WTI $44.49 +$1.00, Brent $46.97 +93c, Diff -$2.48 -7c, NG $2.59 +3c
Here we go again, last time it was Doha, this time Algeria is the venue for the Opec meeting that barks in the night. The market always tries to paint a bullish picture and I suppose one day it might be right. The point about all this posturing by the Opec President is that that is how the mechanism works, someone talks the price up, usually well before the event and then it doesnt happen. We still have six weeks to go before the meeting is even due to start but the oil price is ignoring the actualité and dreaming the dream.
Those uncomfortable truths kept on coming last week, generally worse inventory stats, poor growth numbers in key markets, a generally unhelpful set of reports and finishing up with a rig count that showed a rise of 17 overall and 15 in oil. I cant see anything else bullish apart from the Opec meeting, even Labor day, signalling the end of the driving season is only three weeks away today. No, the mechanism is very much working, indeed like clockwork, the oil price is up two bucks since it was mentioned last week, there are six weeks until the meeting so 34m b/d at an average of say plus, say, $3 a barrel makes it most successful, as the say stateside, you do the math…
Interims this morning from Ithaca showing that all is going to plan for the poster boy of the E&P sector. Production of 9,378 b/d exceeded guidance of 9/- and a ‘solid’ cash flow of $82m is down to sustained reduction of unit operating costs now estimated at sub $25 pre-Stella and lots of hedging, 8,200 b/d by mid 2017. Net debt keeps falling, from being over $800m it is at $606m at the end of June giving headroom of over$120m.
Those of us tracking FPF-1 can see it on the last stage of its journey and going so well that the company have given an actual date for first Hydrocarbons, remember remember November 2017. The outlook is indeed good, strong even and with that date in sight production will rise to 20-25/- b/d and operating costs to below $20. IAE shares have had a good year as the market appreciates all the good work on costs and of course the material change at Stella. At 65.5p they have quadrupled in the year to date but with so much good news coming I am confident that there is plenty more to go for.
Tim Weller is leaving Petrofac to join G4S as CFO where he is already a non-executive director. Exchanging Ayman Asfari for Ashley Almanza may not just be moving from one AA rating to another but Tim is clearly not one for an easy life! Since he arrived at PFC he has had a more rocky ride than he may have expected but has dealt with all of it with equanimity and a significant degree of calmness, something shown by the shares being down 3% on the news. For me Tim has been nothing short of exceptional and he has helped me develop my infamous ‘fag packet’ model with his regular updates, I only wish that he hadnt told everyone about it at the results meeting…I wish him the very best for the future.
Europa Oil & Gas
EOG has bought Shale Petroleum for £1 in order to increase its acreage in the PEDL 299 and 343 licences to 33.32% and 45% respectively. With Ineos operating the former, the Hardstoft oil field was discovered in 1919 and Third Energy operating the latter, the Cloughton gas discovery from 1986, EOG claim to have two high quality and low risk projects now on their books.
Well that was the weekend that was, certainly in Rio. With Super Saturday rolling over into Sensational Sunday, Team GB made out like bandits with golds in gymnastics, golf, tennis, cycling, rowing, sailing and athletics to add to 7’s rugby (still didnt see McConachie jnr), diving, swimming and equestrianism already in the bag. Now 2nd in the medals table above China, can Team GB possibly get any better? With Bolt beating the twice banned drug cheat the weekend couldnt have got much better.
Indeed I suspect that a lot of people didnt even notice the Premiership season getting under way unless of course you are a Gooner who conceded 4 at home on the first day of the season to the Hubcap Stealers. New look Red Devils won 1-3 at the Cherries and with newly promoted Hull City Tigers beating the Foxes 2-1 making it a bad start for last years champions. Wins for the Swans, the Baggies and the Noisy Neighbours whilst the happy Hammers go to Chelski tonight.
And England lost the test match and drew the series showing that they have a bit to learn yet. Catching is one of those things and the brittle middle order usually rely on the lower order to bail them out but the selectors have a lot to answer for by persisting with poor choices again and again.
Ithaca first hydrocarbons………..November 2016!!