Posted by Malcolm Graham-Wood - Malcy's Blog
The market ran out of steam yesterday, there was no shortage of good news but a combination of profit taking and a lessening of geopolitical risk in Kurdistan as I reported yesterday, took the heat out of the market. That was added to by Shell lifting the Force Majeure on Bonny Light crude exports after pipeline repairs were completed.
The good news that was seemingly overlooked was also mentioned here yesterday, over at Opec, Secretary General Barkindo said that he was ‘engaging support' to extend the existing cuts. This comes from the very top as it is sanctioned by Vlad and his new bestie Khalid al-Falih who is acting on orders from the King himself.
Jersey Oil and Gas
One of the worst kept secrets was that JOG was on the road and looking for money, mainly as it is so much of a no-brainer. With a fantastic discovery at Verbier, and operator Statoil looking to appraise the 25-130m as well as a likely exploration well on the already de-risked Cortina prospect, a raise now is perfect timing. I say that as with the inevitable drilling programme over the next few months any delay would have spooked the market, to get it out of the way is in my view very wise indeed.
At 200p the offer is in my view so much of a giveaway that I wouldnt be surprised to see an announcement very soon that it has been massively oversubscribed at this level. Also it should be borne in mind that JOG is still looking for UKCS production opportunities and strengthening the balance sheet at this time is no bad idea. Longer term this will be viewed as a chance not to have missed, I see a minimum of 5x the current share price as a rough TP.
There is something in the water in the square mile as during his roadshow Peter Levine has run into people seemingly very keen to invest in the company and I can't blame them. Today PPC launch a £6.1m raise at 10p and a €5m open offer, also at 10p which given my recent published views on the company's prospects also looks very attractive.
Peter Levine's vehicle is not adding at this stage as the panel would have required a mandatory bid for the company but his vehicle, PLLG will convert debt to a level of a 29.9% equity holding which will reduce the company's costs and strengthen the balance sheet. The raise will give PPC further opportunities to buy more production and likely accelerate the existing work programme in Argentina. With the continent so full of opportunities and many companies looking to invest in the area, PPC has achieved a valuable early mover status and should be rewarded for it. The recent share price movement is only the start of a fully blown re-rating for the company.
Good news from WRL this morning as it says that it is working with both the TPDC and TANESCO to maintain regular monthly payments and focusing on settling unpaid past invoices. As a result they have announced that this week TPDC has paid $1.1m and TANESCO $0.4m which is a big step in the right direction.
As for production, news from Mnazi Bay is also good with Q3 production of 60 MMscf/d which ups the years average to 45 MMscf/d. With the October number being around 64 MMscf/d the year's guidance of 40-50 MMscf/d day looks eminently achievable. See below for Africa Oil Week details but I have an interview booked with WRL which I will report back on asap, watch this space as the company is quietly building its strong position in Tanzania.
After weeks of gossip all with credibility, BP has announced that Chairman Carl-Henric svanberg is to step down at the next AGM. Having presided over one of the worst ever periods in the company's history will mean that his legacy will be correctly remembered with little good sentiment as Macondo and Bo Diddley's $19m pay cheque rather blotted his copybook. The only worse thought is that the FT report this morning that ex HSBC Chairman Douglas Flint is an early candidate for the job, the words frying pan and fire come to mind…
Africa Oil Week
Provided I can work the technology, and that is no given, next week's blogs will come from Africa Oil Week where an incredible array of speakers is lined up. I have been immensely fortunate to having been given access to a number of our quoted company executives who are attending the event and I will report back in the following few days.
As the MotoGP Championship race hots up they head to Australia this weekend. Marquez topped early practice but it's still wide open between Marquez and Dovisioso with Vinales ready to cash in if they should trip each other up.
And in F1 it's time for the USGP and with a commanding lead built up only recently Lewis could win the title on Sunday evening.
In last night's Boropa Cup the Gooners won and the Toffees lost, these two play each other at Goodison on Sunday…
In the footy tonight the Hammers host the Seagulls whilst the standout match of the weekend is on Sunday when the HubCap Stealers play Spurs at fortress Wembley… Also on Sunday is the clash mentioned above. Tomorrow sees the leaders the Noisy Neighbours host Burnley whilst the Red Devils go to the Terriers, Chelski host the Hornets whilst the Magpies host the Eagles, fresh from beating Chelski last week.
And the flat season effectively finishes tomorrow with Champions Day at Ascot, each race is first class and provides a proper finish to the season.
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