WTI $58.58 +$1.52, Brent $65.84 +$1.20, Diff $7.26 -32c, NG $2.61 +7c

Oil price

The oil price primarily tracked the weak dollar yesterday, rising as US GDP figures disappointed and rate hikes were postponed. The EIA inventory stats also provided some succour for WTI, with the stock build being 1.9m barrels lower than the consensus of 2.3m. Whisper it very quietly but stocks at Cushing actually fell last week which is the first time that has happened for five months.

There is also a slight discrepancy appearing in the 1H/2H worldwide supply and demand picture, whilst 2H 2015 looks like seeing the potential for stocks being taken off the market which would be bullish for the oil price the results from the majors show a potential fly in the ointment. BP and Shell have both reported that their trading departments have had brilliant quarters, being able to buy cheap crude and using their storage facilities to sell further out taking advantage of the contango. This does however mean that this crude will reappear in the market in the second quarter as they unwind the contango, but lets worry about that later shall we?

Also, with results today from Exxon, Conoco, Marathon and Phillips 66 and tomorrow from Chevron we may see more of the same.

Finally the changes being made in Saudi Arabia are most interesting and we now have a clear line of succession which should be better all round. The new Foreign Minister is a Washington insider which might encourage the Shermans who have been pretty anti-Saudi on Barry’s watch. It appears that there will be no change in oil policy as a result of the changes even though Ali al-Naimi loses his posts at the top of Aramco.


Todays first quarter figures from Shell echo those of BP on Tuesday, better than the whisper and better downstream where refining margins and lower costs have made the figure look better than expected. As mentioned above, oil trading also contributed as the company took advantage of the contango. Upstream was, as one might expect, grotty but even this was slightly better than expected where the negative effect of lower oil prices was offset by lower costs and new high-margin liquids production volumes from deep-water projects improving the operating performance. As one would expect the emphasis on cost reduction is significant with both opex falling and capex for this year falls by $2bn to a mere $33bn…Overall I would prefer to be investing in Shell rather than BP given the recent performance of the two shares.


Not much to add to today’s statement by Tullow as production is almost exactly in line with guidance which remains at 75/- b/d for this year. Capex is $1.9bn and the exploration budget of $200m will be spent on wells in Norway, Kenya and Suriname. The ‘Simplification’ project is underway and the company expect savings of around $500m over the next three years. As mentioned the other day I remain relaxed about holding Tullow as they are now working from a position of strength in a number of areas.


There is a changing of the Non-executive guard at FOGL as Chairman Richard Liddell departs after the AGM and both Ian Duncan and Stephen Phipps leave ‘with immediate effect’ which always sounds a bit spooky to me. Replacing Liddell is John Martin, who formerly headed up the Standard Chartered Oil and Gas team in London and is a strong pick, I have known John for many years and whilst he supports the wrong cricket team I won’t hold that against him. Elsewhere in the statement there is nothing new, success at Zebedee is well known as is the cost saving of ‘deferring’ the second SFB well, for them Humpback will be pretty crucial.


Catching up on a few things that have happened but not written about… Weir Group rallied sharply yesterday after they announced more disappointing numbers but the reason for this is one of lag, analysts remember that in past commodity falls the Weir price rallied well before it was obvious that business was getting better. Lets hope for their sake then that the same thing happens again…I am travelling to the US in two weeks time and I will keep my ear to the ground to see how particularly in the services area how things are looking as I am spending some time checking out the state of play there.

Lamprell continue to go from strength to strength and whilst the shares have rallied sharply i’m sure that there is significant upside in the shares when analysts realise just how good this business is and how much bigger it is going to be. Take a look at my piece after I spent some time with Jim Moffat recently to get an idea of the potential upside but yesterday their best customer, NDC awarded Lamps with another decent contract. The exercise of an option for their 9th Le Tourneau Super 116E high specification jackup drilling rig is great news and will add to the order book which is already looking pretty sweet.

Falcon Oil & Gas also updated the market and things are looking up there as well with the three wells to be drilled in the Beetaloo Basin in Australia at ‘an advanced stage’. In South Africa their license application is being processed and I hope to hear news from the company before long. I have a meeting in the diary for late May with energetic CEO Philip O’Quigley to be followed by a CEO interview on TipTV so much more about Falcon then.

Cairn has appointed two new non-executive directors, both of whom I know, one better than the other. Keith Lough was founder of Composite Energy which became part of Dart Energy and has been a director of Rockhopper and Rock Solid Images for his sins. Peter Kallos is yet another ex-Enterprise Oil man who then went to PetroCanada which became Suncor, most recently he runs Buried Hill and regrettably is a mad Chelski supporter…

Alkane Energy also has a trading update today which has very much pleased the market. CEO Neil O’Brien tells us that the ‘step-change’ in performance has continued and consequently can report that revenues are up 43% on this time last year. Alkane is a big favourite of the blog and the share price performance really doesnt reflect how well the business is going. I am very much hoping to have a meeting with Neil before long and will report back then, maybe I can persuade him to do a TipTV CEO interview, regrettably he is a supporter of the HubCap Stealers…

And finally…

Last night Chelski took another great stride to the Premiership title by beating Leicester 1-3 after going a goal down. It makes the remaining matches at the bottom of the table more spicy, rather like the idiotic remarks made by Nigel Pearson when unnecessarily bullying some poor journo who had the temerity to question him.

In the snooker Ronnie the rocket lost and Bingham goes through to a semi-final with Trump whilst Hawkins will play Murphy on the other side of the draw, at least the winner will be English…

And Johnny Sutton didnt disappoint me yesterday with his comments about Milipede taking advice from Russell Brand, almost smoked off the paper…