West African crude imports into the US Gulf Coast are picking up this month, drawn by the narrow WTI/Brent spread and African supply glut, Platts data showed Thursday. Thirteen crude Continue Reading
The idea that we will use up all of the earth’s oil has just gone from extreme to ludicrous. According to a new report by BP plc (BP) , the oil game has significantly changed over the last few years. What you thought you knew about how the oil industry works is wrong. But that doesn’t mean we are in any worse shape than before. However, if you are even thinking about getting into today’s incredibly low-priced oil company’s stocks, you need to pay attention. BP’s report, titled "New Economics of Oil," lays out why conventional thinking about oil production and prices is all wrong. For starters, the "Beverly Hillbillies" idea of get-rich-quick oil finds is over. Oil is not something that is found in huge quantities that can be traditionally drilled for decades anymore. Geologists have gotten darn good at finding the big fields, leaving new ones in […]
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A Development Bank of Singapore (DBS) logo in pictured in the backdrop of the central business district in Singapore July 10, 2015. The global commodities bear market is likely to experience only a U-shaped recovery as producers consolidate to shed excess capacity amid slower growth in China, Singapore’s DBS Bank said. "We are in the bottom shape of the U where it’s going to take a while to go through this cycle," Chean Wai Leong, head of commodity derivatives at DBS told the Reuters Commodities Summit. "We need more corrections on the supply side to cut back in both energy and base metals… Demand is going to be a slow story as well," she said. A supercycle in commodities ended last year as demand slowed in China, the world’s largest buyer of most raw materials, but producers ramped up output in the fight for market share. "A bear market […]
There’s a welcome whiff of oil industry consolidation in the air. But a gap between buyers and sellers shows there’s hardly a consensus that petroleum prices have hit bottom. Most of the recent action has been in Australia. Santos Ltd. SSLTY 2.92 % , one of Australia’s biggest energy companies, said Thursday that Scepter Partners, backed by Brunei’s oil-rich royalty, offered a 27% premium for the company over Wednesday’s price. This comes after Australian major Woodside Petroleum WOPEY -1.00 % bid for compatriot Oil Search, only to be rebuffed for being too cheap . Santos is also rebuffing Scepter, saying the bid is opportunistic. Scepter’s offer puts a debt-adjusted market value of $11.38 billion on Santos, or $9.14 per barrel of its proven and probable reserves. That is cheaper than Woodside’s offer for Oil Search at the time for $22.74 a barrel or Woodside’s own value of $17.38 a […]
An oil pump jack can be seen in Cisco, Texas, August 23, 2015. Stagnating rig productivity shows U.S. shale oil producers are running out of tricks to pump more with less in the face of crashing prices and points to a slide in output that should help rebalance global markets. Over the 16 months of the crude price rout, production from new wells drilled by each rig has risen about 30 percent as companies refined their techniques, idled slower rigs and shifted crews and high-speed rigs to "sweet spots" with the most oil. Such "high-grading" helped shale oil firms push U.S. output to the loftiest levels in decades even as oil tumbled by half to less than $50 a barrel and firms slashed rig fleets by 60 percent. But recent government and private data show output per rig is now flatlining as the industry reaches the limits of what […]
An oil refinery in Memphis, Tennessee. The end of the U.S. shale boom is about to claim another victim: oil refiners. Refiners are showing signs of slowing down after an unprecedented rise in U.S. crude production sent them on a five-year bull run. Citigroup Inc. downgraded five refining stocks Wednesday, including a subsidiary of billionaire Carl Icahn’s CVR Energy Inc. Profit margins from turning oil into gasoline and diesel fell last week to the lowest level since 2010, according to data compiled by Bloomberg. Why? As output rose, a ban on most exports left U.S. refiners awash in crude, allowing them to buy it for less than competitors in Europe and Asia. Now that producers have put the brakes on drilling, that advantage is eroding. The change may hurt the bottom line at Exxon Mobil Corp. and Royal Dutch Shell Plc, which report earnings later this month. Refining profits […]
Oil field services company Baker Hughes reports steep decline in business activity in North America, stressing its looking forward to imminent merger with rival Halliburton. Photo by Lilac Mountain/Shutterstock HOUSTON, Oct. 21 (UPI) — Oil field services company Baker Hughes reported a steep decline in revenue from North American operations, stressing its merger with Halliburton was progressing. Companies like Baker Hughes that work in the exploration and production, or upstream, side of the energy sector are facing economic headwinds in an era of historically low oil prices. Baker Hughes said third quarter revenue in North America alone was down 57 percent year-on-year because of "sharply lower activity and unfavorable pricing." In its weekly rig count report, a metric used to gauge the health of the exploration and production sector, Baker Hughes reported the seventh-straight weekly decline in activity in the United States. "In North America, margins declined further driven […]
Texas C+C The RRC data is always incomplete but if this month’s incomplete data is less than last month’s incomplete data then that’s a pretty good indicator that production this month is down. The EIA data here is only through July. They have Texas production peaking in March at 3,644,000 barrels per day and declining by 197,000 bpd to 3,447,000 bpd in July. Dean C+C Dr. Dean Fantazzini has Texas peaking in March also, at a slightly lower point than the EIA but they both pretty much in agreement by July. Texas crude only, when the final data comes in, will show the peak in March. Dean’s algorithm still has crude only peaking in March but holding on a plateau since then. Texas Condensate Texas condensate peaked, so far, in December. It is unlikely that any month, in the next year or so, will top December for Texas condensate […]
Baker Hughes’ revenues for 3Q 2015 are down 39 percent, compared to one year ago. Oilfield services giant Baker Hughes saw revenues drop to $3.8 billion for 3Q 2015, down 39 percent compared to 3Q 2014, and a 5 percent decrease from last quarter. “Compared to the third quarter of 2014, revenue in North America declined 57 percent on sharply lower activity and unfavorable pricing, while actions we have taken to right-size our operational structure resulted in decremental adjusted operation profit margins of 30 percent,” Baker Hughes CEO Martin Craighead said in a company release. A reduction in customer spending is the cause for less drilling in the fourth quarter , Reuters reported. An Evercore analyst report stated that Baker Hughes continues to see a shift in spending, which favors production optimization projects over exploration and development (E&P) work. This will result in further activity and pricing weakness in […]
NEW YORK—U. S. crude-oil stocks are expected to show an increase in data due Wednesday from the Energy Department, according to a survey of analysts by The Wall Street Journal. Estimates from 12 analysts surveyed showed that U.S. oil inventories are projected to have risen by 3.5 million barrels, on average, in the week ended Oct. 16. All 12 analysts expect stockpiles to rise. Forecasts range from an increase of 1 million barrels to a gain of 5.3 million barrels. The closely watched survey from the Energy Information Administration is due at 10:30 a.m. EDT Wednesday. Gasoline stockpiles are expected to fall by 900,000 barrels, according to analysts. Ten analysts expect a decline, with two expecting a rise. Estimates range from a drop of 2.9 million barrels to a gain of 2 million barrels. Stocks of distillates, which include heating oil and diesel, are expected to fall by 1.3 […]
