Wed, Apr. 8, 7:30 PM
- Analysts say Shell's (RDS.A, RDS.B) move to buy BG Group is telling potential acquirers that one of the biggest players is now confident enough to make a big play, and that the worst may be over in the big slide in oil and gas prices.
- The deal also may be the starting gun for a wave of M&A activity that oil industry observers have been predicting since crude prices started to slump in June.
- For starters, BG's U.S. shale assets likely will become candidates for divestiture after the Shell deal closes; in buying BG, Shell has made the choice to double-down on global liquefied natural gas and de-emphasize U.S. shale.
- Among the biggest players, Exxon (NYSE:XOM) and BP could contemplate deals - perhaps even with each other, as has been speculated, since BP ranks among the cheapest major producers relative to estimated profit.
- BG itself could whet the appetite of XOM's Rex Tillerson, who recently said there was "no limitation" to what he might buy - but he will be especially selective after getting burned by 2010's XTO purchase.
- Companies with prime acreage in oil-rich shale fields in Texas, North Dakota and Colorado have become a lot cheaper in recent months; Anadarko (NYSE:APC), Cabot Oil & Gas (NYSE:COG), Pioneer Natural Resources (NYSE:PXD), Occidental (NYSE:OXY), Continental Resources (NYSE:CLR), Concho Resources (NYSE:CXO) and Tullow Oil (OTCPK:TUWLF) are among those at topping analysts’ lists.
- Galp Energia (OTC:GLPEF) may draw interest from buyers because, like BG, it offers access to oil assets in Brazil.
Wed, Apr. 8, 3:21 PM
- Royal Dutch Shell (RDS.A, RDS.B) will become a dominant player in the liquefied natural gas market through its acquisition of BG Group, selling ~50M tons/year of LNG by the end of the decade vs. less than 25M tons/year by Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), Shell CFO Simon Henry says.
- The deal will increase Shell’s LNG sales by 32% immediately and 80% by 2018, accounting for ~15% of the world’s traded LNG, according to Henry.
- The deal gives Shell access to BG’s Australian project to produce 8.5M tons/year of LNG from coal-seam gas; the first unit at the site already is producing and a second will start later this year, BG Chairman Andrew Gould says.
- The acquisition also gives Shell assets in Tanzania, where some of the world’s biggest gas discoveries have been made; BG has a 60% interest in three offshore blocks and may help develop an LNG plant there to export gas to Asia and Europe.
- In the LNG market “size really matters and the size underlines delivery potential,” Shell CEO Ben Van Beurden says. "This is about scale.”
Wed, Apr. 8, 2:37 PM
- The price tag for cleaning up two petroleum refineries in northern New Jersey may wind up costing Exxon Mobil (XOM -1.6%) much more than the $225M settlement brokered by Gov. Christie's administration, but it could be years until it is clear how much the company will pay.
- The cleanup costs are at the center of a fierce debate between the Christie administration and the Democrat-led legislature, which faults the settlement at a fraction of the $8.9B in damages that had been determined in court documents; the administration counters that there is no cap on the cost of cleaning up the site, which XOM must pay for.
- The state's Department of Environmental Regulations says it will not have a firm number on costs until more investigations and a feasibility analysis is undertaken and a remedy is selected, adding that even then the costs are not frozen as circumstances can change.
Wed, Apr. 8, 9:18 AM
- Exxon Mobil (NYSE:XOM) reportedly has returned four oil and gas blocks to Indonesia's government after exploration studies found reserves were not economical for it to extract.
- The blocks returned were the Cendrawasih block in Papua, the Gunting block in East Java and the Surumana and Mandar blocks in the Makassar Strait.
- Separately, Niko Resources (OTCPK:NKRSF) will return six blocks to the government after Indonesia's oil and gas regulator said its exploration contracts would not be extended.
Wed, Apr. 8, 7:59 AM
- Analysts at Jefferies now expect Royal Dutch Shell (RDS.A, RDS.B) to surpass Exxon Mobil (NYSE:XOM) as the world's largest publicly traded oil and gas producer by 2018, with output of 4.2M boe/day, following Shell's $69.6B deal to buy BG Group.
- But XOM has long been rumored as a potential bidder for BG, and Financial Times points out that it now has both the motive and the opportunity, raising the possibility that it could try to outbid Shell for BG.
- Like Shell, XOM is struggling to grow and will find it easier to raise production by dealmaking than by drilling; XOM’s output was ~4.3M boe/day in 2001 and 4M last year.
- With its greater size, low debt and AAA credit rating, XOM could muster a larger cash component in any offer than Shell’s 28% of its total offer of ₤13.50/share; however, hostile deals are very rare in the oil and gas industry.
- Whether or not BG is the perfect fit for XOM, Paul Sankey of Wolfe Research has suggested other midsized E&P specialists could prove tempting, including Hess (NYSE:HES), Continental Resources (NYSE:CLR), Devon Energy (NYSE:DVN), Apache (NYSE:APA) and Anadarko Petroleum (NYSE:APC).
Tue, Apr. 7, 11:20 AM
- Rosneft (OTC:RNFTF) may need to delay development of its Sakhalin liquefied natural gas plant for at least two years because of lower oil prices and financing that has all but dried up due to Western sanctions, Reuters reports.
- The delay in the project with Exxon Mobil (NYSE:XOM) that aimed at starting production of 5M metric tons/year of LNG from 2018 would be the latest blow to the Russian company, which also has been forced to suspend drilling at an Arctic oil project after sanctions over Ukraine also halted cooperation with XOM.
- Reuters cites two sources with direct knowledge of the project that said the 2018 target is no longer realistic.
Mon, Apr. 6, 3:25 PM
- New Jersey reveals the details of its controversial $225M settlement with Exxon Mobil (XOM +1.3%) over environmental damage to waterways and other sites across the state, which begins a 60-day public comment period on the proposed agreement before it goes to a judge for a final rendering.
- The proposed settlement would end potential damage claims that could be brought at 16 other XOM sites beyond the original refineries in Bayonne and Bayway, N.J.; it also proposes resolving claims at all services stations where the state says there was little or no damage and no evidence of the MTBE chemical compound used as a gasoline additive.
Thu, Apr. 2, 9:53 AM
- Exxon Mobil's (XOM +0.2%) planned sale of its Los Angeles-area oil refinery has been delayed until early next year at the earliest following a severe fire in February, Reuters reports.
- The 155K bbl/day plant was put on the block in September, but the process appears to have slowed following a Feb. 18 fire that badly damaged an electrostatic precipitator, followed by a small fire in March.
- The plant has received bids from P-E firms including NTR Partners and refiners such as PBF Energy (NYSE:PBF), the report says; the plant could provide an entry point to the west coast for either company.
Thu, Apr. 2, 8:37 AM
- Exxon Mobil (NYSE:XOM) has lodged a claim against Russia at the Stockholm arbitrage court as part of a tax dispute over its project in Russia's far east, says the country's energy ministry without providing details.
- XOM believes it overpaid profit taxes on the Sakhalin-1 oil and gas project, in which it owns a 30% stake, and is now seeking a cut in taxes and reimbursement of a part of the taxes it already paid.
Wed, Apr. 1, 12:57 PM
- Former Gulf Keystone (OTCPK:GUKYF) Chairman Simon Murray tells Reuters he was talking to several parties, including Exxon Mobil (NYSE:XOM), about a rescue for the oil company before being forced to quit under pressure from an investor.
- Gulf Keystone, which has been hit hard by falling oil prices and delayed payments for crude by Kurdistan, said earlier this week that Murray had retired, but Murray claims he was effectively forced to quit after he disagreed with the company's decision to raise $41M through an equity issue at a 21% to the market to avoid breaching debt covenants.
- XOM, which in 2012 became the first major oil company to invest in Kurdistan, is not responding to the comments.
Wed, Apr. 1, 11:25 AM
- A Dutch judge refuses to order a production halt at Europe's biggest gas field, Groningen, where production was temporarily reduced in February after the Dutch Safety Board warned of possible danger from earthquakes.
- A lawsuit by environmental groups challenges a decision by the country's Economic Affairs Minister to set 2015 production from Groningen at 39.4B cm of gas, down from 42.5B cm in 2014.
- The Groningen field is operated by state-owned Gasunie and output jointly exploited by the government and a joint venture between Royal Dutch Shell (RDS.A, RDS.B) and Exxon Mobil (NYSE:XOM).
Wed, Apr. 1, 7:55 AM
- Exxon Mobil (NYSE:XOM) is said to be escalating plans for a multi-billion dollar expansion of its 344K bbl/day Beaumont oil refinery that could make it the largest U.S. plant and fourth largest in the world.
- XOM reportedly has filed for four Texas permits requesting state approval to increase emissions and install new equipment at the refinery.
- Reports last year had indicated XOM was considering doubling the current capacity by 2020, but now it may go as high as 850K bbl/day by the end of the decade.
- If the Beaumont refinery becomes the country's largest, XOM would have three of the top five refineries by capacity in the U.S., with its Baytown, Tex., plant currently ranking second and its Baton Rouge, La., complex fourth.
Tue, Mar. 31, 2:57 PM
- A Financial Times analysis of the latest annual reports for the big five global oil majors - BP, Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM), Royal Dutch Shell (RDS.A, RDS.B) and Total (NYSE:TOT) - show that proved reserves for the group as a whole shrank by more than a billion barrels to 78.6B boe in 2014 from 80B-plus boe the previous year in the steepest drop since at least 2008.
- The five companies’ organic reserve replacement ratio was 84% last year, the lowest level since 2010, with only CVX reporting a Y/Y increase in extensions and discoveries.
- Behind the fall is a substantial decline in the number of barrels added as a result of recent discoveries and extensions to existing oil and gas fields, which fell 24% last year to 2.3B boe and has been cut nearly in half from 4.4B boe in 2011.
- The deteriorating exploration performance, if sustained, would raise further questions over the companies' ability to grow in the long run without making acquisitions.
Mon, Mar. 30, 3:58 PM
- Exxon Mobil (XOM +2.4%) says it began production at its Hadrian South gas development in the deepwater Gulf of Mexico with facilities tied back to the nearby Lucius project, reducing additional infrastructure requirements.
- XOM expects daily gross production from Hadrian South, its deepest subsea tie-back in nearly a mile and a half of water, to reach ~300M cf of gas and 3K barrels of liquids from two wells.
- Hadrian South is a subsea production system with flowlines connected to the Anadarko-operated Lucius truss spar, which started production in January.
- With the startup of Hadrian South and Lucius, XOM's total Gulf of Mexico net production capacity has increased by more than 45K boe/day.
- XOM holds a 46.7% interest in Hadrian South, with partners Petrobras (NYSE:PBR) at 23.3% and Eni (NYSE:E) holding a 30% stake; XOM owns a 23.3% interest in Lucius.
Fri, Mar. 27, 6:05 PM
- Russia is preparing for the possibility that Exxon Mobil (NYSE:XOM) will file an arbitration claim over as much as $500M in taxes as a statute of limitation for part of a disputed payment at its offshore project expires this week, Bloomberg reports.
- XOM is believed to be seeking a reduced profit tax for the 30%-owned Sakhalin-1 oil venture it operates in Russia Far East, and wants to get back tax it paid above the reduced rate for the past seven years.
- XOM CEO Rex Tillerson, who expanded drilling rights in Russia fivefold in 2014, traveled to Moscow last week but is said to have left without a deal on the tax dispute.
- The statute of limitation over payments for 2008, the first year in dispute, apparently expires March 28; XOM probably would demand taxes for seven years, not just 2008, if it files a claim.
Wed, Mar. 25, 6:08 PM
- The number of drill rigs in North Dakota’s oil patch has slipped below 100 for the first time in five years thanks to weaker crude oil prices.
- Only 98 rigs are now drilling in the area, 100 fewer than on the same day a year ago and the lowest since March 2010.
- North Dakota has been producing ~1.2M bbl/day of oil, and industry officials say ~115 rigs need to be drilling to keep that level of production.
- Top Bakken producers: CLR, EOG, WLL, HES, XOM, OAS, NOG, EOX, MRO
XOM vs. ETF Alternatives
Exxon Mobil Corporation is engaged in energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products.
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