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BHP Shale Writedown Has Some Banks Asking: Where’s the Rest?

The size of BHP Billiton Ltd.’s $2.8 billion writedown for its U.S. shale assets took some banks by surprise: at least two thought it was too small. After the latest charge, Melbourne, Australia-based BHP values its U.S. onshore business at $24 billion. That’s more than 40 percent higher than what analysts at JPMorgan Chase & Co. think it is worth and over twice Citigroup Inc.’s estimate. The producer said its U.S. onshore assets would generate positive cash flow in the year to June 2016 with oil at $60 a barrel, above current prices. “Given the deteriorating conditions of the U.S. oil and gas market, we thought an impending impairment could have been larger,” analysts at JPMorgan including Lyndon Fagan wrote in a research note Wednesday. After four years of record supply, America’s natural gas output is shrinking as producers retreat from shale amid tumbling oil prices. That’s hurting investments […]

Posted On : Published By : Tom Whipple
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Canada set energy sector records last year

Federal regulator’s report points to strong 2014 for energy sector, though industry groups less optimistic in their 2015 forecasts. Image courtesy of the National Energy Board. CALGARY, Alberta, July 16 (UPI) — A federal Canadian report on the energy sector pointed to a strong 2014, though industry groups this year suggest rough waters are ahead in a weak oil market. The National Energy Board, the federal regulator, released a report on full-year 2014 production . Though crude oil prices fell roughly 50 percent from June 2014 to year’s end, the NEB said the energy sector was resilient and export revenue of $100 billion set a record. Total Canadian crude oil production in 2014 increased by 7.9 percent year-on-year to around 3.75 million barrels per day. "This growth is largely attributed to increased oil sands production, including several new in situ bitumen projects coming on-line and increased tight oil production […]

Posted On : Published By : Tom Whipple
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ConocoPhillips Increases Dividend But Cuts Deepwater Spending

The Houston-based oil company’s dividend is now 74 cents instead of 73 cents and is expected to cost an additional $12.3 million a quarter. The most significant spending reductions will come from its program in the Gulf of Mexico where ConocoPhillips will terminate its contract for the Ensco DS-9 deepwater drill ship. Drilling was scheduled to begin there later this year. Financial terms weren’t disclosed. ConocoPhillips will pay a termination fee that represents up to two years of contract day rates and will take a special item charge for the termination in the third quarter. “Since the start of the oil and gas price downturn last year, we have moved decisively to position ConocoPhillips for lower, more volatile prices by exercising capital flexibility and reducing operating costs across our business,” said Chief Executive Ryan Lance. “Our decision to reduce spending in deepwater will further increase our capital flexibility and […]

Posted On : Published By : Tom Whipple
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Sabine Oil, Lenders Put Off Fight Over Cash

During the hearing, Judge Shelley Chapman of the U.S. Bankruptcy Court in Manhattan approved of a series of routine motions designed to ensure the company’s continued operations, including paying employees and accessing bank accounts. But a long fight over about $250 million Sabine holds in cash could signal a difficult and contentious path forward for the company and its newly launched chapter 11 case. Discussions with lenders before filing for bankruptcy didn’t lead to a prearranged restructuring deal that could have made for a more streamlined trip through chapter 11, court papers show. Jonathan Henes, a lawyer for Sabine, said in court Thursday that the company cannot sustain a prolonged trip though bankruptcy. “We need to get this company out as quickly as we can,” he said. Sabine, which hasn’t sought special bankruptcy financing to fund its operations while in chapter 11, asked Judge Chapman for permission to support […]

Posted On : Published By : Tom Whipple
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EIA now reporting monthly base gas levels in underground natural gas storage

graph of monthly U.S. underground natural gas storage by storage type, as explained in the article text Source: U.S. Energy Information Administration, Form EIA-191, Monthly Natural Gas Underground Storage Report Note: Working gas is defined as the quantity of natural gas in the reservoir that is in addition to base gas and is available for withdrawal. It may or may not be completely withdrawn during any particular withdrawal season. With the release of the most recent Natural Gas Monthly , EIA began publishing base gas levels in natural gas storage facilities through the natural gas query system . Base gas plays an important role in underground natural gas storage, serving to maintain cavern or reservoir pressure and keeping natural gas storage facilities operational. Because of the geologic properties of storage facilities, a certain level of pressure is required to maintain reservoir integrity and to withdraw gas for commercial use. […]

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API: US petroleum demand rose in June, second quarter

Total US petroleum deliveries, a measure of demand, increased 4.2% from June 2014 to average 19.6 million b/d last month. In the second quarter, demand gained 3.7% compared with the same period last year. “Demand for and production of oil and refined products grew almost across the board over the last year,” said API Chief Economist John Felmy. “Notably, gasoline demand last month reached the highest level since the summer of 2007.” Gasoline demand in June averaged more than 9.3 million b/d, up 3.5% from June 2014 and the highest for any month since August 2007. Deliveries of gasoline in the second quarter increased 2.6% compared with last year. Distillate deliveries were up 1.3% from the prior year to average 3.9 million b/d. Over the same period, demand rose for jet fuel (0.6%), residual fuel (3.1%), and “other oils” (8.9%). At nearly 9.8 million b/d, US crude oil production […]

Posted On : Published By : Tom Whipple
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ConocoPhillips plans further capex reduction for deepwater exploration

ConocoPhillips reported plans to further reduce its capital expenditures for deepwater exploration, with the “most significant reductions” coming from its operated program in the Gulf of Mexico. The company did not specify by how much capex would be decreased, however. At yearend 2014, the Houston-based independent slashed its 2015 capital budget by 20% to $13.5 billion compared with 2014’s capex plans ( OGJ Online, Dec. 8, 2014 ). “Since the start of the oil and gas price downturn last year, we have moved decisively to position ConocoPhillips for lower, more volatile prices by exercising capital flexibility and reducing operating costs across our business,” said Chairman and Chief Executive Officer Ryan Lance. The company has provided notice that it will terminate its contract for the Ensco DS-9 deepwater drillship, which was slated for delivery to the gulf late this year to start drilling the company’s operated deepwater inventory under a […]

Posted On : Published By : Tom Whipple
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DOE official: LNG exports could be limited by silt-clogged waterways, ports

Silt, which is increasingly filling US waterways and ports, potentially could limit US LNG exports if it is not dredged soon, a top US Department of Energy official warned. Sedimentary deposits in Louisiana’s Calcasieu Ship Channel, “where many LNG exports would be moving,” could reach a point where tankers moving in different directions won’t be able to pass each other, said Melanie Kenderdine, who directs DOE’s Energy Policy and Systems Analysis Office. “These, by and large, are federal responsibilities,” Kenderdine noted during a presentation on the Quadrennial Energy Review and energy security at the Center for Strategic and International Studies. “That makes funding projects difficult under sequestration and budget caps.” The problem should be addressed because DOE has approved LNG projects totaling 9.9 bcfd of export capacity, Kenderdine said. “If all of that gets built, it would bring us close to Qatar, which is the world’s largest LNG exporter […]

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Study: Utica Shale Larger Than Previous Estimates

The technically recoverable resources of the Utica shale play are larger than previously thought, according to a study from West Virginia University. The size of the Utica shale play’s technically recoverable resources is larger than previously thought, a recent study by West Virginia University (WVU) has found. WVU found that the Utica play contains technically recoverable resources of 782 trillion cubic feet (Tcf) of natural gas and around 1.9 billion barrels of oil. That’s higher than the U.S. Geological Survey’s (USGS) 2012 estimate of technically recoverable resources at 38 Tcf of gas and 940 million barrels of oil. The study results indicate that the Utica – which spans West Virginia, Kentucky, Pennsylvania, Ohio and New York – is comparable to the Marcellus shale play in terms of size and potential recoverable resources. The Marcellus is the large U.S. shale play and second largest shale oil and gas play in […]

Posted On : Published By : Tom Whipple