WTI $46.58 +84c, Brent $49.23 +88c, Diff -$2.65 +4c, NG $2.62 +3c
As promised the participants in the ‘get the oil price up’ story are toeing the line and yesterday Russian and Opec ‘officials’ met in Vienna to discuss the oil market. By adding almost another dollar, taking Brent close to the magical 5o bucks level and both crudes up nearly 20% so far this month the job is working.
Elsewhere normal influences on the oil price were decidedly complicated, the dollar fell until someone at the Fed suggested that September was still a possibility for a rate rise and as for the API stats, well mixed was not strong enough to explain why they were so odd. With crude drawing against expectations of a build and gas and distillates adding over 2m barrels each when expectations were for a draw in both categories, it was good that the market was closed, this morning both are down @40 cents. Lets see what the EIA numbers bring tonight.
Independent Oil & Gas- Skipper, the oil moved…
IOG announce the results of their Skipper appraisal well this morning and the primary target, to ensure that oil already discovered was actually there, is deemed successful, indeed with better viscosity than expected. They are now drilling down below skipper to look at two exploration prospects whilst they are on site, watch this space…
Yesterday RKH announced the completion of the Beach Egypt acquisition already announced. The cost is $11.9m all in cash and it brings with it 1,100 boe/d taking group production up to 1,500-1,800 boe/d thus substantially increasing revenues. The recent exploration success adds around 2mmboe and brings the implied transaction multiple down from $2.7 boe to $2.4 boe, indeed that figure may already be lower than that. With operating costs of <$8 boe the deal is smart and the deal is free cash flow positive at <$35 oil. For the group, guidance is that the balance sheet remains strong and by the year end there will be $60-70m of cash and no debt.
For RKH the establishment of a ‘Greater Mediterranean’ strategy is being built diligently and I expect much more to come on this front. Accordingly whilst there should be more news flow from this asset in coming months don’t be surprised to see further deal flow as opportunities become available in North Africa, a very popular post code at the moment.
I think I pretty much covered this one yesterday but the only thing that appeared to come out of the meeting Q&A was that management pretty much ruled out any raise at this time. I am aware that with Catcher and Kraken coming onstream next year, bringing spare cash of around $100-150m to the party, along with its strong cash and undrawn RBL the company doesnt need any more but I thought there might just be a temptation.
Cairn has been criticised for being conservative in terms of resource estimates but it is aware that the risk of over-egging the pudding is a worse crime. It continues its policy of upward only resources reviews which I would imagine will be the case as long as it is the Operator which itself depends on the completion of the Woodside transaction. Meanwhile Far is strongly placed either way, if the Woodside deal completes it probably speeds up the process as alluded to by CNE yesterday as it announced a low cost development with swift move to FID and the glimpse of 120/- b/d, exciting times.
Wood Group-Pay up for quality yes but……
My invitation to the WG analysts presentation yesterday got lost in the post but I got the message as the company has elected to go for the ‘cautiously optimistic’ stance at the presentation. The day had started well with the announcement of a contract worth $700m from Tengizchevroil in Kazakhstan and the order book is satisfactory. More importantly the reorganisation which is designed to take out costs by offering by service not by brand and for right or for wrong it means sustainable cost reductions. I imagine that they will be ok with the guidance of only a 20% fall in ebita but there are signs of some margin erosion which may be reversed especially as the rig count picks up. The WG share price has defied gravity and is up 40% so far this year putting the company on a fairly ritzy rating which I can understand on the ‘pay up for quality’ argument and even the safe haven and guaranteed dividend front, but until there are firmer signs of an improvement in the market place I think I would prefer others.
I am waiting for a little message from Ithaca to say that the Eagle has landed, or at least that FPF-1 is safely moored at Stella, thus bringing the next stage of this process to an end but so far nothing, even my tracking device appears to have gone onto radio silence. I’m sure that it is there, early this morning as expected…
Yesterday I joined Zak and the Moose over at TipTV to review the progress of the bucket list so far this year. If the link works, which at the moment is by no means certain, this is the order I talk about them so that you dont have to listen to the full 26 minutes! PANR, SOU, AMER, RKH, HUR, CNE, FAR, IAE, PMO, FPM, PMG, BLVN, VOG, TLW. In these stocks I give some views on progress and Zak gives a chart analysis, worth taking a look even if I say so myself…If this doesnt work it is on the TipTV website.
If you weren’t absolutely certain you may have dreamt it as Team GB have another massive day at the Olympics. Yesterday was good in cycling as the last day in the velodrome yielded a hatful of medals but also at the sailing, diving and again in the gymnastics. With still more to come as a few brand names enter the stage it looks good although with so many empty seats….