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Transocean Takes $992M Charge On Drilling Business As Oil Slumps

Feb 26 (Reuters) – Offshore rig provider Transocean Ltd wrote down the value of its contract drilling business by $992 million in the fourth quarter as demand slumped due to a steep fall in oil prices. As a result of the impairment charge, Transocean has no goodwill remaining on its balance sheet, the company said in a statement late on Wednesday. Demand for offshore rigs has weakened as oil producers scale back drilling and slash spending due to a near-50 percent fall in oil prices since June. Transocean reported net loss of $739 million, or $2.04 per share, attributable to controlling interest for the fourth quarter ended Dec. 31 compared with a profit of $233 million, or 64 cents per share, a year earlier. Moody’s Investors Service cut its rating on Transocean’s $9.09 billion debt to junk on Wednesday. (Reporting by Swetha Gopinath in Bengaluru; Editing by Kirti Pandey) […]

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As Cushing fills, traders eye Houston to play the storage game

NEW YORK (Reuters) – As rapidly rising oil stockpiles near the limits of storage tanks in Cushing, Oklahoma, traders are quickly turning their sights south to the U.S. Gulf Coast, where capacity is more plentiful but profits more elusive. The Gulf Coast region boasts nearly 210 million barrels of capacity on oil tank farms, more than a half of the nation’s total, according to U.S. data from September. There’s another 75 million barrels in refinery sites, and analysts estimate a further 45 million connected to pipelines. As of last week, only 214 million barrels were stockpiled on the Gulf Coast, just tiny bit below last May’s record-high levels, data show. With little sign of a global glut letting up soon, oil traders are scrambling to secure short- or medium-term leases to stockpile deeply discounted prompt crude, with the hope of selling it for some $12 a barrel more in […]

Posted On : Published By : Tom Whipple
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Are oil producers running out of closet space?

Oil supply running ahead of demand hasn’t just pressured prices, it’s also filling up storage space, potentially pushing crude toward another leg down. “We’re going to see pretty fast inventory builds over the next few weeks,” Francisco Blanch, head of commodity research at Bank of America-Merrill Lynch, told CNBC Wednesday, noting that global supply is running around 1.4 million barrels a day above demand. “If you run out of space, prices tend to react a lot more violently to adjust that supply and demand imbalance and that’s what we expect over the next few weeks,” he said, forecasting both WTI and Brent will fall toward $30 a barrel. Prices settled at $50.99 and $61.97, respectively, on Wednesday. He cited fresh American Petroleum Institute (API) data which showed U.S. crude inventories climbed by a larger-than-expected 8.9 million barrels in the week ended Feb. 20, for a total of around 437 […]

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Refinery Outages: First Half 2015

Previous Issues Fall 2014 (November 2014) First Half of 2014 (February 2014) March 2011 through June 2011 (April 2011) October 2010 through January 2011(November 2010) This report examines refinery outages planned for the first half of 2015 and the potential implications for available refinery capacity, petroleum product markets and supply of gasoline, diesel fuel, and heating oil. The U.S. Energy Information Administration (EIA) believes that dissemination of such analyses can be beneficial to market participants that may otherwise be unable to access such information. This issue of the report focuses on how planned refinery outages may affect the adequacy of regional distillate fuel and gasoline supplies, as defined by Petroleum Administration for Defense District (PADD) areas. The report analyzes the availability of refinery capacity to produce diesel fuel and heating oil (distillate) and gasoline, focusing on two refinery units, the atmospheric crude distillation unit (CDU) and the fluid catalytic […]

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Whiting Shares Tumble On Plans To Keep Fracking Despite Cheap Oil

WILLISTON, N.D., Feb 26 (Reuters) – North Dakota’s largest oil producer, Whiting Petroleum Corp, struck a confident tone for 2015 on Thursday, saying it will hydraulically fracture all wells it drills even as peers scale back, but its bold tactic prompted a sharp drop in its share price. Executives said they were sure that the company can still make a profit with oil prices around $50 per barrel. Whiting shares dropped three percent as details of the plan were announced on a conference call Thursday morning and were down more than 8 percent in afternoon trading. Though the company has cut capex in half for 2015, some analysts said a deeper reduction is needed. The Denver-based company plans to drill and frack 265 wells this year, mostly in North Dakota but also in Colorado’s Niobrara shale formation. The number is at least 15 percent lower from 2014, though final […]

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SandRidge Energy Cuts 2015 Capex By 56%

Feb 26 (Reuters) – Oil and natural gas company SandRidge Energy Inc set a capital budget of $700 million for 2015, 56 percent lower than a year earlier, as the company responds to a slump in crude oil prices. The company said it would reduce its rig count to 7 by mid-year from 32 at the start of 2015, joining a slew of oil producers who have said they would use fewer rigs this year. Net income rose to $314.1 million, or 48 cents per share, in the fourth quarter ended Dec. 31, from $73.4 million, or 6 cents per share, a year earlier. Revenue fell more than 25 percent to $346.9 million. (Reporting by Anannya Pramanick in Bengaluru; Editing by Sriraj Kalluvila) WHAT DO YOU THINK?

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Exxon Says Spending To Fall 11% This Year To $34B

ExxonMobil says spending will decline about 11% this year to around $34 billion due to plunging oil prices, according to a regulatory filing this week. HOUSTON, Feb 26 (Reuters) – Exxon Mobil Corp said spending will decline about 11 percent this year to around $34 billion due to plunging oil prices, according to a regulatory filing this week. Smaller oil and gas companies have been making cuts to capital expenditures that generally range from 20 percent to 50 percent in response to a more than 50 percent drop in crude oil prices from June. Spending cuts at the largest global oil companies such as Exxon have not been as drastic. Another supermajor, Chevron Corp , said its capital spending would fall 13 percent this year. "Major oil companies are much less reactionary because they have a longer-term view on price," Denham Capital Technical Director Samantha Holroyd, told a forum […]

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Top oil drillers face years of pain, get a grip on cost

OSLO (Reuters) – The world’s biggest offshore drillers reported plunging earnings and orders on Thursday but managed to get a grip on costs to improve their chances of riding out a sectoral crisis that could last several more years. Transocean made a net loss in the fourth quarter while rival Seadrill’s bottom line nearly halved as both wrote down the value of their business and earned lower revenue after charter rates plunged. Still, their underlying operations were better than the market had forecast and both managed to reduce their near-term spending commitments for new vessels, giving them cash for the lean years. Rig firms that drill for oil companies have been hit as lower oil prices prompt firms to curb exploration. There is also an abundance of capacity as new vessels ordered during the boom times are being delivered. Rigs firm are also squeezed by a corruption scandal at […]

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KKR’s Struggling Energy Firm Weighs Debt Options

Energy producer Samson Resources Corp., owned by private-equity firm KKR & Co., is working with restructuring advisers, as a sharp decline in oil and gas prices complicates its efforts to stem losses and keep current on its multibillion-dollar debt load. The Tulsa, Okla., company is working with law firm Kirkland & Ellis LLP’s restructuring practice and Blackstone Group LP’s restructuring advisory group on options for dealing with its $3.8 billion in long-term debt, according to people familiar with the matter. Companies hire restructuring advisers to explore options to raise capital, sell assets or cut debt through out-of-court restructurings or bankruptcy filings. It isn’t clear what options Samson is considering, though the company has previously said it is looking to sell some oil and gas fields. KKR led a $7.2 billion buyout of Samson in 2011, as the shale-drilling boom was ramping up. The company took on $3.6 billion in […]

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Green energy auction sets stage for cheaper solar and wind power

Close to 30 UK green energy schemes have been awarded a subsidy pot worth nearly £4bn in a government auction that has set the stage for a big fall in solar electricity prices and much cheaper wind power. Two small winning solar panel projects have said they can produce electricity for nearly 60 per cent less than the maximum price the government had agreed to pay for that type of electricity and almost the same as current wholesale power prices. More On this topic IN UK Politics & Policy Prices for two large offshore wind farms off the coast of East Anglia and the Scottish Borders have come in as much as 18 per cent cheaper, though each scheme is still likely to receive nearly double the prevailing wholesale price. The auction, which is likely to set new ground rules for the way renewable energy is funded across Europe, […]

Posted On : Published By : Tom Whipple