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Energy explorers reeling from the rout in oil prices are looking for liquidity in an obvious place: their rocks. Having exhausted other ways to raise cash as a glut of global supply depresses prices, a slew of producers from Anadarko Petroleum Corp. to Comstock Resources Inc. announced more than $2.4 billion in asset sales last month, according to data compiled by Bloomberg. Selling oil and gas fields to pay off lenders and fund new drilling—often a wildcatter’s option of last resort—is surging after a six-month lull.
Explorers in need of cash are selling oil fields as last resort
The mid-year trade report from the U.S. Commerce Department shows that the oil and natural gas industry continues to drive U.S. economic gains in 2015, a trend that could accelerate under free trade policies, said American Petroleum Institute (API) Chief Economist John Felmy. “Despite a very competitive global market, the U.S. energy revolution continues to push our trade balance in a positive direction,” said Felmy. “Oil imports remain on the decline, and strong exports of petroleum and refined products are creating new opportunities for America to bring wealth and jobs back to U.S. shores.”
Oil and gas boost America's 2015 trade balance, API says
In a note to clients this week, analysts at Goldman Sachs took a look at the market and the supply glut that has been blamed for the collapse in oil prices over the last year. And as Goldman sees it, quite simply, the rules of the market have changed. "The market structure of the New Oil Order is unprecedented," the firm writes, adding that the balance of power between the market's largest and smallest companies has changed.
The new structure of the oil market - Business Insider
An oil industry expert in Saudi Arabia said, “This policy hasn’t worked, and it will never work.” Saudi Arabia’s policy is not working because U.S. shale producers found new ways to extract oil cheaper. Although the number of fields declined, the production output per field increased. Oil industry experts believed that U.S. shale producers will be able to reduce their costs by 45% this year.
U.S. vs. Saudi Arabia: The Oil War
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Algeria is blessed with abundant fossil fuel reserves, and it is even estimated to hold the world’s third-largest shale gas reserves, according to the Energy Information Administration. With over 700 trillion cubic feet of technically recoverable shale gas reserves, Algeria even rivals the U.S. in terms of the amount of gas locked away beneath its territory. However, despite the large bounty, Algeria has overseen a long gradual decline in both oil and gas production. The EIA says that delays in new drilling and new infrastructure projects are the culprit. As a result, the Algerian government reformed its energy laws in order to attract international investment, which it believes will help reverse production declines.
The Latest Contender For The Next Shale Boom | OilPrice.com
Oil traded near the lowest level in more than four months amid speculation a global glut that drove prices into a bear market will be prolonged. West Texas Intermediate futures fell as much as 0.7% in New York after dropping 1.3% Wednesday. U.S. crude stockpiles remain more than 90 MMbbl above the five-year seasonal average and production increased for the first time in four weeks, data from the Energy Information Administration show. Goldman Sachs Group Inc. said the global crude oversupply is running at 2 MMbpd and storage may be filled by the fall, forcing the market to adjust.
Oil trades near lowest since March as Goldman sees global glut
Exxon Mobil Corporation (NYSE:XOM) today announced it has executed two agreements to obtain horizontal development rights in 48,000 acres in the core of the Midland Basin. The two agreements include an acquisition and farm-in adjoining XTO’s existing acreage position in Martin and Midland Counties, providing rights to all intervals within the basin. The acreage will be operated by ExxonMobil’s subsidiary XTO Energy Inc.
ExxonMobil Signs Agreements to Increase Position in Permian Basin | ExxonMobil News Releases
There’s been a remarkable surge in world oil production over the last year. And the United States is only part of the story. World oil production basically stagnated over most of the last decade. From January 2005 to April of last year, daily production of crude oil and condensate increased by less than half a million barrels annually. But over the last 12 months, the figure is up 3.1 mb/d. The surge in U.S. shale production, dramatic as it has been, accounts for only a little over a third of that increase.
OPEC and world oil supplies | Econbrowser
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Russia has publicly touted an array of natural gas export projects over the past year, a web of pipelines that would connect Russian gas to some of its largest customers, while also achieving important strategic objectives. But many of these projects will not come to pass.
Russia’s Natural Gas Plans May Be Little More Than Hype - Yahoo Finance
The lowest crude prices since 2009 might still not be enough to end the U.S. energy renaissance. Some parts of North Dakota’s Bakken shale play are profitable at less than $30/bbl as companies tap bigger wells and benefit from lower drilling costs, according to a Bloomberg Intelligence analysis. That’s less than half the level of some estimates when the oil rout began last year.
Oil at $30 is no problem for some cost-cutting Bakken drillers
When the financial crisis brought the global economy to its knees, Norway was largely unscathed. But oil under $50? That's another story. Unemployment peaked at about 3.7% in 2010 in the post-crisis aftermath. Falling oil prices already pushed the jobless rate to 4.3% in May, the highest in at least 11 years, and that was before a renewed drop in Brent crude.
For Norway, oil at $50 is worse than the global financial crisis
The shale fields that propelled the U.S. energy boom are expected to take another step back next month as producers reduce costs in the midst of a bear market. Output from the prolific tight-rock formations, such as the Eagle Ford in southern Texas, will decline by about 92,000 bopd next month to 5.27 MMbopd, the Energy Information Administration said Monday. It’s the fifth straight month a slide is expected, after output more than tripled from 2007.
Shale oil output wanes as U.S. producers retreat in bear market
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The U.S. declared one of Russia’s largest offshore oil and natural gas fields off limits to American tools and expertise, potentially disrupting Royal Dutch Shell Plc’s plans to liquefy the fossil fuel for export. Sanctions imposed to punish Russian President Vladimir Putin’s regime for the annexation of Crimea and support for Ukrainian separatists were expanded to bar the transport of U.S.-made equipment to Gazprom PJSC’s Yuzhno-Kirinskoye field off Russia’s eastern coast, according to a U.S. Department of Commerce statement on Friday.
U.S. puts Russian gas field off limits as sanctions tighten
The shale fields that propelled the U.S. energy boom are expected to take another step back next month as producers reduce costs in the midst of a bear market. Output from the prolific tight-rock formations, such as the Eagle Ford in southern Texas, will decline by about 92,000 bopd next month to 5.27 MMbopd, the Energy Information Administration said Monday. It’s the fifth straight month a slide is expected, after output more than tripled from 2007.
Shale oil output wanes as U.S. producers retreat in bear market
OPEC pumped the most crude last month in more than three years as Iran restored output to the highest level since international sanctions were strengthened in 2012. The Organization of Petroleum Exporting Countries, responsible for 40% of world oil supplies, raised output by 100,700 bpd to 31.5 million last month, the group said in its monthly market report, citing external sources. This increase came even as Saudi Arabia, which often curbs output toward the end of peak summer demand, told OPEC it cut production by the most in almost a year.
OPEC output reaches 3-year high as Iran pumps most since 2012
The lowest crude prices in six years might not be enough to put the brakes on the U.S. energy renaissance. Some parts of North Dakota’s Bakken shale play are profitable at less than $30 a barrel as companies tap bigger wells and benefit from lower drilling costs, according to a Bloomberg Intelligence analysis. That’s less than half the level of some estimates when the oil rout began last year.
Oil at $30 Is No Problem for Some Bakken Drillers Cutting Costs - Bloomberg Business
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Argentina needs $200 billion in investment to develop its vast but barely tapped shale fields, but no joint ventures were expected soon because of low oil prices and uncertainty ahead of a presidential election, state oil company YPF said on Thursday. YPF, nationalized in 2013, is improving drilling efficiency and developing its Vaca Muerta shale formation in Patagonia so that international companies will invest once prices recover, Chief Financial Officer Daniel Gonzalez said in a conference call with investors.
Argentina cuts shale drilling costs but no new joint ventures expected | Reuters
And the story of increased OPEC production is not, as many people seem to assume, that the Saudis have opened the floodgates in an effort to discipline North American competitors. Saudi production is not up much from where it stood a year ago. A much bigger story is Iraq, where the ambitious new projects that the country has been pursuing for some time are finally showing some impressive results.
OPEC and world oil supplies | Econbrowser
U.S. sanctions against the world’s biggest natural gas producer soured a surprise 71% surge in profit at Gazprom PJSC to push its shares lower in Moscow. The stock sank to the lowest in more than a week after first-quarter net income rose to 382 billion rubles ($5.9 billion) from a year earlier, 8% above the average of eight analyst estimates compiled by Bloomberg. The shares fell as much as 2.4% as the U.S. announced sanctions against one of Gazprom’s largest offshore fields late on Friday.
U.S. sanctions sour earnings surprise for biggest gas producer
Then in May, Exxon Mobil Corp. revealed that under contract from Guyana it had found massive offshore oil and gas deposits. Chavez’s successor, Nicolas Maduro, demanded that the drilling stop because the area was Venezuela’s. He dismissed Guyana’s president as a tool of Big Oil, declared his statements “nauseating” and Guyana’s actions likely to “bring war to our border.” He withdrew his ambassador, and Guyana announced the end to a long-time rice-for-oil deal.
Exxon’s $40-billion find renews old feud off Venezuela
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The emergence of shale technology, particularly in the U.S., is dramatically challenging the conventional rules of the global oil markets, according to Olivier Appert, president of the World Energy Council French Committee. Shale could become be the new ‘swing’ producer in setting the price of oil on global markets. “For the last 40 years, OPEC has been the major player in setting global oil prices because of its location within OPEC Countries, most specifically in the Middle East. It has been the ‘swing’ producer, increasing its production when markets are tight, and reducing quotas when there is over-supply,” Appert said. “However, in the last few years, with the advent of non-conventional shale oil and gas production in the U.S., the dynamics of the global market could be about to dramatically change.”
U.S. shale operators may be the new swing producers
The shale fields that propelled the U.S. energy boom are expected to take another step back next month as producers reduce costs in the midst of a bear market. Output from the prolific tight-rock formations, such as the Eagle Ford in southern Texas, will decline by about 92,000 bopd next month to 5.27 MMbopd, the Energy Information Administration said Monday. It’s the fifth straight month a slide is expected, after output more than tripled from 2007.
Shale oil output wanes as U.S. producers retreat in bear market
ConocoPhillips ended talks with PetroChina Co. on a shale gas development in the country after a two-year study. “The right commercial decision was to halt further discussions on this block,” ConocoPhillips’s China unit said in an emailed response to questions Wednesday. The company said it made the decision last year.
ConocoPhillips halts Sichuan shale gas talks with PetroChina
After years of languishing in a shale-induced coma, the U.S. natural gas market is waking up. Seasonal price swings will intensify as the country begins shipping liquefied natural gas cargoes to Asia and Europe later this year, said Bank of America Corp., RBC Capital Markets LLC and Wood Mackenzie Ltd. While that’s good news for traders yearning for volatility, it could be bad news for consumers.
Gas awakening from U.S. shale slumber as LNG shipments near
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Petroleum geologist and consultant Art Berman is probably the best representative from the skeptical camp. For many years Berman has been pointing to the high cost of getting fracked oil out of the ground. And, those costs led to negative free cash flow for most tight oil operators for several years in a row--that is, they spent considerably more cash than they took in, making up the balance with debt and stock issuance. Not surprisingly, the operators took that money and kept drilling as fast as they could. It was a recipe for oversupply and a crash, one that is now threatening the solvency of many fracking-dependent U.S. oil companies.
An Oil Price Spike Could Be Nearer Than You Think | OilPrice.com
Two major international oil companies, Chevron and Exxon, declared back in December that $40-a-barrel oil won't be a problem for them. One of the sources cited was Exxon CEO Rex Tillerson whose company has had trouble replacing its oil reserves for more than a decade at much higher average prices. In fact, oil majors have been cutting exploration budgets since early 2014 when oil prices were still hovering above $100.
An Oil Price Spike Could Be Nearer Than You Think | OilPrice.com
OPEC can do little to halt the oil price decline on its own and needs producers from outside the group to help in reducing global supplies, Algeria’s Energy Minister said. “A supply reduction by OPEC alone cannot really guarantee a return to oil market stability,” Salah Khebri said at an event in Algiers, according to Liberte newspaper. As the 12-member group of crude producing nations accounts for 40% of the world’s supply, “there should be steps taken within OPEC and with non-OPECs.”
Algeria calls for non-OPEC output cut to stop oil price slump
Saudi Basic Industries Corp., the world’s second-biggest chemicals manufacturer, plans to expand investment in U.S. shale gas projects through joint ventures, according to acting Chief Executive Officer Yousef al Benyan. Sabic, as the company is known, signed an agreement with Houston, Texas-based Enterprise Products Partners L.P. to get shale gas, al-Benyan said in an interview in Riyadh. The company may use the feedstock in the U.S. or export it to other countries such as the U.K., he said. Sabic has converted crackers at U.K. plants to use shale gas as feedstock to produce olefins and their derivatives more competitively.
Saudi Arabia’s Sabic considering shale gas investments in U.S.
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“The Saudi government can’t continue to be the employer of first resort, it can’t continue to drive economic growth through the big infrastructure projects and it can’t keep lavishing on subsidies and social spending,” said Farouk Soussa, chief Middle East economist for Citigroup Inc. in London.
How Much Longer Can Saudi Arabia's Economy Hold Out Against Cheap Oil? - Bloomberg Business
Stresses within OPEC should add to the pressure on the Saudis to rethink their strategy. The Saudis sold their change to their fellow OPEC members as being in OPEC’s general interest. They asserted that the their traditional method of stabilizing the oil market, production cuts, would not work since non-OPEC producers would increase output; second, that “market” forces would reduce investment and therefore increase prices in the medium and longer term and ultimately benefit all OPEC members; and third, that any Saudi increase in output was aimed at defending its market share, not reducing theirs.
Saudis Could Face An Open Revolt At Next OPEC Meeting | OilPrice.com
Low oil prices are expected to continue through much of this year and next, but as companies shelve plans for new drilling, they are setting the stage for a significant rebound in prices in the years ahead.
As Oil Industry Cuts Back, Prices Could Spike In Years Ahead | OilPrice.com
OPEC could potentially boost crude oil production to 33 MMbopd, the most ever, after international sanctions are removed against Iran amid a global supply glut, according to the country’s OPEC representative.
OPEC may boost oil output to record with Iran back amid glut
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The indicators tell us that we do not see the signs normally associated with a large market decline. Instead we see a parade of pundits saying "China, oil prices, and the Fed" because their job is to "explain" every market move. Here is a little test. If oil prices are signaling an incipient recession, how much do you think oil consumption has declined in the last year? If you sense a trap, you are right. Last year marked the biggest rate of increase in five years. The IEA has a nice interactive chart, depicted below. The price decline comes from increases in supply and the fact that none of the suppliers is backing off. Also noteworthy is that the gap is only about 1%. The oil price data are reflecting almost nothing about the world economy, despite the daily drumbeat in the news.
Weighing The Week Ahead: The Start Of Something Big? | Seeking Alpha
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Iran's Oil Minister, Bijan Zanganeh, said on Sunday that holding an emergency OPEC meeting may be "effective" in stabilizing the oil price, Iran's oil ministry news agency Shana reported. Algeria said earlier this month that the Organization of Petroleum Exporting Countries could hold an emergency meeting to discuss the drop in oil prices but other OPEC delegates said no meeting was planned.
Iran says an OPEC emergency meeting may stop oil price slide: Shana - Yahoo Finance
It may take another quarter of weakening oil prices before energy companies start selling assets, according to Australia’s Woodside Petroleum Ltd. Sellers that haven’t been willing to offload their best assets may begin putting them up for sale after suffering a few more months of slumping oil prices, CEO Peter Coleman said Wednesday.
More oil pain needed before energy deals seen picking up
The global oil glut will last through next year as surging demand and faltering supply growth fail to clear the surplus, according to the International Energy Agency. Record inventories will expand further even as consumption climbs by the most in five years in 2015 and supplies outside OPEC contract next year for the first time since 2008, the IEA predicted. Stockpiles won’t be diminished until the fourth quarter of 2016, or later if sanctions on Iranian crude are lifted following last month’s nuclear deal, the agency said.
IEA sees oil glut enduring in 2016 after reaching 17-year high
Legislation to repeal a 40-year ban on most domestic oil exports will probably become law in the first quarter of next year, according to analysts at Evercore ISI. A move to end the ban would probably include a condition that allows the administration of President Barack Obama to set export levels, Evercore analyst Terry Haines said in a research note Friday. While there is some congressional support to lifting the ban, some analysts said it’s unlikely to happen before the 2016 elections.
Congress likely to repeal oil export ban in 2016, Evercore says
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