WTI $47.12 -$1.40, Brent $52.21 -$1.10, Diff $5.09 +30c, NG $2.72 -5c
Last month was not pleasant for the oil price, WTI lost $12.35 or 20.8% of its value whilst Brent shed $11.38 or 17.9%. All the problems have been well documented here and elsewhere but Reuters have confirmed my thoughts that Opec produced 32m b/d in the month, up 140/- b/d. A combination of factors led mainly by countries getting in before the Iranian crude supplies kick in were responsible. Over the weekend the Iranian oil Minister again suggested that they would export around 500/- b/d more as soon as sanctions are lifted and 1m b/d ‘within months’ of that date.
Other factors include a continued sell-off by hedge funds and other traders, particularly in WTI which might explain the monthly fall as exposure to that marker halved on the month to 105,199 lots which is a five year low. Finally on Friday the rig count showed an overall fall of two units to 874 but in oil the number was up by 5 to 664 rigs.
Afren-Time for the Feds?
On Friday Afren finally gave up the ghost and called in the administrators after it failed to get more funds from the Bond Holders. Although the situation received a handful of vague comments in the weekend press I am astonished that it appears that no investigative journalist has taken up this alleged breach of management responsibility and attempted to expose what might be a huge can of worms. I am aware that some shareholders are attempting to take action and they should be encouraged, as so far I have also not seen activity from the appropriate authorities who should be considering launching a criminal investigation going back some way. So many questions appear to have been raised it is difficult to cover up, such as whether directors ‘ignored’ a perfectly reasonable bid for the company, the status of companies within and under the Group umbrella and the transfer of assets therein. Time for action?
Trinity Exploration & Production
Whilst I am on the subject of companies going into administration it looks pretty terminal for Trinity which someone described to me this morning as being between two hard places with a rock on top. Although today’s announcement says that ‘the Company has agreed a further extension to the moratorium on principal repayments, relating to Trinity’s outstanding debt balance of US$13.0 million with its lender, until the 21st of August 2015′ I am not convinced that there is any way out for the company. At this price deck, as they say, Trinity is almost certain to be another casualty of the recent oil price weakness with probably more to come if companies are honest, today’s market cap of Trinity is just £5m…
Both Exxon and Chevron missed the whisper on Friday with the former posting profits down 52% and the latter down 90%. Chevron has more of an immediate problem on capex management as it has a number of mega projects completing which limits their ability to cut costs in the short term. Exxon actually upped output by 3.6% in the quarter but that hardly impacted on a horrible period upstream.
BG announced this morning that the 6th FPSO has started up in the Campos Basin offshore Brazil. The production is now 300/- barrels of oil a day and 16m cubic metres of gas daily and the FPSO can store 1.6m barrels of oil.
Petroceltic has announced that it has pulled its potential $175m bond issue ‘as terms were not acceptable to the company’ but it will continue discussions with ‘selected potential investors’. Given what we have seen above I suspect that it might be a tricky set of discussions…
ENOC has raised the bid for Dragon from 750p to 800p after being out-stared by Baillie Gifford and Elliott Capital Advisors who could have clearly been more than just a fly in the ointment with their blocking 13.1%. Having lived and worked in Edinburgh I can vouch for the fact that you take on the BG’s at your peril as has been proved here…
And it seems that the Serious Fraud Office have been visiting the offices of Soma Oil & Gas who have been doing a lot of very expensive seismic work offshore Somalia. Chaired by former Tory leader Michael Howard, founded by Afren co-founder Basil Shiblaq,who is ‘Executive Deputy Chairman’ with Robert Sheppard, a senior advisor to BP as CEO, Soma has ambitious plans in an area which a number of industry experts rate quite highly.
The cricket did indeed go into the third day and with the Aussies setting over 100 it kept the crowd amused until tea-time. This series has been something of a pendulum, heres hoping it doesnt go back the other way at Trent Bridge on Thursday. It does however call into question why test matches should start on a Wednesday as many fans with tickets for Saturday would have been cursing the authorities…
Worcester opening bowler Joe Leach took a hat-trick with his first three balls of the match against Northants and ended up on the losing side, would you believe it?
Football started in Scotland with newly promoted Hearts winning a thriller against the Saints 4-3, Celtic duly won and there were wins for Dundee, Motherwell and Aberdeen. The Gooners beat Chelski in a friendly at Wembley after the Chelski women had won the FA Cup Final against Notts County the day before.