Will Forbes
17 August 2017

Made a discovery? What are the odds of another?

Opening sequences

For exploration, and particularly for frontier exploration, it is useful to know how likely exploration may open up further discoveries in the block. We try to quantify how exploration discoveries may lead to further success - and how these results should affect company valuation

Read more...
16 August 2017 · 3 min read

Earnings momentum remains stable for now

Economic surprise driving EUR v USD but no FX hit to eurozone profits estimates

It may be the perfect environment for passive strategies as the lack of catalysts during 2017 has led to a continuation of the low volatility yet highly-valued equity market regime. In particular, it has been a robust year for corporate profitability. 2017 earnings growth forecasts remain pinned around 10%. Even while the medium-term outlook for markets looks challenging on valuation grounds as extraordinary monetary stimulus is unwound, those looking for a significant correction in the short-term should beware as corporate earnings trends remain robust at present.

Read more...
11 August 2017 · 3 min read

North Korea: A problem not of Trump’s making

Missile development program slowly shifts the political balance

North Korea’s recent successful test of a missile capable of reaching much of the US mainland is clearly a concern but it is not because such an attack is imminent or likely. The history of military rocket development suggests that it will still be some years before North Korea could be assured of a successful, let alone multiple, strike on the US or even Guam. However, in the event of any attack, the overwhelming superiority of US forces would undoubtedly ensure the destruction of North Korea. Therefore in many respects Trump’s most aggressive comments this week were a statement of the obvious and investors should accordingly not over-react, even as volatility has risen during thin trading over the holiday season.

Read more...
Will Forbes
8 August 2017 · 3 min read

Supply/demand rebalancing some time away

US shales can produce enough to supply demand increases

The oil sector is firmly in a new cycle, with a dramatically lower cost profile across the industry. Inventories in the US remain at elevated levels (only just below last year’s record levels). Although demand growth is steady, the production growth from the US shales alone is seen to be enough to provide for this growth from (Q217-Q218), with OPEC playing a role as the swing producer to cover seasonal variation. The market agrees, and the forward curve has progressively lowered and flattened over the last 18 months. We lower our long-term oil price assumption to $70/bbl in 2022 (equivalent to c $60/bbl real in 2016).

The note is here

Read more...
Will Forbes
8 August 2017

Kosmos searching for more investors

Kosmos coming to London

On 2 August, Kosmos announced that it will be seeking a main-market listing in London during the third quarter in order to access European investors. According to Reuters, the company indicates “There are a number of European investment funds and specialist international oil and gas investors that are currently unable to hold Kosmos’ shares due to their listing outside of a European regulated market”

We also believe it is a function of the differing attitudes the investor bases have towards exploration. Given the multitude of onshore producers, US investors typically place more emphasis on near-term cashflows and production. Especially since the advent of shale fracking, exploration risk is smaller and a greater attention is given to cashflows and financial leverage.

European exchanges tend to see more international explorers focussing on frontier areas, leading to a greater understanding of international exploration and willingness to value it.  European exchanges are more used to taking a risked approach to longer term value ideas such as 2P/3P reserves and exploration.
This may explain why European analysts have higher target prices given Kosmos’ mix of production/ development/exploration assets.

Read more...
Richard Windsor
8 August 2017

Samsung Bixby - Lightweight

Bixby is hopelessly outclassed

Read more...
Richard Windsor
7 August 2017

GrubHub - Big Appetite

Eats24 is an essential acquisition

Read more...
Richard Windsor
4 August 2017

Spotify - Free foundation

Apple Music still making no dent

Read more...
Richard Windsor
3 August 2017

India e-commerce - Road to ruin

The only likely winner in India is now Amazon

Read more...
Richard Windsor
2 August 2017

Apple FQ3 17A - No pause here

Solid base for new product launches.

Read more...