WTI $44.75 -$2.05, Brent $46.26 -$2.21, Diff $1.51 -16c, NG $2.74 +1c
Indifferent news dominated oil markets yesterday, Chinese trade data was poorer than expected, the inventory data was slightly worse than forecast and the IEA produced a bullish report with a sting in the tail. The EIA inventory stats showed a draw of 2.5m barrels but the market had hoped for 3m, added to which products built particularly distillates. The IEA report was the most bullish overall this week with long term call on Opec increasing but the sting in the tail was that they continued to warn about high stock levels. This morning the price has rallied by about 50 cents which indicates some resilience I suspect.
Brief thoughts on the Woodside deal to acquire the COP 35% stake in the three Senegal blocks for $350m +$80m on completion. I am waiting for a call with Far and will add more either today or in more detail tomorrow as time is short. My initial take is that Woodside have done way the better side of this bargain although COP had handled the sale badly and telegraphed the sale all round the market. Historically they are not good traders in these situations but at least with a keen owner it means that development will probably kick on, as WPL have said that they will fast track to near term production and take over the operatorship. Buying a class asset at $2.20 is outstanding and COP have given away an asset in order to pay the dividend, such things happen in these markets and WPL will in due course be applauded for making a superb, counter cyclical move. With WPL and Far using the same reserves data one can be sure that Far consider their stake in the licences to be way higher than their current share price.
Gulf Keystone Petroleum
So, the balance sheet restructuring has happened and pretty much as one might have expected under the circumstances. Debt will be reduced by converting $500m into equity which will amount to 5% before the equity issue. That issue, of $20-25m, underwritten mostly by Capital will be the only way that current shareholders can participate in Shaikan going forward but it should be seriously considered. While there will be a temptation to look backwards and the mess that it has become, in the future there is a world class asset in a country supported and on the mend, albeit slowly, which could be worth something. The money raised will, apparently, be enough to keep Shaikan producing at 40/- b/d and potentially 55/- b/d, not to be sneezed at, especially if you are bullish of the oil price next year. The balance sheet will be cleaned up, and the $32.5m DSRA will be removed. If it were me I would hang on in there, apply for some more stock in the likelihood of making something back and try to put the past behind me, I know that’s not easy but in the here and now GKP still has a future. Oh and by the way, they have got another new Chairman…
Circle Oil has announced that the IFC has extended their support until August 5th while the strategic review is still going on.
Independent Oil & Gas say that the Skipper well will likely spud around 22nd July as per my recent thoughts.
Two of the finest and most historic sporting occasions of the summer start today and as I write it is not raining for the first time for some time…
Up at Royal Troon The Open Golf Championship is under way as Colin Montgomerie hit the first ball at 0635 hours this morning. Recent years have seen total domination by US players in this event but in a Ryder Cup year, not to mention the Olympics, there is more than usual to play for.
Today sees the first test match against Pakistan at Lords and so we are bound to see plenty of no-balls although unfortunately we wont know when they are coming…England have brought back Ballance at 4 and pushed Root up to 3 which I am not convinced about, he averages 29 at 3 and 50 at 4…With Anderson unfit there’s a spot for Jake Ball on debut, Pakistan win the toss and are batting…