Opinion

Oil price, Lamprell, Thalassa Holdings, Sundry-Genel/GKP- Providence- Cairn/Far- And finally...


Oil price

Very little change last week, indeed this time last week you could have closed the book and taken the week off. The usual voices pushing either way had no ammunition although the bears had a go on Friday after the rig count numbers to no avail, with oil units up 29 to 551 one might have expected more. Indeed it was the mildly better economic news from China post their GDP and oil import numbers that got the bulls going ahead of the impending New Year celebrations. Finally the ‘Opec' meeting at the weekend did a fair bit of monitoring and even set up a compliance committee to oversee the numbers, but news from the Saudis remained steadfastly solid.

Lamprell

The pre-close update from Lamprell was never going to blow any doors off, the recent modest orders could only keep the wolf from the door and in the absence of  anything else, this had the smell of a profit warning. Revenues for 16 look like around $700m but guidance for '17 has not changed yet from the $400-500m level albeit a nudge to the lower end of that level. Costs are coming down sharply as you would expect, but with three deliveries in 2H 16 and three more in 1H 2017 the yard must seem quite empty sans Tourneau's. As we thought when we visited just over a year ago there is little that can be done to smooth the cycle, but even having said that the Chairman's statement was distinctly bearish on the order front. Long term this is still a good business but for the moment it is hard going with no sign of the upturn I would have started to see by now.

Thalassa Holdings

There is rarely a dull moment with Thalassa Chairman Duncan Soukup around and todays statement is an immaculate blend of confidence and despair with a lecture to world leaders in between. Firstly the update and outlook where 2016 ‘exceeded' market expectations with revenue of $14m, clean PBT of $2.2m and cash of $7.7m, maybe more. As a result of this the buy out is back but with the '17 outlook as ‘cautious but unpredictable optimism' shareholders may take him up on that. He concludes the statement by worrying about international economic policies and how they will play out, mostly words to jump off cliffs to.

Holding ones breath and jumping is not a prudent economic or business model which is why the THAL Board is reticent to present any long term forecasts in the current political and economic environment. In fact, given the upcoming elections in France and Germany and the inauguration of President Trump, we would go so far as to say that even short-term predictions are nothing more than speculative guesses.” 

PS We wish everyone a prosperous 2017.” He might have said, have a nice day……

Sundry

Genel and GKP have both announced some payment of October invoices, it seems that GENL has done better but it is probably swings and roundabouts. Either way there appears to be a slight warming from the KRG, probably associated with the recent rally in the oil price but the mountain pf receivables has not been dented yet.

News on wells to be spudded include from Providence Resources who say that the Druid well is in good time and they have a spud date of June of this year.

Far and Cairn have announced that the SNE-5 well spudded last Saturday with the intention of fine tuning the SNE concept, it will likely be back to back with the SNE-6 well and they should take 50-60 days each. It has to be noted that the situation regarding the ConocoPhillips farm-out to Woodside is yet to be completed, as Far believe that the pre-emptive rights notice has not been issued to the JOA. Whatever the outcome of the matter, I believe that the upside for Far has yet to be taken into account by the market, especially given what Woodside are preparing to pay for the stake and that was when oil prices were 10 bucks cheaper…

And finally

The Patriots booked their place in Super Bowl LI last night after they beat the Steelers. However, they will face tough competition from the Falcons after Matt Ryan demolished the Packers in Atlanta.

Patriots quarterback Tom Brady will be looking to collect his 5th Championship ring and his team will start as marginal favourites in Houston in a couple of weeks time.

Muzza and Danny boy blew out of Australia on Sunday morning with so much promise, Johanna Konta will be playing Serena Williams on Wednesday.

In the footy there was a bit of a shakeup which might have been more. Chelski beat Hull and the Gooners got a 98th minute penalty to beat Burnley. The HubCap Stealers lost to the Swans at mighty Anfield and some consider the Noisy Neighbours to have been a tad unlucky in only getting a 2-2 against Spurs. Wayne Rooney saved up the scoring of his record goal to secure a point against the Potters.

And Ronnie O'Sullevan won the Masters, never looked in doubt…



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