Thursday, April 9, 2015

The day of the huge integrated international oil company is drawing to a close?

This 'The Economist' article is quite interesting....given current realities in the Oil & Gas industry? How many claims are still valid and which provide some food for thought?

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ON THE surface, things look pretty good for the big, listed oil companies. The world wants more of what they produce than ever before. The price it sells for is high and the profits are rolling in. Exxon Mobil, with a market capitalisation of $417 billion, vies with Apple as the world’s most valuable listed company. Royal Dutch Shell is the most valuable firm on the London Stock Exchange. Chevron employs 62,000 people; Total operates in more than 130 countries. In BP’s case the big numbers are more calamitous—it may end up paying out $90 billion in fines and compensation stemming from the Deepwater Horizon disaster. But its ability to do so and stay standing is a perverse sign of the company’s underlying strength.

In the 1990s, when the oil price dipped, a round of mergers turned the “seven sisters” of the 1950s—BP, Esso, Gulf Oil, Mobil, Royal Dutch Shell, SoCal and Texaco—their descendants and some smaller fry into this new set of “supermajors”. Soon afterwards global economic expansion further increased the demand for oil that had grown for a century, and set its price soaring (see chart 1). Things looked good for the new giants. But the rapid growth of emerging markets also exacerbated a half-century-long trend for power over that oil to shift to the countries where it is found.


In the 1950s the seven sisters controlled some 85% of global reserves. Today

Shell set to take over QCLNG, third train a possibility

ROYAL Dutch Shell looks set to take control of the QCLNG plant on Curtis Island, Gladstone, after agreeing to take over BG Group in a $90 billion deal. The QCLNG plant, which began exporting LNG late last year, is a joint venture between BG Group and QGC. Royal Dutch Shell previously had plans to build a fourth plant on Curtis Island via Arrow Energy, but shelved that proposal last year.

Commentators say the takeover deal is a huge vote of confidence in Queensland's $63 billion LNG export industry. The deal is one of the energy sector's biggest, and the new company would be valued at about $387 billion. 
Brisbane Times reports the two companies confirmed on Wednesday they would push ahead with one of the biggest energy deals in history, and redraw the Australian industry landscape in the process. The deal is expected to deliver $US2.5 billion worth of synergies and a significant proportion of those will be in Australia. 

Oil mergers: Exxon next if history is any clue

If history is any indication, ExxonMobil (XOM)could be the next oil giant to grow bigger through acquisition. In the late 1990s, falling oil prices prompted a wave of mergers in the sector as oil companies sought to bulk up in order to compete in tough times.

BP
(BP) kicked off the merger-mania in 1998 when it forked over $48.2 billion deal for Amoco. Not to be outdone, Exxon announced plans one year later to buy Mobil for $82 billion. At the time, Exxon was the world's No. 1 oil company. Mobil was No. 2. Other oil companies followed up with their own acquisitions, including Chevron (CVX) buying Texaco for $100 billion in 2000.

But Exxon had already solidified its position as the top dog in a deal that was memorable for uniting competitors. "It was very significant because Exxon and Mobil were bitter rivals, like Coke and Pepsi," said Dennis Cassidy, co-head of the oil and gas practice at consulting firm AlixPartners. Their tie-up suggested

Monday, April 6, 2015

Will Record Oil Production Crash US Gas Prices?


 
US oil production has reached record numbers raising concern that they will run out of storage tanks to put it all. Could this lead to another crash in oil prices? We look at the story on the Lip News with Jose Marcelino Ortiz and Nik Zecevic.

http://www.npr.org/2015/03/30/3957762...

UK firms find oil & gas off Falklands, Argentina threatens legal action


 
A group of British exploration companies have found oil and gas in an area north of the Falkland Islands. The Argentine government has threatened to challenge all exploration and drilling efforts in court. READ MORE: http://on.rt.com/yyd2yd

US$ 1.4bn Ethiopia-Djibouti oil pipeline project given greenlight


 
 
Construction of US$ 1.4bn Ethiopia-Djibouti oil pipeline has finally been given authorization to commence after an agreement was signed between the two countries on February 7 this month. The project is set to take three years according to the Ethiopian Ambassador to Djibouti Suleman Dedefo.

The oil pipeline, which measures 550km in length, will stretch from the Djibout port to a fuel depot in Awash and find its way via Ethiopia’s eastern town, Dire Dawa. The fuel is at the end going to be distributed to the whole nation from Awash.

The oil pipeline construction project will be managed by the US-based African infrastructure development company Black Rhino. The signing was done by Ethiopia’s Minister for Mines, Tolosa Shagi and witnessed by Djibouti’s Minister for Energy in charge of Natural Resources, Ali Yacoub Mahamoud.

US$ 1.4bn Ethiopia-Djibouti oil pipeline project given greenlight


 
 
Construction of US$ 1.4bn Ethiopia-Djibouti oil pipeline has finally been given authorization to commence after an agreement was signed between the two countries on February 7 this month. The project is set to take three years according to the Ethiopian Ambassador to Djibouti Suleman Dedefo.

The oil pipeline, which measures 550km in length, will stretch from the Djibout port to a fuel depot in Awash and find its way via Ethiopia’s eastern town, Dire Dawa. The fuel is at the end going to be distributed to the whole nation from Awash.

The oil pipeline construction project will be managed by the US-based African infrastructure development company Black Rhino. The signing was done by Ethiopia’s Minister for Mines, Tolosa Shagi and witnessed by Djibouti’s Minister for Energy in charge of Natural Resources, Ali Yacoub Mahamoud.

US$ 1.4bn Ethiopia-Djibouti oil pipeline project given greenlight


 
 
Construction of US$ 1.4bn Ethiopia-Djibouti oil pipeline has finally been given authorization to commence after an agreement was signed between the two countries on February 7 this month. The project is set to take three years according to the Ethiopian Ambassador to Djibouti Suleman Dedefo.

The oil pipeline, which measures 550km in length, will stretch from the Djibout port to a fuel depot in Awash and find its way via Ethiopia’s eastern town, Dire Dawa. The fuel is at the end going to be distributed to the whole nation from Awash.

The oil pipeline construction project will be managed by the US-based African infrastructure development company Black Rhino. The signing was done by Ethiopia’s Minister for Mines, Tolosa Shagi and witnessed by Djibouti’s Minister for Energy in charge of Natural Resources, Ali Yacoub Mahamoud.

Marin Katusa on Oil and BRICS


 
Edward Harrison is joined by Marin Katusa – chief energy investment strategist at Casey Research and author of “The Colder War.” Marin tells us he sees oil going lower within the next 6 – 12 months because, despite the drop in rig count, output levels will remain elevated. Marin also gives us his take on the demand side problems, with China slowing much more than government statistics suggest and warns that hedges that expire by the end of 2015 will leave many companies naked and that’s when the penny could drop.

Marin says he thinks the $100 billion BRICS bank will help solve the problems that Russia and China want to solve but won’t necessarily help other economies in the emerging markets and gives us his take on what kind of impact oil and gas will have on the economy in Russia this year. He continues his comments with an in-depth analysis of oil and the Middle East with points on both Saudi Arabia and ISIS.

Wednesday, February 25, 2015

Drilling Mud: A Multipurpose Tool in the Oil Patch


 
“Here’s something I’ll bet you haven’t thought about in the last few days: Drilling Mud.

Actually, it’s the simple things that we take for granted. Our $100 billion oil and gas shale revolution couldn’t exist…..without MUD. It’s the single component that lubricates, cools, cleans, balances and even communicates what’s going on down the hole, thousands of feet below the earth’s surface. And most people don’t realize how much it costs, either. It can reach upwards of $300 a barrel, and amount to 25-percent of the cost of a new oil and gas well.”

Continue listening to the Podcast here or you can visit Crude.com to read the full transcript:
http://www.crude.com/media/OGIR-Drill...

For more Podcasts filled with industry insider news discussing oil and gas investing visit our website: http://www.crude.com/podcasts/

Rig Counts Go Down, Production Goes Up. What’s Happening to Oil?


 
“Baker Hughes released more bad news for drilling companies recently, as it seems week after week large numbers of drilling rigs are being de-commissioned. Since the peak last September of 1,931 total rigs in the United States, nearly 600 fewer rigs are working now. That’s about one-third. Yet, with that many fewer rigs, crude oil production keeps going up. What’s going on?

One factor is efficiency. Trimming the fat, if you will. Many of those rigs were either less efficient equipment or were located in less-promising areas. There’s been a re-shuffling of sorts, where producers are totally concentrating on the most productive areas, where they can extract oil and gas at the most economical prices. The Permian Basin is a perfect example of that, where current production is likely to be profitable at these prices…”

Continue listening to the Podcast here or you can visit Crude.com to read the full transcript:
http://www.crude.com/media/OGIR-Rig-C...

Friday, February 13, 2015

OPEC Calls The Tune And U.S. Shale Producers Follow -- By Cutting Production

What happens when Saudi Arabia, the world’s swing producer of oil, rejects its traditional market-balancing role? The job falls to American shale oil producers, which, initial data show, appear to be assuming some of the usual Saudi role of cutting production. Data released today by the Austin energy analytics firm Drillinginfo show that some shale producers are reacting to the new economic reality, cutting back on drilling and new production in response to plummeting oil prices.

Notably, well drilling has dropped in North Dakota’s Bakken shale and Texas’ Permian Basin, and estimates of new oil production are falling in similar fashion. However, in the country’s most prolific, lower-cost shale acreage, production continues virtually unaffected. Full details are analyzed in our
Baker Institute paper. The American shale sector is now revealing itself as a nimble and price-responsive producer, performing exactly as Saudi oil minister Ali al-Naimi hoped it would when he told the world that high-cost oil producers should relinquish their share of the market to the low-cost crude produced by OPEC.

Since the 1970s, the Saudis have usually acted to balance markets and calm volatile prices by twisting a few valves and either raising or cutting production. On November 27, when the Saudis said “No” to expectations of cutting output,

Deloitte: Low Oil Prices Creating Need for More Efficient Operations

Upstream oil and gas companies will have to learn how to operate differently in order to weather the low oil price environment, Deloitte officials said Wednesday.

Unlike the downstream sector, which has been forced to operate efficiently because it doesn’t have the ebbs and flows that upstream does, costs on the exploration and production side have spiraled upwards, said Rick Carr, principal and leader of Deloitte LLP’s oil & gas operations and supply chain, at a media briefing in Houston.

The North America shale market is “still pretty embryonic”, with nobody really having cracked the nut of running a lean, efficient operation, said Carr. In the case of North America shale operations, prices for oilfield services have not been dictated by the actual cost of the service, but what people are willing to pay to get a well done. Companies have been willing to pay 30 to 50 percent more than what a material actually costs, said Carr.

With costs have spiraled out of control, price signals seen today indicate that the industry needs to reset its cost structures. Not only is a deflationary correction needed, but costs in the system truly need to be taken out.  

“There’s a strong school of thought that low oil prices will help the industry reset costs and bring costs down for North America shale,” said Carr. “This will open up shale plays worldwide.”

The move by some companies toward greater operational efficiency started a year and a half ago, when

Wednesday, February 11, 2015

The Energy Market Impacts of Low Oil Prices How Low How Long ?


 
The Energy Market Impacts of Low Oil Prices How Low How Long

Arthur Berman: Why Today's Shale Era Is The Retirement Party For Oil Production


 
 
Berman sees the recent US oil production boost from shale drilling as and short-lived and somewhat desperate; a kind of last hurrah before the lights get turned out.

Chevron Pulling Out of Poland / Permian Basin Still Prolific


 
“Chevron announced recently that it will pull its shale operations out of Poland, joining Exxon Mobile and Total (Toe-Tall), who have all recently done the same. Stating lower than expected reserves as the main reason, Chevron is also pulling the plug in the Ukraine and the Arctic.

During softer times like we’re in now, pullbacks of this nature are normal. Cash is king during slowdowns and smart operators will set their focus on safer bets. In Chevron’s case, they’re reducing their spending on new investments in drilling projects this year by 13-percent to $35 billion dollars, down from just over $40 billion dollars. That is still a vast amount of money Chevron will invest in new wells and projects around the globe. And that’s the point – the industry is only slowing down; it’s not by any means going away. The doomsday predictions that this will knock the U.S. oil industry down to nothing are JUST…PLAIN….WRONG. ”

Continue listening to the Podcast here or you can visit Crude.com to read the full transcript:

Rig Counts Down as Investment in Oil and Gas Drilling Stalls


 
"The number of rigs drilling for oil and natural gas in the United States continues to drop, as oil prices remain under pressure from Saudi Arabia. In the past few weeks, nearly 150 rigs stopped working, or have “been laid down”, as the industry term implies.

One thing to consider is how many jobs each non-working rig affects. While the Industry doesn’t keep tabs specifically on how many staff is employed on each rig, there are some projections that provide clues. For each drilling rig, there are about 20 core people who keep things running, while the oil company employing the rig is investing in the drilling of the well.

However, it is estimated that another 50 people directly support the drilling efforts, although they are not on the pad-site. On top of that, about another 50 people indirectly support the rig’s operation. So bottom line, when a rig stops operating and is sent back to its owner, there are up to 130 people directly and indirectly affected."

Continue listening to the Podcast here or you can visit Crude.com to read the full transcript:
http://www.crude.com/media/ogir-rig-c...

For more Podcasts filled with industry insider news discussing oil and gas investing visit our website: http://www.crude.com/podcasts/

Texas lawmakers file bill to lift crude oil export ban

Crude oil could be exported if a bill filed by Rep. Joe Barton and others passes in Washington D.C. 
 
U.S. Rep. Joe Barton, R-Texas, led the introduction of a bill to remove the decades-old ban on U.S. crude oil exports. House Resolution 702 would remove the restrictions, freeing U.S. oil producers to ship their product to overseas markets. Much has changed since the export ban was put in place in the 1970s, mainly the ability to extract oil from shale using hydraulic fracking. With the current oversupply of oil and precipitous drop in crude oil prices, it's no surprise that Barton and other mostly Texas lawmakers are pushing to lift the ban again.

Seems like a no-brainer to jumpstart a suddenly sluggish energy industry, right? Not so fast. Much like the argument against increasing the export of natural gas, there's concern about a widespread export of crude oil derailing efforts to make the United States energy independent. Putting domestic crude oil on the international market hurts refineries and could put pressure on fuel prices.

Here are key parts of the bill:

Oil prices fall as US stockpiles hit record high

World oil prices fell heavily, with New York crude sliding below $49, as swelling US inventories added to the global supply glut. US benchmark West Texas Intermediate (WTI) for March delivery tumbled $1.22 to $48.80 a barrel compared with Tuesday's close. Brent North Sea crude for March dropped $1.70 to $54.73 a barrel in late afternoon London deals. "The latest inventories data has reminded investors that the supply glut is here to stay for the time being," said analyst Fawad Razaqzada at trading site Forex.com.

The US government's Department of Energy (DoE) reported that commercial crude reserves rose 4.9m barrels in the week ending February 6. Stockpiles were "at the highest level for this time of year in at least the last 80 years", the DoE added in a statement. Market expectations had been for a smaller gain of 3.6m barrels, according to analysts polled by Bloomberg News. "The 4.9m-barrel increase in weekly oil inventories was

Are the Saudis Scared to Cut Oil Production?

With the global oil market currently oversupplied to the tune of an estimated 2 million barrels per day, oil producer group Opec has struggled to formulate an effective strategy aside from “let the market sort it out.” For decades Opec played a price-setting role by increasing production to boost supply when prices were deemed too high. And the producers throttled output back to constrain supply and thus add price support during periods of oil price decline.

But things are different now. At a basic level, the current supply of oil exceeds demand by such a wide margin – due in large part to the US oil production boom – that Opec producers would need to drastically cut their output in order to balance the market. Additionally, de facto Opec leader Saudi Arabia would be forced to do most of the heavy lifting because they maintain the greatest spare production capacity in the group, meaning they can quickly ramp production up and down. It is widely believed Saudi Arabia has the ability to produce over 12 million b/d.

Macroeconomic Insights - The New Oil Order: Making Sense of an Industry's Transformation


 
The shale revolution in the United States has dramatically altered the global energy landscape.

Three members of Global Investment Research at Goldman Sachs – Jeff Currie, global head of Commodities Research; Dominic Wilson, chief markets economist; and Michele Della Vigna, co-head of European Equity Research – discuss how the falling price of oil affects countries, corporates and consumers.

Monday, February 2, 2015

African perspective on Oil price plummet


 
Oil has been making financial headlines recently as it plummets. Joining Tshepo Modiba to look at the declining oil price and in particular it’s impact across Africa is Brian Dlamini from Afriwise Consult.

Decline in the oil price saves China and India $100 BILLION!


 
Martin Murenbeeld of Dundee Capital Markets sits down with Vanessa Collette to talk gold, oil and how it all ties together.

Join us at an upcoming event!
http://www.cambridgehouse.com

Sunday, February 1, 2015

The Gulf Intelligence UAE Energy Forum 2015: “Impact of Low Oil Price on...


 
The Outlook for Gas in a Lower Oil Price Reality?
'What Effect will the Lower Oil Price have on the Rise of Gas? and what may be Potential Impacts on Gas Import and Export Strategies, with a Focus on the Middle East and Asia?'

Musabbeh Al-Kaabi, CEO, Mubadala Petroleum
Narendra Taneja, President, World Energy Policy Summit, India
Dr. Aldo Flores-Quiroga, Secretary General, International Energy Forum
John Roper, Head of Middle East, E.ON Global Commodities SE