The Oil Man: Wood Group, Sirius Petroleum
29th June 2017 11:01
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WTI $44.74 +50c, Brent $47.31 +66c, Diff -$2.57 +12c, NG $3.07 +3c
Another up day yesterday and this time for choice the fundamentals were poor - the EIA stats showed a build of 118,000 barrels against a forecast of a draw of 2.2 million.
Products were better particularly in gasoline, which drew 900,000 barrels when the API had a 1.4 million build. This was partly due to the start of the hurricane season with Cindy and Dora shutting in some production, also domestic US production was down 100,000 barrels per day (45,000 barrels per day from Alaska maintenance) which was better, but temporary news.
The vampire squids confirmed their bearish stance by predicting $45 oil through next year or until the market balances. Finally, as I mentioned yesterday with so much of a bear position having been built up, the advent of the end of month, quarter and half and, of course, Brent expiry, must make the chance of short covering more likely.
Wood Group
A pretty grim trading statement from this morning, which is in effect a profit warning after a half in which a reasonable performance from the west was offset by a poor one from the east, particularly the North Sea.
Expected margin pressure (sp NS) and in places like the GoM where prices were being 'nibbled at' and clients continued to not pay on time…this half was 'weaker than expected', and the company is now 'more cautious' than before, although the the second half is expected to be better.
Better news also as the CFO on the conference call (which was a shambles as operator hadn't asked any of us who we were before the call!) said that there had been a meaningful pick up in tendering for offshore projects and that this was a WG thing, not an industry thing.
The company did announce a contract win for Husky this morning offshore Eastern Canada, but it seems that industry conditions remain hard going. With regard to the AMEC deal, subject to regulatory approvals it is still on for 4Q 2017, although I wouldn't be surprised to see that delayed somewhat.
Caution is clearly the watchword at Wood Group and, although the AMEC deal should be a steal for the company, times remain particularly hard and watch that debt figure.
Sirius Petroleum
Results today from which are meaningless, showed a loss. The period and since have been busy as the company carry on with their offshore development strategy.
The company have in that respect signed a number of contracts with companies such as Add Energy, COSL, , and Tidewater Marine, so progress is being made. They also commissioned a CPR which has resulted in a NPV10 of $49.2 million and, during and after the period end, raised £3.85 million of equity, although a much bigger raise will be needed if the Ororo field is going to be drilled.
They have done remarkably well so far, but this will be the biggest hurdle, the market has a scepticism about Nigeria and the climate is tough, but Sirius has done well to get this far.
And finally…
The Lions team for Saturday has been announced and Gatland has clearly panicked, dropping Teo to bring back an out-of-form Sexton seems odd, but worse the worst lock on the tour, Alun Wyn Jones gets a nod over Kruis, Lawes and Henderson, the All Black camp will be celebrating already…
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