Oil price, Lamprell, Plexus And finally…
WTI $50.55 -15c, Brent $56.43 +14c, Diff -$5.88 n/c, NG $2.95 -15c
Oil vacillated yesterday, Brent rose as Nigerian crude outages kept demand for that crude firm whilst WTI drifted. Exxon have announced that their Baytown and Beaumont refineries have just started producing fuels at reduced rates and that it has opened up crude and product pipelines in the Gulf and other areas of Texas.
Of course today is the Ministerial meeting of Opec and Non-Opec in Vienna, the market expects a further rollover but it may just be a recommendation to the full Opec meeting on November 30th.
Lamprell – Profit warning for now, jam tomorrow.
Interims from Lamprell this morning were a true curate’s egg, very mixed with the word challenging being used all over the place and downgrades to guidance for 2H 2017 due to a low level of walk in work, and for 2018. The market is indeed ‘challenging’, not just for the rest of this year but for next year as well. The good news comes in varying places, 1H 2017 was good with rig deliveries securing cash in and margins up to 13% which is very good indeed. With only two major projects to deliver between now and the end of next year, rations are becoming shorter, even though in the longer term there is plenty of good news to come.
In the jam tomorrow department the foundation is the balance sheet which is very strong and has net cash of $305.9m on board, even old Lamps couldn’t spend that in a hurry. The next piece of good news appears to be in the bid pipeline which is now up at $3.1bn having been $2.5bn in December. This is where the jam comes in, any contracts coming from this pipeline will not likely materialise until 2019 in terms of money in. Other pieces of good news are around the big JV which is signed and all the details are being worked out, again 2019 at the very earliest for the early stage of the Saudi yard although the pre-qualifying process with Saudi Aramco is under way.
Overall the longer term outlook for Lamprell is very favourable indeed, cashed up and with wealthy partners in the JV and a lean operation at home ready to challenge in a mix of markets, any reasonable conversion of that bid pipeline will result in lots of work, in 2019 and onwards though. Shorter term investors have sold today and may be able to finesse their return but should remember to buy back in as all being well there really are decent prospects of jam tomorrow.
Old favourite POS is hanging on in there in what is still a tricky market for OFS companies as highlighted by Lamprell above. Yesterday they announced a bit of good news as they won a new customer in Rosneft in a new territory, Vietnam. The contract is for the usual POS-GRIP HP/HT wellhead equipment for an exploration well. POS are normally pretty good at keeping customers when they get a new one as once tried their kit is usually in for the duration.
The Ayr Gold Cup for tomorrow has fallen to the weather already, I had thought that calling off today was to ensure that racing on the TV was good for tomorrow but there has just been too much rain. The only good news is that this must mean we are getting closer to the jumps season which is great news.
The MotoGP is at Aragon on Sunday with Dovizioso and Marquez on level pegging in the Championship. All eyes will be on Valentino Rossi who has turned up less than 3 weeks after a double break on his leg …These guys are made of different stuff !
In the footy the big game might be the happy Hammers hosting Spurs or the Noisy Neighbours entertaining out of form Eagles, the Red Devils go to the Saints and Chelski are at the Potters. In a repeat of the Haribo Cup game the HubCap Stealers go to the Foxes.
Yesterday’s one dayer against the Windies was washed out, wither the next few games which are a risk in September…
Finally there is some boxing this weekend, in the US Luke Campbell faces a task against Jorge Linares whilst Hughie Fury is fighting Joseph Parker.