WTI $52.78 +$1.13, Brent $58.61 +$1.56, Diff $5.83 +43c, NG $2.73 +4c
Whilst the high levels of stocks around the world are definitely holding back the oil price at the moment I think that there are a few glimmers of optimism one can draw this morning. I am not clutching at straws but just picking up on a few vibes that may or may not come to fruition this weekend!
Firstly, it is beginning to look just possible that Greece may have done enough to get a deal with its lenders, the meeting on Sunday will decide it for once and for all but at the moment its a definite possibility as they say. There is an outside chance that an initial positive verdict could even come as early as today.
Secondly, in Vienna we are approaching D-day with the US saying that there was ‘no hurry’ to do a deal and even Barry himself said yesterday that the chances of success being ‘below 50:50’. After today it looks like being September 7th so oil markets would cheer failure.
Thirdly, there are some signs of the turmoil in China’s equity markets easing and whilst I dont believe that there is a natural link between financial markets and crude demand there is always some sort of knock-on effect on sentiment.
Finally I have been looking at the EIA numbers on gasoline demand in the US, where drivers are very much back on the roads. Automotive gasoline (mogas) demand is up 7.1% y/y and is at its highest level since 2010, up 480/- b/d y/y and up 250/- b/d on the 10 year seasonal average which is quite impressive. Get this one, US motorists drove 988 billion miles in the first 4 months of 2015 which is a stat I never tire of mentioning…With German and Japanese economic data also showing encouraging signs there are indeed a few green shoots or even straws to clutch at!
Petrofac has announced that they have won a contract from the Kuwait Oil Company worth $780m. This is a lump sum EPC contract for the KOC’s manifold group trunkline system in the north of the country. With the PFC price having dropped back down to below 900p I would suggest that they are good value again.
Crikey Batman, I only just started covering Savannah this week following a meeting with CEO Andrew Knott and already we have had a resource update and now a placing. I should have smelt a rat with so much activity going on but the opportunity to acquire the interests in the R3 and R4 PSC area, combining with the almost doubling of the share price in the last few weeks has provided an unmissable chance to grow the company.
So, the placing is 61.69m shares at 38p to raise $36m in two tranches as shareholder approval will be needed. All the blue chip shareholder base has supported the raise and new institutions are apparently also on board. As I said on Wednesday SP has very strong features with a good risk profile, this acreage deal adds to that and the company will have 50% of the Agadem Rift Basin. More to come…
I spent some time yesterday with Raylene Whitford CFO and Rob Shepherd who the company hope will become CEO in due course. I intend to follow Sefton if everything falls into place but for today I am just going to make a few points about where the company is at present. Firstly there has been a lawsuit filed by James Ellerton, compounded by another this morning by an attempt to file a chapter 7 petition under the US bankruptcy code. Whilst I dont intend to try and guess the outcome the company is demonstrably a going concern and exudes confidence with regard the litigation.
Sefton will have accessed a top quality team should the process happen and for those who have concerns the Development agreement route is the best way to ensure that this happens. With the potential deal in Indonesia going through the process it is necessary to have the new team at arms length in order to save time and not to lose this opportunity. Likewise I have heard some concerns about the recent raise, whatever the complaints Novum found the money that the company needed to take it to the next stage, that is now happening. Another concern has been that the deal has not been done quickly enough and is being delayed, as I understand it it is only down to ensuring that the process has to be completed in a thorough and efficient fashion, I would expect no less. When that happens Sefton will have the asset, hopefully swiftly followed by a court settlement which will bring on board Shepherd and at least two new non-executive directors. Whilst I dont know who these will be, I am impressed by the calibre of team that is being considered.
So, in conclusion I am sure that the Sefton team are doing the right thing, this potential deal in Indonesia is modest in size but is a starter pack for what is effectively a shell company and will be the start of more acquisitions. I was most impressed by Raylene Whitford and I know Rob Shepherd very well from his previous stints in the industry, Jossy Rachmantio also brings invaluable experience, added to by new high quality non-execs i’m sure progress can be made. The risks are clearly the court case, which we cant predict and also the chance of the deal going away, this would be seriously compromised should shareholders cause grief, it is worth remembering that the deal and all the personnel could potentially leave at any time.
Its mens semi-finals day at Wimbledon and Djoko looks to have the easier ride against Gasquet with the second semi being Muzza v Roger, if Andy Muzza gets through he will join brother Jamie Muzza in the finals, he having got into the mens doubles final.
The cricket has been close but maybe at this early stage England may be marginally happier. If they can get some wickets today and establish a lead then it will have been a good start.
In the Tour de France Tony Martin had a nasty crash yesterday and has had to withdraw passing the yellow jersey back to Froomey in the process.
And of course the football season is under way, last night the Hammers won 0-1 away at Lusitanos and go through to the next stage as do Aberdeen, unfortunately St Johnstone go out of the Europa Cup.
And rugby fans will be excited to see that the schedule for the British Lions tour of New Zealand in 2017 has been announced, something to dream about then….