fell by 31 units to 703 down from the October high of 1,609.
Kosmos is a favoured international stock so it was pleasing to see them make a substantial gas discovery offshore Mauritania. This significant play opening result comes on the Tortue West project, with 107m of net hydrocarbon pay including what the company describe as ‘A single gas pool was encountered in the primary objective, which is comprised of three high-quality reservoirs totaling 88 meters in thickness over a gross hydrocarbon bearing interval of 161 meters. A fourth zone 19 meters thick was penetrated within the secondary target over a gross hydrocarbon bearing interval of 150 metres.’
Not only was this a good result for Kosmos and for Mauritania but it also looks interesting for Senegal as the discovery looks like being part of the ‘Greater Tortue Complex’ which might extend into that country. Kosmos are represented there in the St Louis offshore Profund block to the tune of 60%.
The International Tribunal of the Law of the sea ruled on Saturday that the request from the Cote d’Ivoire to try and stop Tullow drilling should be rejected. Accordingly, the TEN development project continues to go ahead but with no new wells able to be drilled. Having drilled enough to be able to produce oil in the meantime Tullow can proceed, the courts will not make a final decision on the situation until late 2017 so this was a relief for Tullow, indeed as I write the shares are actually down on the day…
The 14/20-1 Isobel Deep well being drilled by the Operator Premier Oil, along with Rockhopper and FOGL, ran into a bit of local difficulty last week. An equipment malfunction led to the well being suspended and whilst repairs to the BOP are carried out, expected to take around 10-14 days, the rig will be utilised to drill the top-hole sections and set the conductors on the Chatham and possibly the Jayne East locations. I do not therefore, expect the whole process to be significantly delayed nor do I expect this to financially impact any of the partners in the well.
For those investors holding out for a bid for BP, the UK Government just took away the major prop. Readers will know that I have never really believed that BP would be taken over for this and a number of other reasons. Apart from the nationalist issue, BP it must be remembered is not only involved in a multi-billion dollar law suit in the USA but also owns 20% of Rosneft at a time when sanctions against Russia would preclude pretty much anybody getting involved, BP as a takeover candidate was already toxic enough, now it is bullet proof into the bargain…Amusingly it is still possible to buy most of BP’s assets on the second hand market…
It is results week for the majors and they will not make pretty reading for anyone compared to last year’s first quarter. A reasonable guess would pitch most companies at about half last year’s figure although some will be worse with downstream margins likely to be worth watching to see if they are bailed out by them.
Just in case you missed it, the FT carried a really good major piece in its weekend magazine entitled “Oil crash, how the US shale revolution changed the world (and why nothing will ever be the same again).” Ed Crooks gives a fascinating insight into the shale revolution for experts and non-scientists alike and concludes that the recent fall in the oil price, whilst causing grief to the producers will only serve to increase efficiencies in the industry…
England finally won the cricket although at one stage on Friday afternoon I thought that we were carefully dragging defeat from the jaws of victory. The numbers 0,4,59 and 0 are not London bus routes but scores by Jonathan Trott on the tour so far, on wickets you will remember other players suggesting were ‘too easy’ for batsmen. Despite having a brilliant opener warming the bench and this being the perfect opportunity to blood new players ahead of a massively busy year of test matches it looks like Peter Moores wants to keep him in the side which whatever happens will perform no useful purpose…
In the football Chelski and the Gooners played out a bore-draw and Man Who fell apart in front of the Toffees, something that has been on the cards for a while. Villa were heading for a draw with the noisy neighbours and might even have won it but conceded right at the death… At the bottom Burnley had a pen for 1-0 which was missed and Leicester went straight down the other end to score the winner, elsewhere Hull Tigers got a win which with their fixture list was well needed. The Maccams got a draw when they needed more as did the Baggies who are pretty much safe, finally, watch the Magpies perform their own ritual hari kiri much to the amusement of others in the North East for whom the recent fall has probably come just too late.
Properly finally, it was really kind of so many blog readers to sponsor Netty in yesterday’s marathon. She did us all proud by beating not only her target and both her previous times but set a personal best of 4h 41mins in the process. She also beat her fundraising target into the bargain with over £10,000 raised with gift aid against hopes of £5,000 before she started, thank you all very much again.