WTI $44.65 -59c, Brent $46.66 -30c, Diff -$2.01 +29c, NG $2.73 +1c
WTI expires at the close tonight so there maybe unusual movements and the Brent differential usually widens then narrows with the new contract. Weakness yesterday was put down to the oversupply situation but that was a bit tame as Libya lost 100/- b/d with a facility out for strike action. A new word for my dictionary at least is from an American analyst who called the oil price yesterday as ‘trepidative’, not much I can add really…
The API stats which came out after the close didnt add much either, crude drew 2.3m barrels whilst gasoline built 805/- and distillates surprised by drawing 484/- against the whisper.
A litigation update this morning from Cape regarding an industrial disease case being brought by Aviva in which CIU appeared to ‘win some and lose some’ findings in a judgement made yesterday. Accordingly, and whilst the company are seeking leave to appeal the judgement, the board believe it prudent to increase the provision by £9.7m to take account of this judgement. The nature of these cases, and the liability that they still inflict on Cape, going back to 1956, indeed mean that it is an unwelcome but necessary call on cash of an unknown quantity for an unknown amount of time.
PANR announced yesterday that they had increased their interest in Polk County following an internal reconfiguration within Vision that led to an opportunity not to be missed. The cost of the deal is $6.5m in cash which will be paid for through its share of cash flows plus 20% of costs of drilling the VOBM#2H and 3H wells at $1-1.25m each. The deal means that PANR are buying P50 prospective resources at around $1.10 boe and includes an 8% stake in VOBM#1 which IMHO would pay it out in no time.
There were a number of questions yesterday regarding the reasons for sale and why it was not an open market transaction. Having spoken to senior management yesterday I am confident that it was a genuine internal reconfiguration, and that the advantage of the deal staying within the family so to speak is mainly down to Pantheon, word has it that senior management would have gladly participated in the deal had they been allowed. Finally on operational matters I understand that all is going well, VOBM#2H is going accordingly to plan and VOS#1 in Tyler County (not part of the deal) where fraccing is imminent.
Watch out for Halliburton figures later, the market is expecting a fall in revenue, losses of 19c a share and a much lower cash position due to the $3.5bn break fee associated with the Baker Hughes deal, apart from that the market love it. The shares are only a dollar off the years high, 54% above the lows and the chart looks like the north face of the Eiger, whaddya know eh?
Providence Resources have repaid their Melody loan ($20m +10m shares) and discharged the Transocean balance ($5m, $4m net) following EGM approval. Having completed a successful $65m raise, the company is debt free, with a strong balance sheet and in a position to drill in the Porcupine Basin next year not something I thought I would be writing only recently and the assets are genuinely worth looking at.
Who would have thought that Brendan Rodgers’ first game at home would be trying to overturn a 1-0 defeat at the hands of Lincoln Red Imps of Gibraltar eh? Not that there will be any nerves at Celtic Park but knowing the eyes of the footballing world will be on them does just stimulate the juices…
And Russia waits for a decision about its participation in the Olympics do you get a feeling that Brazil 2016 may just not be the great games that they sounded like when it came out of the envelope? With no President to hand, Petrobras in the Ilie Nastase and a killer disease on the rampage who knows what to expect come 5th August.