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U.S. Oil-Rig Count Rises for Sixth Consecutive Week

The number of U.S. oil-drilling rigs, which is a proxy for activity in the oil industry, has fallen sharply since oil prices headed south last year. The rig count dropped for 29 straight weeks before climbing modestly in recent weeks. Oil prices were up 6.9% to $45.49 following the report, as a surprise one-day rally extended to a second day. Oil prices surged Thursday as traders who had bet on lower prices closed out those positions following positive U.S. economic data, news that some Nigerian exports would be halted and a report that Venezuela wanted an emergency meeting of the Organization of the Petroleum Exporting Countries to respond to low prices. The rally comes after concerns about China’s economy, coupled with persistently high oil output from the U.S. and OPEC, the 12-nation oil cartel, has soured investor sentiment recently. Despite recent increases, there are still about 58% fewer rigs […]

Posted On : Published By : Tom Whipple
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US rig count down 8 units, ‘ugly’ next 12 months expected

After several weeks in which the overall US drilling rig count steadily climbed, the week ended Aug. 28 marked its largest loss since early June, dropping 8 units to 877 rigs working, according to data from Baker Hughes Inc. The decline reflected a 9-unit drop in gas-directed rigs. The oil-directed count, however, increased for the sixth straight week, edging up a unit ( OGJ Online, Aug. 21, 2015 ). The overall count is now down 1,037 units year-over-year. In its energy update this week, Raymond James & Associates Inc. noted that it has revised downward its 2015-16 forecast for crude oil prices and US exploration and production cash flows, reflected by what the financial services firm believes will be a “much slower” US drilling recovery than it previously anticipated. RJA earlier in the year optimistically forecast the rig count would bottom out in June at 930 units, which ended […]

Posted On : Published By : Tom Whipple
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Creditors Squeeze the Last Drop Out of Oil-and-Gas Companies

Cash-starved oil-and-gas companies are getting a lot of mileage out of their assets these days. A severe slump in commodity prices has sent energy explorers and producers scrambling to shore up their balance sheets, leading to a flurry of debt sales this year by the industry’s most financially strained firms. The new bonds typically promise creditors ownership of the company’s assets, should it default. But in many cases, that claim sits behind the liens of one or even two higher-priority slices of debt. Halcon Resources Corp. highlighted the trend late Thursday, exchanging $1.57 billion in unsecured bonds for $1.02 billion in new “third-lien” debt , backed by a claim on the company’s assets that sits behind those of its credit line and $700 million in bonds the company sold in May. Halcon followed Midstates Petroleum Co., a Tusla oil-and-gas company that in May issued $504 million in bonds with […]

Posted On : Published By : Tom Whipple
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Reduced offshore share in U.S. oil and natural gas production lowers risk from hurricanes

graph of monthly U.S. crude oil and natural gas production, as explained in the article text Offshore energy production in the Gulf of Mexico has experienced relatively minor disruptions because of tropical storms and hurricanes in recent years, and the National Oceanic and Atmospheric Administration (NOAA) has predicted a below-normal 2015 hurricane season in its updated Atlantic Hurricane Season Outlook , released on August 6. Hurricane-related risk to total U.S. crude oil and natural gas production has decreased over recent years as the share of total U.S. production originating in the Gulf of Mexico has declined sharply. In 2003, 27% of the nation’s crude oil was produced in the Gulf of Mexico; by 2014, that share had declined to 16%. The Gulf of Mexico’s share of natural gas production has also declined from a high of 26% in 1997 to 5% in 2014. This decline in the Gulf of […]

Posted On : Published By : Tom Whipple
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More Oilfield Services M&A Likely On The Way

Whether finally seduced by the relief a merger can usher in or surrendering to the security of making a joint venture permanent, the more distressed companies in the oil patch are de-stressing themselves by succumbing to the safety that mergers and acquisitions (M&A) offer. As companies have readjusted to a world where $60 oil can quickly become $40 oil, businesses – particularly the hard-hit, physically challenging services sector – have been watching their dollars dwindle from each bottom line. The biggest companies have seemed safe enough, but there’s been plenty of angst to go around. And so it was startling, but not shocking, in November when Halliburton bought Baker Hughes Inc. in a largely stock-for-stock deal worth $34.6 billion. Somewhat similarly, in recent days, oilfield services giant Schlumberger Ltd. revealed its plan – in a joint press release with joint venture partner Cameron International Corp. – to take over […]

Posted On : Published By : Tom Whipple
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Weaker Ruble Helps Lukoil Spend Less to Boost Oil Output

Lukoil PJSC was able to boost output in the first half of the year while reducing spending as a weaker ruble cut costs. Russia’s second-largest oil producer cut capital expenditure by 31 percent to $5.32 billion “mostly due to ruble devaluation,” according to a regulatory filing Friday. Oil and gas production rose 4.8 percent from a year earlier to an average of 2.37 million barrels equivalent a day. Brent crude prices have fallen by more than half in the past year, hitting revenue at Russian oil producers. That was partly offset by lower taxes and a weaker currency, which cut costs for companies that earn dollars and pay most of their expenses in rubles. The Russian exchange rate averaged about 53 to the dollar in the second quarter compared with 35 a year earlier. In addition to the currency effect, Lukoil “also reduced drilling,” Alexander Kornilov, an oil analyst […]

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European Refiners’ Profit Revival Faces End

A view of French oil giant Total’s refinery in Donges, western France. LONDON—For Europe’s biggest energy companies, the oil-price rout has had one silver lining: Their little-loved refineries returned to churning out big profits. Now, that bright spot could be fading, even as oil prices slump. Analysts and executives are flagging the prospect of lower refining profits as summer gasoline consumption eases, lowering demand. The International Energy Agency, a Paris-based watchdog for the world’s biggest consuming countries, said earlier this month that “fissures are appearing” in the strong refining environment that has prevailed this year. Analysts don’t expect refining profits to crash in the same way oil prices have, at least in the near term. Major oil companies’ downstream businesses—including refining and the sale of petroleum products—will likely continue to perform better than they have for several years as weak prices for their key input and rising consumption bolster […]

Posted On : Published By : Tom Whipple
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Oil Prices Extend Gains as Markets Rebound

By Eric Yep Crude-oil futures extended gains in Asian trade Friday after financial markets received a shot in the arm from U.S. growth numbers that helped prices rally overnight. Oil prices had surged over 10% in the previous session, the largest one day percentage gain since March 2009 for Nymex crude and December 2008 for Brent crude. On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $42.94 a barrel at 0307 GMT, up $0.38 in the Globex electronic session. October Brent crude on London’s ICE Futures exchange rose $0.17 to $47.73 a barrel. "In terms of percentage, 10% is indeed a spectacular increase for both WTI and Brent. However, in dollar terms, this increase amounted to only $4," analyst Daniel Ang at Phillip Futures said. He said most of the price rally came from short-covering and bargain-hunting as oil market bears are […]

Posted On : Published By : Tom Whipple