Dec. 8, 2014, 4:59 PM
- Noble Corp. (NYSE:NE) says it reached a $12.2M settlement with the U.S. Justice Department related to safety violations on a rig used in Arctic waters off Alaska in 2012.
- The Noble Discoverer was contracted by Royal Dutch Shell (RDS.A, RDS.B) to work on Shell leases in the remote Chukchi Sea off northwestern Alaska.
- The deal is fodder for environmentalists who oppose Arctic drilling, even as Shell seeks to persuade regulators it is ready to resume work in the area next summer.
Dec. 8, 2014, 12:59 PM
- BP (BP -2.3%) is set to cut jobs as part of its latest restructuring efforts, and others are likely to follow suit with Brent now down ~40% since June.
- The ranks employed in the upstream operations of oil and gas companies have continued to rise in recent years, even as production has flatlined or started to fall; at BP, the number of upstream employees rose 17% during 2010-13, and the company's production per upstream employee was nearly a third lower in 2013 than in 2010.
- It is a similar story at other European energy firms: Upstream head count at Total (TOT -2.2%) rose 6% over the same period even as production per head dropped 17%, and Shell (RDS.A -2.6%) reported higher staff numbers after an accounting change while production per member of upstream staff has dropped nearly 20%.
Dec. 5, 2014, 5:57 PM
- Mexico's government likely will delay or scale back tenders for some of the oil fields and areas that it planned to offer in the coming months, especially in areas with shale oil where recovery costs are higher than in traditional oil fields, the country's energy minister says.
- Auctions for deepwater fields were not likely to change because they were longer-term investments, but other fields with non-conventional oil, shale gas and shale oil probably would be delayed or reduced in scope.
- In addition to low oil prices, Mexico’s regulators have been struggling with putting together a large bid round in a short period of time with vast new responsibilities and limited staff, analysts say.
- Chevron (NYSE:CVX) and Shell (RDS.A, RDS.B) are among oil majors that have expressed keen interest in getting involved in Mexico.
Dec. 5, 2014, 5:38 PM
- The Eagle Ford shale formation in south Texas produced its billionth barrel of oil some time last month, according to analysts at research firm Wood Mackenzie.
- Eagle Ford now accounts for 16% of total U.S. oil production, and the firm forecasts E&P spending of $30.8B in the region next year, ~22% of the total $139.3B expected in U.S. onshore spending.
- Eagle Ford is widely considered the most profitable U.S. shale field, and many analysts speculate the break-even price for production to remain profitable is ~$50/bbl in much of the play.
- Top Eagle Ford producers include EOG, CHK, COP, MRO, BHP, APC, APA, BP, COG, CRZO, CWEI, CRK, XOM, GDP, HES, MTDR, MUR, NFX, PVA, PXD, ROSE, RDS.A, RDS.B, SN, SM, STO, SFY, TLM, ZAZA
Dec. 5, 2014, 10:19 AM
- The recent history of oil price collapses shows that M&A activity typically jumps when prices fall, so WSJ says it may be time for another wave of acquisitions to sweep through the energy sector as crude oil prices have been cut by more than a third since June.
- BP jumped by nearly 5% Tuesday on chatter that Royal Dutch Shell (RDS.A, RDS.B) was going to make a bid - the rumor was not new, but it took on a new credibility in the new low price oil environment.
- The WSJ report says several bankers believe BG Group (OTCPK:BRGXF, OTCQX:BRGYY) could be a target for a big company looking to get bigger.
- Oppenheimer analyst Fadel Gheit points out that big deals may be harder now than in the past because there are simply fewer large companies left.
Dec. 5, 2014, 4:30 AM
- Global oil and gas exploration projects worth more than $150B are likely to be put on hold next year as plunging oil prices render them uneconomic, shows data from Oslo-based research firm Rystad Energy.
- With rising costs of production and analysts forecasting oil to average $82.50 a barrel next year, around one third of the spending on a total of 800 oil and gas projects worth $500B, is unlikely to be approved.
- Related tickers: CVX, TOT, STO, BP, RDS.A
Dec. 4, 2014, 7:11 PM
- Royal Dutch Shell (RDS.A, RDS.B) has some natural advantages in Mexico’s opening to foreign oil firms in exploration and production, including three decades of production experience on the U.S. side of the Gulf of Mexico, Marvin Odum, its director of upstream activities in the Americas, tells WSJ.
- Shell operates oil fields in the Perdido Fold area on the U.S. side of the Gulf, not far from an area on the Mexican side where Pemex has found significant resources and is looking for partners; Shell also has partnered for 20 years with Pemex at a Houston oil refinery.
- Even in a climate of low oil prices, Mexico remains attractive because projects such as those in the deepwater Gulf will not come online for many years and the price environment will be taken into account when considering those investments, Odum says.
Dec. 3, 2014, 5:41 PM
- Petronas says it is delaying its proposed Pacific Northwest liquefied natural gas terminal in British Columbia, as the economics of the project do not work with oil at ~$70/bbl and as costs remain high.
- The Malaysian firm has planned to invest ~C$36B to cover the LNG plant, shale fields in northeastern B.C. and a pipeline to connect the two.
- Petronas and other global producers including Royal Dutch Shell (RDS.A, RDS.B) and Chevron (NYSE:CVX) are considering exporting LNG from Canada’s Pacific coast to meet rising demand in Asia.
Dec. 2, 2014, 10:58 AM
- BP (BP +2.4%) is surging higher amid market chatter of a takeover bid from Royal Dutch Shell (RDS.A +1.9%).
- "BP shares have rallied on the back of enthusiastic buying on talk of Shell's interest in the company, but it seems difficult to believe that Shell would make such a big acquisition at this difficult time for the oil market," says IG analyst Chris Beauchamp.
Nov. 28, 2014, 10:05 AM
- With OPEC having seemingly handed the market responsibility for removing the ~1mb/d of supply needed to achieve balance into 2015, our concern is that the lack of transparency around the price at which supply breaks and speed/scale of a non-OPEC response leaves oil equities facing a period of uncertainty," writes analyst Lucas Hermann, downgrading Statoil (STO -13.2%) to Hold.
- On a brighter note for the oil majors, Hermann notes on a 12-month view, the sector's relative valuation is at levels last seen in 2009, maybe meaning "absolute support" for names like Shell (RDS.A -6.2%) "where we have real conviction in the solidity of distributions."
Nov. 26, 2014, 4:32 PM
- Nigeria's National Assembly says Shell (NYSE:RDS.A) should pay $3.96B in fines for the 2011 Bonga oilfield spill. The decision is non-binding, since the parliament can only recommend fines to the government.
- This month has already seen Shell deny it lied to a Dutch court about a 2004 Nigerian oil spill, and the BBC report Shell was warned a Nigerian pipeline could leak prior to two 2008 spills. Shell has made a rejected $51M compensation offer to locals for the '08 spills.
- Meanwhile, Shell announced last week it has sold its 30% stake in a Nigerian oilfield for $600M, after having contended with oil theft and local violence.
Nov. 26, 2014, 8:35 AM
- British Columbia's government has granted environmental approval for its Pacific Northwest LNG export plant backed by Malaysia’s Petronas and two pipelines proposed for shipping gas to terminals on Canada’s Pacific coast.
- One of the two pipelines is designed to connect the Petronas plant with gas fields hundreds of miles inland, and the other is to win approval is for a rival liquefied natural gas plant backed by BG Group (OTCPK:BRGXF, OTCQX:BRGYY).
- The Petronas project is the second planned LNG terminal to receive B.C. environmental clearance after a competing project sponsored by Chevron (NYSE:CVX); earlier this month, a project led by Royal Dutch Shell (RDS.A, RDS.B) filed paperwork with the prorvincial government for its environmental assessment certificate.
- The approvals do not necessarily mean the projects will be built, as the companies involved have yet to make final investment decisions.
Nov. 24, 2014, 2:21 PM
- Analysts weigh in on Shell Midstream Partners (SHLX +3.6%) and its strong post-IPO performance after the end of the MLP's quiet period.
- UBS initiates SHLX with a Buy rating and $40 price target of $40, as it expects Royal Dutch Shell (RDS.A, RDS.B) to drop assets to the company faster than necessary to drive a 25.7% distribution growth compound annual growth rate during 2015-18, motivated to build scale quickly to make the MLP a meaningful entity within the company and to provide greater flexibility to finance growth projects and/or make acquisitions; it sees upside potential to $56 should Shell accelerate its drops to $1B of EBITDA by year-end 2016.
- Citigroup also starts SHLX at Buy, while Barclays begins coverage at Outperform and Morgan Stanley at Equal Weight.
Nov. 24, 2014, 12:29 PM
- Societe Generale analysts believe there is a real possibility of even lower oil prices, and if that occurs the firm recommends “bottom fishing” in European oil majors.
- The sector offers more sustainable dividends than in the last oil price crash, as well as stronger balance sheets and liquidity, and reasonable valuations after the recent correction, the firm says, noting that in the 2009 crash, only the three supermajors in Europe - Royal Dutch Shell (RDS.A, RDS.B), BP and Total (NYSE:TOT) - maintained dividends unchanged, while the other six all cut them.
Nov. 21, 2014, 5:55 PM
- Four years after the Deepwater Horizon disaster, giant new oil projects are returning to the Gulf of Mexico - bigger and more expensive than ever - even as U.S. oil prices are below $80/bbl at a four-year low.
- New projects alone have the combined capacity to pump ~900K bbl/day: Hess (NYSE:HES) said Monday it had started pumping crude from its deepwater Tubular Bells installation, Exxon (NYSE:XOM) and Anadarko (NYSE:APC) plan to start up two more major Gulf projects in coming months, and Hess, Chevron (NYSE:CVX) and other partners recently OK'd a $6B Gulf development.
- Even BP is returning in a big way, with two Gulf projects and plans to spend $4B/year in the Gulf for the next decade, as it works on technology to drill at greater depths.
- All this is happening even as costs are jumping, partly because companies are drilling farther from shore and in deeper waters; deepwater wells are up to 25% more expensive today than in 2010, and drilling the average deepwater Gulf well takes 13% longer than it did before the 2010 spill.
- Shell’s (RDS.A, RDS.B) 100K bbl/day Olympus, which came online ahead of schedule and under budget, began tapping oil and gas in the Gulf in February; it is also working on a new Gulf project that will tap an oil field under 9,500 feet of water, 3x deeper than Olympus.
Nov. 21, 2014, 8:17 AM
- Korea Gas says it is seeking to sell part of its 15% stake in Royal Dutch Shell-led (RDS.A, RDS.B) LNG Canada natural gas export terminal planned for the Pacific coast of Canada.
- The project is one of 18 terminals proposed for shipping liquefied natural gas to Asian markets from Canada’s west coast; none of the plants have been built, amid concerns about construction and operational costs.
- Shell’s Canadian unit owns half of the project in partnership with affiliates of PetroChina (NYSE:PTR), which owns another 20%, along with 15% stakes each for Korea Gas and Japan’s Mitsubishi.
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