Tue, Jul. 21, 5:37 PM
- Royal Dutch Shell (RDS.A, RDS.B) is downgraded at Standard & Poor's by one notch to AA- from AA, citing a weaker financial risk profile, mainly due to soft oil prices, and continuing substantial capital expenditures.
- The rating agency assigns a negative outlook, reflecting possible adverse effects on Shell's credit metrics if the BG Group acquisition is finalized.
- S&P says Shell's funds from operations to debt will be well below 60% over 2015-17, mainly due to subdued hydrocarbon prices, and projects discretionary cash flow will remain negative until 2016 because of large capex and material dividends.
Mon, Jul. 20, 3:20 AM
- Royal Dutch Shell (RDS.A, RDS.B) which is all set to acquire rival BG Group (OTCQX:BRGYY), may cut its capital expenditure for the year by several billion dollars from its previously announced $33B figure, FT reports.
- Shell also told investors that the BG deal works with crude oil at $70 per barrel, citing much greater synergies that will likely be "a multiple" of the $1B in annual projected savings.
Fri, Jul. 17, 4:39 PM
- Royal Dutch Shell (RDS.A, RDS.B) still does not have the final permits it needs to begin boring an exploratory oil well in the Chukchi Sea north of Alaska, but today's sendoff of the Noble Discoverer drilling rig suggests the company’s confidence that those authorizations are on the horizon.
- While the Discoverer could arrive at Shell’s Burger prospect in less than a week, a second Shell-contracted drilling rig, the Transocean Polar Pioneer, is still in port ~1,200 miles away from Shell’s planned oil wells.
Fri, Jul. 17, 3:26 PM
- ConocoPhillips’ (COP -1%) cancellation of a contract with Ensco (ESV -5.9%) "calls backlog sanctity into question for offshore drillers," raising uncertainty about contracted newbuild rigs even though COP has been vocal about tightening offshore exploratory spending since March, J.P. Morgan analyst Sean Meakim writes.
- Backlog uncertainty will remain an overhang until major operators prove commitment to their drilling programs, and exposure to Petrobras (PBR -5.4%), Shell (RDS.A -0.1%) and Chevron (CVX -1.1%) could serve as a headwind until the binary risk to contracts is resolved through dayrate renegotiations or terminations, according to Meakim.
- The firm maintain a negative outlook on the offshore drillers, with an Underweight rating on ESV, Noble Corp. (NE -4.3%) and Transocean (RIG -7.1%).
- Earlier: Offshore drillers under heavy pressure
Thu, Jul. 16, 2:46 PM
- Iran can restore production to 1970s levels of 6M bbl/day by 2020, as the country's plentiful and inexpensive reserves draw in foreign oil explorers, former Eni (E +0.5%) CEO Paolo Scaroni says.
- The flood of Iranian oil into a global market that’s already oversupplied will keep crude prices low for the rest of the decade, Scaroni says.
- The risk of sanctions being re-imposed on Iran if it violates the terms of the nuclear deal will lead companies to focus on renovating and restoring output at existing fields rather than investing in new projects, he adds.
- Eni worked under Scaroni’s management on several oil and gas fields in Iran before beginning to pull out in 2010 amid sanctions, and was among a handful of oil company chiefs who met with Iran's oil minister late in 2013; Eni, BP and Shell (RDS.A, RDS.B) are among companies that are considered well positioned to take advantage if restrictions are lifted.
Thu, Jul. 16, 8:29 AM
- Royal Dutch Shell (RDS.A, RDS.B) expects crude oil prices to recover very gradually over the next five years, with progress slowed by persistent global oversupply and receding Chinese demand growth.
- "It will take several years but we do believe fundamentals will return," says Andy Brown, Shell's upstream international director; while seeing the drop in spot prices as irrelevant to Shell's outlook for the business as most of its supply is sold through long-term deals at a stable price.
- Shell is counting on crude rising to $90/bbl by 2020, a key assumption in its move to buy BG Group for $70B to help transform it into a leading player in the deepwater oil and liquefied natural gas markets.
- In the nearer term, Shell expects Brent crude to show only slight improvement from the current ~$58/bbl, forecasting 2016 prices to average $67/bbl and $75 in 2017, based on the company's BG offer.
Wed, Jul. 15, 4:58 PM
- Kinder Morgan (NYSE:KMI) agrees to acquire Royal Dutch Shell's (RDS.A, RDS.B) 49% interest in their proposed Elba Liquefaction joint venture near Savannah, Ga.; KMI already owns 51% of the project.
- KMI says it plans to invest an additional $630M in the project as a result of the deal, bringing its total investment to $2.1B; construction is expected to begin in Q4, with initial production to begin in late 2017.
- Shell still has a 20-year contract subscription to the terminal’s 2.5M metric tons of annual export capacity.
- Earlier: Kinder Morgan misses by $0.04, misses on revenue
- Earlier: Kinder Morgan declares $0.49 dividend
Wed, Jul. 15, 11:57 AM
- European energy majors BP, Royal Dutch Shell (RDS.A, RDS.B) and Total (NYSE:TOT) are likely to be among the first beneficiaries of the Iran nuclear deal and the anticipated removal of sanctions, while U.S. energy companies face being left in the cold.
- TOT could see Iran allowing it to resume construction of a 2B cf/day liquefied natural gas export facility; Shell says it has "done business in Iran before and will be interested in looking at new possibilities when sanctions are lifted."
- Italy's Eni (NYSE:E) also says it would consider investing in Iran again if sanctions are lifted and Iran improves its contract terms.
- A few avenues for U.S. companies may be open: U.S. firms will now be allowed to sell or lease commercial passenger aircraft to Iran as long as they procure licenses from the U.S. government, giving companies such as Boeing (NYSE:BA) an opportunity.
- Still, Iran has the reputation of a difficult place for outsiders to do business, ranking 130th on the World Bank’s ease-of-doing business list amid encounters with bureaucracy, episodic corruption and political interference.
Mon, Jul. 13, 2:36 PM
- Royal Dutch Shell (RDS.A, RDS.B) says a damaged icebreaker that is critical to its Arctic drilling campaign is heading to Oregon for repairs.
- The decision to stitch up a gash in the MSV Fennica at an Oregon shipyard rather than on site in Alaska is another setback for Shell, which still hopes to launch drilling in the Chukchi Sea later this month.
- The Fennica is one of two icebreakers in Shell’s Arctic fleet, but the vessel is unique in that it holds a capping stack designed to fit over a damaged well in an emergency.
- The concern is that transit and repair time could eat into Shell’s already brief window for drilling, and any repairs could be subject to additional Coast Guard review and inspections.
Mon, Jul. 13, 8:58 AM
- BG Group (OTCPK:BRGXF, OTCQX:BRGYY) says it has started up and loaded its first liquefied natural gas from the second production train at the Queensland Curtis LNG facility in Australia.
- BG expects peak production by mid-2016, when both trains at the facility will be producing enough LNG to load 10 vessels/month combined, exporting ~8M metric tons/year; 27 cargoes have been shipped since production from the first train started in December 2014.
- While the start-up marks a major step forward for Queensland state's new $70B gas export industry, the new wave of LNG supply is set to hit the Asian market in a period of low prices because of slower than expected growth in demand and weak crude oil prices.
Fri, Jul. 10, 10:50 AM
- Royal Dutch Shell (RDS.A, RDS.B) may consider restarting mothballed Canada oil sands projects but not until oil prices return to $80/bbl, says Marvin Odum, its director of the upstream Americas.
- Oil sands expansion “is further back on the burner in terms of where we are investing now,” Odum says, with the company not yet sanctioning a 100K bbl/day Jackpine expansion which has secured regulatory approval; Shell already has shelved two oil sands projects - the 80K bbl/day Carmon Creek development and the 200K bbl/day Pierre River project - due to unfavorable economics.
- Odum says that while new oil sands projects are on hold, the company is moving ahead with its liquefied natural gas project on Canada's west coast and exploration offshore Nova Scotia later this year.
Fri, Jul. 10, 7:54 AM
- Royal Dutch Shell (RDS.A, RDS.B) agrees to buy Morgan Stanley's (NYSE:MS) European gas and power trading portfolio for an undisclosed sum.
- "Comprising predominantly physical and financial gas and power trades, the deal further expands Shell's activities in core energy markets across Europe," the company says.
- Morgan Stanley’s exit from trading power and gas in Europe follows similar moves by Deutsche Bank, Bank of America and Barclays in the past two years.
Thu, Jul. 9, 7:21 PM
- Bloomberg's Carl Pope makes the case that the largest publicly traded oil companies face a problem that will only grow worse with time: Dependence on ever higher oil prices to match their ever higher costs of discovery.
- Pope notes that publicly traded oil and gas companies have access to only 10% of the world’s oil reserves, and those reserves increasingly are located in areas that are among the most difficult and expensive to extract; meanwhile, more accessible, inexpensive crude reserves in places like Russia and the Persian Gulf are set aside by governments for their own national oil companies.
- The columnist notes that the percentage of Exxon’s (NYSE:XOM) proven reserves made up of tar sands and heavy oil increased from 15% in 2006 to 32% by 2013, and relying on a larger share of more expensive oil has worn on XOM's margins and returns.
- Other relevant tickers: CVX, COP, BP, RDS.A, RDS.B, TOT, E
- ETFs: XOP, IEO, PXE, NDP, GUSH, DRIP
Wed, Jul. 8, 10:26 AM
- Royal Dutch Shell (RDS.A, RDS.B) wins regulatory approval from Brazil to buy BG Group (OTCPK:BRGXF, OTCQX:BRGYY), clearing another antitrust hurdle to completing its $70B acquisition.
- Brazil follows the U.S. in approving the deal, which still needs approval from countries including China.
- Brazil is set to account for 20% of Shell’s output by the end of the decade, with BG’s Brazil portfolio seen by analysts as a key growth driver.
Tue, Jul. 7, 12:56 PM
- Royal Dutch Shell’s (RDS.A, RDS.B) drive to resume Arctic drilling this summer hits another roadblock, as a hole is found in the hull of an ice management vessel meant to safeguard the company’s operations in the Chukchi Sea.
- The icebreaker has returned to port and is being examined by marine experts, but it is uncertain how quickly the breach in its hull can be repaired and whether it will delay Shell’s hopes to begin drilling an oil well in the Chukchi Sea later this month.
- The ship is just one of the 29 vessels in Shell’s Arctic fleet, but it is unique since it carries a critical piece of the company’s Arctic containment system: a capping stack designed to fit on top of a damaged well in case of a blowout or other emergency.
Mon, Jul. 6, 11:23 AM
- Brazil’s congress is likely to pass a landmark bill that could ease financial pressure on state-controlled Petrobras (PBR -6.6%) by opening the country’s biggest offshore oil discoveries to greater foreign and private investment, Financial Times reports.
- The bill, which could pass as soon as September, is aimed at stimulating much needed investment into one of the world`s most promising oil exploration areas; oil majors such as Royal Dutch Shell (RDS.A, RDS.B), which so far have been permitted to participate in the pre-salt only as financial partners to PBR, have indicated their interest in becoming operators should the rule change.
- The bill has gained strength in recent days with support from the leader of the senate, whose party dominates both houses of congress; Pres. Rousseff has publicly opposed the proposal, but her ability to block the bill is seen as limited.
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