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Weatherford: Future looks grim

Rig services company Weatherford says the future does not look good for the North American market. Photo by Calin Tatu/Shutterstock BAAR, Switzerland, July 24 (UPI) — With few prospects for a recovery in the crude oil market, rig services company Weatherford said it was making deeper cuts in its North American portfolio. "Market conditions will not improve significantly in the balance of the year," Weatherford President and Chief Executive Officer Bernard Duroc-Danner, said in a statement. "There will be modest activity increases in North America and selected international geographies but these will not be material." Weatherford, which has headquarters in Switzerland, joins peer companies Baker Hughes and Halliburton in announcing downbeat expectations for the trajectory in crude oil markets. West Texas Intermediate, the U.S. benchmark for crude oil, traded Friday at around $48.60 per barrel, down about 18 percent from July 1 and more than 50 percent below June […]

Posted On : Published By : Tom Whipple
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Weatherford Raises Layoffs Target to 11,000

Responding to continued weakness in the North American oilfield services market, Weatherford International said Thursday it would revise the number of planned layoffs to 11,000. The company completed 97 percent of its planned workforce reduction of 10,000, Weatherford said in its second quarter 2015 earnings report Wednesday. The additional cuts in Weatherford’s workforce will occur in the company’s U.S. operations, with a focus on support positions. Based on its 2015 reduction in force actions, Weatherford now expects annualized savings of $754 million from the release of 9,936 employees, said Weatherford Chairman, President and Chief Executive Officer Bernard J. Duroc-Danner during the company’s second quarter 2015 earnings call Thursday morning. The company is taking advantage of the downturn to develop a leaner structure and a tighter organization, Weatherford said. In addition to layoffs, the company has closed more than 60 operating facilities across North America through the first half of […]

Posted On : Published By : Tom Whipple
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North Dakota oil well completions slow sharply: Kemp

A service truck drives past an oil well on the Fort Berthold Indian Reservation in North Dakota, November 1, 2014. No new well completion reports have been filed in North Dakota since July 10, the longest gap this year, according to daily activity records published by the state’s Department of Mineral Resources (DMR). Completions, rather than wells drilled, provide the best guide to short-term changes in output, since operators can always delay completing a well and putting it into production, either because they are waiting for completion crews to be available or to wait for better prices. Completion is usually defined as a single operation including the stimulation and testing of a well as well as the installation of surface production equipment (“Dictionary of petroleum exploration, drilling and production” 2014). North Dakota’s regulators consider a well completed when the first oil is produced through wellhead equipment into tanks from […]

Posted On : Published By : Tom Whipple
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Rail Tank Car Orders Fall Sharply

Orders for railroad tank cars fell sharply in second quarter, reflecting lower shipments of crude oil amid falling prices. Orders for 3,155 tank cars were placed in the quarter, down 29% from first quarter and off 70% from the second quarter of 2014, the Railway Supply Institute reported. The order backlog dropped 11% from the first quarter to 46,375 tank cars. The decline comes amid a broad decline in energy shipments at railroads. Carload volume for oil and petroleum products for the week ended July 18 was down 20% from last year and were off 2.7% in the first 28 weeks of 2015 from the same period in 2014, according to the Association of American Railroads. Meanwhile, orders for boxcars surged in the second quarter as shippers—led by the paper industry—complained of car shortages caused by railroads culling older boxcars from their fleets. Boxcar orders were 2,940 against none […]

Posted On : Published By : Tom Whipple
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How plunging oil prices have created a volatile new force in the global economy

He’d spent years touting his vision that America would one day dominate one of the world’s most powerful markets. And when Harold Hamm, a pioneer in discovering vast reserves of shale oil under American soil, took the stage in front of several hundred oil luminaries, he never acknowledged that the narrative was in doubt. “For the next 50 years, we can expect to reap the benefits of the shale revolution,” Hamm said one day this spring. “It’s the biggest thing that ever happened to America.” But away from the stage, the US oil industry – and Hamm – was in crisis. In the previous six months, Hamm, founder of oil giant Continental Resources , had lost $6.5bn, more than one-third of his net worth. The industry that Hamm had helped create was facing its greatest test in a frantic race to stay profitable as rival Saudi Arabia worked to […]

Posted On : Published By : Tom Whipple
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Chesapeake to Eliminate Dividend to Pay for Capital Spending

Chesapeake Energy Corp. CHK -9.54 % said Tuesday that it will eliminate its shareholder dividend starting in the third quarter and redirect the money to capital spending, the latest round of cutbacks for the U.S. shale driller. Shares of Chesapeake, down 48% this year, fell 1.2% to $10.15 a share in premarket trading. Chesapeake estimated that getting rid of the annual dividend of 35 cents a share will save the company $240 million a year. The company plans to use the money for its 2016 capital program. Chesapeake said it has also agreed to sell some properties to FourPoint Energy LLC. Chesapeake has struggled to recover from years of aggressive spending as the land-grab approach the company pioneered for oil and gas drilling meant it spent more than its wells generated in profit. But under Doug Lawler, who joined as chief executive in June 2013, the company has been […]

Posted On : Published By : Tom Whipple
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Wall Street Lenders Growing Impatient With U.S. Shale Revolution

Raising Cash Halcon Resources Corp. almost ran into trouble with its banks in June 2013. And again in March 2014. And in February 2015. Each time, the shale driller came close to violating debt limits set by its lenders, endangering a credit line that provided as much as $1.05 billion in much-needed cash. Each time, Halcon’s banks, led by JPMorgan Chase & Co. and Wells Fargo & Co., loosened their restrictions, allowing Halcon to keep borrowing. That kind of patience may be coming to an end. Bank regulators have issued warnings on the risks involved in lending to U.S. drillers, threatening a cash crunch in an industry that’s more dependent than ever on other people’s money. Wall Street has been one of the biggest allies of the shale revolution, bankrolling thousands of wells from Texas to North Dakota. The question is how that will change with oil prices down […]

Posted On : Published By : Tom Whipple
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Oil Explorers Retreat From Shallow U.S. Gulf in Shift to Shale

Explorers Mostly Quit Shallow U.S. Gulf in Shift to Inland Shale Energy producers are abandoning the search for oil and natural gas close to shore in the U.S. Gulf of Mexico as drilling budgets shrink and exploration migrates to land-based shale fields. The number of permits for new wells in seas less than 500 feet (152 meters) deep plunged 74 percent to nine during the first six months of this year from a year earlier, according to the U.S. Bureau of Safety and Environmental Enforcement. Shallow-water drilling has largely targeted gas in recent decades because most of the crude in fields close to shore had already been discovered and harvested. The glut of gas from shale fields in Texas, Louisiana, Oklahoma and Pennsylvania that crushed prices for the fuel made offshore gas production less attractive. “A lot of the players operating on the continental shelf are financially distressed or […]

Posted On : Published By : Tom Whipple
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Halliburton secures $500 million to fund drilling in old wells

A Halliburton facility sits behind a barbed wire fence on the outskirts of Williston, North Dakota January 23, 2015. Halliburton Co ( HAL.N ) said it had tapped BlackRock Inc ( BLK.N ) for $500 million to help fund drilling in existing shale wells, the first such move by a major oilfield services provider at a time when oil producers are shying away from drilling new wells. The world’s No.2 oilfield services provider, which is buying No.3 Baker Hughes Inc ( BHI.N ) to cope with a fall in demand, also reported a better-than-expected profit, helped by cost cuts. Market leader Schlumberger NV ( SLB.N ) and Baker Hughes have touted refracking, the practice of fracking existing wells, as means for oil producers to save money. Drilling normally accounts for about 40 percent of the cost of a new well. "Though a relatively small market today, we see significant […]

Posted On : Published By : Tom Whipple