WTI $47.39 -75c, Brent $53.47 -$1.15, Diff $6.08 -40c, NG $2.79 +1c

Oil price

If it wasnt already an element in the oil price then volatility in Chinese markets certainly is now, with commodity bears reading badly into recent data and thinking a hard landing scenario all over again. Yesterday might have been worse but for a weak dollar which saved a few blushes but as I write this morning crude prices are down again, WTI at $46.81 only $2.85 above the February low…

Tonight’s API release and tomorrow’s EIA stats will be equally as crucial, two bad numbers might push prices down again. And watch out for that product pull I have been talking about, retail prices have fallen again this week, gasoline at $2.745 a gallon is down 5.7 cents on the weak and diesel at $2.73 is off 5.9 cents.

BP

No great surprises in the BP numbers this morning, the RC loss was $6.27bn after a $10bn hit for Macondo, last year it was +$3.8bn. Underlying profit for the quarter was $1.3bn against $3.6bn this time last year, with lower oil prices providing only $0.5bn profit upstream ($4.7bn) but making the downstream number good at $1.9bn ($0.7bn). Rosneft profit was halved at $510m and apart from Macondo there were exploration write-offs and a big lump on Libya operations. Guidance for net downstream margins is that they will be reduced but also that cost savings are kicking in still.

Gearing has crept up to 18.8%, within targets but more asset sales will be needed, on that note the company say that $7.4bn has been achieved of the $10bn target. These funds had been used for share buy-backs which I used to monitor but it was an easy decision to cull that spending when funds are noticeably tight around the company. The company said that within the financial framework any surplus was used for buy backs, now there isnt a surplus there ain’t no buy back. I remain cautious on BP given its over-generosity of dividend payout last year, this, in my view, will seriously constrain the company at a time when cash is at a premium and the board may come to rue that call.

Trap/Jersey

Quite how Scott Richardson Brown has kept Trap on the go is beyond belief, there were many who had consigned the company to the Trap-door a long time ago. The combination of Trap and the Andrew Benitz company Jersey Exploration is intended to be a vehicle to acquire North Sea assets in the ‘evolving consolidation’ of the North Sea. The £820/- raised will be enough to fund the company through to next year, by which time some acquisitions should have been found and if appropriate, offer the chance of refinancing at that stage. There is no shortage of assets available in the North Sea including end-of-life assets which with production will be valuable particularly if you have £15m of tax breaks. Watch this space…

Global Petroleum

Global announced last Friday an asset review, acquisition update and corporate cost reduction programme which the market had been warmly awaiting. Global has $13.5m of cash which for a company with a market cap of £3.7m is interesting and the market has been keen to find out their plans. The current portfolio includes assets in Italy where applications are ‘progressing’ and other companies success is considered to be ‘encouraging’, and Namibia where results of recent work is ‘very encouraging’. The Mozambique Channel is not deemed to be core and the company has withdrawn from the acreage.

Whereas some pundits had expected maybe a bid for Tower Resources, the statement says that the acquisition will show a ‘change of geography’ and is possible as asset and company vendors are now being more realistic with regards to valuations. I suppose that means that we will have to wait and see what the company has up its sleeve, when I last saw CEO Peter Hill he had been whittling down what was a long list of possible deals, lets hope that we are nearer to finding out what the acquisition is going to be.

Sundry

Pantheon has announced that the VOBM#1 well in Polk County onshore East Texas has spudded targeting the Eagleford/Woodbine sandstone. With 50% of  potential P50 prospective recoverable resources of 301 mmboe, profitable below $30 a barrel this looks very interesting indeed. The shares have already risen sharply this year and whilst these wells are still exploration in nature the have a greater chance of success than most and the next well has the back-up of the Austin Chalk gas into the bargain. In 45-50 days we will have an idea but Pantheon remains one of my key picks despite the drilling risks always associated in these situations.

It is worth digging out a good interview in the Daily Telegraph with Jón Ferrier new CEO of Gulf Keystone, in it he shows a refreshing depth of knowledge and capacity to understand the situation as well as having a good relationship with Dr Ashti. He would clearly like to bring in a respected partner and the data room is still open. I have been in contact with Mr Ferrier recently and he has kindly agreed to meet with me shortly so more after that. I know I have said before and been wrong but I wouldnt give up on GKP quite yet, famous last words…

And finally…

Today sees the start of Glorious Goodwood or as I heard on the radio this morning, the ‘Qatar Goodwood Festival’ which to my old fashioned thinking is a travesty but vaguely inevitable as impoverished British nobility try to avoid flogging the family silver/paintings. (I remember seeing a substantial Van Dyke at Goodwood House once…) If you can you should read Kate Burgess in the FT Lombard column today as she states that the FT’s credentials have never been stronger in pronouncing on foreign investments in treasured British Institutions (!) and that the dress code is unchanged…

Unfortunately England’s women lost the third of the one-dayers  against Australia but there is a test match and a T20 series yet to come but 2-4 down here will make for a long haul which is why I suppose the Aussies have been warm favourites… While on cricket it was sad to see today that Clive Rice had died at the early age of 66, ever present in my childhood certainly.

And I see that President Putin has suggested that Sepp Blatter should receive a Nobel Prize for his achievements in football. Unable to mention myself what category this might come in for legal reasons I would love to hear any from readers…