WTI $50.00 +39c, Brent $58.53 -$1.20, Diff $8.53 -$1.20, NG $2.68 -16c
Oil price
A very quiet day according to my trading contacts, even the Chinese trade data which provided a huge surplus of $60.62bn was explained away as 'bad data' given that Chinese New Year happened in January last year and exports over the first two months of the year were subdued.
WTI for once outperformed Brent as the Genscape inventory report suggested that the build up in stocks at Cushing may be tailing off, we shall see what the API and EIA say tonight and tomorrow. Retail gasoline continues to climb in the US, having reached a recent low of $2.04 per gallon it has now reached $2.49, those economic stats from last week, along with the refinery maintenance season might push that number up again.
Cairn Energy
Figures today from Cairn which show that last year the world class discovery in Senegal was a game changer for the company. Having said that the company reacted fast to the fall in oil prices with a 40% headcount reduction despite the company being busy in Africa, on Kraken and Catcher and having the distraction of India into the bargain. Senegal is clearly going to be were the company concentrates this year and over the next year or so they plan three firm wells, three options and a 3D seismic shoot.
Cairn has net cash of $869m and an undrawn RBL facility of $575m which will cover the 2105 exploration budget of $185m and development capex on Catcher and Kraken of $590m between now and 2017. By then I expect free cash flow from those developments, India is an unknown so not worth speculating on but the company remain unrepentant.
Cairn was one of the first on the notepad for the bucket list primarily due to Senegal but also due to the fact that the company is in a strong cash position, its current developments will enable it to take advantage of significantly reduced industry costs and will benefit should oil prices recover in the longer term. As such it remains a favourite and despite the rally from 143p the stock is significantly undervalued. And finally, Happy Birthday to Simon Thomson with whom I thus share the day, albeit him being much younger than me…!
IGas Energy
Probably not one of the most difficult predictions I ever made but certainly the most accurate as IGas…
