WTI $59.64-$1.62, Brent $63.80 -$1.69, Diff $4.16 -7c, NG $2.63 -6c
The day before the Opec meeting and the good and the great from the oil industry are gathered in Vienna talking shop. The oil price fell yesterday after the EIA inventory stats which despite showing a draw of 1.9m barrels and thus relief after the API numbers, were still deemed slightly disappointing. At this time of the year it is important to watch carefully the product stock movements and whilst gasoline fell, distillates rose by 3.8m barrels way more than the 1.1m barrel forecast. Refiners, who have seen very strong world-wide diesel demand recently, have enjoyed the high margins and are making hay while the sun shines but at 93% + refinery runs they need that demand to remain robust, big stock builds dont help.
There is no doubt that anything but the current status quo would be a surprise from tomorrows meeting and the words from Gulf oil Ministers yesterday seemed to predict a short sharp meeting, indeed the Iraqi and Saudi Ministers were clearly singing from the same hymn sheet.
Oil industry executives were out in force too as the opportunity to blow into a few Opec ears was too good an opportunity to miss. What they said was a mixed bag, Rex Tillerson stating that US shale was ‘moving to a different place’ by reducing costs (not what Opec wanted to hear) and John Watson of Chevron saying that the world should be more realistic on carbon emissions (which is what they did want to hear). Watson pointed out to Europe that closing down nuclear power plants and being hostile to shale gas would rather tie their hands behind their backs, highly intelligent speak. Finally, Bo Diddley expects low oil prices until 2016 which is fine if anything below $100 is low, if he’s thinking sub $50 then we are all doomed…
An update this morning from Aminex with regard to financing in which the company say that they have negotiated a six month extension to the corporate loan facility. With Kiliwani first gas expected in ‘mid 2015’, (Aminex are awaiting final commissioning of the pipeline and the process plant), things must be imminent and visible or a further delay would have been flagged so that is good news. Elsewhere the GSA still has not been signed up but again the company appear confident that it is only crossing of t’s and dotting of i’s…
Aminex are also in the process of refinancing with new debt expected to be raised to pay down existing facilities and to finance the development of the Ruvuma PSA, here they are confident that enough progress has been made to be close to signing something up. Readers will know that I believe that there is good value in the Aminex offering and that Jay and the team are more than capable of delivering it. I am now looking forward to final delivery of these promises so we can see how the company can move forward in Tanzania.
Independent Oil & Gas
IOG announced during the day yesterday that it had made the acquisition of the remaining 50% of the Skipper discovery that it did not already own from partner Alpha Petroleum. As a result of this IOG’s independently reported 2C resources will increase by 13.1m barrels, they will then be 100% owners and operators subject to regulatory approval. IOG is another company where I rate the management very highly and they have the makings of a really good portfolio of assets, they have been unfortunate with financing but it seems that this is about to change. Apparently they have signed an LOI with ‘an internationally listed group with a multi-billion market cap’ which if it goes ahead will be a game changer for the company.
The announcement may have come out late in the day yesterday but the shares have been on fire lately rising from lows of 5.25p in March and 6.5p only a month ago to 9p this morning so good news was clearly expected. The question I suppose is how far might the price go from here having had such a heroic performance of late? The big question mark is clearly the funding but that does sound like its nearly done in which case a company with a market cap of £6m that might be producing 20/- b/d in three years is just wrong. The money when raised, will be enough to pay for everything through development so after this it is only a question of backing the management, in this case, I would.
Petrofac has announced that it has amended and extended its $1.2bn revolver with lower margins and fees, CFO Tim Weller feels that the offer at this time is wise with which I concur. I will be away at the time of the Petrofac fireside chats at the end of June but hope to catch up after that.
I dont cover Solo for many good reasons but note that the shares are suspended this morning ‘pending news from Horse Hill’. Whatever this news is I havent a clue but there have been enough claims about Sussex being the next Texas to last a lifetime…
So the French Open is living up to its promise with the hard side of the draw becoming almost impossible. With Novak seeing off Rafa in straight sets yesterday and Muzza beating Ferrer for the first time on clay the semi-final on Friday will be most interesting. The thought that Murray might be in the mix for this tournament shows just how his game has come on and it will be great to watch, whatever happens.
Things at FIFA go from bad to worse with odious little toe-rags competing with each other to squeal to the Feds, the throwing of these guys to the sharks will be worth the admittance fee at least…
And if you are in the Salazar camp you need to hire a good lawyer as another big brand is about to go down the Ilie Nastase….