WTI $49.43 +$1.62, Brent $53.05 +$1.72, Diff $3.62 +10c, NG $2.50 +2c
Oil price
Another hike in the crude price yesterday and as not much has changed on fundamentals we should assume that the market is adding a modest geopolitical premium in for hostilities in Syria. With Russia and Saudi Arabia on different sides on this one the likelihood of any easing in tensions is low and the possibility of something going horribly wrong one way or another shouldn’t be ruled out. Yesterday it was clear that genuine buying was happening, the bears having closed their shorts some time ago and the Chinese came back from their holidays ready to catch up with world markets. As mentioned earlier in the week I am certainly getting a modest upward shift in sentiment from China which may help, seeing them buying for stock would add to that uplift.
Ithaca Energy
Ithaca has announced that Delek Group has made an investment of $66m in the company at 53p, a 19% premium to last night close. This morning the Ithaca share price has rallied to 50.5p as I write, thus making up 13% of the difference, it should be more. Delek now has 19.9% of the company which readers will know is one of my favourites in the bucket list. Ithaca say that the proceeds will be used to strengthen the balance sheet, reduce debt and provide flexibility to ‘pursue value accretive satellite opportunities in the Greater Stella area’ which shows that they are now looking further down the track.
I am in the process of writing up a meeting I had recently with Les Thomas and Graham Forbes which only served to reinforce my confidence in the company. The Ithaca model of making the business work at $50 and protecting the downside is laudable in this market and their hedging policy and the way they use the financial instruments equally effective. With the big value event of Stella coming up in 2016 I am not surprised that someone like Delek has taken such an investment, indeed they might have rung the bell for Ithaca and possibly others in the sector, more next week.
Petrofac
Petrofac has announced that the contract with ZPMC to construct the JSD 6000 Deepwater multi-purpose offshore vessel has been terminated ‘due to issues with ZPMC’s performance in respect of the construction’. The board are now ‘reviewing our options’ which doesn't give us…
