The high-growth business models of the U.S. Independents are being tested by low oil prices and tougher access to capital. Two recent Wood Mackenzie reports conclude that concerns surrounding October reserves-based-lending (RBL) redeterminations have been exaggerated.
Near-term financial risks for U.S. Independents exaggerated: Wood Mac
After falling 8.4% in September, and 24% for the third quarter, the price of oil has started to recover in October. Even more gains could be on the way. This is according to the CEO of Royal Dutch Shell and the secretary-general of OPEC, both of whom see signs on the horizon that suggest oil prices could move higher.
Oil Prices: Is a Major Rebound on the Horizon? -- The Motley Fool
Oil slid to a one-week low in New York as the IEA’s prediction that the global surplus will persist next year countered OPEC’s view of a recovering market. West Texas Intermediate futures slipped 0.6% after Monday’s 5.1% drop, the biggest in six weeks. Global markets will remain oversupplied in 2016 as demand growth slows from a five-year peak, the International Energy Agency said in a report. In contrast, Abdalla Salem El-Badri, secretary-general of the Organization of Petroleum Exporting Countries, said global oil consumption is expanding while non-OPEC nations will supply less.
Oil falls to one-week low as IEA counters OPEC view on recovery
Oil prices won’t rebound to $100/bbl before 2020 to 2025, when U.S. shale production will gradually start to decline, according to a former head of the International Energy Agency. Demand for crude in China, India, Southeast Asia and Africa will drive up global prices in the “long term,” Nobuo Tanaka, who served for four years as the IEA’s executive director, said in an interview in Abu Dhabi. Tanaka left the IEA, an advisory body to the world’s industrialized nations, in September 2011 and currently works as a professor at the University of Tokyo School of Public Policy.
Oil seen below $100 until 2020 by ex-IEA chief due to U.S. shale
More than $200 billion worth of oil and natural gas assets are for sale globally as companies come under renewed financial pressure from the prolonged commodity price rout, according to IHS Inc. There are about 400 buying opportunities as of September, IHS Chief Upstream Strategist Bob Fryklund said in an interview. Deals will accelerate later this year and into 2016 as companies sell assets to meet debt requirements, he said. West Texas Intermediate crude has averaged about $51/bbl this year, more than 40% below the five-year mean.
Oil slide means ‘almost everything’ for sale as rout deepens
Hedging protections for North American E&P companies will plunge in 2016 to just 11% of total production volumes, leaving many companies at high risk of financial stress, according to new energy company performance analysis from IHS. The IHS Energy North American E&P Peer Group Analysis: Hedging Protection Set to Plunge in 2016 assessed the amount of oil and gas hedging protections in place for 48 small, mid-sized and large North American E&P companies for the second half of 2015 and full-year 2016. Overall hedging for second-half 2015 was largely unchanged from the previous IHS analysis offered earlier this year—the North American E&Ps have 28% of total production hedged for the remainder of 2015.
Hedging protections for North American E&P companies to plunge in 2016: IHS
A new report finds that the largest oil companies are set to cut spending on exploration by at least half, potentially leading to few new oil discoveries in the years ahead. The report from investment bank Tudor, Pickering, Hold, and Co., and reported by Fuel Fix, estimates that exploration budgets among the oil majors will drop to $25 billion in 2016, down from $50 billion from just a few years ago.
Beginning of the end for major oil? - Business Insider
Every spike above $50, as happened last week, is met by a wave of hedging from shale companies. Late last week, U.S. producers locked in new production at north of $50 for 2016 and 2017 delivery. As prices reached about $53, any further rise was limited by sellers locking in prices. Even so only some 11 percent of expected 2016 production is forward sold according to IHS Energy, quoted in Reuters.
U.S. Shale Is Too Adaptive For The Saudis To Kill | OilPrice.com
After hanging on for almost a year, the US shale oil industry is on the brink of complete capitulation. The reason for its impending downfall is simple: the lowest cost producer always wins. In this instance the most profitable producers are Saudi Arabia and its close Gulf Arab allies, who effectively control the Organisation of the Petroleum Exporting Countries (Opec).
US shale oil stares into abyss with Opec ready push it over - Telegraph
Total US output has fallen by almost 600,000 barrels per day (bpd) since the end of the first quarter, with the biggest declines occurring recently as operators begin to crack under the financial pressure caused by Opec’s squeeze on prices. By next year, the US government expects output to decline to an average of 8.6m bpd, down from an average of 9.3m bpd in 2015. According to Mark Papa, the former head of US shale oil specialist operator EOG Resources, this is just the beginning of the downturn in North America. Speaking at the annual Oil and Money conference in London this week, Mr Papa said: “We are about to see a pretty dramatic decline in US production growth.” The insurmountable problem the US shale oil industry faces is that it is too highly dependent on debt and too reliant on crude trading above $60 per barrel to remain profitable. Break-even prices in America’s most productive areas, such as the Eagle Ford and Bakken, are thought to range from $54 to almost $70 a barrel, which currently means producers are operating at a loss, living in hope that Opec finally relents and cuts production.
US shale oil stares into abyss with Opec ready push it over - Telegraph
Bechtel has announced the first cargo of liquefied natural gas from the GLNG project has been successfully loaded onto the cargo vessel Seri Bakti, and began its journey to South Korea. The Santos GLNG facility is one of three LNG plants that Bechtel is building on Curtis Island, Australia, alongside Queensland Curtis LNG (BG Group) and Australia Pacific LNG (ConocoPhillips). In the past nine months, Bechtel has successfully produced LNG on three of the six LNG trains being built on Curtis Island.
Bechtel delivers first cargo of LNG for Santos GLNG project
Total is to sell a 15% interest in Gina Krog field, in Norway, to Tellus Petroleum, a subsidiary of Sequa Petroleum NV. The completion payment will be about $173 million (1.4 billion NOK). Sanctioned in 2013, the Gina Krog project is currently under development in the Norwegian North Sea and is expected to start-up in 2017.
Total sells a further 15% interest in Gina Krog field
Saudi Arabia, the world’s largest oil exporter, is storing record amounts of crude in its quest to maintain market share as it cut shipments. Commercial crude stockpiles in August rose to 326.6 MMbbl, the highest since at least 2002, from 320.2 MMbbl in July, according to data posted on the website of the Riyadh-based Joint Organizations Data Initiative. Exports dropped to 7 MMbopd from 7.28 MMbopd.
Saudi crude stockpiles at record high amid quest to keep share
OPEC member states should cut crude output to boost prices to a range of $70/bbl to $80/bbl, Iran’s Oil Minister Bijan Namdar Zanganeh said, even as his country prepares to ramp up production in the aftermath of economic sanctions. “No one is happy” with prices at current levels, Zanganeh told reporters in Tehran. “OPEC should decide to manage the market by reducing the level of production.” Zanganeh said he doesn’t expect the producer group to decide to scale back output when its ministers meet next in December.
Iran urges OPEC to cut oil output to raise prices to $70-$80
The high-growth business models of the U.S. Independents are being tested by low oil prices and tougher access to capital. Two recent Wood Mackenzie reports conclude that concerns surrounding October reserves-based-lending (RBL) redeterminations have been exaggerated. Wood Mackenzie’s Corporate Service Insight, US Independents: How strong, for how long?, examines the financial health of the top 26 U.S. Independents, and concludes that the larger producers—which, along with the Majors, account for the majority of upstream investment and production—have the required flexibility to tide them through the near term at the very least.
Near-term financial risks for U.S. Independents exaggerated: Wood Mac
The oiliest county in Texas has seen its new natural gas production capacity more than double as drillers home in on their most profitable acreage. The peak output rate from new gas wells in Karnes County has surged 134% since January, estimates from Drillinginfo show. The only other county in Texas’s Eagle Ford shale patch where new gas capacity’s gaining is Live Oak, about 50 mi southwest of Karnes, the Austin-based energy data provider said.
In the heart of the Texas oil patch, it’s gas that’s taking off
YOUNGSTOWN, Ohio – The Ohio Department of Natural Resources issued 21 new horizontal drilling permits last week to six companies exploring for oil and gas in the Utica shale, the agency reports. As of Oct. 17, 2,047 horizontal permits have been issued in the Utica, 1,614 wells have been drilled, and 1,022 are in production, ODNR said. Gulfport Energy Corp. and XTO Energy Inc. each received five permits while Ascent Resources received three permits to drill in Belmont County.
Chesapeake Exploration LLC was awarded three permits for wells in Carroll County, Antero Resources secured three permits for wells in Monroe County, and Triad Hunter LLC received two permits to drill wells in Noble County. The Ohio Utica’s rig count stood at 21, ODNR reported, down from 24 the previous week.
No new permits were issued for wells in Columbiana, Mahoning or Trumbull counties last week. Nor were any new Utica permits issued for wells in nearby Lawrence and Mercer counties in western Pennsylvania, according to the Pennsylvania Department of Environmental Protection.
'Martinistocks' pid='63901' datel Wrote:YOUNGSTOWN, Ohio – The Ohio Department of Natural Resources issued 21 new horizontal drilling permits last week to six companies exploring for oil and gas in the Utica shale, the agency reports. As of Oct. 17, 2,047 horizontal permits have been issued in the Utica, 1,614 wells have been drilled, and 1,022 are in production, ODNR said. Gulfport Energy Corp. and XTO Energy Inc. each received five permits while Ascent Resources received three permits to drill in Belmont County. Chesapeake Exploration LLC was awarded three permits for wells in Carroll County, Antero Resources secured three permits for wells in Monroe County, and Triad Hunter LLC received two permits to drill wells in Noble County. The Ohio Utica’s rig count stood at 21, ODNR reported, down from 24 the previous week. No new permits were issued for wells in Columbiana, Mahoning or Trumbull counties last week. Nor were any new Utica permits issued for wells in nearby Lawrence and Mercer counties in western Pennsylvania, according to the Pennsylvania Department of Environmental Protection.
I own 50 acres in Guernseycounty( real close to Monroe). The drilling came to a standstill in this area around Feb after 2 years of frenetic activity. I was fortunate to have 4 wells drilled on my property and half of my acreage included in a unit before everything came to a halt. There are plans to include the rest in another unit that has the well site ready to go, but I think the are looking for 60+ oil before they will proceed. Just when Ohio was starting to boom from this Utica activity, the Saudis stuck it to us. Oh well, I'm happy with the monthly checks even at half priced oil/gas.
Nice Tom.... Ohio will get going again. Looks like legislature is struggling to figure out how to tax it or not...
After a year suffering the economic consequences of the oil price slump, OPEC is finally on the cusp of choking off growth in U.S. crude output. The nation’s production is almost back down to the level pumped in November, when the Organization of Petroleum Exporting Countries switched its strategy to focus on battering competitors and reclaiming market share. As the U.S. wilts, demand for OPEC’s crude will grow in 2015, ending two years of retreat, the International Energy Agency estimates.
After year of pain, OPEC close to halting U.S. oil in tracks
BP Plc agreed to supply liquefied natural gas to China Huadian Corp. in a deal worth as much as $10 billion over two decades. The London-based company will supply as much as 1 million metric tons of LNG annually to the Beijing-based company that operates power stations, according to an e-mailed statement. BP and China National Petroleum Corp., the country’s biggest oil producer, also agreed to jointly explore and produce shale gas in China’s Sichuan basin and retail fuels in the nation, according to a separate statement.
BP agrees to $10 billion deal to supply LNG to China Huadian Corp.
Oil fell after a government report showed U.S. crude inventories grew by the most in six months. West Texas Intermediate futures for December delivery declined below $45 for the first time since Oct. 2. Inventories expanded in the world’s biggest oil consumer by 8.03 MMbbl last week, the Energy Information Administration said. A Bloomberg survey forecast a gain of 3.75 million. Refineries processed more crude for the first time in five weeks.
Crude oil declines as U.S. inventories grow most in six months
The worst of the oil-price slump is behind us, according to a unit of Europe’s biggest asset manager. Brent crude, trading below $50/bbl in London, will rise to at least $65 next year as the global surplus becomes “less acute,” Stephane Soussan, a portfolio manager at Amundi Group’s CPR Asset Management, said by phone. “The market will tighten,” he said.
Worst of oil slump over as glut seen shrinking, asset manager says
Login / Free Trial / Subscribe / Advertise
Offshore Deepwater Subsea Shale Geology & Geophysics Drilling Completions Production
Home > News > Worst of oil slump over as glut seen shrinking, asset manager says
Worst of oil slump over as glut seen shrinking, asset manager says
10/21/2015
Share on facebookShare on twitterShare on linkedinShare on google_plusone_shareShare on print
ANGELINA RASCOUET
PARIS (Bloomberg) -- The worst of the oil-price slump is behind us, according to a unit of Europe’s biggest asset manager.
Brent crude, trading below $50/bbl in London, will rise to at least $65 next year as the global surplus becomes “less acute,” Stephane Soussan, a portfolio manager at Amundi Group’s CPR Asset Management, said by phone. “The market will tighten,” he said.
The price of Brent, a global benchmark, has dropped more than 40% in the past year as world oil supply swamped demand. Futures sank to a six-year low in August as OPEC countries pumped more than their target to maintain market share, while crude stockpiles in the U.S., the biggest consumer, remained more than 100 MMbbl above the average.
A reduction in U.S. oil production will help curb the global oversupply to 500,000 bpd next year, according to Soussan, who oversees 525 million euros ($596 million) in the global resources fund at the Paris-based firm. The surplus was estimated at 1.6 MMbopd in the third quarter, International Energy Agency data show.
U.S. Supply
“In 2016, the supply coming from outside the Organization of Petroleum Exporting Countries should contract slightly, especially in the U.S., which has been the main source of supply increase outside OPEC over the past two to three years,” Soussan said.
U.S. oil-output growth has gathered pace in the past decade as producers tapped the country’s vast shale deposits. Yet tumbling crude prices have weighed on high-cost operations and cut active rigs by 60% from a year ago, according to Baker Hughes Inc.
The nation posted its first quarterly oil-production loss in more than four years in the three months through September, with output of 9.1 MMbpd compared with a peak of 9.61 MMbpd on June 5, according to Department of Energy data.
As the U.S. trims output, OPEC continues to pump above its quota and is unlikely to change strategy any time soon, Iranian Oil Minister Bijan Namdar Zanganeh said this week. Soussan also expects the group to maintain output policy when it next meets in December.
Iran itself is preparing to ramp up production once world powers remove sanctions on its economy. State-run National Iranian Oil Co. has said the country can raise exports by 500,000 bpd within a week of sanctions ending, and by 1 MMbpd within six months.
“I’m dubious on 1 million because it’s a very sizable amount of oil,” Soussan said, estimating 500,000 bpd as a more likely growth figure for next year. Iran’s return to the market should be “manageable,” he said.
Others in the industry have taken a more bearish view. Demand growth will ease and Iranian exports may swell the surplus next year, the Paris-based IEA said last week. Vitol Group, the world’s largest independent energy trader, said Tuesday that crude will struggle to surpass $60 next year with Iran’s likely return, while the International Monetary Fund said Iranian output will put “downward pressure” on prices.
Soussan expects the tail-off in U.S. production to help turn the market around. The nation’s output is almost back down to the level pumped last November, when OPEC switched its strategy to focus on battering competitors and reclaiming market share. Production will drop by 390,000 bopd next year, the Energy Information Administration estimates.
Amundi Group, owned by Credit Agricole SA and Societe Generale SA, has more than 950 billion euros under management. The fund management firm said this month it registered for an initial public offering with France’s market regulator, the first step to listing.
RELATED NEWS ///
Monster gas field revival sets Norway up for output record (10/22)
LAGCOE '15: Diamond Sponsor PhDsoft offers leading technology to manage and monitor structures, static equipment and piping (10/21)
LAGCOE '15: Diamond Sponsor Quality Mat is the industry standard (10/21)
LAGCOE '15: Diamond Sponsor Louisiana Cat is driven by efficiency (10/21)
LAGCOE '15: Diamond Sponsor Cheniere Energy changing the energy market through LNG exports (10/21)
Baker Hughes expects less drilling as it reports $159-million loss (10/21)
FROM THE ARCHIVE ///
Demand for more wells, more footage with fewer rigs drives drill bit design (December 2014)
ShaleTech: Permian Basin (December 2014)
Production gains through the reuse of produced water in fracturing (November 2014)
Subsea infrastructure growing and moving deeper (November 2014)
Regional report: The Arctic (November 2014)
Centralizer sub optimizes cementing performance (November 2014)
COMMENTS ///
Connect with World Oil
JOIN OUR NEWSLETTER ///
Sign-up for World Oil Daily News
LATEST NEWS ///MORE
Caofeidian 6-4 confirmed as mid-sized oil field, CNOOC says (10/22)
Santos rejects $5.15-billion bid from royal asset manager (10/22)
Monster gas field revival sets Norway up for output record (10/22)
U.S. offering another $1 billion for advanced energy technology (10/21)
Most Read
Most Commented
Regional Report: MENA
Plug the value leak: Fix your drilling data
ShaleTech: Niobrara-Codell shale
Executive viewpoint
Drilling speed: More savings to be had?
Home About Us Advertise Subscribe Renew Site License Contact Us FAQ Store Sitemap
Magazine
Archive
Current Issue
Supplements
Reprints & Back Issues
Author Guidelines
Handbooks
Resources
Videos
Webcasts
White Papers
TechTalk
News
Latest News
Conference News
People
Products
RSS
Newsletter Sign-Up
Data
Engineering Data Tables
Shale Research
Forecast
Events
World Oil Events
World Oil Awards
Women's Global Leadership Conference
Eastern Mediterranean Gas Conference
HPHT Drilling and Completions Conference
Energy Construction Forum
GTL Technology Forum
GasPro North America
Topics
Offshore
Deepwater
Subsea
Shale
Geology & Geophysics
Drilling
Completions
Production
Regions
North America
Latin America
Europe
Russia & CIS
Africa
Eastern Mediterranean
MENA
South Asia
East Asia
Australasia
Arctic
Links
Hydrocarbon Processing
Gas Processing News
Construction Boxscore Database
Gulf Publishing Company
Petroleum Economist
© 2015 World Oil, © 2015 Gulf Publishing Company.
All material subject to strictly enforced copyright laws
Please read our Terms & Conditions, Cookies Policy and Privacy Policy before using the site.