Posted by Malcolm Graham-Wood - Malcy's Blog
The CERA conference in Houston has a lot to answer for, as it managed to get enough people in the industry thinking that Opec couldn't hold together and then wouldn't rollover in June, cue the spivs head for the door panicking about their overweight positions. To be fair, the inventory stats had unsettled traders who needed little excuse to shake the tree and WTI ended up down $4.84 on the week and Brent -$4.53. The Opec speakers, particularly the Saudis as one might expect, held their line and warned US shale players not to expect any ‘free rides' although to be fair by then they had rather shot their bolt. I am still of the view that they have to stick to it and rollover as well, not least because of a certain rather large float on the way….
Wood Group/Amec- Even Dick Turpin wore a mask…
Wood Group has secured a recommended all share offer for Amec/FW whereby the latter receive 0.75 WG shares for one of their own, valuing them at 564p each still 10% below the recent high. This is certainly what might be described as being pillage and with Amec shareholders owning 44% of the combined entity you might expect something to show for it. But no, the Chairman, CEO and CFO from Wood fill all those jobs and the Amec board have turned turtle in a spectacular way.With what will be substantial cost cutting the deal will be earnings accretive in year one making it a bit of a steal and one couldnt help see the smile on the face of the WG personnel at the presentation.
I feel sorry for Ian McHoul mainly, after the total disaster of the FW takeover (discussed here often and a deal that could have been aborted) and the sacking of Samir Brikho he very capably took up the role of temporary CEO and made a significant success of the turnaround, so much so that even I turned around to be a buyer. Oh well, what will Wood Group do with all the Wimbledon debentures and the trips to Davos eh?
Cape has announced the settlement of the PL litigation for a down payment of £18m, including substantial legal costs, and deferred payments of up to £34.5m between 2018 and 2023. It seems as if the EL claims are not affected and are outstanding whilst the total liability number has increased to £172m. I'm sure that we will get chapter and verse on wednesday when the company host a results presentation.
Range has announced that it is to re-acquire the drilling business from LandOcean for $5.5m plus the $19.5m of debt.This deal sees RRL take back control of operations in Trinidad, dramatically reduce costs and be in a position to run everything more efficiently themselves. It is now likely that the drilling business will become a profit centre in itself, with an inventory of the best, newest rigs on the island it is perfectly possible to see them perform strongly as a third party operator.
As it is a RTO, Range shares will be suspended for some time, after which one can expect to see acquisitions and deals that should make to future very bright for the company.
A number of companies have made announcements in the last couple of days whilst I was away, this is a synopsis of them.
Amerisur Resources made two announcements at the end of last week both of which should have pleased the market. February production was 4,262 b/d of which 3,554 went through the OBA and that number is now over 4,100 apparently. There is still substantial scope to increase that number and discussions about a pumping station are under way in case that becomes necessary. The second announcement was that the Platanillo-22 well is imminent after a number of social issues (involving ‘appropriate crop planting') have been resolved. This is more good news as the extension would extend the Platanillo field and produce more high valued barrels of crude oil. At 20.5p AMER shares are ludicrously cheap although I understand from a market trader that there has been a persistent seller which might square a couple of circles, but this is an outstanding buy at these prices.
The programme in Argentina continues with the DP 12 well completing on time and budget. The well is back onstream with production of 120 b/d and the company is already well on track to be producing the promised 1,200 b/d by September. After a bad year last year, PPC is fast making up for it and is most definitely making up for lost time, the shares deserve to be much higher…
Results last week and a catch up on the state of the debt refinancing package which is at the last knockings thank goodness. Guidance for 2017 production is 75/- b/d not including Catcher which I understand is still very much intact and in my view a number of medium to longer term projects are looking promising. These include Tolmount, Sea Lion and in Mexico to name but three and the stock should be looking to rally from these levels.
The company has said that all is going to plan with the bondholders and the equity injection and raise looks to be under way with few hitches.
I did an interview with Proactive this morning following my visit with Sound Energy, please see below.
The quarter finals of the FA Cup produced no great surprises and Spurs saw off Milwall 6-0 whilst the Gooners did Hereford 5-0. With the Noisy Neighbours easily beating Boro only one fixture remains and that is Chelski v the Red Devils tonight although united dont have any forwards left with the first call top 4 all injured or suspended.
In the Prem, The Hubcap Stealers came from a goal behind to beat Burnley 2-1 whilst the Hull City Tigers had a good win against the Swans.
And the rugby produced two cracking games with Wales beating Ireland and the expected black eyes rebellion from the Scots never materialised and England put 60 on them.
Finally I may have missed something in which case prod me and I will catch up, I'm afraid I can't always reply in person to your emails.
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