WTI $54.98 -$1.95, Brent $59.76 -56c, Diff $4.78 -36c, NG $2.75 -3c
With the US closed on Friday the prices above are the opening ones from London this morning, markets are naturally cautious and have continued the fall from the end of the week. WTI fell 6.91% and Brent was down 4.65% on the week, a number that might have been worse one suspects. A combination of higher stocks, an increase in the oil rig count and a potential deal with Iran not surprisingly kept the market subdued not to mention Greece.
The situation in Greece probably has more of a currency effect on the oil market and traders will be watching the dollar closely into the bargain but rate rises in the US appear to be being talked down a touch in recent days.
Probably of more significance is the likelihood of a deal with Iran in the nuclear talks. The next technical deadline is tomorrow but John Kerry has said that it may be this week and that there is ‘every chance of success if all parties pull together’. The real key date is Friday as the 10th is the 30 day review deadline day for the US Congress, if it misses this we are talking September 7th so expect something either way this week.
The elusive KRG bond issue is still being talked around but bond guru Marcus Ashworth tells me he hasn’t seen any signs of a raise in what must be a difficult and very specialised market. In Brazil it looks like Congress there will pass a bill allowing other companies than Petrobras to be operators of offshore fields, a move that the likes of Shell will welcome.
Ophir has announced its pre-close trading update with first half production of 14,600 boe/d in line with guidance, as will the full year be. The Fortuna FLNG is progressing according to plans with costs down and first gas sooner than expected and there will be at least two exploration wells in Thailand in the second half of this year. In addition to this the company is achieving $60m p.a. of cost savings and have a strong cash position with $405m in the bank and an intention to review the debt position in the second half. Ophir enjoys its ‘flexibility’ and appears to have cut back on a lot of drilling activity recently, but it’s difficult to comment further as I have not seen the company for a long time despite having some of my favourite people on the board.
Velocys has announced this morning that CEO Roy Lipski has been suspended ‘pending an investigation into allegations of serious misconduct’. I understand that there are no implications of fraud and that the allegations are not of a ‘financial’ nature which has meant that the company has been able to say that trading remains in line with expectations. CFO Susan Robertson has taken over as interim CEO and is a very safe pair of hands having been with the company effectively since formation. I have no idea of the timescale of this investigation but knowing the quality of the NED’s it will be thorough and fairly processed but not what investors want to hear right now. Velocys has been a favoured stock of mine and for the moment the best course of action should be to await the outcome of the investigation.
Europa Oil & Gas
EOG has announced that it is to raise up to £3.4m via a firm and conditional placing and open offer, all priced at 6p. With the shares having fallen to 6.38p on the news the market cap is £13.3m so the raise is, if fully taken up, a fair added chunk to the market value of the company. The proceeds are to pay for their share of any start-up costs of the Wressle discovery, any seismic costs should they be awarded licences in the 14th round and funding for the Irish Atlantic Margin licences. The first of these is the most valid as Wressle, along with other parts of the onshore portfolio of some value, the second is hypothetical although as always imminent and the third is way off, I am not expecting Kosmos to consider it until 2018 or later at this stage. Finally it is worth noting that in a raise of potentially £3.4m the directors between them have agreed to subscribe for shares totalling £26,960 which is hardly an act of faith I suggest…
Plexus has signed a collaboration agreement with COSL, part of CNOOC, RST, (Red Sea Technologies) and its new partner Jereh to explore common opportunities for shallow water, subsea and crossover wellhead production systems in China. This is more good news for Plexus who are again expanding their potential market in the far east.
Martin Waller reports in The Times that Baillie Gifford are not quite yet lying down in the face of the ENOC bid for Dragon Oil in which they own 7.2%. Apparently they want to be issued with a contingent payment note on production from the Cheleken Field in the Caspian and are hoping that enough other holders hold out against the bid to make life uncomfortable for ENOC. Not necessarily time to hold one’s breath…
Over at Genel, The Sunday Times suggests that the company is about to announce that CEO Tony Hayward is to move up the the Chairman’s position in apparent ‘flouting’ of the UK corporate governance code. On the first point it has been clear for a very long time, indeed written about in here enough times, that he would move to a less operational role to one of a more strategic nature. I can think of no one better than Mr Hayward to take on the Chairman’s role leaving the day-to-day operational matters to one of his lieutenants.
Sound Oil announced on Friday that they had completed the second tranche of their £12m placing and that all the necessary funds had been received.
Alkane Energy has announced a trading update this morning and all continues to go very well indeed. A 25% increase in output and a more than 40% rise in generation revenue is the result of the Carron Energy sites bought in 2014 and encouraging base load production from CMM sites with the power response activity in STOR seeing ‘progressive improvement’.I remain very positive on Alkane and provided it doesnt come back to the well again soon will prove to have been exceptional value at these levels.
Finally it made interesting reading at the weekend as the leader writers from one paper to another piled scorn on the US legal system all the way to The White House post the BP settlement. One paper actually accused Halliburton of being a ‘monstrous carbuncle’ of a global energy services company and was the ‘chief mischief maker’ in the tragedy. Clearly someone hasn’t worked out the distinction of being the ‘operator’ then…
Well, it truly was a great British weekend of sport with the highlight probably being watching Lewis win the Grand Prix at Silverstone after a perfectly timed pit-stop when the rain came. Frankie Dettori was on the podium too after Golden Horn won a very strong Coral-eclipse Stakes at Sandown the day before.
At Wimbledon Muzza takes on Carlovic this afternoon, lets hope that we dont get a repeat of the third set on Saturday night when his shoulder went a bit peaky…
And the USA won the Womens World Cup last night after the England team had despatched ze Germans to pick up the bronze medals.
So, Rory McIlroy has damaged the ligaments in his ankle playing football with his mates and may be out of the Open…