Oil & Gas Atlas --Crude prices rise despite economic headwinds --Macquarie Research,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Oil & Gas Atlas
Crude prices rise despite economic
headwinds
Energy Market Indices WoW Changes
⇒ S&P/TSX Energy Index: 0.4%
⇒ S&P 500 E&P Index: 1.6%
⇒ Oil Service Sector Index: 1.7%
⇒ UK FTSE Oil & Gas Producers Index: 0.6%
⇒ Asia Pacific Oil & Gas Producers Index: 1.2%
Weekly Market Recap
Despite a shortened trading week due to the July 4th holiday, a steady flow of economic
news contributed to a choppy week in crude oil markets. West Texas Intermediate (WTI)
prices began on a positive note following a strong US factory orders report and received
further support Thursday after payroll processor ADP released positive data regarding
private sector employment. However, much of this gain was returned Friday after the US
Department of Labor released official payroll statistics with less positive findings. In the
end, WTI prices gained just over 1% during the week to close at US$96.43/bbl. Henry
Hub natural gas prices declined just over 2%, to close at US$4.22/mmbtu, as a larger
than anticipated storage injection more than offset expectations for warm weather over
the next week.
In Canada, Macquarie analyst Ray Kwan initiated coverage on RMP Energy (RMP CN,
Outperform, TP: C$3.25), a small-cap E&P company with a market cap of C$200m and
productive capacity of 3,100boe/d. Bankers Petroleum grabbed headlines after its 2Q11
production of 12,973bbl/d fell significantly short of our expectation for production of
14,000bbl/d and the company lowered its exit guidance. However, we remain positive on
its reserves as we look for the Gorani discovery to make a material contribution to its
year-end bookings and mitigate the effect of near-term production challenges.
In Europe, a highlight this week was the UK Government's announcement to raise ring
fence expenditure supplements rate from 6% to 10%. The move was welcomed by North
Sea operators, among which Statoil said it would consider resuming work at the Mariner
heavy oilfield development. Other positives include Faroe securing new banking
facilities to finance its North sea drilling after spudding the first operated Fulla exploration
well on UK Licence P.1161; Tullow's trading statement reported good progress on the
Enyenra-Tweneboa development as well as increased FY11 production guidance to 90–
94kboe/d; Galp also guided to higher than expected oil production from the pre-salt Lula
reservoir of 100kb/d in 2012.
On the downside, GeoPark reported lower than expected 1H11 production of 6.4kb/d
despite a significant 2kb/d oil flow test in June from the Konawentru-1 well; Lundin’s 88–
280bcf gas discovery at the Skalle prospect was also, in our view, negative due to
expectations of larger oil volumes. Our E&P sector note this week summarized the near
term E&A activiites for our coverage, highlighting the unrisked upside potential for small
caps such as Max, Aurelian, Melrose and Faroe and among the mid-caps, Tullow is
entering a period of high drilling activity with serveral catalysts expected in the next few
months.