WTI $50.79 +37c, Brent $56.57 +$1.02, Diff $5.78 +65c, NG $2.53 -9c
Oil price
Yesterday the oil price staged a modest rally, it would have been better if it hadn't been for a sharp fall at the death. Influences on the market came mainly from Iran where both the Supreme Leader and the President made it clear that nothing less than a full lifting of sanctions remains a pre-requisite to signing of any nuclear deal. With the US making it equally clear that sanctions would be lifted gradually it appears that we are back at square one.
Elsewhere, economic data from Germany was was good with a rise in exports and also good factory output figures whilst inflation in China remained slightly higher than estimates. At a conference in Riyadh a senior advisor to the Saudi Oil Ministry was upbeat on oil demand saying that he expects it to grow by at least 1m b/d every year for the next ten years.
Faroe Petroleum
Faroe has announced a small gas discovery this morning on the Shango or Skirne East well operated by Total. Despite only being in the range of 3-10mmboe against pre-drill estimates of several times that we must be grateful for small mercies and that it is still a discovery. Indeed in a better location it may have been significantly better apparently. It is also worth noting that with nearby infrastructure and much cheaper costs, smaller discoveries like this are most definitely viable and in some cases pay-back is achieved pretty quickly. Faroe now go on to two exciting prospects on Pil which will to a large extent determine their exploration year. I'm staying with Faroe as I feel that the company ticks a number of the right boxes, it is fully funded for this year, largely controls its own destiny and management is of good quality and pro-active enough to take advantages of appropriately good deals should they come up.
Trinity Exploration & Production
I promised to return to Trinity after the news on Wednesday that they too were planning a strategic review. Like Lansdowne they say nothing is sacred and all of the usual options will be explored. Accordingly they are in an offer period as the process will undoubtedly lead to some asset sales, farm-outs or similar corporate transactions such as bringing in a strategic investor. The company has received a number of…
