WTI $29.53 +$1.18, Brent $29.25 +$1.37, Diff +28c -$1.61, NG $2.14 +2c
At last a rally as traders sensed some short closing yesterday and it has carried over into today, as I write WTI is $30.91 and Brent $30.84. The WTI price will be watched closely by chartists as $30.85 is the Fibonacci retracement resistance level and a close above that would please them no end. Even if the week does end up well it will be put down to transient, unimportant reasons such as the cold weather about to hit the North East of the USA or maybe IS militants attacking Ras Lanuf again.
The EIA stats weren’t too clever, showing a build of 4m barrels, higher than the whisper of 2.8m and although Cushing only added 191/- barrels the total stock of 486.5m barrels was the highest for this time of year for 80 years apparently…
And in Dav-oh where all the big chiefs are hanging out it was the turn of the Saudis to speak, they said that $30 oil is ‘irrational’ and that whilst the short term is ‘bleak’ the long term is much more rosy.
Pantheon has virtually halved from the peak as the market tries to determine whether the second Texas well is as good as first thought or a problem child. Today we have a sort of holding statement from the company who must have been somewhat irritated by a number of short sellers pushing against an open door. VOS#1 has a blockage and the company has completed a pressure build up test and have a number of other potential solutions to try. I think that the clue is in the words saying that there is ‘such a large section of net pay’ and that they are accessing the data from wells on the Double A field where similar problems have been encountered. The worst case scenario would be to put it on production, it is after all a commercial discovery.
With further work to be done to sort out this blockage I can understand why the market is nervous and also how the work of the shorters is being made easy in the vacuum of no news. This may continue but I am going to stick to my guns and especially back at 82p I am going to reiterate my 200p+ unrisked valuation, if the well is eventually sorted it should be more, institutions should take note and use this opportunity wisely. Finally the first well, VOBM#1 is performing well and negotiations are under way to start commercial production of gas and liquids in Q1 2016.
Providence has this morning announced the start of a seismic programme in the southern Porcupine and Goban Spur basins offshore South West Ireland. This area contains the Newgrange exploration project which the company is very excited about. The market still has bad memories about items such as Barryroe and at the moment it is difficult to make a case for buying the shares, but with a sub £20m market cap there must be a chance of a surprise on the upside from the company.
A Paraguay update this morning from President who are battling away in the region with consistent determination. They have today announced that their Pirity and Hernandarias concessions are estimated to hold 3 TCF and 440 mmbbls or 940 mmboe of gross mean prospective resources in six identified main structures. Seismic data has identified 23 leads in the Cretaceous and Palaeozoic plays and the company has applied for a new licence area and are reorganising other areas of interest. There is no doubt that the company firmly believes that this investment in Paraguay is ‘laying foundations’ in country and these new resource estimates, combined with vigorous cost cutting will see them successful for the long haul.
Schlumberger kicked off the results season beating the whisper by 2 cents but slightly missing on revenue down 39% at $7.74bn in the quarter. Things aren’t that bad as they have added another $10bn to the buyback programme.
Northern Petroleum has completed its Canadian acquisition and will now produce 200 b/d from the Country of which 80% is oil. Proved and probable is 1.5m boe, 0.9m in the former category. Italy is long haul but they have Cascina Alberto onshore exploration play with Shell. The company has $2.4 in cash and a positive cash flow and the G&A is sub $3m…..
Finally the trade press is reporting a statement from Worldview who say that they are ‘evaluating and preparing for a possible all cash offer’ for the shares in Petroceltic that they do not already own, ie 70%. PCI are up 30% this morning at 17.5p but I thought that you had to pay at or higher than the price paid in the last year, in this case around 130p, i’m sure a bid at that level would be listened to…
The cricket has moved up to Centurion Park but with England being 2 up with one to play it already has a dead rubber feel about it. Batting on what looks like a sweet track South Africa are 157-1 as I write.
The big game in the Premiership this weekend is Chelski’s trip to the Gooners, they dont often go there needing points to avoid relegation so Sundays game might at least be fun…Elsewhere its another mix up, the Canaries under the new leadership of Ed Balls in the chair host the HubCap Stealers, Spurs go to the Eagles, the Foxes host Stoke and the Saints go to the Theatre of Dreams. The Maccams have the long trip to the Cherries, the Hornets host the Magpies, the Noisy Neighbours go to Upton Park for the last time and there is a tasty derby as Villa go to the Baggies. The other Sunday fixture is the Toffees hosting the Swans.
Back to European Champions Cup in rugby where Stade Toulousain host the Sarries and Leicester go to Stade Francaise, note that Toulon have applied to play in the Premiership which would be great fun.