The Oil Man: Oil price, Faroe Petroleum, Wood Group

WTI $50.85 +22c, Brent $51.78 +40c, Diff -$0.93 -2c, NG $2.99 -15c

The oil price was virtually unchanged last week; the inventory stats helped with another draw but the rig count numbers on Friday showed the 17th straight up week with oil units up 11 at 443.

With only five weeks to go until the November OPEC meeting all eyes are still on the talks and of the cuts; Russia and OPEC are still apparently "committed" to success and with production still high they will need to at least be seen to work.

There appears to be little sign of money managers reducing their length which is always worrying but I wouldnt be surprised to see them taking some money off the table at some stage.

Wood Group

Wood has signed a five year, with two five year optional extensions, EPC and maintenance contract for the Hibernia platform offshore Newfoundland with its client, Hibernia.

No value is attributed to the contract, but it maintains the WG stranglehold on business in the area.

Faroe Petroleum

Faroe took a group of analysts for a site visit last week to see the Njord A platform currently awaiting dry dock at the Kværner Stord yard in Bergen. After completing a refit the platform will return to the Njord area, hopefully for another twenty years of production, now to include Snilehorn and the Pil/Bue discoveries.

Faroe has taken the opportunity in the last two years of oil price weakness to hunker down, concentrate on fewer wells in Norway and bolster its financial strength.

Having raised money just before the crash it remained financially strong and this has been added to by the raise of £66 million this August, more than was needed for the Dong acquisition. 2016 will prove to have been a good year to buy assets and strong companies like Faroe have taken advantage and will likely do so again.

The Dong deal will come out cheaper and more efficient that initially planned and Faroe will make a final payment of around $35 million (£28.6 million) in November or December of this year to complete it.

With £122 million of cash on the balance sheet, the company is likely to make more acquisitions, probably back in the UK sector, but don't rule out some trading of portfolio assets if monetisation is more efficient. Indeed whilst the reserves based lending may be replaced with a similar facility of up to, say, $250 million, it may be looking for more innovative financing via convertibles or other such high yielding instruments.

The exploration strategy adopted by Faroe in recent years has consistently delivered commercial discoveries which have fed through to reserves and production. Along with the acquired assets this means that this year Dong's 10/- barrels per day (b/d) will more-than-double current production, currently guided at 16-18/- b/d, and the five-year plan is for 40-50/- b/d from the existing portfolio.

Faroe is taking advantage of this perfect storm of increased production: development costs falling and accretive acquisitions, not to mention exploration success such as at Brasse at this time.

With some high-upside wells to come, such as at Dazzler over the winter and appraisals at Brasse and Fogelberg, plus others, the tax-efficient drilling in Norway should provide excitement.

Faroe has consistently delivered on its strategy of being a well managed, strongly funded company with a base of exceptional exploration success building towards a very strong production growth scenario.

Combine that with a successful acquisition policy with hopefully more to come, and investors may have overlooked FPM to their cost. A stalwart of the bucket list and a readily achievable target of at least 125p.

And finally…

The test match against Bangladesh turned into a real thriller; going in last night was a great call and this morning the discipline of the seam attack meant an England win by 22 runs. In low-scoring games, modest-looking scores often appear disappointing but, on this occasion, with runs and wickets Ben Stokes was justifiably man of the match.

Chelski and the HubCap Stealers were the big winners at the weekend; another goal for the latter would have put them at the top of the table as neither the Gooners or Spurs could win.

The Special One probably didnt feel so special in the Kings Road last night, but it's still all very tight up there.

Despite winning in Texas, Lewis still needs to have something extra over Nico and it still looks like the team have chosen who will win this year. Without a DNF, Lewis can win all he likes from now on in...

And, for the first time at Twickenham, it was American football, as the New York Giants beat the Los Angeles Rams 17-10, with more to come next week.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.