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RE: OPEC, for some quiet moments.. - admin - 08-25-2015

Low global crude prices have hit Saudi Arabia hard. With a considerable budget deficit, Saudi has been forced to begin borrowing from capital markets—$4 billion in July. The kingdom is highly reliant on oil—accounting for more than 90% of budget revenues. Cuts have not been made to capital expenditure and Saudi has engaged in an expensive conflict within Yemen. Consequently, the decision to ride out lower prices has put a huge strain on finances—the IMF estimates $50 oil will lead to a deficit of ~$140 billion (20% of GDP) this year. Plugging holes in the budget with bond issues is the clearest sign yet that the kingdom is feeling the pinch, the question is, how long can it continue?

Oil price slump is hitting Saudi Arabia: DW Monday

French energy giant Total has been left disappointed by a shale exploration well in Denmark. Total E&P Denmark, the operator of license 1/10, drilled the Vendsyssel-1 well in the northern part of Jytland close to Dybvad, Denmark. It was drilled as a vertical data acquisition well with the Alum shales as its target.

Total abandons Danish shale gas well

Emerging market currencies are getting slammed by the collapse in commodity prices, a downturn that has accelerated in recent weeks. The health of many middle-income and emerging market economies has been predicated on relatively strong commodity prices. A whole category of countries achieved strong growth by exporting their natural resources.

Oil Price Collapse Triggers Currency Crisis In Emerging Markets |

Iran plans to raise oil production “at any cost” to defend the country’s market share and backs calls for an emergency OPEC meeting to help shore up crude prices. “We will be raising our oil production at any cost and we have no other alternative,” said Oil Minister Bijan Namdar Zanganeh, according to his ministry’s news website Shana. “If Iran’s oil production hike is not done promptly, we will be losing our market share permanently.”

Iran plans ‘any cost’ oil output rise to defend market share

RE: OPEC, for some quiet moments.. - admin - 08-26-2015

The global oil market is healthier than it looks, signaling that crude’s plunge to six-year lows has probably gone too far. While futures tumbled below $45/bbl in London for the first time since 2009, Morgan Stanley and Standard Chartered Plc say other measures suggest physical markets for crude have stabilized or even strengthened in recent weeks. China, the world’s second-biggest oil consumer, will keep buying extra barrels to fill its strategic reserve this year, according to Goldman Sachs Group Inc.

Out in the real world, oil market is much better than it looks

Crude at $40/bbl is unsustainable and prices will have to rise as supply drops out of the market, according to Norway’s Oil Minister. “There has developed a surplus capacity on the production side and the supply side -- the supply side will be reduced in today’s oil prices,” Tord Lien said in an interview in Oslo on Tuesday. “But $40 oil prices? They are clearly unsustainable in the medium- to long-term.”

Norway’s Oil Minister says crude price at $40 can’t last

Oil and gas companies are looking more attractive to buy than individual assets following the plunge in share prices, according to Oil Search Ltd., Exxon Mobil Corp.’s partner in Papua New Guinea. It’s one of the few times “I’ve seen that buying companies may actually be cheaper than buying assets,” Oil Search Managing Director Peter Botten said Tuesday in a phone interview. “With the recent correction in the share market, should it be sustained, you are going to see a lot of corporate activity and consolidation.”

Energy companies cheaper than assets after rout, Oil Search says

As the price of West Texas Intermediate (WTI) retests the $40 per barrel (bbl) mark, some pundits are again calling for WTI to fall to $15 or $20/bbl. The same thing happened earlier in the year when crude prices tested $40. Lots of people predicted $20, the price went to $60, and the $20 crowd went quiet for a while. Well, they are back:

Why $20 Oil Won’t Happen |

RE: OPEC, for some quiet moments.. - admin - 08-27-2015

Bad news is pouring down on the U.S. oil industry so quickly that analysts can’t keep up. Half of the oil explorers, rig owners, refiners and pipeline operators in the Standard & Poor’s 500 Index are at least 40% below the target prices set by analysts, double the number of a month ago, according to data compiled by Bloomberg. When the rout in crude markets began in June 2014, there were no companies in the group lagging their targets by that margin and one in four was actually higher than analysts were forecasting.

Oil industry crash leaves Wall Street playing catchup

Despite the slowdown, production growth in the Eagle Ford remains resilient as sweet spots emerge across all active sub-plays, according to Wood Mackenzie's North America Key play analysis. Wood Mackenzie divided the Eagle Ford into 9 distinct sub-plays and results show that its core areas are still some of the most attractive oil and gas investment opportunities across the globe.

Eagle Ford production remains resilient, Wood Mac says

All of that is true, and in fact, Saudi Arabia is under tremendous pressure. The Saudi government is considering slashing spending by a staggering 10 percent as it seeks to stop the budget deficit from growing any bigger. The IMF predicts that Saudi Arabia could run a budget deficit that amounts to about 20 percent of GDP.

Why Saudi Arabia Won’t Cut Oil Production |

In the short-term, there are few reasons for bulls to be optimistic. OPEC continues to ratchet up production in the face of collapsing prices. In July, the oil cartel boosted collective output by 100,000 barrels per day, well in excess of its declared target, led by large gains from Iraq and Iran. In fact, Iran’s oil minister, Bijan Namdar Zanganeh, stated on the ministry’s website that Iran would make all efforts to continue to increase production. “We will be raising our oil production at any cost and we have no other alternative,” he said. “If Iran’s oil production hike is not done promptly, we will be losing our market share permanently.”

The Fed could be oil's only hope - Business Insider

RE: OPEC, for some quiet moments.. - admin - 08-28-2015

Natural gas production across all major shale regions in EIA's Drilling Productivity Report (DPR) is projected to decrease for the first time in September. Production from these seven shale regions reached a high in May at 45.6 billion cubic feet per day (Bcf/d) and is expected to decline to 44.9 Bcf/d in September. In each region, production from new wells is not large enough to offset production declines from existing, legacy wells.

EIA expects near-term decline in natural gas production in major shale regions - Today in Energy - U.S. Energy Information Administration (EIA)

Oil jumped the most in more than six years, caught up in a relief rally that swept the globe as the U.S. economy grew more than predicted. West Texas Intermediate futures rose 10%, the biggest gain since March 2009. U.S. gross domestic product grew at a 3.7% annualized rate in the second quarter, exceeding all estimates of economists surveyed by Bloomberg. The Standard & Poor’s 500 Index headed for its biggest two-day gain since 2009 as Chinese shares snapped a five-day losing streak.

Oil surges most in six years on faster U.S. economic growth

Just over half a trillion dollars: that's how much cash oil industry companies will need to repay in maturing debt over the next 5 years. Specifically, according to BMI Research cited by Bloomberg, there is $72 billion in oil-related debt maturing this year, $85 billion in 2016 and $129 billion in 2017, and a total of $550 billion in bonds and loans through 2020.

The Scariest Number For The Oil Industry: $550 Billion | Zero Hedge

Similarly, if investors are comfortable with leverage then the Velocityshares 3X Inverse Crude Oil ETN trading under DWTI is another option. As the name implies, the shares are leveraged to track three times the inverse performance of the S&P GSCI Crude Oil Index. DWTI has roughly $220 million in AUM and has enough liquidity to allow most investors to hedge their portfolios against crash risks. The ETF surged more than 16 percent as the markets plummeted on Monday, but that protection comes with a relatively steep 1.35 percent expense ratio.

How To Profit From Crashing Oil Markets |

RE: OPEC, for some quiet moments.. - admin - 08-29-2015

The move by these exploration companies reflects a much broader scramble by the industry—from the world’s biggest integrated oil companies to state-owned giants—to cut costs. But these smaller players are a vital part of the energy food chain: They are small and nimble enough to gamble on highly prospective regions that the majors aren’t willing to bet on. When they find a big deposit, they often partner up with bigger firms to develop the discovery.

Oil Exploration Companies Scramble to Cut Costs - WSJ

London-based BG Group PLC moved early into Brazil, for instance. Royal Dutch Shell PLC agreed to buy BG earlier this year for about $70 billion. Anadarko Petroleum Corp., the Woodlands, Texas-based company, was first into Mozambique. London-based Ophir Energy PLC pushed into Tanzania ahead of the pack, and Noble Energy Inc., of Houston, took a chance on natural gas offshore Israel, and found a gusher. Now, as these sorts of smaller competitors pull back, industry executives warn that this could result in fewer new big finds down the road. That, in turn, could crimp supply years from now.

Oil Exploration Companies Scramble to Cut Costs - WSJ

The pullback comes on top of cancellations and delays of around $200 billion in new oil and natural-gas projects, according to estimates from energy consultancy Wood Mackenzie. ENLARGE This year, exploration spending across the global oil industry is forecast to fall an average of 30% from last year’s $70 billion. U.S. oil company Exxon Mobil Corp. cut its capital and exploration expenditure by 16% in the second quarter of this year compared with the corresponding period a year earlier. The number of exploration wells either drilled or planned this year around the world is expected to fall 26% to 1,004the lowest level in five years, according to Mangesh Hirve at U.K. energy database provider 1Derrick.

Oil Exploration Companies Scramble to Cut Costs - WSJ

Russia—A $27 billion energy project is rising rapidly on this icy peninsula jutting above the Arctic Circle, but the race to shore up its finances has emerged as a test of Moscow’s ability to weather Western sanctions.

Sanctions Bite Massive Gas Project in Russian Arctic - WSJ

RE: OPEC, for some quiet moments.. - admin - 08-31-2015

On several occasions I have explained why "energy" should not all be traded like an oil futures contract. Joshua Kennon does a very good job on this topic, backed up with data and charts. A key point is that the oil majors must operate on a longer time frame than the quarterly report. You acquire reserves when it is possible to do so, not when compelled, for example.

Weighing The Week Ahead: What Are The Lessons From The Market Turmoil? | Seeking Alpha

But at some point, the cost of intervention becomes too high. The government has blown more than $200 billion in foreign exchange in an effort to keep the yuan from further devaluation. What comes next is anybody’s guess.

The Fed could be oil's only hope - Business Insider

The U.S. will permit some crude oil sales to Mexico in a step toward loosening the government’s ban on most domestic oil exports in place since the 1970s oil embargo, an administration official said. The Obama administration plans to approve an exchange of Mexican crude oil for similar quantities of American crude oil, granting a Mexican request for permission to relax the 40-year-old U.S. ban, said the official.

Obama said to approve crude oil exports to Mexico, easing ban

Despite low oil prices, Saudi Arabia is maintaining its investment in its oil industry. Saudi Aramco Chairman Khalid Al-Falih indicated in March that Saudi Aramco would not cut investment. James Crandell, a Cowen & Co. oil analyst cited in this article, who has tracked oil companies’ budgets for many years, estimates that Aramco and its Kuwaiti and UAE counterparts will increase their investment in oil exploration and production in 2015 by 4.5 percent to $38.1 billion. (If proportional to output, the Saudi share would be $24.5 billion).

OPEC Divorce And Self-Destruction Thanks To Saudi Oil Strategy? |

That sparked a massive rally, with oil prices shooting up by more than 10 percent, the most in a single day since 2008. It wasn’t just the solid growth rate from the U.S. that caused oil prices to jump. Royal Dutch Shell (NYSE: RDS.A) also declared force majeure on its oil from Nigeria, after it was forced to close two oil pipelines. Oil theft, sabotage, and violence are rampant problems for oil producers in Nigeria. A leak struck Shell’s Trans Niger Pipeline and the company also had to conduct maintenance to avoid theft on its Nembe Creek Trunkline. The lost production was a bullish catalyst for oil, as some production was expected to be removed from global markets.

This Week In Energy: Can This Rally Hold? |

RE: OPEC, for some quiet moments.. - admin - 08-31-2015

“To make investment decisions you need stability [in the oil price] and there’s no stability at the moment,” said Aidan Heavey, chief executive of Tullow Oil PLC, the U.K.’s biggest independent oil explorer. The Africa-focused company has already slashed its exploration budget by 80% to $200 million. It has canceled plans to drill a costly deep water offshore well in Mauritania scheduled for this year. And it is seeking to sell down its stakes in other licenses in Mauritania and Namibia, in an effort to cut out projects that can’t make a profit with oil prices at $50 a barrel. These international explorers have seen capital markets close off funding. Many of these companies are relatively big, but they aren’t “integrated” like Exxon Mobil and Shell, which have other businesses—like refining—that can turn a profit when oil prices are low. This year’s pullback by explorers follows almost two years of lower spending in exploration in the first place, as investors soured on a number of smaller companies after a poor run of drilling and ever-mounting costs. Even before oil prices began to slide last June, the share prices of explorers traded in London—a favorite listing destination for international explorers—were underperforming the bigger oil companies.

Oil Exploration Companies Scramble to Cut Costs - WSJ

Eni has discovered a “super giant” natural gas field offshore Egypt in what the Italian oil company said is the largest find in the Mediterranean Sea. The deepwater deposit in the Zohr prospect in the Shorouk block may hold 30 Tcf of gas, equivalent to 5.5 Bboe, Eni said in an e-mailed statement. Eni, which wholly owns the license for Shorouk, said the discovery validates its strategy of exploring mature areas. Egypt’s petroleum ministry confirmed the discovery in a separate statement.

Eni discovers 30 Tcf gas field in Mediterranean offshore Egypt

China’s biggest oil companies say they’ll cut costs, but not employees. As the collapse in crude prices curbs profits and prompts a wave of layoffs in the energy industry from Schlumberger Ltd. to Royal Dutch Shell Plc, Chinese state energy giants say their employees are safe. The oil and gas industry has cut more than 176,000 jobs globally this year and more reductions are likely, according to Swift Worldwide Resources. While eschewing those layoffs may avoid a repeat of protests early last decade when China Petroleum & Chemical Corp. and PetroChina Co. fired tens of thousands of workers, it’s going to make further cost savings a challenge, said Gordon Kwan, a Hong Kong-based analyst at Nomura Holdings Inc.

Chinese oil giants eschew global jobs purge amid belt tightening

Natural gas production across all major shale regions in EIA's Drilling Productivity Report (DPR) is projected to decrease for the first time in September. Production from these seven shale regions reached a high in May at 45.6 Bcfd and is expected to decline to 44.9 Bcfd in September. In each region, production from new wells is not large enough to offset production declines from existing, legacy wells.

EIA expects near-term decline in natural gas production in major shale regions

RE: OPEC, for some quiet moments.. - admin - 09-01-2015

Oil capped the biggest three-day gain in 25 years after OPEC said it’s ready to talk to other global producers to achieve ‘fair prices’ and the U.S. government reduced its crude output estimates. Crude traded in New York surged 27% in three days, the most since August 1990 when Iraq invaded Kuwait. Both West Texas Intermediate and Brent benchmarks have climbed more than 20% from their closing low on Aug. 24, meeting the common definition of a bull market. The Organization of Petroleum Exporting Countries, responsible for about 40% of the world’s supply, said in a monthly publication it’s willing to talk, “but this has to be on a level playing field.”

Oil caps biggest three-day gain since 1990 as OPEC ready to talk

Nevertheless, U.S. tight oil production continued to climb through April. It has fallen since, but the EIA estimates that September production will only be down 7%, or about 360,000 barrels/day, from the peak in April. This is despite the fact that typically output from an existing well falls very quickly after it begins production. The EIA estimates that tight oil production from wells that have been in operation for 3 months or more has declined by 1.6 mb/d since April, as calculated by the sum of the EIA estimated monthly declines in legacy production from May to September.

U.S. tight oil production decline | Econbrowser

Despite oil being up today, it's ugly for E&P companies across the globe. But I think Canadian producers have been hit with Murphy's Law worse than anyone. After a decent Q2-because of the low Canadian dollar and forest fires reducing supply-virtually everything that possibly could go wrong, has gone wrong. Look at this list:

OilVoice | It's Murphy's Law for Canadian Oil Producers

Emotionally, in the short term, a lot seems to have changed in the oil market. That can happen when a turbulent commodity mixes with outsized bets by large investors like hedge funds. "It's really being driven by the speculators. That's why we're seeing such wild swings," said Anthony Starkey, energy analysis manager for Bentek Energy, an analytics and forecasting unit of Platts.

Oil skyrockets up to almost $50 a barrel - Aug. 31, 2015

RE: OPEC, for some quiet moments.. - admin - 09-02-2015

Most OPEC members would like to see crude prices at $70 to $80/bbl and the producer group doesn’t need to coordinate with other oil suppliers to determine output levels, Oil Minister Bijan Namdar Zanganeh said in an interview.

Iran sees shale recovery as OPEC longs for $80 crude

The Americas will take the brunt of any cuts in oil production as Iran increases output once international sanctions are lifted, according to a report by A.T. Kearney Inc.’s oil and gas consulting practice in Dubai. North, South and Central American oil production could fall 1.1 MMbpd by 2020 because of higher costs as Iran’s output climbs, starting with an increase of 800,000 bpd next year, Chicago-based A.T. Kearney said in a report to be issued this week. Brent crude prices are seen trading at $45/bbl to $65/bbl next year, according to the report. The international benchmark was trading at $52.85/bbl on Tuesday.

Americas will take brunt of any oil output cuts as Iran returns

Egypt plans to keep all the natural gas produced at a giant field Eni SpA found off its Mediterranean coast to itself, heightening competition among gas producers in the Middle East and Africa. “This field is now in competition with the ones in Cyprus, Israel, Mozambique, Tanzania and Iran,” Thierry Bros, an analyst at Societe Generale SA in Paris, said Tuesday by e-mail. “But as we are short of growing demand, especially in Europe, and short of money, only projects that will find a win-win solution with buyers will go ahead.”

Egypt to keep Eni's find for itself, stiffening gas race in the Middle East

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

RE: OPEC, for some quiet moments.. - admin - 09-03-2015

Saudi Arabia and its Gulf allies are at odds with Iran and other OPEC members over whether the organization should include oil-price forecasts in its long-term strategy report, according to three of the group’s delegates.

OPEC said to be split on need for long-term oil-price forecasts

The U.S. EIA recently found that production from seven major shale basins in the U.S. should start to drop quickly after reaching an all-time production high in May. The seven basins produced a total of 45.6 billion cubic feet per day of gas in May, but that figure should drop 1.5 percent by September. Of the seven basins, only Utica will post an increase in production.

might be the time for natural gas - Business Insider

More U.S. oil and gas companies could come under financial distress in the coming months as crucial hedging protection begins to expire. Many companies had locked in high prices for their oil sales last year, allowing them a degree of protection as oil prices collapsed precipitously over the second half of 2014. Few, if any, hedged all of their production though, so revenues declined along with the oil price. Still, with some protection, the vast majority of companies (aside from a tragic handful) have not missed debt payments and have stayed out of bankruptcy. That could become an increasingly tricky feat to pull off.

Financial Sector To Cut Credit Supply Lines For Oil And Gas Industry |

Projecting from International Energy Agency (IEA) data, Iran is on track to produce an average ~2.85 mmbl/day of crude in 2015. The IEA puts Iran’s current sustainable capacity at 3.6 mmbl/day (defined as a level achievable in 90 days and sustainable for an extended period). This is roughly comparable to Iranian Oil Minister Bijan Namdar Zanganeh’s assertion Iran could increase output 500,000 barrels per day within a few months after international sanctions on Iran’s economy are lifted and another 500,000 barrels per day in the following months .

The Mirage Of An Iranian Oil Bonanza |