Oil price, Trinity, Europa, Majors results, And finally…

WTI $44.60 -78c, Brent $47.99 -9c, Diff $3.39 +65c, NG $2.29 -10c

Oil price

Last week both WTI and Brent lost around $2.50 with crude stocks increasing and products holding their own. The strength of the greenback in the last day or two hasn’t helped and the rate cut in China didnt help commodity markets much. The rig count was very modest, unchanged overall and minus one in oil is hardly going to light any fires, although evidence appears to be showing more falls. Net speculative length positions fell again last week by 13,841 contracts indicating little optimism from the hedgies.  It is worth noting that NG fell sharply again on Friday and is heading back to $2.

I said last week that the end of October is an important time in the US market, refinery maintenance should be complete and they will be prepared for the first of the cold weather and sales of heating oil. If that is correct then maybe, just maybe, we might see a modest pick up in demand and perhaps a stock build before long. Certainly it is worth looking at the offline capacity numbers which have fallen by a million barrels since the beginning of the month to the end of last week.

Trinity Exploration & Production

Its been a busy week for Trinity what with the sale of its onshore interests to Touchstone and now the reorganisation of the board. The market heaved a huge sigh of relief with the sale, there had been so many extensions of the debt that the market was fearing the worst, as it was the shares doubled on the news. Today the company announce that Monty Pemberton has resigned as CEO with effect from the end of this year and that Bruce Dingwall will return as Executive Chairman. As the ‘forward focus’ is to be on the company’s offshore acreage and a further serious cutting of costs can be expected much is to be done, but my optimism, though tempered, may be reinstated. I look forward to catching up with Bruce again in the not too distant future.

Europa Oil & Gas

There have been plenty of announcements from EOG lately on both the UK onshore and Irish offshore assets. Today sees the announcement of the updated independent assessment of assets by ERCE following the departure of Kosmos. The assessment has been made as I can see it with the benefit of four new factors, that EOG, subject to Government approval, will now own 100% of the licence, the removal of the value of the free carry, a changed, lower analysis of the price deck and the benefit of new, lower industry cost basis.

The total Gross mean Un-Risked prospective resources of 1.5bn boe across 3/13 has not been changed but the NPV 10 has fallen. Whereas the previous Un-risked NPV 10 was $1.6bn to EOG’s 15% stake, the number for its 100% stake has risen to $7bn, a fall of $3.3bn in the process, although CEO Hugh Mackay said ‘We believe this is a very strong indication of the commercial potential in our licences in offshore Ireland’. As per my most recent report following a meeting with the company, it is now crucial that the farm-out process gets under way and I do believe that informal conversations have already taken place. The only fly in the ointment is ironically a positive one, whilst this farm-out process is on-going,  the Atlantic Margin Licensing Round is underway and EOG have ‘multiple applications’ in as may have potential farminees.

The announcement today regarding Ireland, coupled with the better news from Wressle last week, shows that EOG has still got potential to develop reasonably near term production and revenues in the UK as well as holding out for the significant  prize of the Porcupine basin longer term. Shareholders will have to be patient but that data room had better be busy as one would not want this to be a 2018 or later scenario…

Results season…

It’s the third quarter results season and this week we have numbers from BP (Tuesday), RDS,Total, Conoco and Eni (Thursday) and BG, Chevron and Exxon on Friday. E&P will be down again on this time last year although again I expect the downstream to have been strong still as will have been trading. With the dividend decisions, such as they are, not to be made until February it is likely that these announcements will be policy light and cost rhetoric heavy, watch this space…

And finally…

I havent watched it yet but congratulations to Lewis for winning the World title again and for Nico in being so graceful in defeat…

In the cricket the tail is wagging desperately but it would be amazing if England got out of this. If James Taylor doesnt play in the next test then its time to go back to square one…

The weekend’s football was the usual mix, of the derbies I talked about, the Manc one is easily forgotten but not the other two. In London the Hammers continued their domination of the best sides by beating Chelski 2-1 with the Chosen One and his No 2 being sent of as well as one of his players, it must have been quite fun in the dressing room in the second half. In the Tyne/Wear derby the amazing sequence of Maccams wins was continued as the Magpies committed football suicide, the wally mit brolly looked a picture though…Another win for the Gooners had them at the top of the table if only temporarily and Villa who sacked another manager at the weekend are now at the bottom. Elsewhere Klippetty Klopp still hasn’t registered a win at Anfield yet, Spurs were sharp, scoring 5 at the Cherries who look poor, the Baggies had a good result away, again winning 0-1 at the Canaries. With the Foxes beating the Eagles 1-0 and Stoke unexpectedly losing 0-2 at home to the Hornets much is still in the melting pot.

And no surprise to see the All Blacks v the Wallabies in the RWC Final next weekend, they both looked solid and no doubt that no Northern hemisphere side would have stayed with any of the four on view, great comments by Sir Clive Woodward after yesterdays game…

In the NFL, E.J. Manuel went from zero to hero and back again as the Bills were edged out by the Jags at Wembley. The Patriots managed to overcome the Jets thanks to a big fourth quarter from Tom Brady. They now move to 6-0 alongside the Panthers who defeated the Eagles 16-27. In Miami, the Dolphins put 44 points on the Texans and the Falcons move to 6-1 after beating the Titans in Tennessee. Elsewhere, there were wins for the Seahawks, Saints and Redskins. Tonight sees the Ravens take on the Cardinals.

And in the baseball…

Matt Harvey will pitch the first game for the Mets as they take on the Royals in the World Series. Whatever the result, a long drought will be ended. The Royals last won the World Series in 1985, the Mets in ‘86.

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