Interactive Investor

The Oil Man: Shell/BG, Genel, Faroe, Thalassa

20th January 2016 10:05

Malcolm Graham-Wood from interactive investor

WTI 28.46 -96c, Brent $28.76 -18c, Diff -30c -117c, NG $2.09 -1c

The reprieve for the oil price was indeed temporary and when the IEA report came out with its headline of the oil market "drowning in oversupply", all bets were off.

This morning prices are lower again, with still no sign of anything positive on the horizon. The IEA did increase its non-OPEC production fall to 600,000 barrels per day (b/d), but that will be offset by an equally large Iranian supply by the mid year.

Product markets are also weak in the USA and retail gasoline is another 8.2 cents down on the week at $1.914 a gallon. Inventory stats will be out a day late due to Martin Luther King day.

Shell/BG

In trading updates released early so as to be ahead of next week's votes, the numbers actually don't look that bad. BG had record volumes, with Queensland Curtis liquefied natural gas (QCLNG) ramping up and the sixth floating production, storage and offloading (FPSO) unit in Brazil coming onstream. LNG cargoes, at 282, were also up 58%.

Shell has fourth-quarter earnings at $1.6-1.9 billion (£1.1-1.3 billion), $10.4-10.7 billion for the year. Gearing was slightly up at 14%, dividends are safe through 2016 and capital expenditure (capex) is down more than expected; combined capex in 2016 of $33 billion will be 45% off the peak.

Genel

There is not much one can really add on Genel until after the results presentation. A slight miss on revenue guidance was hardly a surprise and, providing the regular - if modest - payments from the Kurdistan Regional Government of Iraq (KRG) continue, they will, as they say, "weather the storm".

Genel reminds the market that its costs are low by international standards and should ensure long term survival.

Sundry

Plexus announce a new contract with another new client in Oman: Masirah Oil, worth around $0.6 million.

VOG has announced that trading in the fourth quarter was significantly up year-on-year at 7.1 million standard cubic feet per day (mmscf/d) but, at the end of the low season, January has already seen a peak of 16.6 mmscf/d.

Thalassa has reported in a trading update that operating results will exceed analysts' expectations on revenue and profits, but will also see estimated impairments of assets by up to $14 million. More after I have spoken to Duncan…

Faroe has been awarded six new licences in the Norwegian round and, with no commitments, this gives it more backlog and potential for the future.

And finally…

No more surprises from Melbourne - except that it was raining this morning…

And in the FA Cup replays? No surprises there either; Villa beat Wycombe and Pompey beat the Tractor boys, which I suppose was a bit of a shock. Eastleigh's run came to an end, though.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.