WTI $56.93 -3c, Brent $62.07 +6c, Diff $5.14 +9c, NG $2.82 +4c

Oil price

The oil price was modestly up yesterday lunchtime in the US preparing for a quiet long weekend, the NFP numbers were in line at least with GSach’s best guess although there was a revision down of previous data, the greenback had fallen giving crude some support. Then the rig count came out and Baker Hughes said that overall rigs were up 3 at 862 and in oil were up 12 at 640. This was the first rise in 29 weeks, since December in fact and whilst was entirely predictable took the best part of a dollar off the price. This morning the price is about 30c off the US close as Europe prepares for the referendum in Greece which is looking quite close at the moment.


So, BP has finally achieved a settlement with the US Federal Government and will pay another $18.7bn in civil penalties and damages to Federal, State and local Governments. The good news is that, apart from the fact that a settlement has been achieved, is that it is over 15-18 years and partly tax deductible, also it could have been worse with the top end of spillage numbers, finally the payments can be accelerated if BP has a change of control…The bad news is that having already cost $54bn ( like Christopher Columbus they laughed at me 3 years ago when I pencilled in a $55bn total) it isnt quite over yet, there will be more settlements to the individuals and local businesses and the class action of 2012.

BP has justifiably been a miserable performer since Macondo and has down-sized significantly, so what should investors expect from now on? The much mooted takeover is now more likely- no US company could touch it while it was toxic with litigation- but by no means a certainty. Having tied their hands behind their backs with dividend promises the cash flow situation is not ideal and dont forget that they have the minor matter of Russia to deal with, the Rosneft investment may prove to have been another poor call. Potential bidders may have their own Russian investments which could help, but quite a lot of the family silver has been sold off and whilst now undoubtedly more vulnerable, is far from a slam dunk, pencils will be sharpened in A&D departments but with no certainty of action, now if we could just take to GoM off their hands….


Lamprell is a favourite of mine and so far this year the company has justified that with a continued run of good results, order book success and consistent delivery. The share price has mirrored that and has moved from the lows of 95.25p to the current 150p level, however I think that despite the rig market elsewhere being uncertain Lamps has the ability to continue its upward trajectory.

CEO James Moffat points to a ‘strong operating performance’ so far in 2015 with the delivery of three major projects and with 6 jack ups under construction, about to be 7 in the yard the year will be another good one. Moffat has carefully broadened the addressable market and now dependence on any one project is minimal but the work for NDC is proof that they can see off the competition whilst remaining highly competitive on terms. Other work such as piperacks and modules add to the diversity and the rig refurb business and land rig services continue to flourish with clients old and new.  I interviewed JM a few months ago and you will remember that I came away incredibly impressed with his vision which I genuinely believe he can and has, put into action. There is an inevitable degree of uncertainty in the market but the company say that they are seeing a strong bidding pipeline and to finally quote the CEO, ‘we will continue to focus on maintaining our competitive position in the sector and remain confident of our ability to win our share of new projects.’ Lamprell is well financed, throws off cash, has exerted strong cost saving disciplines and most of all it is very cheap still in comparison to its peers in the services sector thus making it as close to a no-brainer as it is possible to find, IRMC.

Wood Group

Wood has also been busy whilst I have been away producing its trading statement in addition to a couple of contract awards and a small acquisition. Concentrating on the update, like most other oilfield services players, revenues and profits will have been hit hard so far this year but Wood is demonstrating the ‘relative resilience and flexibility’ of the company’s model although markets are unsurprisingly ‘challenging’. They also say that cost savings are up versus their targets and at the moment numbers are in line with expectations. Like the others Wood has come off the top but I dont expect any funny surprises with the figures next month.


Also whilst I was away Petrofac had its pre-close update which meant that I missed my usual hour with CFO Tim Weller, a shame as I had been hoping to show him the intricacies of my company model…With order intake of another $4.7bn  yet again beating expectations Petrofac is going back to its roots which pleased me and the market. IES is being pared back, the losses on Laggan-Tormore appear to be almost over and the onshore E&C division will deliver as expected. PFC is not overrated, the divvi is as good as certain and the worst is behind it.

I have returned to a message inviting me to visit with Afren which comes as quite a surprise but given that all but one of the previous board has resigned and almost total destruction of shareholder value has taken place it would be churlish to refuse and I would be fascinated to see what Alan Linn has up his sleeve, more after that meeting…

A lot has been going on at Sefton who appear to have cut a deal with UTAS the Rob Shepherd vehicle for a JV. Should the Indonesian assets come good then RS will become CEO of Sefton and new NED’s be appointed. As I know Rob very well I have scheduled a meeting with him and Raylene for next week and will report back after that.

And on the subject of NED’s I notice that there have been mass resignations over at Gulf Keystone with V Uthaya Kumar, Joe Stanislaw and Maria Darby-Walker all taking their leave. I must have missed something but assume its down to the change in CEO but to lose a director of the quality of the good Dr Stanislaw is what you would normally call careless in the extreme…

And finally…

Probably one of the best of the Great British sporting weekends approaches, I hardly know where to start…

Wimbledon continues and at present we still have exposure in the singles with Muzza, Wardy and Heather, last night I managed to catch some of Rafa’s defeat, that was exciting stuff.

Its also Henley Royal regatta down on the Thames where a lot of Pimms will be taken watching the rowers from Olympians and schools alike, always cheer on Pangbourne if still involved.

And of course how could we miss Coral Eclipse day at Sandown where a small but exceptional field is headed by Derby winner Golden Horn.

And its also the British GP at Silverstone where Lewis will hope that home advantage and a better clutch than last time can put him ahead of you know who…

And the football season started again last night with the happy Hammers winning 3-0 against Lusitanos of Andorra, easy enough and I hear that 16 year old Reece Oxford was impressive at centre back and managed a booking on debut into the bargain. Finally lets hope that Nani successfully passes his medical at the weekend and heads off to Turkey.

And even more finally I would like to wish all my American followers a very Happy Independence Day for tomorrow.