WTI $52.33 -20c, Brent $56.85 +31c, Diff $4.52 +51c, NG $2.72 -4c

Oil price

If yesterdays short blog had gone to everyone as intended it would have read not much differently regarding the oil price as today, except of course after the events in Greece at the weekend causing the sharp price fall. All the factors are still in place this morning and it’s all about deadlines.  Greece has until tomorrow night to present its case to its lenders after which the full EU will meet to decide on Sunday, Grexit we are told, is very much on the agenda.

The next deadline, or should I say last deadline is for the talks in Vienna on the Iranian nuclear situation which were scheduled to complete yesterday. I mentioned previously that these talks were more than 50:50 to provide an agreement but this has to be before Friday which is the 30 day review deadline for the US Congress, after that it reverts to September 7th so expect something one way or another in the next 48 hours.

Apart from that the oil price remains consistently tied into the US dollar, again as I have said before, if you have a strong view of the greenback you are likely quids in, as it were, take a look at the chart its compelling…

Today is budget day in the UK with Chancellor Osborne presenting a Conservative Bill for the first time since 1996.

I will comment further on the EIA STEO another time but the key takeaways are that their Brent forecasts are for $60 in 2015 and $67 in 2016, they expect a gradual but continued fall in US production through ‘early 2016’ before seeing a resumption in growth.

Savannah Petroleum

I spent some time yesterday with Andrew Knott, CEO of Savannah and in the next few days will write up my conclusions, broadly they are pretty positive but this is one you need patience with although the rewards do seem tangible. In the meantime though they have announced this morning an update by independent experts CGG on their resource volumes on their R1 and R2 blocks in Niger. The numbers appear compelling with an increase of gross risked prospective oil resources from 573m barrels to 1,191m, for the 14 3D seismic prospects CGG have given them 259m barrels against the company’s estimate of 215m.

As I said, I will write more later in the week but Savannah does appear to exhibit interesting characteristics. Niger is hardly over-invested by the oil majors, indeed CNPC appear to have ruled the roost there in recent years and SP has cleverly piggy-backed on their success. With a Government keen to please, the company is welcome and licences and permits are easier awarded than almost anywhere I have seen and having seen such success in neighbouring countries if the pipeline can be completed then risks are significantly reduced. More later…

Independent Oil & Gas

News flow from IOG lately has been a bit of a curates egg but we do seem to be moving towards the holy grail as the company has felt able to share some details of the funding they flagged a little while ago and would be company making. The funding will be split between equity and debt, mainly debt as the funder will receive 30m shares at 23.79p making them owners of 29.9% of the company. This will be done by the 31st of July in order to demonstrate adequate funding to the Oil and Gas Authority and complete the Skipper acquisition. The debt will be in two tranches, the first to drill wells on Skipper and Cronx and maybe one other, the former drilling in ‘mid 2016’.

Finally, the 3rd party who didnt come up with the moulah last week appears to be back on and the company suggest that this will now be paid by the 17th of July. As before, subject to this funding I remain confident in the IOG team who are amongst the best I have met in the industry and deserve to succeed, if they even get to base camp I am sure shareholders will be amply rewarded.

 

And finally…

Its a big day for a Wednesday as its mens semi-finals at Wimbledon where Muzza takes on the unseeded Popsicle and Djoko faces Cilic-Bang, Roger plays Simon and Stan the man hopes Gasket misfires…

And of course what we have all been waiting for, the Ashes start today with an away fixture for both sides as they go to Cardiff in Wales for the opener. With the Aussies being red-hot favourites England have nothing to lose and hopefully will carry on playing cricket like New England as recently against the Kiwis…