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Large-scale MENA oil investment must continue to sustain industry: Naimi

Arab oil producers will need about $700 billion in financing for petroleum sector projects over the next 10 years to assure the sustainability of the Middle East and North Africa region’s key industrial sector, Saudi Arabia’s oil minister said Thursday. Forecasting a continued rising trend in global oil demand to the tune of about 1 million b/d, despite the current market oversupply and sluggish world economic growth, Ali al-Naimi said annual depletion from producing fields was running at about 4 million b/d. He calculated that the petroleum industry would need to add 5 million b/d of new production every year to satisfy future demand. "This needs financial solutions at the Arab and international level. Investment should include all the phases of production and manufacturing," he said during a keynote speech at the Apicorp Energy Forum in Bahrain. In the context of the sustained slump in oil prices since mid-2014, […]

Posted On : Published By : Tom Whipple
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Oil Crash Means Biggest Boomers Halt Supply Growth in 2016

To understand what the oil price crash will mean for global crude supplies next year, look no further than the two nations that added more barrels to world markets in 2015 than anyone else. The U.S. and Iraq, whose extra crude this year equates to about 80 percent of the global surplus, will fail to boost output in 2016, according to the world’s biggest forecasters. While the U.S. curtailment is mainly because prices are too low to spur fresh supply, the Middle East country’s ability to boost output is also being crimped by a need to fund its battle with Islamic State. Slowing output in the the two fastest-growing producers signals the global glut, which has depressed oil prices to near $40 a barrel, may begin to dissipate next year, according to Barclays Plc. While that would start to fulfill Saudi Arabia’s plan to re-balance world crude markets, Iraq’s […]

Posted On : Published By : Tom Whipple
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Across the Oil Patch, Firms Are Going Bust

The collapse in oil prices has sent three-dozen companies into bankruptcy court this year—and that might not be nearly enough to balance the glutted market. Thirty-seven North American oil and gas producers have​filed chapter 11 cases in 2015, according to law firm Haynes and Boone LLP. The cases involve $13.1 billion in debt, and “industry and economic indicators suggest more producer bankruptcy filings will occur before the year is out,” the law firm said a report. ​More may well be needed to bring production back into balance with demand, some investors say. “There’s been more efficiency in the space than we all expected, and that’s helped current owners hold on a little longer,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, which oversees $126 billion. “We’re not seeing as much turnover in the oil patch as we’d expect, in terms of weak hands to strong hands. […]

Posted On : Published By : Tom Whipple
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Chesapeake Energy Bonds Plunge to the Lowest Ever as Oil Falls

Debt of Chesapeake Energy Corp. tumbled to a record low on Thursday as the price of oil plunged. Nine of the energy producer’s unsecured notes plummeted, some losing more than 12 cents on the dollar, as it was the most actively traded company in the junk-debt market. Credit-default swaps, which are used by investors to protect against defaults, rose to the highest ever. The company’s $1.1 billion of unsecured notes due 2017 dropped 12.2 cents to 70.75 cents on the dollar at 11:48 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. One of its biggest bonds, the $1.5 billion of floating-rate notes due 2019, fell 7.4 cents to 43.6 cents at 11:48 a.m. in New York, the data show. Five-year CDS contracts rose 5.5 percentage points to 53.5 percent upfront, according to S&P Capital IQ. Swaps are used to protect […]

Posted On : Published By : Tom Whipple
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Shell finds 100 million oil barrels in deep-water Gulf discovery

Probing one of its recent discoveries in deep waters of the Gulf of Mexico, Royal Dutch Shell found 100 million barrels of oil equivalent buried at its Kaikias field, nearby three of its massive production facilities and a network of subsea pipes, the company said Wednesday. The one-year-old Kaikias discovery, about 60 miles south of the Louisiana coast in the Mars-Ursa basin, is nowhere near the size of the big-ticket deep-water oil fields that Shell uncovered in that region two decades ago. But its location near existing oil-production infrastructure make it an attractive bounty for an industry that has had to dramatically rein in exploration spending and project costs as oil prices languish under $45 a barrel. The field would be much cheaper to develop than more remote projects, far removed from the Gulf’s expansive network of pipelines that help ship crude to land. A 100-million-barrel find “is not […]

Posted On : Published By : Tom Whipple
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Chesapeake Energy Bonds Plunge to the Lowest Ever as Oil Falls

Debt of Chesapeake Energy Corp. tumbled to a record low on Thursday as the price of oil plunged. Nine of the energy producer’s unsecured notes plummeted, some losing more than 12 cents on the dollar, as it was the most actively traded company in the junk-debt market. Credit-default swaps, which are used by investors to protect against defaults, rose to the highest ever. The company’s $1.1 billion of unsecured notes due 2017 dropped 12.2 cents to 70.75 cents on the dollar at 11:48 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. One of its biggest bonds, the $1.5 billion of floating-rate notes due 2019, fell 7.4 cents to 43.6 cents at 11:48 a.m. in New York, the data show. Five-year CDS contracts rose 5.5 percentage points to 53.5 percent upfront, according to S&P Capital IQ. Swaps are used to protect […]

Posted On : Published By : Tom Whipple
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Texas oil production drifts lower

Texas crude oil production down for the second straight month and parts of the state economy are softening as a result. File photo by Gary C. Caskey/UPI AUSTIN, Texas, Nov. 19 (UPI) — Preliminary data from a Texas energy regulator show crude oil production in the No. 1 producer in the nation is down for the second straight month. Data from the Texas Railroad Commission show a full-month preliminary estimate for September at 83,326,908 barrels, down about 8.3 percent from the previous month and the second straight month for a decline. Year-on-year, however, the daily production rate of 2.4 million barrels is 10 percent higher than for September 2014. The U.S. oil sector is faltering under the strain of the long slump in crude oil prices, which are down about 45 percent from this time last year. Texas, however, has shown some resiliency during the downturn, with federal reports […]

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High-value oil find for Shell in Gulf of Mexico

Shell says its latest discovery in the Gulf of Mexico may be cheaper to development because it’s near existing infrastructure. Photo by James Jones Jr./Shutterstock HOUSTON, Nov. 19 (UPI) — Shell said it confirmed what it considers a high-value and significant discovery of oil in the deep U.S. waters of the Gulf of Mexico. "Kaikias is a high-value opportunity in the deep-water Gulf of Mexico, development potential could exceed 100 million barrels of oil equivalent recoverable," the company declared. U.S. and international reports indicate inland shale oil basins will decline in part because of financial pressure from lower crude oil prices. In its latest monthly market report, the Organization of Petroleum Exporting Countries said production declines from the Lower 48 may be offset by "strong growth" from the Gulf of Mexico, where year-on-year production increased 14.5 percent . Shell said the Kaikias prospect is near its existing infrastructure in […]

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Bakken Production Down 4.6% Over 2014

bakken EIA For the first time in more than a decade, Bakken’s oil production is showing a year-over-year decline. Related: OPEC’s Plan to Squeeze out U.S. Shale: Is it Working? Thanks to the shale oil boom, the Bakken region has experienced years of unprecedented growth with each year dwarfing the year before. But things have changed since oil prices crashed one year ago. The U.S. Energy Information Administration (EIA) released their latest drilling productivity report showing production across all the shale basins are in decline. The report estimates that in October 2015, the Bakken Shale produced 1.16 MMbpd (million barrels per day) of crude oil—1.8% less than the production levels in September 2015 and 4.6% lower than production was one year previously. This is the first time in over a decade that the production trends have gone backward. have reversed. Related: Marathon Oil Shifts Focus to U.S. Shale Total […]

Posted On : Published By : Tom Whipple