Opinion

Oil price, Northern Petroleum, Frontera Resources, And finally...


WTI $49.44 +$4.21, Brent $50.47 +$4.09, Diff -$1.03 -12c, NG $3.35 +4c

Oil price

So, the organisation got it together roughly as expected but is this an early Christmas present or trouble by Easter? As with any Opec agreement, particularly those burnished with gilt, the proof of the pudding is in the eating, will they deliver on the agreement reached yesterday after an unusually long meeting? The 1.2m b/d is at the top end of expectations and individual countries are much as expected. Iran has actually had its reference production level increased to 3.975m b/d which they may not achieve but Iraq has taken a cut which shows more than a bit of willing. With the Saudi's taking their 500/- cut it is clear that they have led by example, possibly influenced by the head of corporate finance and his warnings about needing a stable background for the Aramco float.

The stated aim for the price is somewhere in the $55-60 range which for most exporting Governments and companies even they would take your hand off for. Whatever the last two years has done for the industry it has re-balanced their costs, to such an extent that for many E&P companies that price means revenue and profit, for the majors the dividends are safe for the time being.

The EIA inventory stats put a thin layer of icing on the cake, the draw of 884/- was better than the whisper of a 678/- build and whilst inventories in products built, particularly in distillates the market breathed a sigh of relief all round.

Northern Petroleum

It has to be said that I'm sure that a number of people werent sure that they would be writing so positively about NOP, it has definitely been on the critical list for a little while. So it was very pleasing to see yesterday that they have introduced a strategic investor in the form of H2P who are investing in the asset portfolio and providing much needed financial and technical support. NOP are raising £5.1m at 3.5p which is a 12% premium plus a small Open Offer of a 1 for 7 at the same price. This is exactly the sort of deal that NOP should be doing and the buyer is taking a piece of some of the less desirable assets as well just to show that you have to kiss a few frogs en route…

Frontera Resources

After two years of not being able to meet with Frontera, despite many blog readers insisting I remain keen, and having my latest meeting being cancelled recently, I finally got a conference call earlier this week. I spoke with Steve Nicandros whom I suspect has been protected from reptiles like me by Investor relations for all this time. It is far to early to try and judge the company on one call and if you look at the share price, maybe too late to make something of the assets but I was actually quite impressed. Block 12 in Georgia looks to have a number of interesting prospects but I will have to suspend judgement on Moldova for a while. Early days yet, as I say but it certainly goes on the watchlist despite it being only an £8m market cap.

And finally...

Jose Mourinho should ‘get lost' a bit more often as his hiding place was not discovered and the Red Devils went through 4-1 against the Hammers. They will meet Hull City Tigers in the semi finals, the other one is the HubCap Stealers against the Saints who knocked out the Gooners.



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