TheChek News Flow

This has been a long-held goal for the company and, given the turbulent geopolitical backdrop in the region, it was an important one to hit in order to reassure investors that it’s business as usual for the £575 million market cap company.

The giant Shaikan field, where there are 12.5 billion barrels of oil in place, produces from seven wells, with an eighth due online this month and another now drilling ahead. The 40,000 bpd milestone was reached on December 27 and two days later, the company loaded a record 354 trucks from its PF-1 and PF-2 facilities with nearly 58,000 barrels of Shaikan crude for trucking to the Turkish coast for export.

CEO John Gerstenlauer said the company was “proud” to have delivered a near 300 per cent increase in production and export sales from Shaikan despite the challenges in the region.

Importantly, the Bermuda-registered company is now getting paid for its export production. In early December the company announced it had received an initial US$15 million for its oil export sales.

Given the ongoing export dispute between Baghdad and Erbil, the capital of the Kurdistan Region of Iraq, concerns about payment have long been a headwind for the stock.

In November the Kurdistan Regional Government’s Ministry of Natural Resources, which is keen to exercise is constitutional rights to produce and market the natural resources under its control and to put clear blue water between how it operates compared to its counterparty in Baghdad’s Ministry of Oil, made an initial payment of US$75 million on account to producers for exports, with further payments to follow on a regular basis.

This was good news for Gulf Keystone and fellow producers in the region, such as Genel and DNO, which together have helped lift exports through the Kurdistan to Turkey pipeline to around 400,000 bpd, with plans to export 500,000 bpd by the end of Q1 2015 and 1 million bpd by early 2016. This production is vital to the KRG as it continues to battle Islamic State and handle a growing refugee crisis.

While Gulf Keystone’s initial US$15 million is a modest contribution to the monies it is currently owed for export sales, it does signal the willingness of the KRG to meet its obligations to the international oil producers. Analysts at Edison Investment Research said the payment was a “very welcome first step”, noting that they believe the company is owed US$35 million from its production over H1 2014 with “probably more” than US$50 million due in H2.

The company now wants to bed in its higher production rate and ensure a period of stability at this 40,000 bpd level. Next steps will be to ensure those payments are made regularly and to finalise a pipeline solution for exporting Shaikan crude in order to reduce trucking costs.

The elephant in the room, however, remains the oil price. Stable production of 40,000 bpd at an oil price of US$100 or more would have been transformational for the company; with oil now under US$60 a barrel and still falling, the revenue stream will be lower and more volatile, weighing on the company’s ability to fund its capex plans for the year ahead, which may include further development of Shaikan as well as starting work on the first phase of the Akri-Bijeel development.

Shares in the company have lost two thirds of their value over the past 12 months, a reflection of the troubles in the region and the wider lack of appetite for oil stocks, but have added 20 pence since the lows of October. On Monday the stock was trading at 64.5 pence per share.

Analysts at Northland Capital Partners said that were the company operating in another part of the world it would be a “ripe takeover target” but its “strong underlying fundamentals” remain “offset by the significant risk profile that continues to mean it is not one for the faint hearted”.

*NORWEGIAN PROPERTY SAYS CANICA HAS MADE NO DECISION ON OFFER

Constellium CEO: Focus for Auto Aluminum Sheet Shifting to U.S.

Amsterdam Aluminum Company Ramping Up Investment in U.S. Operations to Meet Anticipated Car-Maker Demand

Car makers are increasingly using aluminum instead of steel as they try to meet new government fuel-efficiency standards by making cars lighter. By 2025, 18% of all vehicles in the U.S. will have all-aluminum bodies, compared with less than 1% now, according to Ducker Worldwide, a consulting and market-research firm.

“In Europe, for the time being the cars that have switched to aluminum are high brand,” Mr. Vareille said. “In this country, it’s the high sellers, and it’s been very brutal, very quick.”

Amsterdam-based Constellium, a spinoff of Rio Tinto PLC’s Alcan unit, expects demand for sheet aluminum from the U.S. auto industry to grow to 1 million tons a year by 2020, from 100,000 tons a year now. It sees an increase to 600,000 tons from 200,000 tons in Europe over the same period.

There are only four companies with operations in the U.S. that can supply the aluminum sheet Detroit needs: Alcoa Inc., Novelis Inc., Logan Aluminum —and Constellium. There is so much demand for their metal that they are already getting auto makers to buy into seven-year-plus contracts.

Constellium, which also makes aluminum products for the beverage and aerospace industries, agreed to acquire a private Alabama company, Wise Metals Intermediate Holdings LLC, in October in a deal valued at $1.4 billion. Wise supplies aluminum for the beverage and food can industry.

Constellium will invest up to $750 million in the Alabama operations by 2022 and produce up to 200,000 tons of sheet a year for the auto industry. It plans to increase Wise’s total hot-mill capacity to more than 700,000 tons from 450,000 tons. Constellium is also building a $150 million facility in Bowling Green, Ky., to produce 100,000 tons of sheet aluminum a year.

Negative Eurozone Inflation Doesn’t Make ECB’s Job Easy

Quantitative Easing Looks a Step Closer

But the numbers still don’t make the decision straightforward for the ECB, given the complications that eurozone sovereign quantitative easing brings with it.

The eurozone still isn’t experiencing deflation, or a downward spiral in prices fueled by expectations that goods and services will be cheaper in future. December’s decline in headline inflation to minus 0.2% from 0.3% in November was driven by lower energy prices, which fell 6.3% on the year, and a drop in food prices, down 1%. That should be a boon to cash-strapped consumers.

So-called core inflation, which strips out energy, food, alcohol and tobacco, actually rose in December to 0.8% from 0.7%. That matches the 12-month average: core inflation has been low, but remarkably stable. Citigroup expects core inflation to average 0.7% this year.

Of course, the headline rate is what matters for the ECB, which aims to keep inflation below, but close to, 2%. Expectations are even more crucial. Market measures have fallen sharply, with the five-year/five-year inflation swap, a closely watched indicator of medium-term inflation expectations, now at 1.57%, according to Deutsche Bank .

The concern will be that with demand in the eurozone remaining weak, lower energy costs will prompt businesses to cut prices, leading to more entrenched downward pressure on inflation and increasing the chance of deflation. Consumers, who tend to extrapolate from the headline rate, might start to think about deferring spending. But since oil and food prices are driving inflation, it isn’t clear why that would be the case.

Nor is it clear that ECB sovereign-bond purchases would themselves address deflationary pressure from food and energy prices—except through delivering a weaker euro, where the ECB’s current efforts may already be having an effect. Barclays notes that prices for imported goods are starting to rebound, potentially providing countervailing upward pressure on inflation.

The more worrying number released Wednesday was actually the eurozone unemployment rate, which has stopped falling and remains stuck at 11.5%. That too masks underlying developments: while unemployment has fallen in Spain and Germany over the past year, it has risen in France and particularly Italy.

That is a big problem for the eurozone. But it is also a problem to be addressed by governments just as much as by the ECB.

- Auto sheet aluminum business is shifting to the US

-->+ve for AA & CSTM (Constellium)

- North Korea cyber attack against Sony was the most serious such attack ever against US interests

--> +ve Security network sector FEYE,...