< "> edit this post http://www.investegate.co.uk/afren-plc-%28afr%29/rns/trading-statement-and-operations-update/201301210700069619
http://www.investegate.co.uk/afren-plc--afr-/rns/2012-full-year-results/201303250700107200A/

In an attempt to cut down the header page,i've transferred some of the older news to Page1 post No.3.

http://www.oil-price.net/index.php?lang=en
http://www.ft.com/home/uk

http://www.investegate.co.uk/Article.aspx?id=201111020700081674R
http://www.investegate.co.uk/Article.aspx?id=201111150700250723S
http://www.investegate.co.uk/Article.aspx?id=201112010705051251T
http://www.investegate.co.uk/Article.aspx?id=201201170700146472V
http://www.investegate.co.uk/Article.aspx?id=201201230701479690V
http://www.moneyam.com/action/news/showArticle?id=4323758
http://www.investegate.co.uk/Article.aspx?id=201204170700164488B
http://www.investegate.co.uk/Article.aspx?id=201205140700212304D
http://www.investegate.co.uk/Article.aspx?id=201205210700407032D
http://www.moneyam.com/action/news/showArticle?id=4430164
http://www.investegate.co.uk/afren-plc-%28afr%29/rns/significant-new-seychelles-3d-seismic-programme/201212120700052973T/
http://www.investegate.co.uk/afren-plc--afr-/rns/2013-half-yearly-results/201308230700063334M/
http://www.investegate.co.uk/afren-plc--afr-/rns/ogo-drilling-and-resources-update/201311190700083404T/
http://www.investegate.co.uk/afren-plc--afr-/rns/trading-statement-and-operations-update/201401280700096280Y/
http://www.investegate.co.uk/afren-plc--afr-/rns/interim-management-statement/201405200700135209H/
http://www.investegate.co.uk/afren-plc--afr-/rns/interim-management-statement/201410300700116483V/
http://www.moneyam.com/action/news/showArticle?id=4942625
http://www.moneyam.com/action/news/showArticle?id=4943375

http://www.cnbc.com/id/102382559


Crude settles up 8% at $48.24, best day since June 2012

NEW YORK Fri Jan 30, 2015 4:28pm EST

http://www.reuters.com/article/2015/01/30/us-markets-oil-idUSKBN0L305Q20150130

(Reuters) - Oil prices roared back from six-year lows on Friday, rocketing more than 8 percent as a record weekly decline in U.S. oil drilling fueled a frenzy of short-covering.

In a rally that may spur speculation that a seven-month price collapse has ended, global benchmark Brent crude shot up to more than $53 per barrel, its highest in more than three weeks in its biggest one-day gain since 2009.

http://m.fool.com/investing/general/2015/01/31/opec-sees-oil-prices-exploding-to-200-a-barrel

Sunday Times article
mment (0)
Print

The drop in oil prices has burnt investors The drop in oil prices has burnt investors

Kevin Broger had quite a yarn to tell. The Canadian geologist was involved in Brazil’s oil boom in the early 2000s, when explorers discovered vast quantities of the black stuff trapped 20,000ft beneath the sea floor. Namibia, he reckoned, could be next.

Before the Pangea landmass broke apart 200m years ago, Brazil and the arid southern African nation were neighbours, and their present-day geology is strikingly similar.

Based on that logic, Chariot Oil & Gas, the company Broger ran, claimed its exploration blocks across the Atlantic also “may hold significant hydrocarbon accumulations”.

It was not an iron-clad investment proposition, but punters piled in regardless. When Chariot floated in May 2008, it raised £45m to drill some wells and find out. The company was worth £184m.

Chariot has been a disaster. Broger left a year after the listing. The company raised another £129m in three subsequent fundraisings, pulled off a couple of strategic pivots and went through two more chief executives. For all its efforts it has nothing to show but dry holes and hope.

On Friday its shares closed at 7½ p, or 94% below the offer price. Late last year it relinquished rights to a pair of its Namibian licences.

Chariot is not alone. The collapse of the oil price from $114 a barrel in the summer to nearer $47 last week has thrown it, and the rest of the UK’s 120 or so listed explorers, into a life-or-death crisis.

Since 2008 — the last time the price of crude plummeted — the explorers and producers below the big three of BP, Shell and BG have raised $24.8bn (£16.5bn) through 347 stock market floats and follow-on offerings, according to figures compiled by Dealogic.

That mountain of cash underlined the primacy of the City of London as the place to go for prospectors in need of funding, legal advice and everything else that goes into hunting for oil in the modern world. The money was used to fund campaigns from the North Sea to east Africa, in the iceberg-strewn waters of Greenland and on the pampas of Argentina.

The returns, with a few glaring exceptions, have been abysmal. The oil and gas index for AIM, the junior market where most explorers are traded, has dropped 60% over five years. The FTSE 350 oil index, comprised of the largest groups, has fallen 8% in the same period.

Dividends have been almost non-existent. Cairn Energy’s £2.2bn special dividend in 2012 after its blockbuster find in India is a notable exception. Only eight other listed explorers have made payouts since 2008: they were “vanishingly small”, totalling just £1.3bn, according to Justin Cooper of Capita Asset Services.

Nearly half the listed explorers (55) do not even have oil reserves on their books. In other words, they don’t produce oil, nor do they plan to. They simply exist on the hope that, at some point, they will be able to drill a well and find some. But that requires money.

In a new world of rock-bottom crude prices, investors have little interest in throwing good money after bad. A whole swathe of the sector, which makes up 13% of the entire London market, faces going bust or simply being starved to death over the longer term.

One City fund manager said he was pulling out of the sector entirely. “There has been an incredible run of bad drilling results. This is a complicated business. A lot more complicated than I thought,” he said.

The crunch will force fundamental and painful changes through every layer of the exploration industry, including in the City. Philip Lambert, head of Lambert Energy Advisory, said: “Oil courses through the veins of London, and will continue to do so. But given the amount of money raised, and the returns that have been generated, the UK [oil exploration] sector will now have to positively reinvent itself.”

The question is: which companies are going to be claimed by the chaos?

A GOOD WAY to hunt for the vulnerable is to analyse “liquidity”, or how much cash a company has to pay its bills.

Afren is an extreme case. Last summer the Nigerian producer was worth £1.4bn and generating boatloads of cash from its reservoirs in Africa’s biggest country. Then it all began to unravel. Its chief executive was fired over a pay scandal. The company wrote down to zero its biggest acquisition, a $588m field in Kurdistan. And the oil price cratered.

The biggest bombshell came this month when its stand-in chief executive warned that despite having $235m in cash, Afren may not able to make a $50m loan payment and may need to raise money “in excess of the current market capitalisation”. On Friday, shares in the company, which is in rescue takeover talks with rival Seplat, were priced at 5.3p, valuing it at £59m.

On the face of it, the crunch made no sense. Balance sheets, however, can be deceiving. To obtain government approval for developments, companies are usually required to commit to drilling a minimum number of wells or hitting project milestones by a certain time.

In an industry where costs have soared — one deep-water well can cost $100m or more — a single commitment can mean that most or all of a developer’s money is spoken for, even if it has not been spent yet.

Bonds and loans, meanwhile, are based on an assumed oil price, revisited on a half-yearly or annual basis. When the crude price falls far and fast, it does two things. It hollows out turnover and can also make companies breach their loan agreements.

That is how solvent companies can suddenly find themselves in crisis, not unlike homeowners forced to remortgage after a 50% cut in both their salary and the value of their house.

A rival executive said: “The Afren statement was when the penny dropped for a lot of investors. Liquidity crises can come on incredibly quickly.”

To make matters worse, few companies have built up goodwill with their investors. The industry is notorious for wildly overpaying their executives. So now, when they are most in need, investors have little inclination to bail them out.

Another company that traders have zeroed in on is Gulf Keystone, a former high-flyer whose shares have also dived.

The company generates a fair amount of cash, producing 40,000 barrels a day from its fields in Kurdistan, northern Iraq. But it is lumbered with a huge debt pile, dwindling cash and a $54m annual interest bill.

In April, Gulf Keystone must pay half of that — $27m. As of last year, its cash pile had fallen to $90m. It had committed to spending $159m this year to develop a new field, Akri-Bijeel, but is likely to slash that.

Its biggest customer, the Kurdish regional government, owes it more than $100m in payments but is struggling to fund a war against Isis (also known as Islamic State) and support 1.5m refugees who have flooded across its borders.

Without a cash infusion, Gulf Keystone may struggle to make its payments, which is why one of its bonds dropped to 60p in the pound. Creditors are braced for the worst.

BACKING explorers has always been about betting on a team believed to have the best chance of finding the proverbial needle in the haystack. A few have succeeded in recent years — Ophir Energy in east Africa, Tullow Oil in Ghana, Genel Energy in Kurdistan — and could yet be scooped by opportunistic buyers. But most fail.

That has always been the case. The problem is that in recent years succeeding has become far harder. Costs have rocketed. An offshore engineer makes $120,000 a year on average — twice what he did a decade ago. With much of the “easy oil” found, prospectors have been forced into more difficult — and costly — regions.

Yet Big Oil slammed on the spending brakes. Shell said last week it will cut $15bn from investment over the next three years. That will trickle through to the rest of the industry. Already salaries are being cut and workers are being laid off. Drilling-rig rates have halved. The correction has begun. “The sector doesn’t work at $50 a barrel, let alone $44,” said Barclays’ analysts. “Balance sheet strength remains the focus.”

The problem is that for most of London’s listed oil companies, their balance sheet is their weakness.

cyril - if you have ST on line, please can you do me a favour and c+p the article on Flybe on the relevant thread

Sorry no can do,just a C&P from around the various boards.

OIL price - The biggest one day rise last Friday

Why Oil Prices Jumped 8% on Friday
By Paul Ausick January 31, 2015 8:35 am EST

Looking at the chart for the price of West Texas Intermediate (WTI) crude oil for Friday, January 30, we see the closest thing we have seen in months to the much-loved “hockey-stick” profile. The price of WTI was up about 1.7% on the day at around noon. By 4 o’clock it was up 7%, after touching a top of 8% in the mid-afternoon. Did the Saudis stop pumping crude? Did Tesla go out of business?

Nope. The spike to a settlement price of more than $48 a barrel is a bet on the future primarily based on the number of oil rigs that were idled last week. We noted Friday that the U.S. oil drilling rig count fell by 94 in the week ended Friday, and the total number of rigs looking for oil in the United States now stands at 1,223. The number will get smaller.

According to oil industry research firm RBN Energy, the rig count at more than a dozen onshore drilling companies will drop by a total of 42% in 2015, from a total of 221 in 2014 to a total of 128. All these companies operate primarily in shale plays, and combined they are expected to spend 28% less on capital projects in 2015 than they spent in 2014.

Big rise this morning.

the buying does not look to be very strongly based, but i wouldn't be tempted to short at this level either - not enough to go for

Mr Cynic
I would not short anything just now - with all this EU turmoil.
Except Fresnillo is a share I watch and short perhaps as silver may
reflect a weak gold price.
Copper is the lowest it has been for years and probably also iron ore.
I suspect the Saudi's may cut back the pumping of more oil, without
actually saying so, and try to find a balance just below shale oil costs.
The rest of the middle east and Russia are anxious to see an oil price rise.
All it needs is Islamic State or some other crazy group to damage some
pipelines etc and hell could be let out of a bag !
Generally not a calm climate for serious shorting I think.
Keep your money in your pocket for a while longer
Personally I think Afren will come right eventually, but perhaps not back to 160p levels.
Afren could sell interests in Iraq probably to Hunt oil.or even sell Madagascar oil finds.
I think that Afren is not out of play yet, and still has a promising future.
Who knows in these turbulent days ???
I am longer than I was before ..... ha ha

AFTER THE NORMAL PROFIT TAKING

now is back to 8p

I thought it might rebound......the most incredible thing is that this company might survive as a sole entity....with large debt perhaps.....what I'm wondering is this US shale oil ?...is that going to last ?....or is it just for a couple of years before big imports resume sending crude up again ?....if that was the case Afren would benefit greatly.....

AFR sells at Brent price
today there was some earlier profit taking low $51.40 after the sharp spike late last Friday but now is bouncing back strongly to $52.50

------------------ Intraday Brent Oil ----------------------------------------- 2 month ---------------

required field
We are seeing a repeat of what happened in the 1980's.
Oil price was high and a couple of Australian companies shares went sky high as they had large oil shale deposits - I think it was Central Pacific, and Southern Pacific Petroleum.
I bough into one of them only to see the price of oil unexpectedly fall back, and the economics of oil from shale was dashed.
What is the lesson I guess- ?
1 The world is not short of oil from shale or otherwise
2 Oil has a false market which is controlled / rigged by the Saudi's

Thanks for that Rekirkham....it's just that I'm finding it hard to believe that crude is going to remain as low as it is....it might drop further...(hope not).....but a rebound back to above $60 or so is not out of the question in my view....it's not getting any better In Ukraine...

If any oil problems arise in Saudi, then the world will certainly know about it.

How stable is the place now they have a new king, and this Sunni / Shia religious thing continues. Never mind about Catholics and Protestants that will seem like childs'play.

My motto is - Be Optimistic and Strong ................ ha ha ha

Aramco - is at Ras Tanura, near Dammam, Saudi.
They even had rocket launchers around the refinery some twenty years back.
Oil is a high risk game.

US crude (WTL) has also bounced today to $49.50, but that is something of an aside

Why would Saudi cut production?
There's certainly no sign of that from where we're sitting

For sure crude will find it's own level again - my totally arbitrary level says ~$60 - as supply and demand reach equilibrium, but i do not believe that will happen until mid or even late in the year

As for AFR, I'll stand by my prediction that, as far as PIs are concerned, this is a dead duck .... but then i do not currently have money married to mouth

Cynic

You write "Crude has also bounced ...of an aside. "
Reason - US oil rigs taken out of production last month at record levels.

You write "Why would Saudi cut production"
They have done before, but usually to stabilise price of oil, but could under pressure from other OPEC members and Russia.

$60 a barrel your guess guess could be about right ???
Brent up 3.5% today - maybe it will be sooner than "mid or even late"

Afren production cost I think may be about $40 a barrel, and Seaplat need more gas.

Let us see who will end up as "a dead duck"

if either of us actually KNEW what would happen, we wouldn't be sitting here discussing the issue

as i have said on the FLYB thread, you pays yer money and takes yer choice
as it stands, i currently have no position, but as is my wont, i'll probably post (truthfully!) as and when i do so