Oil
Prices – WTI and Brent
The front month contract for West
Texas Intermediate crude oil (WTI) ended Friday at US$97.84 a barrel, down $1.72
on the previous week’s close. Dated Brent, the European benchmark finished at
US$114.28, up US$3.56 a barrel.
The Brent/WTI spread widened due to
strengthening Brent prices buoyed by stronger manufacturing data and ongoing
tensions with Iran. Markets are concerned that Israel might launch a
pre-emptive attack on Iranian nuclear facilities which could spark a new hot
war in the Middle East and lead Iran to
attempt to close the Strait of Hormuz.
Oil Prices - Tapis
Tapis, an Asian marker crude for
Australasian producers, ended the week at US$121.55, up $2.04 from a week ago. For local producers that’s an oil price of
some A$113.60 a barrel at US$1.07cents to the Australian dollar.
US
Natural Gas Price
The price of the front month US natural gas contract (the Henry
Hub benchmark) closed Friday at US$2.50 an mmbtu down 26 cents on a week ago. The
Henry Hub spot price closed at US$2.41 an mmbtu.
Our Market for Oil and Gas Stocks
Just over a month into 2012 and we have had three up weeks in the
first three weeks of the year followed by two down weeks. This past week losers
numerically pipped winners but the gains winners made far outweighed the losses
of the weaker stocks. With Wall Street up strongly on Friday when the Dow put
on 156 points our market should begin next week on a positive note.
Included in the past week’s winning stocks were the bigger cap
stocks with production and cash flow from oil fields in the Cooper Basin. We
refer to Drillsearch,
Senex Energy,
Beach Energy
and Cooper
Energy. There was also more corporate activity with QGC
taking a 9.4% stake in Drillsearch and Senex acquiring 19.9% of Orca. We
expect to see a consolidation of the players in the Cooper Basin as the year
progresses.
The area is hotting up as a centre of investor attention not just
for the number of small but profitable oil fields being discovered and brought
into production but also for its basin centred shale gas potential. This year
over 20 wells will be drilled to explore for, or appraise already discovered,
shale gas reservoirs.
This past week Beach returned to the Encounter #1 drilled last
year. Fracture stimulation activities should commence there mid February. And Beach spudded
Moonta #1 the first of five shale gas exploratory wells planned for this year. Senex is
drilling its first shale gas well Sasanof #1 in PEL 516.