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Oil Producers Curb Megaproject Ambitions to Focus on U.S. Shale

Big U.S. oil companies are starting to think small. A stubborn 16-month crude rout with no end in sight is driving the largest U.S. oil producers away from costly, high-risk megaprojects long touted as the industry’s future and toward safer shale operations that generate the cash needed to satisfy anxious investors. Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp., ConocoPhillips and Hess Corp. have all either delayed or abandoned projects that range from the deep seas of the Gulf of Mexico to Canada’s oil sands and the U.S. Arctic. At the same time, Exxon and Chevron both announced plans to substantially increase U.S. crude production, largely as a result of their shale operations. “What makes more sense in this environment: drill a $100 million well in the deepwater Gulf that might come up empty, or poke lots of holes in west Texas where you already know there’s oil […]

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Anadarko drilling for less in U.S. shale

U.S. oil and gas company Anadarko Petroleum posts loss, but improves economics of drilling operations in U.S. shale basins. Photo courtesy of Anadarko Petroleum HOUSTON, Oct. 28 (UPI) — While taking a hefty loss for the quarter, U.S. oil and gas company Anadarko Petroleum said it was able to improve costs at operations in domestic shale basins. Anadarko reported a third quarter loss of $2.24 billion, compared with a profit of around $1.1 billion one year ago. Like its peers in the industry, the Houston-based company is struggling to generate cash at a time when crude oil is selling for about 45 percent less than it did at this time last year. "We remain committed to building and preserving value in this challenging environment," Anadarko Chairman, President and Chief Executive Officer Al Walker said in a statement. Despite the losses, the company said it was improving efficiency and productivity […]

Posted On : Published By : Tom Whipple
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Oil company Hess posts fourth straight loss

Hess Corp. posts loss for the third quarter, but maintains ability to keep producing oil in a depressed market. Photo by photostock77/Shutterstock NEW YORK, Oct. 28 (UPI) — U.S.-focused oil producer Hess Corp. said it was taking a disciplined approach to its business operations after posting its fourth consecutive quarterly loss. Hess reported a net loss of $279 million for the third quarter of the year as crude oil prices, down by about 45 percent from last year, take their toll on producers. Exploration and production operations, known as the upstream sector, accounted for the bulk of the losses in the third quarter. Chief Executive Officer John Hess said spending cuts were expected from the company moving forward, but the company’s operational performance was robust in the weakened market. "We are well positioned in the current low price environment and are taking a disciplined approach to preserve our financial […]

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Occidental Posts Loss as Oil’s Slide Bring Sales, Writedowns

Occidental Petroleum Corp. reported a third-quarter loss on sliding crude prices, a slump in production tied to the spin off of the company’s California business, and writedowns of the value of oil and natural gas fields. The company lost $2.61 billion, or $3.42 a share, compared with net income of $1.21 billion, or $1.55, a year earlier, Houston-based Occidental said in a statement Wednesday. Excluding some one-time items, the per-share gain was 3 cents above expectation. Estimates had ranged from a 15-cent loss to a 14-cent gain among the 27 analysts surveyed by Bloomberg. Occidental’s crude and natural gas output fell after the company cleaved off its West Coast holdings into a separate company in late 2014. A glut of North American supply has deflated the benchmark U.S. oil price by 52 percent to an average of $46.50 a barrel during the quarter from $97.25 a year earlier. The […]

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Shale-rich Oklahoma expecting budget squeeze

Oklahoma Governor Mary Fallin calls for cuts in non-essential spending as state coffers see dwindling revenue from oil and natural gas. File photo by J.P. Wilson/UPI OKLAHOMA CITY, Oct. 27 (UPI) — The governor of emerging oil and gas state Oklahoma signed an executive order calling for preparations for what’s expected to be a challenging budget year. Gov. Mary Fallin signed an executive order calling on all state agencies, boards and commissions to outline plans to cut non-essential expenses by 10 percent for the rest of the fiscal year and for the 2017 fiscal year, which begins July 1, 2016. "I’m asking every agency to start planning for potential spending cuts, and to develop a strategy that protects essential services," Fallin said in a statement. "It’s important we get ahead of this issue as we enter a difficult budget year." In a September report, State Treasurer Ken Miller said […]

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Has oil-rich North Dakota passed downturn?

Data from North Dakota show exploration and production activity in the shale-rich state may be stabilizing. UPI/Gary C. Caskey BISMARCK, N.D., Oct. 26 (UPI) — The number of rigs actively exploring for or producing oil and gas in North Dakota held steady for the third straight week, state data show. The North Dakota Industrial Commission reports 68 rigs in service as of Monday , unchanged for the last three weeks. Rig counts serve as a barometer for the health of an energy sector burdened by depressed crude oil prices, down roughly 45 percent from this time last year. The price for West Texas Intermediate, the U.S. benchmark for crude oil prices, of $44.60 per barrel is down about 8 percent from the start of October. Year-on-year, the number of rigs in service in North Dakota, the No. 2 oil producer in the nation, is down 65 percent. In terms […]

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China’s Yantai Xinchao to buy U.S. oilfields for $1.3 billion

China’s Yantai Xinchao Industry Co Ltd has agreed to spend about 8.3 billion yuan ($1.31 billion) to buy oilfields in the U.S. state of Texas, the company said in a corporate filing late on Saturday. The oilfields, in Howard and Borden counties, will be bought from Tall City Exploration LLC and Plymouth Petroleum LLC, Xinchao said in the filing to the Shanghai Stock Exchange. The transaction has already been approved by the U.S. Treasury’s Committee on Foreign Investment, it added. (Reporting by Ben Blanchard and Meng Meng; Editing by Simon Cameron-Moore )

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U.S. Shale Drillers Running Out Of Options

Much has been made about the impressive gains in efficiency and productivity in the shale patch, as new drilling techniques squeeze ever more oil and gas out of new wells. But the limits to such an approach are becoming increasingly visible. The U.S. shale revolution is running out of steam. The collapse of oil prices has forced drillers to become more efficient, adding more wells per well pad, drilling longer laterals, adding more sand per frac job, etc. That allowed companies to continue to post gains in output despite using fewer and fewer rigs. However, the efficiency gains may have been illusory, or at best, incremental progress instead of revolutionary change. Rather than huge innovations in drilling performance, companies were likely just trimming down on staff, squeezing suppliers, and drilling in the best spots – perhaps all sensible stuff for companies dealing with shrinking revenues, but nothing to suggest […]

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North Dakota extends deadline to bring new oil wells online

Stacked rigs are seen along with other idled oil drilling equipment at a depot in Dickinson, North Dakota June 26, 2015. North Dakota regulators approved a plan on Thursday to give oil producers an extra year to bring a new well online, a change designed to give the energy industry breathing room during the crude price downturn. Oil producers will now have up to two years to hydraulically fracture, or frack, and start producing from a well that has been drilled. Under previous standards, producers had only one year. Each well must still receive individual approval. Nearly 1,000 wells in the state are nearing their one-year deadline and were in danger of being forcibly plugged by regulators. (Reporting by Ernest Scheyder ; Editing by Chizu Nomiyama )

Posted On : Published By : Tom Whipple
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U.S. oil output slide looms as shale firms hit productivity wall

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 […]

Posted On : Published By : Tom Whipple