Posted by Malcolm Graham-Wood - Malcy's Blog
Both crudes are likely to be down slightly on the week as the bears think they are winning the battle but the bulls still have more fire power. High inventories have spooked a touch but as warned before, it is often like that at this time of the year when it is sometimes better to look at product stocks which are drawing.
The key event is the meeting this weekend in Kuwait where all will be present from the Opec/Non-Opec team including the Saudi Minister and all the members of the monitoring group which is Kuwait, Algeria, Venezuela, Russia and Oman. They should, if all goes well, say that compliance is high and improving and that whilst they won't make a decision about rollover until May, point out that it would all have otherwise been a waste of everybody's time. Indeed, whilst nothing can be taken for granted, the sight of the downside should strike terror into their collective balance sheets.
Results today from SDX are, given that they are pre-Circle and pre-raise, pretty meaningless but do make a good point as to how fast the company is moving and there is much exciting progress being made. As pointed out earlier in the week the South Disouq well is under way and looks for gas as well as oil and is virtually free for shareholders. Work continues on NW Gemsa as well as upgrades at Meseda, all part of the existing SDX story and of course there is a good deal of work to be done in Morocco as another part of the Circle deal. Today the shares are over 50p, a new high but deservedly so, they went into the bucket list for a good reason and have the scope to climb higher.
Results today from LAM were as expected awful, after a huge impairment figure of $180m hit an already weak number. Admittedly cost have been cut big time and there is $275m of cash in the balance sheet, in addition the yards are still busy, but take a look at the order book and bid pipeline and things still look fairly grim. The order book is $393m (740m) and the bid pipeline is $2.5bn ($5.4bn) and the jack up market is still worryingly quiet. Margins have suffered and the unadjusted number is 4.3% down from 10.3% although similar after adjustment.
Guidance for 2017 revenue, which is all we get, is down to the lower end of the $400-500m mark after $705m last year so unless business walks into the yard pdq then this year will not break any records. Readers know that I have been, and remain a big fan of LAM but with the current state of work and the Saudi project being only a pipe dream at the moment its quite a leap of faith to be too optimistic at this time. With the shares having doubled since the last results in September optimism, like elsewhere in the sector, has prevailed but at the moment I would want to see some pretty good additions to the order book for that price strength to continue.
I did my first review of the bucket list on TipTV on thursday, here is the link if you would like to catch up with it.
Football is World Cup qualifying this weekend and the best match maybe the ROI v Wales but Northern Ireland host Norway, Lithuania come to Wembley and Scotland welcome Slovenia.
F1 is back and with i'm told faster, noisier cars which will make it more fun and with new owners and team changes at least there will be some changes. No change so far in practice where Lewis is streets ahead may take some catching even by his new teammate.
I am drawn to MotoGP which also restarts this weekend in Qatar giving the ‘2 wheel nutters' a chance to see their heroes. At the top of the list last year for us was Cal Crutchlow who I am told is the new Barry Sheene and on the LCR Honda whilst Bradley Smith on the KTM and Sam Lowes who steps up from Moto2 is on the Aprilia. Favourite may be Jorge Lorenzo having switched to Ducati, but Valentino Rossi, older but not out of it, may fight with new team mate Maverick Vinales but in the end Marc Marquez, last year's winner will start favourite…
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