Oil price, Kosmos, Hunting, AOW And finally…

WTI $51.90 +6c, Brent $57.37 -38c, Diff -$5.47 -44c, NG $2.99 +8c

Oil price

All a bit drifty again in oil markets as Iraqi exports through northern routes are up a bit at 288/- b/d still well short of normal. Inventories this week are expected to draw again but with little conviction I am told. Looking at the CFTC numbers for last week the bulls still have it, short positions are still falling especially in WTI where there is little conviction betting against further modest strength.

Kosmos

Kosmos has announced the acquisition of three new exploration licences offshore Equatorial Guinea and the purchase from Hess of a portion of the adjacent Ceiba and Okume fields. This is an exploration and production deal with Trident Energy ( Ex Perenco senior management) in a 50/50 JV which gives Kosmos low cost, high margin with ‘significant upside potential’. Some people are calling it going back home as as Triton Energy this discovery was made by original Kosmos founders which given how much they know about the asset shouldn’t be ignored.

From Africa Oil Week, Kosmos in the form of Exploration VP Tracey Henderson, made a most interesting presentation on deepwater exploration in which compared discoveries such as Liza with shale. The compelling part of the comparison was that deepwater easily competes with the best of shale which will return less than the onshore. Kosmos has an enviable record and has pinned its colours to the West african mast which is remarkably economical, no surprise then that the area is amongst the hottest of properties in world oil.

Hunting

3Q trading update from Hunting this morning shows further consolidation and revenue continues to strengthen primarily driven by US onshore activity levels as one might suspect. Accordingly revenue guidance for the full year is now for around $700m nicely up on previous expectations. EBITDA remains positive, the 9 month number is $33m after a first half of $11m which means that it was a pretty good quarter, probably tilted towards the end of the period which bodes well for the final quarter.

All businesses focussed on US onshore continued to report ‘strong results’, all the usual suspects and even the electronics appears to have a more positive report. Offshore and international markets remain ‘subdued’ but ongoing cost cutting has narrowed losses here. The revenue increases come with their own baggage, in this case working cap has built up and debt is up to $15m but the company expect a year end net cash position more than offsetting the increase in debt.

Hunting is as strong as any in the UK quoted sector as it has the enviable US business to rely on, this is something I expect to continue whilst most of the rest of the UK quoteds excluding PFC are finding it hard going. Hunting shares have fallen since the peak but were an early riser and performance has been creditable against peers, something I expect to continue for the foreseeable future.

Africa Oil Week

To continue last night’s theme there is little doubt that the mood around Cape Town is significantly more upbeat than for the last two years, no great surprise really. Today’s presentations saw Ophir Energy extolling the virtues of Fortuna LNG in Equatorial Guinea and of course most presenters saying that costs were down and in most cases still falling.

Celicourt and Memery Crystal LLP combined to host a meeting of a number of oil company executives and advisors which was well attended and was noticeable that a large number of guests were not actually attending the conference… Those who were in possession of badges returned to hear Rick Parry, the US Secretary of State for Energy who didn’t tip his hat so much to Africa but reminded us all how brilliant the US oil industry is…

And finally…

Back to the Haribo Cup tonight when for some clubs the kids come out to play. The Gooners host the Canaries, Bristol City are hosting the Eagles, the Foxes entertain Leeds, Boro are at the Cherries, the Red Devils go to the Swans needing a pick-me-up and the Noisy Neighbours host the Wolves.

Tonight sees the start of the World Series in which the Houston Astros who have never won the title take on the LA Dodgers who must be warm favourites…

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