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Bargain Hunters Stymied as Oil Rout Offers 1 in 6 Odds of Profit

Bargain hunters looking to profit on the latest oil rout might as well roll a six-sided die. Only one in six of the stocks and bonds issued by North American energy producers since the start of the year appreciated in value, according to data compiled by Bloomberg. “People’s expectations were that prices would get better as the year went on,” said Chip Hodge, who oversees a $12 billion portfolio of natural resource bonds at Manulife Asset Management in Boston. “People are now trying to figure out how low it will go and how long it’s going to stay this way.” Oil’s rebound fizzled, with prices sliding from a June peak of $61 a barrel to a six-year low of $43.08 as rising production from the U.S., Saudi Arabia and Iraq exacerbates a worldwide glut. As prices seesawed, oil companies sought to raise cash to shore up their balance sheets. […]

Posted On : Published By : Tom Whipple
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EIA: US crude output declines to continue through mid-2016

Total US crude oil production declined 100,000 b/d in July compared with June, and is expected to continue decreasing through mid-2016 before growth resumes late in 2016, according to the US Energy Information Administration’s most recent Short-Term Energy Outlook (STEO) . In the outlook, EIA noted that global liquids production continues to exceed demand, resulting in strong inventory builds throughout the forecast period. Global oil inventory builds averaged 2.7 million b/d in second-quarter 2015, up 800,000 b/d from the first quarter. Inventory builds are expected to slow to roughly 1.8 million b/d in the second half of the year, and to 900,000 b/d in 2016. Brent crude oil prices are expected to average $54/bbl in 2015 and $59/bbl in 2016, $6/bbl and $8/bbl lower than in last month’s STEO, respectively. Forecast West Texas Intermediate crude prices in both 2015 and 2016 average $5/b less than the Brent price. Global […]

Posted On : Published By : Tom Whipple
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US Shale Declining and OPEC Still Climbing

There is new data out today. The EIA published their International Petroleum Statistics yesterday. The EIA also published their Drilling Productivity Report which gave their expected shale oil and gas production through September. Then this morning OPEC published their Monthly Oil Marketing Report with OPEC crude only production numbers through July. First the Drilling Productivity Report. Of course most of the Drilling Productivity Report is projection, not history. And that projection goes through September 2015 . The EIA has the Bakken peaking in December and declining 107 thousand barrels per day since that point. A secondary peak was reached in April and declining steadily since then. Eagle Ford The EIA has Eagle Ford peaking in March and declining 226 thousand barrels per day since that point. The EIA has Niobrara peaking in March, almost flat for one month then declining sharply after that for a total decline of 75 […]

Posted On : Published By : Tom Whipple
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U.S. shale oil output forecast to fall 75,000 barrels per day in September: EIA

A pumpjack drills for oil in the Monterey Shale, California, April 29, 2013. U.S. oil production from the largest shale plays was forecast to fall by some 75,000 barrels per day in September from August, data from the U.S. Energy Information Administration showed on Monday. Eagle Ford production was set to fall by 56,000 bpd to 1.48 million bpd while production from the Bakken was set to drop 27,000 bpd to 1.16 million bpd. Production from the Permian Basin of West Texas and New Mexico bucked the trend and was forecast to rise by 8,000 bpd to 2.04 million bpd. Meanwhile, new well oil production was seen to rise 6 bpd to 333 bpd for the Permian and 26 bpd to 792 bpd in the Eagle Ford. It was set to rise 4 bpd to 692 bpd in the Bakken. (EIA corrects new-well oil production per rig to 688 […]

Posted On : Published By : Tom Whipple
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Sanchez Energy boasts of hefty production gains

Sanchez Energy takes major hit during the second quarter, but maintains optimism about future production growth. File photo by Gary C. Caskey/UPI HOUSTON, Aug. 10 (UPI) — Despite reporting a half billion loss in the second quarter, U.S. shale player Sanchez Energy said its total production was up 164 percent year-on-year. Chief Executive Officer Tony Sanchez said in a statement Monday his company plans to cut capital spending by $50 million for the year, but still increase its production target by 4 percent, or about 2,000 barrels of oil equivalent per day. "The 2016 capital budget is expected to maintain production consistent with 2015 levels and will likely lead to some moderate year-over-year growth," he said. Low crude oil prices leave energy companies with less money to spend on exploration and production. Some of those companies are boasting of production gains by crediting improved efficiencies in well operations. Sanchez […]

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EIA: US shale oil output to drop 93,000 b/d in September

Crude oil production in September from seven major US shale plays is expected to decline 93,000 b/d to 5.27 million b/d, according to the US Energy Information Administration’s latest Drilling Productivity Report (DPR) . EIA previously projected a 91,000-b/d decline for both July and August ( OGJ Online, June 9, 2015 ; July 13, 2015 ). The DPR focuses on the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian, and Utica, which altogether accounted for 95% of US oil production increases and all US natural gas production increases during 2011-13. The Eagle Ford continues to represent a bulk of the overall oil output declines, projected to fall 56,000 b/d in September to 1.48 million b/d. The Bakken is expected to fall 27,000 b/d to 1.16 million b/d, and the Niobrara is expected to fall 18,000 b/d to 399,000 b/d. In the Permian, meanwhile, EIA projects a larger increase for September […]

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Shale Oil Output Wanes as U.S. Producers Retreat in Bear Market

The shale fields that propelled the U.S. energy boom are expected to take another step back next month as producers reduce costs in the midst of a bear market. Output from the prolific tight-rock formations, such as the Eagle Ford in southern Texas, will decline by about 92,000 barrels a day next month to 5.27 million, the Energy Information Administration said Monday. It’s the fifth straight month a slide is expected, after output more than tripled from 2007. Shale producers like EOG Resources Inc. have cut spending and reduced output after oil prices fell more than 20 percent from their 2015 peak in June, and remain down by more than half from a year ago. The number of rigs drilling for oil last week was 670, down from 1,609 in October, according to oil-field service company Baker Hughes Inc. “We’re certainly in the period where we should see the […]

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Pipeline overbuild forces company executives to seek new opportunities

A doubling of pipeline capacity in one of the most prolific U.S. shale plays may have gone overboard in its rush to move oil to market, top pipeline company executives said during earnings announcements over the past week. With more than 1 million barrels per day of additional pipeline capacity moving oil from the Permian Basin of West Texas added since early 2014, companies dependent on new projects to drive revenue growth are now faced with a limit. The buildout has also caused some temporary inbalances in spot prices, traders say, as pipelines flood Houston-area refiners with surplus crude. The race for new and bigger pipelines to ease bottlenecks has led to a slew of new projects coming online through 2017, even as output wanes with oil prices down nearly 60 percent from a year ago on a global supply glut. Plains All American Pipeline, one of the biggest […]

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Plunging Oil Prices a Boon for Logistics Companies

The logistics of the oil market is proving to be a lucrative business, even as the price of crude plunges toward multi-year lows. Companies that transport and store oil and refined products, as well as manage shipping terminals reported soaring profits this week. The glut of crude driving down prices is also creating more work for petroleum logistics firms, also known as midstream companies. Higher volumes of oil being brought to market generally means more business for operators of pipelines, tanker trucks, storage tanks and marine terminals. Tesoro Logistics TLLP -0.42 % LP reported second-quarter income of $72 million on Wednesday, more than twice its net income as the same quarter a year ago, citing big gains in oil production and an improving climate for its terminal and transportation businesses. Spectra Energy Partners SEP -1.53 % and Arc Logistics Partners ARCX 0.00 % LP also posted earnings this week […]

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Byproduct of fracking spilled in North Dakota

Spill of product used during hydraulic fracturing reported in North Dakota near the Canadian border. Photo by David Gaylor/Shutterstock BISMARCK, N.D., Aug. 7 (UPI) — The North Dakota Department of Health reported more than 4,000 barrels of a product associated with hydraulic fracturing spilled near the Canadian border. The state said it was notified by Samson Resources of a spill of brine in Divide County, situated in the northwest of North Dakota at the Canadian border. Of the 4,260 barrels spilled, the Department of Health reported 225 barrels were recovered . No surface waters were impacted. The brine release is at least the sixth such incident reported this year. In May, Oasis Petroleum reported its fourth release of brine, known also as produced water, in the state. Energy companies inject brine, or salt water, to improve oil and gas production from shale deposits. The Federal Environmental Protection Agency said […]

Posted On : Published By : Tom Whipple