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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
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Occidental’s North Dakota deal mixed omen for pending oilfield deals

Occidental Petroleum Corp’s move to sell its North Dakota acreage likely removes a logjam that had impeded U.S. oilfield deals for much of the year, though the deal’s price sets an unusually low bar for future deals and gives buyers the advantage over sellers. Oxy is selling all of its roughly 300,000 acres in North Dakota’s Bakken shale formation to a private equity fund in a deal valued around $500 million, sources familiar with the matter told Reuters. The price is roughly one-sixth, though, of what Wall Street had expected Oxy to fetch for the assets as recently as last year. Houston-based Oxy did not sell the North Dakota assets out of distress; indeed, it has $2.8 billion in cash in the bank. Rather, the deal removes an operational distraction from managers focused elsewhere and helps the company achieve its goal of being cash-flow neutral. Still, for ConocoPhillips, Whiting […]

Posted On : Published By : Tom Whipple
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How Banks Funded the U.S. Oil Boom and (So Far) Escaped the Bust

When Whiting Petroleum needed cash earlier this year as oil prices plummeted, JPMorgan Chase, its lead lender, found investors willing to step in. The bank helped Whiting sell $3.1 billion in stocks and bonds in March. Whiting used almost all the money to repay the $2.9 billion it owed JPMorgan and its 25 other lenders. The proceeds also covered the $45 million in fees Whiting paid to get the deal done, regulatory filings show. Analysts expect Whiting, one of the largest producers in North Dakota’s Bakken shale basin, to spend almost $1 billion more than it earns from oil and gas this year. The company has sold $300 million in assets, reduced the number of rigs drilling for oil to eight from a high of 24, and announced plans to cut spending by $1 billion next year. Eric Hagen, a Whiting spokesman, says the company has “demonstrated that it […]

Posted On : Published By : Tom Whipple
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Oxy to exit North Dakota’s oil fields in sale to private equity fund

The Occidental Petroleum Corp headquarters is pictured in Los Angeles, California September 16, 2013. Occidental Petroleum Corp, the fourth-largest U.S. oil producer, has agreed to sell all of its North Dakota shale oil acreage and assets to private equity fund Lime Rock Resources in a deal worth around $500 million, according to sources familiar with the matter. The sale, which marks the first exit of this downturn by a major oil company from the Bakken shale formation, encompasses all of Oxy’s more than 300,000 acres in the state, including a 21,000 square-foot regional office built just three years ago. Lime Rock, which already operates in North Dakota, is buying the assets as the oil industry contends with the worst crude price crash in more than six years, a drop the fund used to its advantage. As recently as last fall, Wall Street had expected Oxy’s Bakken assets to sell […]

Posted On : Published By : Tom Whipple
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Wall Street Sets Aside More Cash to Cover Weakening Oil Loans

Wall Street lenders that bankrolled the debt-fueled U.S. oil boom are putting aside more cash to cover potential energy losses as "lower for longer" takes its toll. After rebounding to $61 a barrel in June, crude prices tumbled 24 percent in the third quarter. JPMorgan Chase & Co. said Tuesday that it increased its loan loss reserves for oil and gas by $160 million in the third quarter. Bank of America Corp.’s at-risk loans increased 15 percent from a year ago due to the deteriorating finances of some of its oil and gas borrowers. And Wells Fargo & Co. reported that it reserved additional cash to cover potential losses in the energy sector. The financial industry has so far avoided the kind of damage that triggered the collapse of hundreds of energy lenders in the 1980s. Banks are in the middle of the second round of twice-yearly reassessments of […]

Posted On : Published By : Tom Whipple
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Bakken Production Down plus IEA Predictions

ND & Bakken Bakken production was down 19,502 bpd in August while all North Dakota was down 20,552 bpd. Here is an amplified chart of Bakken and all North Dakota production. ND & Bakken BPW Bakken barrels per well per day is now 112 while all North Dakota gets 94 barrels per well per day. North Dakota Change in BPD This chart shows the monthly change in North Dakota production. It is likely that by next month the 12 month average change in production will be negative. Bakken wells producing increased by 69 and ND wells producing increased by 65. From the Director’s Cut July Permitting: 233 drilling and 0 seismic Aug Permitting: 153 drilling and 1 seismic Sep Permitting: 154 drilling and 1 seismic July Sweet Crude Price1 = $39.41/barrel Aug Sweet Crude Price = $29.52/barrel Sep Sweet Crude Price = $31.17/barrel Today’s Sweet Crude Price = $35.00/barrel […]

Posted On : Published By : Tom Whipple
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U.S. shale oil output to fall by most on record in November: EIA

A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma September 15, 2015. U.S. shale production is expected to fall the most on record in November, extending a nationwide output decline into its seventh consecutive month, according to a forecast on Tuesday from the U.S. Energy Information Administration. Total output is set to fall by more than 93,000 barrels per day (bpd) to 5.12 million bpd, according to the EIA’s monthly drilling productivity report. That’s the largest monthly cut forecast since data was available in 2007. Oil production from the Eagle Ford play in South Texas was expected to fall 71,000 bpd to 1.37 million bpd. Bakken oil output in North Dakota was expected to slide 23,000 bpd to 1.16 million bpd. Oil production from the Permian Basin of West Texas, which continues to buck the trend, was projected to rise 21,000 […]

Posted On : Published By : Tom Whipple
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Lenders Yank Credit From Struggling U.S. Oil Company

Lenders slashed a Denver energy company’s credit line to less than its outstanding balance, in one of the harshest cuts yet to a U.S. oil producer’s collateral-backed loans. Emerald Oil EOX -24.45 % Inc., which produces oil in North Dakota and Montana, said late Monday that its lenders have reduced its credit by 40%, to $120 million. It is in talks with those banks about how to pay back the roughly $20 million by which it is now overdrawn and is trying to find alternative financing, the company said. The credit-line cut is the second for Emerald this year and comes amid the second of a twice-annual review by banks of the oil-and-gas reserves that serve as collateral for loans. Over the last year as oil prices plummeted, banks have been reducing the amount they lend to companies across the country. “It looks as if the borrowing base bogeyman […]

Posted On : Published By : Tom Whipple
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North Dakota rig count holds steady

North Dakota rig counts stable after a week of strong gains in crude oil prices. Photo by David Gaylor/Shutterstock BISMARCK, N.D., Oct. 12 (UPI) — After a week of strong gains in crude oil prices, data from North Dakota show a level of stability in the level of exploration and production operations. Data from the North Dakota government show 68 rigs engaged in exploration and production in the state, unchanged from the previous week. Monday’s rig count is down 64 percent from this date in 2014. Rig counts serve as a barometer for the health of an energy sector burdened by depressed crude oil prices, down roughly 42 percent from this time last year. The price for West Texas Intermediate, the U.S. benchmark for crude oil prices, of $49.80 per barrel is up nearly 8 percent from one week ago , however. Lower crude oil prices are nevertheless starving […]

Posted On : Published By : Tom Whipple