WTI $57.74 +$1.58, Brent $64.85 +$2.12, Diff $7.11 +54c, NG $2.53 -8c
The week is ending strongly for the oil price as the conference week bulls speak more loudly or impressively than the bears. Actually, part of the rise was for geopolitical reasons, the cease fire in the Yemen announced on Tuesday was shattered well and truly yesterday with over 20 air strikes yesterday that have apparently continued overnight.
Also worth noting is that the FT picked up this morning on something that I have been mentioning for a few weeks, viz the massive increase in speculative money coming into the oil market. Figures show that net length in Brent has reached another record position and as long as we dont get a shake out that will likely remain, but the warning still stands and should there be a significant closing of these open contracts there will be blood on Wall Street…
It’s probably a good thing that the tribunal looking into the sea borders between Ghana and the Cote d’Ivoire is going to hand down its judgement on a Saturday because markets will be closed and of course the weekends press will have a chance to pass judgement. The Ten development has been very costly for Tullow and they could do without another two year delay if the ruling goes against them but word is they will keep on investing regardless, they dont have much choice I guess. Tullow shares have been very strong of late running up from 280p to the current 420p which indicates that the market are sanguine about the company’s chances, I am still happy with Tullow down here but we may have a bumpy ride for a little while.
Sound have confirmed that the second well on Nervesa spudded yesterday, drilling and logging will take about 30 days and then there will be 5 days of completion and clean up followed by another 5 days of testing. These figures are of course tentative but we should therefore know the results in around 40 days from now. The company are hosting visits for shareholders, analysts and the media during early May so I expect there to be not only significant interest in Nervesa but the company overall as senior management will all be presenting.
I have been waiting to write up MOIL for about a week ever since the company received approval for the development plan for the Tsimiroro development project but made the mistake of putting in a call to the company and expecting a reply! It seems that the phones have been ‘ringing off the hook’ so I am writing without having spoken to anyone from the company. Actually it probably doesnt need anyone to explain what is happening, as it can be summed up quite easily, its a very big, very long term heavy oil development that goes ahead ok at $40-60 oil. It will need funding though and I notice that the house broker says that they ‘assume an equity raise this year of around $30m’ plus another ‘$85m in 2016’. A development of this size will attract a number of wide-ranging industry participants such as traders (Vitol is very interested in country), private equity players and even infrastructure funds. So far, major shareholders have stumped up in previous raises and whilst they will not want to be over-diluted I imagine that they will not fund all the ongoing costs of development. The shares doubled on the news but have since lost most of that gain, this is still good news and there will be lots of upside albeit on a very long term timescale.
The farm-out of Barryroe has been beset by many problems over recent years and whilst the field is clearly substantial it has not attracted the field of participants that the company or its shareholders had hoped for. The most recent approach was announced by the company but it was unable to identify who it was as the buyer had not yet raised the necessary funds with which to pay. An eagle-eyed reader of the blog, along with my own diligence, is trying to put the pieces of the jig-saw together and have come up with Sequa Petroleum or Sapinda as I thought it was. Sequa, a subsidiary of Sapinda, announced yesterday that it was raising money and should it do so we may find out if it really is the farminee to Barryroe. A bit convoluted but lets wait and see!
Ithaca has announced that it has sold its Norwegian interests to MOL for $60 plus a possible $30m in earn out should wells be successful. This part of the Valiant acquisition completes the restructuring post the deal and the proceeds will be used to pay down debt. Ithaca is still a very much preferred bucket list stock and exhibits all of the necessary attributes to come out of the present malaise in the sector in good shape.
The Premiership is already done and dusted but if there was any doubt whatsoever it can be cleared up on Sunday when Chelski play the Gooners. With Man Who at the Toffees, Noisy Neighbours hosting Villa and the HubCap Stealers at the Baggies its the minor places which are likely to be more exciting. Even better is the melee at the bottom where anything could still happen, key match here is clearly Burnley v a resurgent Leicester. With their awful run-in, Hull City Tigers need to win at the Eagles whilst the woeful, winless, witless Maccams have a difficult trip to the Potteries.
The draw for the semi-finals of the Champions league takes place today, will Barca and Real be drawn together I wonder?
The cricket yesterday was ok, England are in a very strong position and by losing silly wickets may have to be a bit more adventurous this afternoon. I dont know whether you saw the Marlon Samuels salute to Ben Stokes as he went off but it was pure cricketing comedy and it made me laugh out loud, fantastic stuff against a team who are making a living out of sledging at the moment and having to take one back for a change!
And finally, this weekend sees the London Marathon, the culmination of months of training and heartache. Final thanks to everyone who has sponsored Netty and we all wish her the very best of luck, if you are watching she is running for the Lord’s Taverners and wants to finish with a 4 in front of the time.
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