Oil price, Saudi Aramco Plc, Shell/BG, Bowleven, And finally…
WTI $33.27 -70c, Brent $33.75 -48c, Diff $-48c +22c, NG $2.38 +12c
Further weakness in the oil price yesterday as the China crisis played on, at least the authorities suspended the suspending of the markets working out that if you think you are about to be banned from selling your stocks that you should get on and sell them. Also we should bear in mind that it is a predominantly much more of a retail exchange than other international Bources and behaves accordingly, and that it has gone up more than we might care to remember. Yesterday both WTI ($32.10) and Brent ($32.16) hit intra-day lows but came out fighting, today really needs to be an up day all round. The word on everybody’s lips is capitulation, will that take the form of a final commodity shakeout or will it be corporate, either way I dont think we have seen it yet although it may be quite close.
Saudi Aramco Plc
In a widely reported interview with the Economist, Deputy Crown Prince Mohammad bin Salman of Saudi Arabia said that a decision to IPO Aramco will be made ‘in the next few months’. Cue vampire squids and their ilk getting the company jet to Dhahran, a destination probably not in the stored flight plans. I have already seen some analysts attempted valuations of the company, that seems pretty heroic to me without the aid of any reserves or revenue numbers. Lets just say it will be a whopper, guesses of selling a 20% stake for around $250bn may not be wide of the mark which is why all those bankers are making pension plans.
As we approach deadline day for the shareholders of the above, primarily the 27th Jan when Shell’s will vote, the market is already trying to predict the outcome. I notice that having given a couple of break-even prices Shell has now gone even lower, with Simon Henry apparently saying that $50 over the next two years should do the trick. Whilst it is clear that the bid is too high, much is in stock and has fallen in line, there is no time to renegotiate and walking away now would likely ruin Shell’s reputation for a generation. Shell more than anyone in the industry takes the long view, and whilst this is rather stretching that philosophy the combined business should be world class…
The company has released a Bomono update this morning and announced that the testing at Moambe and Zingana is complete. Without giving any flow rates away they say that initial supply of 5-6 mmscf/d of gas will be available for power generation under agreements with Actis and Eneo. The company also state that further evaluation of additional potential of these sands and deeper sands also targeted is ongoing. Good news all round and I am hoping to catch up with Kevin shortly to hear all about the strategy in Cameroon and elsewhere.
December 21st seems a long time ago but I recorded for TipTV a short piece, partly on why one should stay short oil and also to look at a few stocks at the year end. They included Sound, Pantheon, Rockhopper, President Andes Energia and Hurricane, the link is below and of course on www.malcysblog.com
The first round proper of the FA Cup, when the big boys enter the competition is always exciting and usually provides an upset or two. Kicking things off tonight, the HubCap Stealers go to Exeter which shouldn’t be too much trouble and give K Klopp an idea of cup football. Without naming all the fixtures, interesting ones maybe Wycombe v Villa, the Gooners hosting the Maccams, Leeds Utd v Rotherham and the Toffees welcome Dagenham & Redbridge. The Noisy Neighbours wont like going to Carrow Road, not because of the football but because Ed Balls has just joined the board, another all Prem game is also tricky to call as the Eagles go to the Saints. The Blades might fancy the visit to the Theatre of Dreams at the moment while the Happy Hammers host Wolves, there are two other tricky Prem match ups as the Hornets host the Magpies and high flying Foxes go to White Hart Lane. Apologies I havent time to go through them all.
In rugby it’s back to the Premiership and a juicy match between the Quins and the Sarries, although it’s at The Stoop it may be hard for the home side to beat the machine… Also the Tigers host the Saints which will be good and the Chiefs host Gloucester Rugby and that will be tight as well.