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Canadian Oil Sands Rejects Suncor Offer

Suncor’s unsolicited bid for the largest owner in the Syncrude oil-sands consortium has been closely watched by industry observers as a sign that Canada’s biggest oil and gas producer may think global crude prices are at or close to their bottom, after falling 50% over the past year. Oil’s slump has punished stock prices of most energy producers, including Canadian Oil Sands, whose shares fell to 15-year lows in the weeks before Suncor made its offer. “It’s no secret that Suncor’s timing is opportunistic. It’s designed to take advantage of Canadian Oil Sands’ shareholders during an unprecedented period of market uncertainty in the energy industry,” Don Lowry, chairman of Canadian Oil Sands, said on a conference call. Mr. Lowry accused Suncor of seeking to buy out Canadian Oil Sands at “fire-sale prices,” but he left the door open to a possible deal by saying the board would continue to […]

Posted On : Published By : Tom Whipple
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Oasis Well In North Dakota Out Of Control, Leaking Oil And Brine

WILLISTON, N.D., Oct 19 (Reuters) – A North Dakota oil well owned by Oasis Petroleum Inc blew out over the weekend and is leaking an unknown amount of crude and saltwater, state officials said on Monday. The well is located about 15 miles south of White Earth, North Dakota, in Mountrail County, one of the more-prolific oil-producing regions in the state. The blowout happened at 11 p.m. local time, Saturday, Oct. 17, and the company worked all weekend to regain control of the well but so far has been unsuccessful, the North Dakota Department of Health said in a statement. A light sheen of oil was spotted about 850 feet (259.08 m)away from the well on the White Earth River, a tributary of the Missouri River, and an absorbent boom has been installed in an attempt to keep the oil from moving downstream, state officials said. Crude oil extracted […]

Posted On : Published By : Tom Whipple
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Oil companies “virtually abandoning” exploration

The hunt for new stores of oil and gas has been dramatically curtailed amid a global crude slump, with exploration budgets at the largest oil companies expected to tumble 50 percent next year from their peak levels in 2013, according to a new analysis. Investment banking firm Tudor, Pickering, Holt & Co., which tracked exploration capital spending at integrated oil companies and major exploration and production companies, forecast that spending on exploration will fall to about $25 billion next year. Oil companies are spending less in part because service costs have tumbled alongside oil prices, allowing explorers to spend less money to search for new reservoirs. But a vast majority of those spending cuts are related to a pullback in activity, according to the Tudor, Pickering, Holt & Co. analysis released to investors Monday. “Many (exploration and production) companies are virtually abandoning exploration altogether, especially in the U.S.,” the […]

Posted On : Published By : Tom Whipple
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Occidental Petroleum Corporation and the Reminder That Timing and Location Are Everything

Source: Hess Corp. It was roughly one year ago when reports surfaced that Occidental Petroleum Corporation ( NYSE:OXY ) was seeking a buyer for its Bakken Shale assets. At that time, Wall Street pegged the value of those assets at as much as $3 billion. However, one year later, those same assets are reportedly being unloaded for a mere $500 million. What’s important to understand about that price is the fact that it is not the result of a fire sale by a company in desperate need for cash — Occidental is doing just fine — nor is it due to a huge disconnect in the M&A market. Instead, the low reported sales price boils down to two things: poor timing and a less-than-ideal location. Once upon a time When Occidental Petroleum first put its North Dakota oil assets on the market, it was right around what, in hindsight, […]

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Once Hot, Master Limited Partnerships Reel From Sharp Selloff

Energy pipeline and storage companies were one of the hottest investments on Wall Street, offering steadily higher payouts, tax benefits and insulation from wild swings in oil prices. Now, investors are contending with a sharp selloff in master limited partnerships that has outpaced the fall in oil prices . Deal making in the sector has slowed and investors say they are calling into question the ability of MLPs to keep up the steady pace of payout increases as U.S. oil output finally starts to decline. The yearslong boom in U.S. oil production fueled the proliferation of MLPs. The companies transport, store, produce and refine energy, passing on the bulk of their earnings to shareholders. Income-starved investors flocked to the sector, lured by the companies’ assurances of steady payout increases and their tax advantages. Since 2009, MLPs have raised more than $100 billion from initial public offerings and follow-on stock […]

Posted On : Published By : Tom Whipple
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Goldilocks and the three prices of oil

We all know Goldilocks from the story of Goldilocks and the Three Bears in which the young maiden wanders into the home of the bears and samples some porridge that happens to be sitting on the dinner table. The first bowl is too hot, the second is too cold and the third is just right. Like a corporate version of Goldilocks, the oil industry has been wandering into the world marketplace in recent years often finding an oil price that is either too high such as in 2008 and therefore puts the brakes on economic growth undermining demand and ultimately crashing the price as it did in 2009. Or it finds the price too low as it is today therefore making it impossible to earn profits necessary for exploiting the high-cost oil that remains to be extracted from the Earth’s crust. Oil that hovered around $100 per barrel from […]

Posted On : Published By : Tom Whipple
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Even BP admits, some existing oil reserves are unburnable

The idea of a carbon bubble — the scenario in which fossil fuel-related investments become “stranded assets” as the world moves away from fossil fuels — has been gaining mainstream credence in recent months. From coal communities seeking help to transition from fossil fuels to vastly improved renewables that are competing directly with carbon emitting fuels , there are good reasons to question the idea that fossil fuel demand will continue to grow in the coming decades. Still, I wasn’t expecting the latest development in the carbon bubble story. The new economics of oil As reported over at The Guardian, oil giant BP has just admitted that some existing fossil fuel reserves are unburnable , and that some oil will have to remain in the ground if we are to have any hope of keeping global climate change within “safe” (which, at this point, really just means “less dangerous”) […]

Posted On : Published By : Tom Whipple
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Is Peak Oil Just A Myth?

As Niels Bohr famously said: “predictions are difficult, especially about the future.” And they are doubly difficult if you are talking about the future of oil. The more uncertain the future, the more vehemently each side presents its case. For years a debate has raged about peak oil, the dreaded moment when we start running out of accessible oil reserves, a debate made only more heated by suspicions of vested interests. So environmental campaigners have been crying out that modern society is about to be plunged into darkness, while oil industry experts have blithely assured us that the oil is there, and they will fetch it for us. Even if it lies several miles under the Arctic seabed or has to be stripped from tar in Canada. Down Dale Now BP chief economist Spencer Dale, a former Bank of England policymaker, has thrown his reputation into the fray by […]

Posted On : Published By : Tom Whipple
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Schlumberger: Market looks challenging

Oil field services company Schlumberger said it expects market challenges to continue. File photo by ekina/Shutterstock HOUSTON, Oct. 16 (UPI) — Revenue from North American operations alone dropped 4 percent in the third quarter as the oil business environment declined further, Schlumberger said. "For oilfield services, the market outlook for the coming quarters looks increasingly challenging with activity expected to be reduced further," Schlumberger Chief Executive Officer Paal Kibsgaard said in a statement. Schlumberger said third quarter revenue fell 4 percent for North American operations and 7 percent internationally. Year-on-year, revenue for North American operations alone dropped 34 percent. In a September report, the U.S. Energy Information Administration said total upstream investments could stay below the 10-year average if crude oil prices remain depressed. West Texas Intermediate, the U.S. benchmark for crude oil prices, closed trading Thursday about 0.3 percent below the start of October despite a rally last […]

Posted On : Published By : Tom Whipple
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Comerica Reports Profit Decline, but Tops Expectations

The Dallas-based lender said it classified about $480 million worth of energy loans as “criticized” in the quarter, meaning the bank had concerns about the borrowers’ financial condition. The bank said non-accrual loans and charge-offs, where the lender is uncertain the loan will be paid back on time or has given up on collecting, remained low. “Energy is still getting worse at a relatively quick pace,” John Pancari, an analyst at Evercore ISI, said of the bank’s results. But the bank “didn’t see losses spike and they didn’t have to add to their reserves in a big way.” More than $1 billion of the bank’s $3.2 billion in energy loans and $615 million worth of loans in other businesses that are closely tied to energy are now classified as criticized. That energy exposure, about 8% of the bank’s $49 billion in overall loans, was relatively high among big regional […]

Posted On : Published By : Tom Whipple