WTI $55.74 -97c, Brent $63.45 -53c, Diff $7.71 +44c, NG $2.63 -5c

Oil price

The oil price ended the week up, resuming the positive trend and keeping the bulls happy. Whilst I wouldnt want to rain on anyone’s parade I feel that there will be some testing of the lower levels in the next few months. In the meantime the signs are quite positive, as I mentioned last week refiners have their buying boots back on post the maintenance season and ahead of the driving season which starts on the 25th of May this year. Margins are reasonable and gasoline prices have remained stable over the last few weeks and well up from the low of $2.04 per gallon at the nadir of the oil price.

Friday’s rig count was pretty good, a fall of 34 rigs overall is a more meaningful weekly number on 954 rigs, for oil the fall was 26 to 734 which is down 877 units year on year. The service company results season is upon us and we will be reminded just how bad things are in North America but maybe not so bad on the international front as reported by SLB and HAL.

Petrofac profit warning- Maybe my model was better than theirs…

Another profit warning from PFC this morning as yet again the costs on Laggan-Tormore have run away with them. Having already set aside $230m they now say that due to inclement weather and industrial action there will be another $195m down the proverbial as they realise just how much man hour costs are over here. Although there will be some tax deductability it will mean a reduction in profit forecasts and even as someone with such a rudimentary model, as implied by the CFO, I can tell you that it is the red pen that is out…

Shares in Petrofac have fallen by a short 15% this morning which reflects that the market thought that unpleasant news from the lump-sum contracts at L-T and Stella was behind them, clearly this is not the case. Up until now I had been giving the company the benefit of the doubt on the experiment with the deep offshore investment, maybe I have been too kind, lets hope that this is the ultimate wake-up call on lump-summery. Until both these contracts are signed off with no further red ink the market will caution, and having risen by circa 80% this year will likely mark time, results on the 23rd June are the next time to worry.


A quick look at the Halliburton figures which have just come out shows that they too have beaten an undemanding whisper quite easily. EPS of 49c clean against forecast consensus of 37c seems good and even the revenue number is better than expected. Like SLB they say that North America is under severe pressure and the international business mixed but generally better. For Halliburton Latin America is good with Venezuela up and unconventional drilling in Argentina up as well (think Andes Energia) but earnings in that part of the world carry their own discount. The Middle East and Asia is also good but in the Europe/Africa division there were black marks for Angola, Norway and Russia which for the latter is to be expected. As one might expect the company say that visibility is uncertain but they are at least very excited by the Baker Hughes deal which is ongoing.


This paragraph actually only started with a jotting that the Kurdish forces have continued to push back the IS activists from Kirkuk creating a much larger buffer zone in recent days. I was then drawn to the article on Reuters which says that there is a substantial rise in the oil flow through the pipeline from Kirkuk to Ceyhan on the Mediterranean coast. Throughput is now apparently 650/- b/d having only recently been down at 500/- b/d which is good growth indeed.

And another article about Tony Hayward in the weekend press as speculation increases about his tenure as CEO of Genel continues. As far as I am concerned this is a non-story for two reasons, firstly I seem to remember that he always was going to move up to Exec Chairman at some stage (the last I heard was being 18 months/2 years from last summer) and secondly that he will still be very much running the show but leaving operational matters to others in the company. Genel remains a top pick and far too cheap on pretty much any long-term scenario…

Victoria Oil & Gas

More good news from VOG and the shares are cruising into new high ground at least on a one year chart. Today the company announced that gas supply to clients of GDC has risen to 9.4 mmscf/d on a seven day average basis with a peak of 10.5 mmscf/d achieved. With the Bassa power plant fully operational and Logbaba looking nearly complete this is full justification of the strategy of the management and proof that the full cycle of exploration through utility sales is not just possible but highly profitable, particularly in a market decidedly lacking in efficient power supply.

And finally…

With the second test starting in the West Indies tomorrow the coach and selectors are pinning their hopes on a non-specialist opener to partner an out of form one, one of them must get some runs before long on those friendly wickets…And yes, 19 runs…!

Lewis delivered again and this time it was a different Ferrari that split them and with a new engine unit about to arrive the Tifosi have much to shout about.

In the Premiership if it wasnt already done after a few games, it certainly was as Chelsea beat Man Who 1-0 despite the reds having 70% of possession. At the bottom it really will go to the wire as with Leicester winning three on the bounce they might just do a Lazarus… The FA Cup semis-finals were closer than predicted with a goal-keeping faut pas giving the Gooners a narrow win in the first game. In the second, despite taking the lead, the HubCap Stealers managed to lose to Villa who could yet ‘do a Wigan’ and do the Cup winning/relegation double. So Stevie Gerrard might go to the Cup Final but only if someone buys him a ticket for his birthday.

And I have two reasons to congratulate Bristol City on their promotion as Champions of League 1, firstly as it will come as welcome news for Keith Bush over at Northern and secondly as I had the pleasure of meeting manager Steve Cotterill some time ago. He came across as a highly intelligent man and a really good manager into the bargain, couldnt  happen to a nicer bloke.

And the rugby final will be between Clermont and Toulon which will come as no great surprise although Leinster pushed very hard right to the end, as Johnny Sutton says, there is no financial fair play in rugby union…