WTI $49.43 +$1.62, Brent $53.05 +$1.72, Diff $3.62 +10c, NG $2.50 +2c
Another hike in the crude price yesterday and as not much has changed on fundamentals we should assume that the market is adding a modest geopolitical premium in for hostilities in Syria. With Russia and Saudi Arabia on different sides on this one the likelihood of any easing in tensions is low and the possibility of something going horribly wrong one way or another shouldn’t be ruled out. Yesterday it was clear that genuine buying was happening, the bears having closed their shorts some time ago and the Chinese came back from their holidays ready to catch up with world markets. As mentioned earlier in the week I am certainly getting a modest upward shift in sentiment from China which may help, seeing them buying for stock would add to that uplift.
Ithaca has announced that Delek Group has made an investment of $66m in the company at 53p, a 19% premium to last night close. This morning the Ithaca share price has rallied to 50.5p as I write, thus making up 13% of the difference, it should be more. Delek now has 19.9% of the company which readers will know is one of my favourites in the bucket list. Ithaca say that the proceeds will be used to strengthen the balance sheet, reduce debt and provide flexibility to ‘pursue value accretive satellite opportunities in the Greater Stella area’ which shows that they are now looking further down the track.
I am in the process of writing up a meeting I had recently with Les Thomas and Graham Forbes which only served to reinforce my confidence in the company. The Ithaca model of making the business work at $50 and protecting the downside is laudable in this market and their hedging policy and the way they use the financial instruments equally effective. With the big value event of Stella coming up in 2016 I am not surprised that someone like Delek has taken such an investment, indeed they might have rung the bell for Ithaca and possibly others in the sector, more next week.
Petrofac has announced that the contract with ZPMC to construct the JSD 6000 Deepwater multi-purpose offshore vessel has been terminated ‘due to issues with ZPMC’s performance in respect of the construction’. The board are now ‘reviewing our options’ which doesnt give us much of an idea where they are going from here with this project but an educated guess might be towards or beyond the back burner…
President has announced the results of the successful 2015 seismic campaign on the Hernandarias block in Paraguay and details significant new prospective resources within it. In the oil case they announce gross unrisked recoverable best estimate prospective resources of 302 MMBOE while in the gas/condensate case they have 559 BCF and 17m barrels of condensate with an overall COS of 22%. Chairman Peter Levine says “The results of the seismic programme carried out earlier this year are very promising and underline the potential of the Paleozoic play in the Hernandarias Block. The very large Boqueron structure is a compelling drilling opportunity which is eminently risk covered and the success case economic even in the current depressed market environment.” Whilst not exactly the lowest beta in the sector I remain positive about President and the areas it operates in.
I understand that the Afren creditors meeting is taking place this morning and a pretty grim experience it will probably be. With the inability to sell off the whole company the best one might expect is some piecemeal asset sales and very little overall return. Although not apparently a requirement there is also a shareholders meeting which might also be grim, if the creditors are struggling then I fear that the investors have been left between a rock and a very hard place.
Its a busy weekend in the RWC with a number of key quarter final places to be fought for, Australia and Wales both want to win to avoid the Springboks and Scotland should beat Samoa to get the chance to play the winner of that match. On the other side of the draw and probably the most interesting game will be France v Ireland on Sunday afternoon where the loser is rewarded by a QF against the All Blacks…
The Euro qualifiers carry on but for Northern Ireland last night was unconfined joy as they confirmed their place in France next year by beating Greece. Elsewhere Ireland beat Germany 1-0 and by doing so, and Scotland only drawing with Poland, consigned the sweaties to Euro oblivion. Ireland can get through by right if they win in Poland on Sunday but still have the fall-back of a playoff place. England play Estonia tonight and are already through.
It’s the Russian GP at Sochi this weekend and practice this morning was disrupted after a number of cars came off the track after a cleaning truck dropped a large quantity of diesel on the track…Mercedes can clinch the drivers title this weekend I am told.