WTI $57.26 -$2.17, Brent $64.02 -$2.25, Diff $6.76 -8c, NG $2.95 -6c
Another bad day in the crude markets yesterday as a combination of continued dollar strength, absorption of Saudi export numbers and profit taking in WTI as the June contract expired. Indeed volumes of the next month July contract were noticeably higher than usual as traders saw more than usual rolling over of positions, not surprising considering the massive amount of open long positions at the moment.
Upward pressures at the moment might come from the better than expected GDP figures from Japan at 2.4%, a possible strike in the UK North Sea as the GMB and Unite unions protest about new working conditions and inventory reports from the US ahead of the Memorial Day holiday weekend. The inventory figures are beginning to help out a bit, last night the API numbers showed another draw, this time of 5.2m barrels against a consensus of only 1m which shows that the analysts aren’t getting any better…Lets see how the EIA numbers look tonight.
Faroe Petroleum- Ahh Bister….
Faroe has announced that its Bister well in the Norwegian Sea gas not encountered hydrocarbons. Whilst this is a disappointment to the company I believe that the upcoming wells, particularly on Pil are much more important and have always thought that it will be the second half of the year that will determine value addition for Faroe. After Pil, where the company are drilling the first of two follow-up wells, Faroe will target the Blink and Boomerang prospects. Whilst this is not good news for Faroe and the shares are off their recent peak of around 90p I would reiterate that investors should not lose faith and that the stock remains firmly in the bucket list.
Yet more news from Sound this morning as early indications are appearing from the Nervesa gas well which is drilling at the moment. The well is ahead of schedule and below budget and the wireline logs and the logging while drilling have shown evidence of gas very much as per the original discovery. The next few days of testing should be most interesting and for ten days the webcam on site will be highly educational. Should Nervesa come in satisfactorily then the next piece of the Sound jigsaw will have worked, my intermediate valuation of 30p will be franked with substantial upside to come from the like of Badile and Laura in Italy and of course Morocco adds more spice.
The 1st tranche of new equity is also announced this morning with £9.12m coming in and 48m shares and warrants issued. Another tranche to finish this process is expected shortly. I remain happy with Sound and will watch the next weeks’ announcements with considerable interest.
Gulfsands has announced its results which confirm just how bad things really are at the company. Asides reporting a loss which is de facto at the moment, it confirms that it is in serious need of cash, by my reckoning at least $25m to pay off Vitol/Arawak and to continue to invest in Morocco. Colombia and Tunisia are up for sale and Syria is in the too difficult box for the foreseeable future. I am looking forward to a meeting with Michael Kroupeev which had to be rescheduled after my recent trip, after which I hope to be able to add some more. In the meantime I’m sure Waterford are aware that it will have to be them that leads a funding process. Still an outright sell at the moment and wait to see at what level the raise is.
A short and sharp video appearance by John Gerstenlauer, CEO of Gulf Keystone this morning in which he says that debottle-necking at PF-1 and PF-2 has been successful and that production is in excess of 40,000 b/d, indeed the annual target of 36/-b/d is achievable and that includes the best part of two months shut-in. With money from the pre-payments coming in and exports possible before long things are looking better and even the oil price is helping a tad.
Mr Sterling went up to pick up his award as young player of the year at the HubCap Stealers party last night and got booed off the stage, better get used to it Raheem…
Tonight the Gooners host the Maccams who probably dont have to win but to put pressure on the Magpies it would be sweet just to take a point…
And surprise surprise the Patriots have decide not to appeal the fine etc dished out after the ‘deflate-gate’ enquiry, over there last week it didnt look like they had a leg to stand on.