WTI $50.42 -$3.56, Brent $55.55 -$3.55, Diff $5.13 +1c, NG $2.62 -6c

Oil price

I said yesterday that the oil price was ‘resilient’ in the face of most influencing numbers being bearish and yesterday it was the EIA inventory stats that broke the camel’s back, so to speak. Market expectations were for a build of 3.3m barrels of crude so coming in at 10.9m when the so called experts had gone low in the hopes of the high API number just being a catch-up were proved wrong. In fact, stock levels are very high across the board, crude has 100m barrels more than this time last year and even gasoline and distillates are 33m higher year on year and we havent even started building ahead of the driving season yet. I mentioned also that the EIA had forecast lower US production, the actual number is now a mere 9.39m b/d ‘well’ off the peak of 9.42m achieved on March 20th….

Shell

Taking a look at the press today it seems that most journos have elected to err on the side of caution with regard to the BG bid describing it as ‘a huge bet’ or a ‘huge bet on LNG and Brazil’ or using ‘aggressive oil price assumptions’. One or two have seen through the short term and see it for what it is, a potentially game changing deal for Shell in which it solves a lot of problems in one go. I dont think that they have overpaid for BG, I think that BvB has done a ‘transformative’ deal and consider the near 10% fall in the B shares to be a great buying opportunity.

Rockhopper/Premier/FOGL

For the above three Falklands participants the drilling programme in the northern basin goes on with the spudding of 14/20-1 Isobel Deep well. This is a high-risk, high-impact well targeting the Isobel deep fan in the area of maximum mapped reservoir thickness and has a GCoS of 20%.  The well is targeting Gross Pmean resources of 72mmbbls (range 9-207mmbbls) although the complex as a whole in this area has gross Pmean prospective resources of just over 500mmbbls. As such the well is an out and out exploration prospect and will take around 30 days to complete.

Rockhopper has two other announcements this morning in the form of final results and the confirmation of the CGT liability deferment. The former were completely in line with expectations as one might expect, key thing here is the cash which at $200m at end 2014 and forecast $125m by end 2015 remains in line with guidance. As to the tax it merely confirms the deal done in December 2013, the tax liability is the same at £64m and the timing is also as before, linked to first oil. RKH are also preserving full flexibility to secure bank debt as an alternative to the Premier loan agreed at the time of the farm-out.

Lansdowne

Yesterday I rather ran out of time and teased by putting Lansdowne in the header but not in the text for which I apologise. The company has announced a strategic review which will be wide-ranging and might include virtually every option. The company themselves include possible merger or acquisition, farm-down or sale of the business which is confirmed by them entering a formal sale process under the auspices of the Takeover Panel. With the interminable Barryroe process still apparently awaiting a fund raise by the farminee, a frightening prospect in itself, this approach by the board seems eminently sensible and in the best interests of the shareholders. For them, Barryroe apart, there is potential in the portfolio which is shown by the quality of major participants offshore Ireland which is very high although the problem is that drilling is unlikely until late 2015 or more likely 2016. Accordingly the process Lansdowne has entered into appears to me the best under the circumstances, the company could still be very cheap if someone can see the wood for the trees, that may be one of the bigger players in the region.

And finally…

So Stevie Gerrard’s dream of a Wembley birthday present remains intact as the HubCap Stealers went through to a semi-final against Villa last night.

Its the start of the Masters tonight and how exciting is that? With Tiger returning, Rory pumped up and Bubba having just received the most unpopular player on the circuit award (he even voted for himself) but at Augusta he is the man in form. See Jack Nicklaus had a hole-in-one in the par 3 competition yesterday…

Also starting today is the 3 day Grand National meeting at Aintree and with a full month since Cheltenham there are more competitive races than ever. The weather in the UK at the moment is dry and fine so watering the course has been happening and may happen again before the big race on Saturday. Its the last festival for AP so McCoy mania is in full food and he has a number of live chances today.

English cricket is being shaken up a bit and I was genuinely sad to see Paul Downton leave yesterday, I will not feel so sad if and when the coach and the National selector leave the building which cant come soon enough…