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‘Strippers’ Pose Dilemma for Oil Industry

Steve Plants, vice president of Plants & Goodwin Inc. in Shinglehouse, Pa., still pumps crude oil from wells drilled in the 1890s. But with the price of crude below $50 a barrel, some of those low-producing wells, known as stripper wells, don’t turn a profit. Mr. Plants has permanently closed 10 wells, he says, and plans to plug another 10 by the end of the year. “We’re losing money every day,” said Mr. Plants, who operates about 200 wells in Pennsylvania and New York. “If we were pumping wells every day, we might be pumping them once a week now,” to save on costs. Mr. Plants, and thousands of individual operators like him, could turn out to be a key element in ending the oil-price rout, rather than a large producing country like Saudi Arabia or a big public company. A sharp drop in stripper-well output, currently estimated at […]

Posted On : Published By : Tom Whipple
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In Canada’s prairies, crude slump puts first oil patch in reverse

Sr. foreman Dwayne Roy checking tap for production at an active well site about 60 kilometres east of field office during a tour of Gear Energy’s well sites near Lloydminster, Saskatchewan August 27, 2015. Amid the corn and canola fields of eastern Saskatchewan, oil foreman Dwayne Roy is doing what Saudi Arabia and fellow OPEC producers are loath to do: shutting the taps on active wells. Inside a six-foot-square wooden shed that houses a basic hydraulic pump, the Gear Energy Ltd employee demonstrates how shutting down a conventional heavy oil well in this lesser-known Canadian oil patch is as simple as flipping a switch. His company has already done so hundreds of times this year, making the Lloydminster industry among the first in the world to yield in a global battle for oil market share that has sent crude prices tumbling to six-year lows. Gear Energy Ltd, has idled […]

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Shell Cheapest in 6 Years for Buyers Braving Takeover Doubts

Royal Dutch Shell Plc It’s the cheapest opportunity in six years to be a shareholder in Europe’s largest oil and gas company. BG Group Plc, the oil and gas producer Royal Dutch Shell Plc agreed to buy for about $70 billion, is trading at a price equivalent to paying just over 14 pounds ($21.53) for a Shell B share, according to data compiled by Bloomberg. That would be the lowest valuation for Shell since the global recession of 2009 and a discount of 13 percent to the company’s current share price. Investing in BG “would be the cheapest way into Shell, if you’re taking the view that the deal is going to go through,” said Philip Lawlor, a strategist at Smith & Williamson Investment Management LLP in London, which oversees about $24 billion of investments including in Shell and BG. The outlook for the oil market has deteriorated since […]

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Congress Set to Duel Over Iran Nuclear Pact This Week

WASHINGTON—Lawmakers set to begin a bruising foreign policy fight over the Iran nuclear accord this week are likely to hand President Barack Obama a narrow and partisan victory, but one that saddles Democratic supporters with uncertain political consequences. Both chambers return to Washington on Tuesday after Congress’ annual summer recess, kicking off a fractious fall that will feature acrimonious debate and a possible veto fight over the nuclear agreement. The issue also will set the tone for showdowns later this year over government spending. A stream of Democratic endorsements dribbling out over recent weeks has all but guaranteed the White House will be able to implement the deal before Mr. Obama leaves office in less than two years. The agreement, reached in Vienna on July 14, imposes strict curbs on Iran’s nuclear program that will start to be eased after 10 years. In exchange, the U.S., the European Union […]

Posted On : Published By : Tom Whipple
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Move Over Exxon, Russian Drillers Are Oil World’s Top Performers

At a time when the collapse in crude prices pushes Russia’s economy into a recession, the nation’s oil producers are managing to beat their western counterparts. On measures including cash flow, profit margins and share prices, OAO Rosneft, Lukoil PJSC– Russia’s two largest oil producers — and OAO Gazprom Neft are performing better than Royal Dutch Shell Plc, BP Plc or Exxon Mobil Corp. “When oil goes down, the western companies are hurt more than the Russian companies,” said Maxim Edelson, a Senior Director at Fitch Ratings in Moscow. Because Russian tax rates adjust automatically to lower prices the nation’s companies enjoy a buffer to the slump in crude while “a lot of the hit is taken by the government.” The oil industry is struggling to adapt after prices fell to the lowest level in six years amid a global supply glut. While energy producers have fallen more than […]

Posted On : Published By : Tom Whipple
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Oil prices fall on global glut fears, slowing U.S. jobs growth

An oil pumpjack operates near Williston, North Dakota January 23, 2015. REUTERS/Andrew Cullen Oil prices fell on Monday as oversupply concerns, a firmer dollar and lackluster U.S. non-farm payrolls data weighed on global markets, but a rebound in Chinese stocks after a two-day holiday helped prop up prices. The long Labor Day holiday in the United States may also lead to thin trading until U.S. markets open in the next session. "I think there is a bit of investor relief China’s stock market opened relatively firm," said Ric Spooner, chief market analyst at Sydney’s CMC Markets. China’s main indexes rose on Monday in the first trading after a two-day holiday during which further restrictions on futures trading were announced. Oil prices have seesawed in recent weeks due to turmoil in global stock markets after a devaluation of its currency and weaker economic data raised concerns about a slowing Chinese […]

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Oil Futures Edged Lower Amid Cautious Trade

By Eric Yep Crude-oil futures pared early losses in Asian trade Monday but were still trading marginally lower on demand concerns and amid lingering fears over volatility in China’s markets after Asia’s top oil consumer cut its growth rate for last year. On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $45.79 a barrel at 0329 GMT, down $0.26 in the Globex electronic session. October Brent crude on London’s ICE Futures exchange fell $0.32 to $49.29 a barrel. Nymex and Brent futures regained some ground after having fallen as much as 1.6% earlier in the session. Oil prices had ended mixed last week, with Nymex crude gaining 1.8% while Brent crude lost 0.9%. Nymex crude has risen for two consecutive weeks and Brent crude has fallen for eight of the past 10 weeks; both oil benchmarks are down by around 13%-14% year-to-date. […]

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Golden age of OPEC has passed: Rosneft CEO

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, August 21, 2015. The Golden Age of OPEC countries to keep oil markets balanced passed when the group decided not to cut production in November last year to end a price rout, the chief executive of Russian oil major Rosneft said. "The Golden Age of this organization has passed," Igor Sechin said during the Financial Times’ Commodities Retreat in Singapore on Monday. "If quotas (for production) had been observed, global oil markets would have been rebalanced by now," he added, referring to OPEC’s decision in November 2014 to keep production near record highs in defense of market share over prices. Oil prices have fallen to below $50 per barrel since June 2014 as record global output has started to outweigh consumption. Sechin said an average oil price of $70 dollar […]

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Gulf Arabs Expand Yemen Ground War as More Troops Enter Country

The city Sana’a in Yemen Gulf Arab nations are expanding the ground war in Yemen, pouring more troops into the country to defeat Houthi rebels they say are backed by regional rival Iran. About 1,000 troops from Qatar entered the country on Sunday from the Wadia post on Saudi Arabia’s border with Yemen, the Qatari-owned Al Jazeera television reported. The soldiers, backed by armored vehicles, missiles and missile launchers, were headed to the oil-rich central Marib province, Al Jazeera said, citing its corresponding at the border. The reinforcements arrived after 45 troops from the United Arab Emirates and 10 Saudi soldiers were killed in Marib on Friday in the worst setback for the coalition since the Saudi-led military campaign started in March. Bahrain, another member of the coalition, said five of its soldiers were also killed defending Saudi Arabia’s southern border. Expanding the ground war carries a “huge risk […]

Posted On : Published By : Tom Whipple