Oil price, Aminex, Enteq, Talon, Range,
WTI $51.14 -$2.13, Brent $59.97 -$2.32, Diff -$8.83 -19c, NG $2.39 -1c
It’s a game of two halves and perfectly reflects the oil price volatility over recent weeks. Yesterday saw another 2+ bucks off oil as the US inventory stats from the EIA showed another build in crude stocks which worried the market. Being now substantially above the five year average and still building panics the market but looking a little deeper gives a rough idea as to the nature of the problem. I spoke to a trader friend who reminded me that the US is still importing crude, particularly for refiners who can’t use the domestic grades leading to this temporary glut in certain areas of the US.
The second half is this morning where reports from the British navy indicate that a Frontline oil tanker has been torpedoed in the Gulf of Oman, a particularly important spot for anything unfriendly and as I write the finger of guilt is, unsurprisingly, being pointed at Iran. As a result oil is up over 4% this morning. Finally, yesterday saw the EIA STEO, today sees the Opec report and tomorrow sees the IEA monthly, I will review after all three but the general trend will probably to say that 3Q should be tight but not so clever after that.
Aminex held its AGM yesterday and I took the opportunity to touch base with Chairman John Bell as there is much to discuss and I was surprised at the openness and candour that he displayed. He pointed out that Eclipse and ARA were both represented at the meeting and were both highly supportive of Aminex. They had made it clear that they have a long-term view on getting Ntorya developed and in particular they pointed out that the future value of Ntorya is worth the ongoing approval delays that Aminex has experienced. All of Eclipse, ARA and Aminex are engaging with the Tanzanian authority reps directly and have been in-country ‘many times’ to progress the licence extension issue in order to expedite the closure of the farm-out.
With regard to Kiliwani North the company do want the asset up and running again and producing with the low cost options previously envisaged but in my view wisely they cannot make any promises that such production would be at previous levels. Operationally re-entering the well at modest cost does make it worthwhile and of course there is still significant potential available in the surrounding area but this is not a top priority compared to executing the farm-out.
There is no doubt that all the management are very aware that shareholders are frustrated by these constant delays the the closure of the deal and I suspect that after speaking to them yesterday they will ‘engage’ with shareholders more from now on. On the subject of management the new team are completely focused on reducing the costs of the business, remember what John Bell did with the cost base at Gulfsands. Such things as option awards instead of salaries, employee numbers and director numbers are being reduced and as I understand it non-executive directors are taking on additional workload. Nothing is sacred in cost cutting until the receipt of the farm-out money and probably afterwards.
This all means that a new CEO will be appointed ‘in due course’ but not until there is an obvious candidate who would add value to Aminex. The board appear to be fully confident in the existing management team and that between them they will all steer the company back into a strong position. I understand that after a ‘difficult’ AGM last year this time was more constructive and ‘engaging’ and the shareholders were prepared to discuss the future of the company with the board. For those who have been patient enough to hang on in there it does seem that although much is yet to be done, Aminex is not without hope.
It is nice to be writing good stuff about Enteq again, readers will know that I was a big fan when it first came to the market but in entered at a difficult time and to be frank I thought at one stage that it wouldnt last the distance. So it is a tribute to Martin Perry that he is here and reporting a pretty good set of 2018 finals.
Indeed if you had been in the audience at his January speech and invested after that you would have done well as the shares are up by around 40% since then. Yesterday he reported revenue of $10.2m (6.5), adjusted EBITDA of $2.5m (0.2) at a margin of 24% and cash of $11.9m.
The company reports growth in both the North American market and Internationally with increased investment in new technologies and the rental fleet. The statement says that Enteq has seen ‘substantial positive growth and a return to real profitability in the last year’ and is well placed in an ‘essential market sector’ for the foreseeable future with a strong base of new products, technology partnerships and a broadening addressable market. Whilst I am hearing of price weakness in the rig area Enteq is not involved there and the current outlook seems pretty exciting.
I wrote about Talon Petroleum the other day after meeting MD Matt Worner in London, the company is an ASX quoted but interestingly North Sea play. I don’t normally write about non-exec appointments but this is most interesting, Steve Jenkins has joined the board adding to what can only be described politely as a distinguished, experienced bunch of North Sea experts. One for the notebook….
Not much to write about at Range as they are suspended while they restructure their debt and consider the acquisition of a Chinese educational company. However the announcement today could make a meaningful difference should there be any positive outcome.
The company has submitted a notice of arbitration against the State of Georgia over wrongful termination of the PSC on block VIA which they held through their 65% interest in Strait Oil & Gas. This is the meaningful bit, Range is claiming damages of $21.9m plus interest of $1.7m as the government allegedly re-tendered the block.
It’s not even Royal Ascot yet and still the Premiership fixtures for next season are already out. Champions the Noisy Neighbours start their campaign at the London Stadium against the Hammers while Liverpool host the newly promoted Canaries, Spurs host Villa and the biggest tie is the Red Devils entertaining Chelski at the Theatre of Dreams, the Gooners go to the Magpies.
The US Open starts today at Pebble Beach, California with Brooks Koepka going for a hatrick of wins in the major.
And the St Louis Blues beat the Boston Bruins to win the Stanley Cup for the first time.