Edison Investment Research

Fed Governors’ speeches - bias to tighten in Dec

The publication of yesterday’s speeches from Fed Governors Bullard, Evans, Fischer and Lacker provided a useful real-time sample of the current thinking at the FOMC. In our view, despite a clearly dovish speech from Charles Evans, the more hawkish tone of October’s FOMC statement was only reinforced. This may have triggered the sell-off in commodities and equities towards the end of the day and reinforces our view that the Fed is not bluffing on a rate increase in December, absent a major market decline.

Fed flip, market flops?

In recent months investors could be forgiven for sitting on their hands. By clearly telegraphing a rate increase in Q3 15, US Fed policymakers predictably added to upward pressure on the US dollar and created the conditions for capital flight out of China and other emerging markets.

Falklands exploration: Humpback results finally in

The long anticipated results from Humpback, the only well to be drilled in the South Falkland Basin in the current Falklands drilling campaign, have been disappointing, with the well encountering non-commercial quantities of oil and gas.

Is the Serica deal a sign of improved North Sea co-operation?

A recent transfer of equity in a Central North Sea block may herald the beginnings of a new period of cooperation in the UK North Sea that would encourage undeveloped assets to be brought onstream. Serica Energy (WI 50%), together with partners Endeavour (25%) and EOG (25%), looks set to pick up 100% of the Columbus field, mainly located in Block 23/16f. Columbus extends to the south into the 23/21a block, where partners BG and SSE have agreed to transfer their equity in the part of the block covering Columbus for a nominal sum.

Genel trading statement

The headline from Genel’s trading statement this morning is perhaps the downward revision of the 2015 production guidance from 90-100mbopd to 85-90mbopd and revenue guidance narrowing at the bottom of the range (was $350-400m, now $350-375m) assuming $50/bbl crude.

Is there a link between the oil prices and deals?

Analysis indicates that there is a linkage between the prevailing oil price and industry deals, but this is unsurprisingly not linear and differs between types of deals.

Kurdistan payments ~ two payments in two months

Today’s announcement that Gulf Keystone has been paid for the second month running is good news for all concerned. Gulf Keystone gets much needed revenues, and a second payment starts to give Kurdistan companies (and investors) a taste that these payments could be the start of regular, reliable cashflows. We note Genel and DNO have yet to announce payments themselves, though we would be surprised to not see these in the near future.

Plexus Holdings taps subsea market

The launch of Plexus Holdings’ Python Subsea Wellhead at Offshore Europe 2015 is a major step for the company, allowing it to access a previously untapped market with its innovative POS-GRIP technology.

Gulf of Mexico - stepping up to the challenges

The full note is available here

The Gulf of Mexico benefits from a unique combination of factors that make it a particularly attractive region for major operators, with Shell, BP and Chevron holding substantial acreage. Companies operating in the area have access to potentially large resources together with the ability to hold large positions that gives them running room to grow, while the concentration of companies with interests in the region allows flexibility to farm in and out as necessary. The Gulf is close to a centre of excellence in a range of oilfield applications from seismic to drilling technologies, and also benefits from a well developed infrastructure. Together with the predictable fiscal regime and low tax rate of the US, this makes it a good place to replace reserves and grow production. The region is technically demanding which plays to the majors’ strengths, however US independents are also active in the region, with Cobalt and Anadarko holding key positions in the inboard Lower Tertiary.

Genel Interims