The Oil Man: Range, Faroe, Circle, Amec Foster Wheeler
9th August 2016 13:59
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WTI $43.02 +$1.22, Brent $45.39 +$1.12, Diff -$2.37 -10c, NG $2.75 -2c
A decent rally yesterday but, on pretty flimsy evidence, the OPEC president gets on his hind legs and calls an "informal meeting of OPEC in September to discuss the current slump in oil prices" and people only go and believe it…
The way to read it is that all participants will be in Algeria for the International Energy Forum and, all of a sudden, you've got an OPEC meeting.
Some more colour on the likely oversupply of crude oil this year should come from the monthly reports from the Energy Information Administration,OPEC and the International Energy Agency this week; after blowing a bit more positive recently, will they temper that optimism this time?
Amec Foster Wheeler
A big relief rally at this morning as the figures, despite being distinctly average, beat the market whisper and, to be frank, might have been a lot worse.
The company describes them as "mixed" which is fair enough; good numbers in Solar and the North Sea were offset by bad numbers in Americas Oil & Gas. Indeed, with clean energy up 80% and environmental up 10%, mitigating the bad bits, there is cause for a degree of optimism.
The loss of £429 million post-write-offs and impairments was expected and, with modest trading profits, margins were only down just under a point at 6.2%. They even paid a divi of 7.4p - albeit down 50%, as the market expected.
Net debt is £1084 million and likely to be like that at the year end but, with £500 million of disposals expected, that number will be substantially reduced in line with a more efficient company, also driving significant cost savings, as one might expect.
The order book could also have been worse, sitting -at £6.2 billion - against £6.6 billion this time last year - and is holding up reasonably well under the circumstances; at the same time operational cash flow remains good.
The statement was hardly encouraging, although, again, I would expect nothing different from a new CEO assessing his asset base.
The world is very challenging and capital projects are being delayed or cancelled, so there is only one thing to do: go for a strategic, organisational and cost review, and snappy. Some things are already underway, such as the highly respected John Pearson having moved over to the US; I rate him very highly.
The review is scheduled to be completed by "the autumn" and I am led to believe that it will be "evolution rather than revolution" but will, either way, be a proper shake up - so wait for the leaves to fall off the trees and see what he comes up with.
Amec is in a difficult space along with many others worldwide, but is addressing the problems and should come out ok.
Range Resources
has announced that the LD-1 development well has spudded in Trinidad on the Morne Diablo field and, with a Total Depth of around 2,500 feet, should only take a couple of weeks.
It is encouraging to see the well programme going ahead as per the company's plan and, with new rigs being approved all the time, the outlook is bright. Indeed, the two wells 250 and 251 are hoped to be brought onto production in third-quarter of this year after current production testing.
The company still has plans for three more wells this year: one at Morne Diablo, one at Beach Marcelle and an exploration well on the Guayaguayare block.
Faroe Petroleum
has announced that the take-up of the open offer was just 13.7%, with the balance placed by the underwriters; fortunately the major placing was so oversubscribed that there were plenty of willing takers of the rump.
The £4.2 million raised from the open offer adds to the £62 million raised in the placing and leaves Faroe with a strong balance sheet, ready to take advantage of any opportunities should they arise.
FPM remains a solid member of the bucket list and ,although off the year's peak, is still showing a 50% gain from the lows earlier in the year.
Circle Oil
After the year it has had, all needed was an earthquake at Kenitra, which has damaged the ONHYM pipeline and cut their gas production to 70% of capacity.
The company says this is a temporary issue and should be resolved before long. What next, pestilence?
And finally…
The GB team won two bronze medals yesterday: Ed Ling, a Somerset farmer, won bronze in the shooting and Daley and Goodfellow did the same in the diving.
We are at exactly the same point as London 2012 after three days - and bear in mind that no team has ever beaten the total they got after hosting the games.
A couple of big signings heading for Manchester, Stones goes to the noisy neighbours - eventually - and Paul Pogba returns to Old Trafford for plenty more than he left…
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