The Oil Man: BP, Rockhopper, Premier, Hunting
14th April 2016 11:25
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WTI $41.76 -41c, Brent $44.18 -51c, Diff $2.42 -10c, NG $2.04 +3c
The blog has been absent for a couple of days - much more on why in upcoming issues - but the visit to Gdansk to see FPF-1 was in that respect a resounding success and most impressive. Travelling by Wizz Air was a resounding failure, ending up sitting around at Gdansk airport for 11 hours without a word of explanation; more of that later also…
The oil price was probably getting carried away with itself ahead of Doha on Sunday, but don't rule out further hefty enthusiasm from those who are long.
The fall yesterday, which has continued this morning, was down to a couple of things and poor - but not irretrievable - inventory numbers. First, the Saudis made it plain that any production cut was "out of the question" - not surprising really, they hardly want to be responsible for the reincarnation of oil profitable at $50.
Secondly, the Russian oil minister said the Doha meeting/agreement would be "loosely formed with few detailed commitments" - no surprise there either, although he could have added that all will cheat as soon as is practicable, as there will be no enforcement.
On the more bullish side, the OPEC report, at a swift glance, showed that non-OPEC production was falling more than previously expected and the headline is similar in the International Energy Agency monthly, whereby it suggests the fall in shale will wipe a lot off stocks.
My own view is well known: add this to the $400 billion (£283 billion) of capital expenditure cuts by the majors and the market might start looking very squeezy indeed in the not-too-distant...
As to those inventory stats, the build of 6.6 million barrels of crude was way higher than the scribblers' guesses of 1.9 million, but the market didn't take it so badly, as the gasoline number was a draw of 4.2 million against the whisper of only 1.4 - overall, still a big add to stocks.
FAR Ltd
As slightly predicted in the blog previously, FAR has taken advantage of a good well result and a strong market by raising A$60 million (£33 million) at 8.5 cents.
I think this is eminently sensible and the company is now fully funded until the full extent of the commercialisation is understood, likely to be early 2017.
FAR remains an outstandingly cheap way to play the world class discoveries in Senegal.
Cape
has announced a contract on Teeside with and, whilst not specified as to value, it is for five years and likely to be a useful add to the backlog.
Sundry
As also mentioned earlier in the week, appears intent on driving a coach and horses through best practice on executive pay. No one minds a fair pay cheque, but twenty million sovs when you've just made a huge loss and laid off a quarter of your workforce, and you're having a laugh at the expense of your shareholders…
On the subject of boards, as we almost were, it seems like the pruning shears have been out at , as the Chairman has decided to reduce its size reflecting current industry malaise. One executive director has paid the price and two non-execs have also received the Order of the Spanish Elbow.
Whilst I was away a few things came out, I will try to cover in next day or so.
Results from were very much in line with expectations; the main focus was on what a good year it was. Decent discoveries at Zebedee and Isobel deep managed to significantly increase the booked reserves and the Sea Lion development is progressing well.
Like a number of companies out there, this could be a perfect scenario, as the lowest costs for many years are being taken advantage of. The Greater Med strategy is working well and production is building nicely up to 700 barrels of oil equivalent per day now.
Finally, RKH has cash of $110 million - plenty to keep it going - and the stock remains a key long term player in the bucket list.
Finally for now, had its trading statement at the AGM yesterday and it was also very much in line with one delivered at the results last month. Trading is still weak, about 50% down on this time last year, reflecting the dramatic fall in the rig count.
As with other service companies, costs are strongly down and, all being well, Hunting will be well placed for recovery as and when…
And finally…
I see that the Noisy Neighbours are in the Champions League semis, where they won't be facing Barca, who went out to Athletico last night.
It's a shame there were no TVs for our 11-hour ordeal in Gdansk airport, as we might have had something to do…
Tonight it's the second leg of the HubCap Stealers against Borussia Dortmund and, at Anfield, they will really fancy their chances of progressing.
And it will be Man Who v. the Toffees in the other FA Cup semi final.
And they did it, the Golden State Warriors kept it together long enough to win the 73rd game and take the record; elsewhere, it was farewell to Kobe Bryant, who bowed out last night.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.