Opinion

Oil price, Sound Energy, Cape, Sundry-Tullow-Plexus- And finally…


Oil price

Another good day for the oil price as the KPC confirmed that it was cutting production in January as part of the Opec agreement. Further good news came from Bloomberg as their survey showed that in December Opec output fell by 310/- b/d to 33.1m b/d. Another vaguely positive number was that US car and truck sales last year were a record 17.555m units, exceeding forecasts. It is interesting to note that whilst the millions of cars made in Mexico for the American market save a considerable amount of tax, they have also contributed to significant destruction of the domestic car industry and the jobs that go with it. Free traders might not like it, but if The Donald is going to revive the rust belt he may decide that the 750/- jobs created in Mexico should be better recreated in the USA…

The API stats came out late as usual and were rather obfuscating as usual at this time of the year, a draw of 7.4m barrels looked highly encouraging against forecasts but a build of 4.3m in gasoline and 5.2m in distillates was worse than expected. The EIA numbers out later should put them into some sort of perspective.

Sound Energy

A Badile update from Sound this morning where all appears to be going according to plan. The ground works are complete, the conductor pipe was set last week and the rig has been mobilised. Spud date is now March and this long awaited well will be underway albeit later than expected but it is in Italy after all…Having said that the delay hasn't made the well any less meaningful, with a potential 85 Bscf of gas and 10 mmboe of condensate as net best-case prospective resources, a success here would still be almost as transformational as Tendrara has been.

Cape

Cape clearly put the burners on at the end of November, I have just re-read the trading statement of 18 November in which trading was described as being ‘slightly ahead of expectations'. According to today's update trading is now expected to be ‘materially ahead of expectations' due to ‘Additional work scope awarded at the Chevron-operated Wheatstone natural gas project' and to be fair a strong performance in Asia-Pacific. The company has also felt able to say that ‘This improvement in performance is supported by strong cash generation with a consequent positive impact on net debt'. Only the good lord knows what might have happened by the time of the results which are coming out during the Cheltenham Festival…

Cape remains one of my top picks, like most followers I was rather put off by the announcement about the insurer PL industrial disease claims situation, which appeared to worsen last year and the company had to admit that the worst case scenario might threaten the divvi. (There is nothing in today's release about this)  If one can put that to one side it is clear that the excellent management team continues to deliver and then some and in what has been a difficult environment has come through with flying colours.

Sundry

Tullow Oil has announced that CFO Ian Springett is taking extended leave of absence in order to undergo medical treatment. Finance VP Les Wood steps up to the plate and I wish Ian all the very best and hope to see him back again fully fit before too long.

Plexus has announced that Masirah has awarded them a follow-on contract  for a second well offshore Oman. This contract is worth  $285/- and may extend again as there is potential for a third well in the drilling programme.

Two lots of interviews below, firstly I did a Vox Markets Podcast earlier this week talking about the recent Pantheon news, here is the link.

VOX Markets podcast: includes Malcy on Pantheon Resources

Also just before Christmas I did three interviews for Interactive Investor they can also be seen on these links.
Interactive Investor interview: Favourite oil major for 2017 named

Interactive Investor interview: Is oil sector a buy in 2017?

Interactive Investor interview: AIM's most exciting oil stock for 2017

And finally…

Only the game at White Hart Lane needs to be discussed as the 13 run unbeaten run by Chelski was halted as Spurs and Deli Ali beat them 2-0. As I said yesterday that top of the table is getting mighty congested and will take a breather this weekend for the first round proper of the FA Cup.


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