WTI $60.30 +$2.62, Brent $65.56 +$2.98, Diff $5.26 +36c, NG $2.64 -6c
Last week the oil price was weak mainly due to the dollar strength but it picked up sharply right at the end. A combination of inventory draw and the continued fall in the rig count, which was down 13 oil rigs at 646, gave bulls fresh impetus. Accordingly, WTI was up 58 cents on the week and 67 cents on the month while Brent recorded a rise of 19 cents and a fall of $1.22 respectively, hardly busting out all over. With a fall of nearly 250/- b/d from Canada due to the fires the local market is quite tight.
This week sees the Opec meeting on Friday and all the signs are that it will rollover the December agreement, maintaining the 30m b/d target. Obviously the ‘target’ has been missed by as much as a million barrels a day since then and will continue to be so but the Gulf states will hope that by the time of the December meeting demand will have risen and supply fallen. Certainly the outlook for 2016 looks considerably better and while US shale producers appear to be living with $60 WTI, capex cuts from the majors will take a lot of crude off the market starting next year.
And if you believe the EIA then the Saudis can afford the pain being created by market share gains. According to their numbers the Kingdom will lose $39bn in 2015 which is only 5% of the $733bn that is in their Sovereign Wealth Fund…
So the market rumours that have placed Jón Ferrier at the helm of GKP are true and in the latest bout of management changes CEO John Gerstenlauer has been replaced. This means that the company has replaced the Chairman, two CEO’s and one CFO in recent times and this is the latest roll of the dice. I have a great deal of time and respect for John Gerstenlauer and I hope that he reappears before long, maybe after a well deserved break.
Mr Ferrier has what looks like an admirable CV with experience in many companies and indeed time in Kurdistan with Maersk. I have spoken to former colleagues who rate him very highly as an oilman and a ‘people person’ and if he lacks anything it will be a shortage of market experience, with the amount of noise around GKP on Aim he will need his wits about him. The best quote I have read is ‘can he put lipstick on the pig and sell GKP, then yes’ which, providing that is the plan will do the trick although at current prices, long suffering shareholders might prefer to hang on for the ride…
I said last week that just when San Leon had actually had a drilling success shareholders were left in misery as they appeared to lose a costly court case following the Aurelian acquisition. Today the news gets worse as the company announce a fund raising which is being done at 0.8p, comfortably below the long time low for the share price. In the raise it seems that Toscafund goes from owning 22% of the company to 41.5% which looks like curtains for remaining shareholders who will, one assumes be frozen out of the process from here on in…
Fastnet Oil & Gas
A corporate update from Fastnet Oil & Gas where the team are knuckling down and cutting costs whilst also looking at appropriate M&A opportunities. The former has been pretty successful with costs down over 40% and still falling, whilst relatively new CEO Carol Law has been looking at a number of deals without yet finding the right one. I would much rather it was this way round that making a wrong call and there must be plenty of opportunities in the offing. With $16.2m of cash the company is well placed and when the right deal comes along they will be able to take advantage of the situation.
Intriguingly the Molly Malone and Mizzen options have expired and the company has re-submitted new licence applications on high graded portions in the area which again seems like common sense. I recently met with the company and will do so again before too long but the policy of cutting costs, preserving cash and identifying possible new opportunities looks pretty sound to me.
Bowleven has announced that drilling operations have commenced on the Zingana well on the Bomono permit onshore Cameroon after some lengthy delays. Zingana is the first of two exploration wells scheduled to be drilled this year, the second well site at Moambe has also been prepared and will be drilled next. I feel that the market has left BLVN behind somewhat and not yet given them credit for the strong position they find themselves in right now. VOG has proved that Cameroon can be a profitable and successful place to operate, with a strong balance sheet and potential upside from drilling the company should be well set.
Circle results were immaterial and the market has been spooked by the combination of debt rising and Egypt receivables falling ‘significantly’. Consequently the words that strike terror into the hearts of shareholders ‘a strategic review of the cost base and funding options is under way’ has led to a sharp fall in the share price this morning. The new CEO who started this morning has got some immediate work to do in all respects.
Difficult to know where to start after another good weekend of sport, boxing in the ring and on the football pitch and a KO in to Cup Final to boot.
The cricket has been good with the Kiwis showing how they bring the application of the shorter game into the test arena. Scoring so fast that a result will always be likely is exciting but may prove bad news for England who will have a big, probably impossible target to aim for. At 215-1 pressing the accelerator and not the brake pedal was not the right call and Trevor Bayliss would have been having kittens back home in Oz.
The Gooners dutifully destroyed the Villa which was pretty much to form and the famous FA Cup factor didnt get into the losers, anything can happen at Wembley but not this time.
At Fir Park, Motherwell comfortably beat Rangers 3-0 winning the tie 6-1 consigning the Glasgow club to another year in the Championship. Tunisian Bilel Mohsni didnt take to having a handshake after the game, preferring to kick and punch his opponents which probably havent done much for his chances of a new contract at Ibrox for next season…
Sarries beat favourites Bath for whom nothing went right on the day and the game rather fizzled out as they dominated the west country team.
In the real boxing Kell Brook beat Frankie Gavin but my eyes were on Anthony Joshua who still has hardly gone more than a couple of rounds against anyone. This time was meant to be different as his opponent had never been stopped and had fought most of the best around. So the KO in round two came as a surprise and still Mr Joshua hasn’t gone anything close to the distance.
Week two of the French Open tennis and Muzza plays today against Jeremy Chardy for a place in the quarter finals, never normally one for clay it will be an interesting week for him and also to see how Rafa is, injury-wise…