WTI $59.47 +$1.14, Brent $63.59 +$1.58, Diff $4.12 +44c, NG $2.83 +3c
I have been away for just over a week, during which what might be described as considerable trauma has occurred but the oil price is almost exactly as I left it, notwithstanding some humps in the road. Greece has defaulted which has strengthened the dollar and there is even more crude oil and product around than before, likely to be added to by Iranian crude in the next six months.
On that front the deadline was last night but has been extended until July the 7th, pictures of all the top teams assembling in Vienna lead me to think that red lines have been crossed and humble pie eaten particularly by the Supreme Leader. Inspections will need to be carried out and sanctions will not be withdrawn immediately but expect to see Iranian tankers starting their engines before long.
In the expectation of a bit of supply competition Opec has upped its game, in June depending on who you believe the cartel may have been pumping at 32.1m b/d, remember when I wrote after the June 5 meeting that they might as well not have kept to the 30m b/d target…..
The API stats last night foxed the analysts again, they were looking for a draw of 2m barrels when it turned out to be a build of roughly the same amount…..
I am doing the company stuff that I have missed piecemeal over the next day or two as otherwise there wouldnt be a blog today either…
Tullow has issued an update this morning which reads quite positively and should arrest the decline in the share price which has happened recently although I have noticed an unusual diversity in analysts views of late, I tend to feel that sub 350p it looks like good value to me despite my slight worries about the oil price.
With the West African producing portfolio performing strongly Tullow has upgraded guidance for 2015 from a range of 63-68/- b/d to 66-70/- b/d which is good news for the bottom line. As I found at a recent meeting with Kosmos things are looking up in the area and even TEN is within budget and still on line to produce first oil in mid 2016. Tullow had the appropriate moment of epiphany a few months ago and despite some setbacks with the drill bit I think that the portfolio looks to have a sound base with plenty of upside and indeed down here can be regarded as being quite cheap.
Independent Oil & Gas
Not a great morning for IOG as the provider of the most recent funding didnt appear with the moolah last night as promised, one hopes that this is only a delay which I am expecting. Not that this really matters as the CEO and CFO have raided the piggy bank and come up with 50 grand to keep the place open. Readers will know that I rate this team very highly and the fact that new funds are coming available is very good news, making this most recent setback hopefully a small one. The money so far is all being raised at 23.79p, the level of the listing and they are to be commended in not cutting and running in the darker hours. The spotlight should remain on the much bigger raise that the company has alluded to recently and should this come off it is genuinely a transformational one, hopefully at around the recent price but not essential. I still see the risks in IOG as being primarily on the upside, as assuming the bigger investment comes in the shares are phenomenally cheap, if it fell through as ever there is still a problem but the assets are still there.
Whilst I was away Amerisur announced the acquisition of Petro Dorado SA for $6m to be paid in installments and in shares or in cash, the first stage is 5.2m shares at 37.0214p. There is also a 2.5% net royalty on production income and they will pay 50% of the seismic programme, expected to be $2m. PDSA also comes with a remarkably handy tax position of $57m in Colombia which is a potential $20m to Amerisur. CPO-5 in the Llanos Basin is a potential light oil play and the Tacacho prospect is a heavy oil exploration play that complements PUT-12 and PUT-30 in a big way.
This acquisition may be relatively modest but it ticks so many boxes to me, it shows that the management is alert to deals that give them plenty of exploration upside particularly with a pipeline to fill, it demonstrates the ambition to not be a single play company and finally whilst never being a reason to do a deal, the potential tax breaks are significant. I like the prime Llanos Basin acreage in the near term as well as the upside and the fit in the heavy oil plays as well make this deal not much short of a no-brainer…
there have been a bunch of other announcements which I will catch up on in more detail but I couldnt help noticing the $281m loss at Petroceltic as well as the $175m bond issue quite a brave move when the enemies are still just outside the tent…More when I have seen the company.
Over at Gulfsands the tricky problem of the Arawak loan appears to have been almost solved. Waterford and Richard Griffiths have taken over the loan which the company still insist will be paid off as demanded. To pay this off the company are having an equity raise of $22m of which Waterford and Griffiths have pledged $11m. With a market cap of £12.38m at 9.75p this should prove to be an interesting one to watch if not entirely predictable in recent months…
Wimbledon is underway and its the first Wednesday and there are still four almost British blokes in it…add to that a great performance yesterday from Heather Watson and it was worth coming back for…
Tonight sees the second semi final of the Womens World Cup and England take on Japan to see who will play the USA in the final. It wont be easy as Japan are the holders but so far its been a fantastic run.
In the men’s game Nigel Pearson finally ran out of lives at Leicester City, I note that the BBC are saying that it was linked to the recent filming on tour in which his son played a starring role that didnt please the Thai owners..