AuthorTopic: Oil Price Crash: Who Cooda Node?  (Read 158769 times)

Offline K-Dog

  • Global Moderator
  • Sous Chef
  • *****
  • Posts: 3554
    • View Profile
    • K-Dog
Re: Oil Price Crash: Who Cooda Node?
« Reply #915 on: December 08, 2019, 08:47:18 PM »

Certainly Venezuela can just pay themselves tons of bolivars to build their own drilling and oil production equipment, as the US does, and begin more oil production with their now booming economy! Don't need the FOREX involved for that do they?

No, they can't.  You don't buy drilling equipment with Bolivars.  You buy it with dollars.

Clearly, you are ignorant as to how FORERX works.  I am done with you.

RE

A true Bolivar of a man could pull it off but there would be blood.  The existing regime did finance social programs un-sustainably and now the grim reaper calls in loans.  Had Hugo Chávez had the foresight to know what Nicholas Maduro was going to get stuck with when heavy crude prices crashed he might have done things differently.  But Hugo was under heavy pressure to keep up with the Jones.  He really can't be faulted much and America had no interest in bailing out Venezuela for America made those prices fall.  Regarding Venezuela America rubs salt in wounds.
Under ideal conditions of temperature and pressure the organism will grow without limit.

Offline BuddyJ

  • Bussing Staff
  • **
  • Posts: 61
    • View Profile
Re: Oil Price Crash: Who Cooda Node?
« Reply #916 on: December 08, 2019, 09:01:42 PM »

Certainly Venezuela can just pay themselves tons of bolivars to build their own drilling and oil production equipment, as the US does, and begin more oil production with their now booming economy! Don't need the FOREX involved for that do they?

No, they can't.  You don't buy drilling equipment with Bolivars.  You buy it with dollars.

Sure you buy drilling equipment with Bolivars. And the people who manufacture it make it from Venezuelan steel, which they pay for in Bolivars. To Venezuelan steel manufacturers, who pay Venezuelan miners in  Bolivars to mine ore to make it. We're talking about <1400m of depth here according to the USGS, so call it 1940's US drilling technology. Nothing special there in terms of drilling equipment. It is all refining that is the pain in the ass because of the heavy metals involved, Venezuela ships their oil to the US for just that reason. But production with domestic equipment could certainly work.


Quote from: RE
Clearly, you are ignorant as to how FORERX works.  I am done with you.

RE

What does FOREX have to do with Venezuela being able to build their own drilling equipment? Seems like the only reason you are saying you need FOREX is for foreign exchange to buy international stuff, and if they could get their own people to take their own currency, how is FOREX even involved?

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 40219
    • View Profile
Oil Price Crash: Sock Puppet Alert!
« Reply #917 on: December 08, 2019, 09:19:38 PM »

Certainly Venezuela can just pay themselves tons of bolivars to build their own drilling and oil production equipment, as the US does, and begin more oil production with their now booming economy! Don't need the FOREX involved for that do they?

No, they can't.  You don't buy drilling equipment with Bolivars.  You buy it with dollars.

Sure you buy drilling equipment with Bolivars. And the people who manufacture it make it from Venezuelan steel, which they pay for in Bolivars. To Venezuelan steel manufacturers, who pay Venezuelan miners in  Bolivars to mine ore to make it. We're talking about <1400m of depth here according to the USGS, so call it 1940's US drilling technology. Nothing special there in terms of drilling equipment. It is all refining that is the pain in the ass because of the heavy metals involved, Venezuela ships their oil to the US for just that reason. But production with domestic equipment could certainly work.


Quote from: RE
Clearly, you are ignorant as to how FORERX works.  I am done with you.

RE

What does FOREX have to do with Venezuela being able to build their own drilling equipment? Seems like the only reason you are saying you need FOREX is for foreign exchange to buy international stuff, and if they could get their own people to take their own currency, how is FOREX even involved?


RE
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 40219
    • View Profile
https://www.cnn.com/2019/12/11/business/chevron-oil-gas-writedown/index.html

New York (CNN Business)America's abundance of crude oil and natural gas is forcing Chevron to slash the value of its energy portfolio.


Chevron (CVX) announced Wednesday it dimmed its long-term outlook for oil and gas prices because of that glut of fossil fuels. The nation's No. 2 oil company plans to take a $10 billion to $11 billion charge to reflect that gloomier outlook.
More than half of that non-cash charge is related to natural gas properties in Appalachia, although Chevron is also writing down the value of a major Gulf of Mexico deepwater oil drilling project.
Chevron pledged to cut funding to multiple natural gas projects in the United States and Canada. The company is even weighing selling those projects, underlining the weak outlook for natural gas.

Taken together, the moves by Chevron reflect the consequences of America's shale oil and gas boom that has reshaped the global energy landscape.
The shale revolution has made the United States the world's largest producer of both oil and natural gas, reducing the nation's dependence on foreign energy. But an oversupply of fossil fuels, especially gas, is keeping a lid on prices. That's great news for most households and businesses, but it's putting pressure on energy producers.
"The announcement continues a wave of writedowns related to price downgrades," Tom Ellacott, senior vice president of corporate analysts at consulting firm Wood Mackenzie, wrote in a note on Wednesday. "US shale gas assets have been hardest hit, reflecting the weak outlook for US gas prices."
Chevron's $4.3 billion gas deal backfired
Wall Street is pressuring Big Oil to keep its spending in check to prevent another crash in crude prices caused by excess supply. Oil companies are also under pressure to repair their debt-laden balance sheets.
Chevron is heeding that advice by announcing plans to keep spending flat at $20 billion for the third straight year. And that's despite Chevron continuing to pump more money into the Permian Basin, the booming West Texas oilfield. Chevron plans to spend $4 billion on the Permian alone next year.
"We are positioning Chevron to win in any environment," Chevron CEO Michael Wirth said in a statement, by investing in "the highest return, lowest risk projects in our portfolio."
America is now the world&#39;s top oil producer, but cracks are emerging
America is now the world's top oil producer, but cracks are emerging
Chevron said it will reduce funding to its Appalachia shale properties as well as international projects, including the Kitimat liquefied natural gas project in British Columbia.
The Appalachia writedown shows how Chevron's 2011 takeover of Atlas Energy hasn't paid off. That deal, valued at $4.3 billion including debt, greatly expanded Chevron's exposure to Appalachia gas, especially in the Marcellus Shale of southwestern Pennsylvania.
Yet Chevron achieved just $1 billion of free cash flow from Marcellus shale gas between 2012 and 2019, according to Rystad Energy. Chevron's large Marcellus portfolio isn't worth more than $600 million in the current price environment, Rystad said.
"Obviously it can be viewed as massive value destruction," Artem Abramov, head of shale research at Rystad, said in an email to CNN Business. "Persistent gas price weakness did not allow Chevron to generate any value from the assets."

Chevron also said its revised oil price outlook resulted in an impairment charge at Big Foot, a US Gulf of Mexico oil drilling project. Chevron has previously said that the deepwater oilfield is estimated to contain total recoverable resources north of 200 million barrels.
"With capital discipline and a conservative outlook comes the responsibility to make the tough choices necessary to deliver higher cash returns to our shareholders over the long term," Wirth said.
Save As Many As You Can

Offline BuddyJ

  • Bussing Staff
  • **
  • Posts: 61
    • View Profile
https://www.cnn.com/2019/12/11/business/chevron-oil-gas-writedown/index.html

New York (CNN Business)America's abundance of crude oil and natural gas is forcing Chevron to slash the value of its energy portfolio.

Saudi America, the gift that just keeps crushing the oil companies.

What do we call it when it is Saudi Natural Gas? Qatar America?

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 40219
    • View Profile
https://www.cnn.com/2019/12/11/business/chevron-oil-gas-writedown/index.html

New York (CNN Business)America's abundance of crude oil and natural gas is forcing Chevron to slash the value of its energy portfolio.

Saudi America, the gift that just keeps crushing the oil companies.

What do we call it when it is Saudi Natural Gas? Qatar America?

A Rose by any other name is still a Rose.  The same holds true for a pile of Shit.

RE
Save As Many As You Can

Offline BuddyJ

  • Bussing Staff
  • **
  • Posts: 61
    • View Profile
Saudi America, the gift that just keeps crushing the oil companies.

What do we call it when it is Saudi Natural Gas? Qatar America?

A Rose by any other name is still a Rose.  The same holds true for a pile of Shit.

RE

So calling it Qatar America makes it a pile of shit because Qatar is? Well, we can't call it Paraguay America because they don't have much natural gas, and the entire point is finding a meaningful euphemism for what the US has done with the its natural gas production. Qatar struck me as good just because it was the only place I could think of that has a bunch.

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 40219
    • View Profile
Saudi America, the gift that just keeps crushing the oil companies.

What do we call it when it is Saudi Natural Gas? Qatar America?

A Rose by any other name is still a Rose.  The same holds true for a pile of Shit.

RE

So calling it Qatar America makes it a pile of shit because Qatar is? Well, we can't call it Paraguay America because they don't have much natural gas, and the entire point is finding a meaningful euphemism for what the US has done with the its natural gas production. Qatar struck me as good just because it was the only place I could think of that has a bunch.

Qatar is a Pile of Shit.  So is Amerika.  In fact the whole WORLD is a Pile of Shit now.  Shit by any other name is still Shit.

RE
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 40219
    • View Profile
🛢️ Revealing The True Extent Of Exxon’s Natural Gas Blow Out
« Reply #923 on: December 18, 2019, 01:16:39 AM »
https://oilprice.com/Energy/Energy-General/Revealing-The-True-Extent-Of-Exxons-Natural-Gas-Blow-Out.html

Revealing The True Extent Of Exxon’s Natural Gas Blow Out
By Irina Slav - Dec 17, 2019, 9:30 AM CST


A natural gas well operated by Exxon that blew out in 2018 released a lot more methane than previously believed, a study by a team of U.S. and Dutch scientists concluded.

Bloomberg reports that the study they conducted using satellite imagery showed that the methane emissions following the blast topped what “the oil and gas industries of France, Norway and the Netherlands emit over a 12-month period.”

The well, in Belmont County, Ohio, blew out in February 2018. It leaked for almost three weeks before it was plugged. Local communities had to be evacuated because of the release of natural gas into the atmosphere and environmental groups voiced concern about environmental damage. Now, the results of the study suggest the damage may have been greater than expected.

Methane is a much more powerful greenhouse gas than carbon dioxide but it only recently came to prominence in the media as the push against the oil and gas industry strengthened and the industry began addressing its carbon footprint problem. The methane footprint seems to be a much more serious problem, however.

Another study published earlier this year, for example, found that methane emissions in the United States had spiked because of what many like to call the shale revolution. More specifically, it was gas flaring during oil production in the shale patch that led to a strong increase in methane emissions from the upstream industry.

“Previous studies erroneously concluded that biological sources are the cause of the rising methane,” study author Robert W. Howarth from methane monitoring company GHGSat said. “The commercialization of shale gas and oil in the 21st century has dramatically increased global methane emissions.”

Access to satellite imaging capabilities is proving invaluable to those concerned about the role of methane in climate change.

“Our work demonstrates the strength and effectiveness of routine satellite measurements in detecting and quantifying greenhouse gas emission from unpredictable events,” the authors said. “In this specific case, the magnitude of a relatively unknown yet extremely large accidental leakage was revealed.”

By Irina Slav for Oilprice.com
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 40219
    • View Profile
🛢️ From Boom To Bust: Permian Shale Towns Face Exodus
« Reply #924 on: December 18, 2019, 05:20:59 AM »
https://oilprice.com/Energy/Energy-General/From-Boom-To-Bust-Permian-Shale-Towns-Face-Exodus.html

From Boom To Bust: Permian Shale Towns Face Exodus
By Anes Alic - Dec 17, 2019, 6:00 PM CST


Perhaps it’s not evident to anyone who is not an oil-worker living in America’s biggest shale towns, but signs of the shale slowdown predicted by many analysts, and the EIA itself, are already surfacing in the form of vacant hotels, a dip in home prices, a noticeable reduction in overtime hours for oil workers, and a change in standards for hiring.

Texas’ Permian basin lost 400 jobs in the first 10 months of this year, according to the Dallas Morning News, and fracking contractor Superior Energy Services Inc. alone announced in late November that it had cut 112 jobs from its Permian Pumpco unit.

This is in stark contrast to the first 10 months of 2018, when the Permian added 16,700 jobs.

According to the Dallas Federal Reserve’s “Permian Basin Economic Indicators” from November 27 this year, oil production reached a new high in September, though the rig count slipped and drilling has dropped to its lowest level in nearly two years.

Not only are frack crews for well completions in the Permian down more than 20% this year, according to the Dallas Morning News, citing Primary Vision Inc., but oilfield services companies are firing people--from National Oilwell Varco to Halliburton and RPC.

The Greater Houston Partnership said in a December report that Houston is facing a situation that is “eerily similar to what it faced after the 1980s bust -- an oversaturated real estate market, a bleak outlook for oil and gas, and the need for innovation to drive the economy forward”.

To that end, it’s putting its hope in other industries--not oil and gas--as it forecasts the disappearance of 4,000 oil jobs by the end of 2020.

Why is Houston important when it isn’t even in the shale patch itself? Because this is the financial and corporate hub for many of those shale operations, and the job cutbacks are expected to hit investment banks and trucking firms in Houston.
Related: Have Oil Prices Reached An Inflection Point?

Speaking to Bloomberg in late November, a Texas shale CEO and veteran fracker described the industry as “in shambles”, and questioned predictions of strong U.S. production growth in 2020. It doesn’t seem to reflect the reality that producers have been cut off from funding, share prices are dismal, and public offerings are being ignored entirely.

The EIA forecasted a production increase of 1 million barrels per day in 2020. But in mid-December, the agency said that production in the Permian, for instance, would only increase by 48,000 bpd in January 2020--the smallest increase since July this year. Bakken will see a negligible increase, and Eagle Ford will see a decrease.

And if we move to the Marcellus and Utica shales, which span Pennsylvania, West Virginia and Ohio, we see giant Chevron pulling up stakes entirely, putting its 890,000 acres up for sale after these operations accounted for more than 50% of a massive impairment charge of around $11 billion for the supermajor in Q4 this year.

The reality, it seems, is very different on the ground.

The first sign of a slowdown outside of the actual shale numbers is this: Home prices have dipped, and home sales have flattened. In October, median home prices fell 2.6% from August, while monthly home sales fell 3.6% from September.

The Wall Street Journal tells a similar slowdown story, but in the form of empty hotels.

Citing hospitality benchmarking firm STR Inc., the WSJ notes that the hotel business was booming until this year, when occupancy in the first 10 months of the year fell 14%.
Related: The 5 Biggest Threats To Oil & Gas In 2020

In October, news started emerging from West Texas about suddenly cheap hotel rooms and unusual vacancies.

It seemed rather sudden because just in Q2, rooms that had been $800 a night were down to $250 a night.

To many, that’s one of the biggest signs of the times, even if it doesn’t exactly mean that hotels are going to be closing down. They just aren’t going to be basking in the overpriced room boom next year, by most accounts.

The slowdown, however, isn’t directly related to low oil prices. It’s the result of an adaptation in production company strategy.

Shale producers are under immense pressure to cater to shareholders and give back after all those years of sucking up funding in the shale boom frenzy. So now, producers are slowing both growth and spending in order to reward shareholders. That’s starting to make itself felt in everything from hotels to overtime for workers.

It’s no longer a free-for-all of spending, and the new normal of cautionary spending isn’t going to depress any of these shale economies, but it will likely bring them back down to earth.

By Anes Alic for Oilprice.com
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 40219
    • View Profile
🛢️ Oil industry looks forward to more mergers—and more bankruptcies
« Reply #925 on: December 19, 2019, 05:08:48 AM »
Down the tubes goes Industrial Civilization.

RE

https://www.cnbc.com/2019/12/18/the-us-oil-industry-shook-up-the-world-and-now-its-shaking-out.html

Oil industry looks forward to more mergers—and more bankruptcies
Published Wed, Dec 18 201912:54 PM ESTUpdated Wed, Dec 18 20196:53 PM EST
Patti Domm    @in/patti-domm-9224884/    @pattidomm
   
   
Key Points

    In the past decade, U.S. oil production has grown dramatically, leapfrogging Saudi Arabia and Russia, but with that quick growth came a lack of financial discipline.
    The U.S. energy sector is at an inflection point, with more mergers and bankruptcies expected before the industry becomes attractive to investors.
    The upstart drillers that drove hydraulic fracturing, or “fracking,” technology are being disrupted themselves with leadership shifting to oil majors, such as ExxonMobil and Chevron, and large independent drillers.

GP: Orion Drilling U.S. Shale production natural gas
Workers make a pipe connection on the Orion Perseus drilling rig, Webb County, Texas.
Eddie Seal | Bloomberg | Getty Images

The U.S. oil industry shook up the world energy order in the last decade, and now it has been going through a shakeout of its own that is expected to end in more bankruptcies and mergers.

In the early part of this century, an upstart band of U.S. energy producers brought hydraulic fracturing, or “fracking,” technology to the world. It was an American-born innovation that helped turn the U.S. from the world’s biggest importer of oil into, just recently, a net exporter of oil and fuel products.

In the last decade, U.S. oil production boomed as producers used hydraulic fracturing and evolving horizontal drilling technology to extract oil from difficult-to-access places and some fields that had previously been considered nearly tapped out. The U.S. is now producing just under 13 million barrels a day and has become the world’s largest oil producer.
VIDEO04:19
Two major oil stocks could be the best comeback plays, pros say

With their growing success, American drillers were able to find ready debt financing as investors were willing to gamble on the idea that wells could start producing in a fraction of the time it took more conventional drillers. That helped drive an oil glut, and global prices suffered from oversupply. The imbalance is improving, but now there are questions about how fast demand will grow.

Investors have lost patience with the industry’s boom-to-bust cycles. As a result, energy stocks have been among the worst performers of the decade, up just 4%, and energy debt is among the least desirable.

“There’s going to be a hatchet taken to these companies in the next year,” said John Kilduff, partner with Again Capital. “There will be bankruptcies and consolidation. The party is over.”
Market disruption

The growth of U.S. shale created a boom-town atmosphere in the places where drilling was growing most — West Texas and North Dakota. But it also disrupted the entire world oil market.

In what would have been unheard of a decade ago, Saudi Arabia and OPEC forged a deal with Russia and other non-OPEC producers to control their production to support oil prices. The recent extension of this three-year-old pact has helped steady prices.

Unlike many of those producers, the U.S. industry is untethered, with no government deciding production levels, and its only constraints are economic and financial. That has made life hard for U.S. drillers this year, with oil prices below their break-even level much of the year. West Texas Intermediate crude futures were at $60.81 per barrel Tuesday.

“We’re at the early stages [of the shakeout]. The problem is some of these companies still have a bit of rope to go,” said Ken Monaghan, Amundi Pioneer co-director of high yield. “They don’t have [debt] maturities that are coming up in 2020 and 2021. They’re going to try to outrun the clock and hope that oil prices move higher.”
VIDEO02:02
Expecting a lot of non-OPEC oil production growth in 2020: Energy expert

Daniel Yergin, who has authored books on the evolution of the oil industry, said the U.S. industry is likely to morph now, as the industry hits an inflection point. The oil majors, such as ExxonMobil and Chevron, were slow to join the shale boom. But now they and the biggest oil independents will increasingly dominate the industry over the core of small independents and mom-and-pop oil drillers that launched the industry.

Both Exxon and Chevron have announced aggressive expansion plans for the Permian Basin, the hottest shale play covering a 75,000-square-mile area that runs through West Texas and southeastern New Mexico.

“It’s clearly a new era for shale. The irony is the U.S. is heading for these unimagined levels of production,” said Yergin, vice chairman of IHS Markit. “The U.S. industry is the world’s No. 1 oil producer, and it’s a major exporter, but the financial markets are giving them no credit for that anymore. The stocks were actually more highly valued when the oil price was in collapse than they are now. ... Investors and producers have to work out a new social contract.”

The market-imposed discipline on energy companies is not new, but analysts see it taking a new turn, with more mergers and more debt restructurings needed for the industry to emerge in healthier shape.

“Most people are saying we don’t want you to spend money on growth. We want you to give the money back because you guys are dummies,” said Michael Bradley, energy strategist with Tudor, Pickering, Holt. “People want a return on capital. [Oil] prices today are higher than they were a year ago at this time, but cap ex is lower.”

With the new discipline is coming slower production growth. Analysts said part of the reason U.S. production has grown so quickly is that the payback on shale wells is much faster than conventional wells and, particularly, offshore platforms where development can take years.

According to Citigroup energy analyst Eric Lee, U.S. oil production’s rapid growth ramped up to 2 million barrels a day year over year in August alone. In the past week, oil production totaled 12.8 million barrels a day, up 1.2 million barrels from a year ago, according to weekly government data.

Over the past 10 years, U.S. oil production more than doubled, rising by more than 7 million barrels a day since January 2010, when it was just 5.4 million barrels per day.

“That’s what they’ve wildly been doing for the last 10 years,” said Lee. “The first crash happened because the world didn’t need as much as was being produced.” As more U.S. oil came onto the world market, oil prices fell hard in 2014 and then bottomed in 2016, at under $30 a barrel.

Lee said Citi analysts expect U.S. oil production to reach nearly 16 million barrels of crude by 2023. Analysts say the price of oil will be a big determinant in how quickly U.S. output will grow and at what level it will peak.
Mergers and a debt bomb

Energy has been the worst-performing sector in the stock market this year, as well as in the high-yield debt market.

For the year to date, the XLE, the Energy Select Sector SPDR ETF, is up just 5%, compared with the 29% gain in West Texas Intermediate crude futures and the 27% gain in the S&P 500.

The energy index of the high-yield market has a face value of $170 billion and a market value of $150 billion, according to Amundi.

“There’s more distressed energy names than there are in any other sector,” said Monaghan. “Up until this month, energy bonds in the high yield index had lost money for the year-to-date, and now they’re in positive territory only in the month of December because there’s been a little higher [oil] prices.”

Bradley said he expects that about $30 billion to $40 billion of high-yield energy debt is at risk. He and other analysts said some companies will have no choice but to seek bankruptcy protection and restructure.

“Weatherford went through bankruptcy,” said Bradley. “They’re coming through it. That’s the right thing to do.”

Once the fourth-largest oil services company, Weatherford emerged from bankruptcy on Friday after selling $6 billion in assets and receiving $10 billion in support from bondholders, according to the Houston Chronicle. Those bondholders now control 94% of the company.

Some companies remain poorly capitalized, and the very nature of shale is one of the reasons.

The shale industry needs to keep drilling to keep its production rate high because of the rapid depletion of its wells in the first year alone. According to IHS, young shale wells can decline at a rate of about 70% to 75% in the first year, so companies continue to drill more wells. If they stopped drilling, production would be down by as much as 35% a year later, according to IHS.

“If you look at the problem with the sector itself, which is the significant depletion of the reserve over a briefer time than used to be the norm, you better have capital and balance sheet structures that better match that probability,” Monaghan said.

Some of these issues could be fixed in mergers, which have challenges of their own. “It’s often hard to create a merger when you have two companies or three companies that are in the walking wounded category,” said Monaghan.

“The issue then becomes the acquisition currency. It’s not easy to execute on. Then you have a management team that’s probably hoping and praying oil prices will move a little higher.”

Bradley said the merger this week between WPX Energy and private company Felix may be a sign of things to come for the sector, since Felix did not garner much of a premium. WPX shares gained after the transaction was announced and were up 16% on the week.

“This is the first deal I’ve seen in a long time where the stock was up,” said Bradley.

He expects to see more mergers in the mid-cap sector. “Anything between $2 [billion and] $7 billion is going, in the next two years, to be gobbled up,” Bradley said. He said companies such as Concho Resources and Diamondback Energy could be the larger independents, which he says would have a market cap of about $15 billion to $25 billion.

Bradley said it’s clear the majors are growing market share in shale, since they have not shut down wells while others have.

Lee said the majors now make up about 15% of shale production and are growing. “There’s still a lot of little guys,” said Lee. He said private companies continue to be a big chunk of Permian production, with about 45%.

Ultimately, analysts expect the industry to end up in better financial shape.

“Theoretically, this doesn’t bode well for the consumer,” said Kilduff. “Consolidation and mergers should bring in a much higher level of production discipline, which should mean less supply for the market and higher prices.”
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 40219
    • View Profile
🛢️ China Dumps LNG Amid Massive Glut In Asia
« Reply #926 on: December 20, 2019, 08:30:30 AM »
https://oilprice.com/Energy/Gas-Prices/China-Dumps-LNG-Amid-Massive-Glut-In-Asia.html

China Dumps LNG Amid Massive Glut In Asia
By Tsvetana Paraskova - Dec 19, 2019, 11:00 AM CST


PetroChina, one of the largest buyers of liquefied natural gas (LNG) in the key LNG demand growth market, has offered the lowest bid in an LNG tender in Pakistan, in a sign that the Asian market continues to be oversupplied even after the winter heating season began.

According to the documents from the latest Pakistan LNG tender, PetroChina International Singapore offered the lowest bid at a price slope—that is a percentage of the Brent oil contract—of 8.594 percent, for a delivery window on February 16-17. PetroChina beat commodity traders Gunvor and Trafigura and the trading arm of SOCAR to the lowest bid in the Pakistani tender.

It’s not certain if Pakistan will award this tender, because it sometimes chooses not to buy. But the fact that China is offering LNG so cheaply points to the persistent LNG glut on the Asian markets.

According to Bloomberg, this was at least the second time in which PetroChina has offered the lowest bid in an LNG tender in Pakistan.

This year, Asian spot LNG prices are at their lowest ever for this time of the season.

Last week was the first week since October in which spot LNG prices in Asia increased week on week. Asian LNG spot prices for delivery in January rose to US $5.65 per million British thermal units (MMBtu) last week, up by 15 cents from the previous week, trading sources told Reuters. 
Related: Iran Holds End Of Year Fire Sale For Crude Oil

Still, prices were at their lowest for this time of the year, because of ample LNG supply and tepid demand growth with milder weather earlier in the heating season.

While the lower LNG prices create some demand in India, for example, overall demand in Asia this winter is certainly not growing at the record-breaking pace of the past three years. The reason—supply is more than enough, as new volumes continue to come out of the U.S., Australia, and to an extent, Russia.

Last month, a Singaporean buyer of a U.S. cargo of LNG canceled the loading, as both Asia and Europe are facing an LNG glut. Some other customers of U.S. LNG cargoes are also reportedly considering paying for those cargoes but not loading them, traders have told Reuters. 

By Tsvetana Paraskova for Oilprice.com
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 40219
    • View Profile
🛢️ 2020: The Year Of The Oil Bankruptcies
« Reply #927 on: December 28, 2019, 02:10:25 AM »
https://oilprice.com/Energy/Energy-General/2020-The-Year-Of-The-Oil-Bankruptcies.html

2020: The Year Of The Oil Bankruptcies
By Alex Kimani - Dec 27, 2019, 5:00 PM CST


A bankruptcy boom has hit the oil and gas industry, and it’s just getting started. Investors have lost their appetite for shale, and energy debt has become among the least desirable in the market.

The industry has been teetering on the verge of mass hysteria for much of 2019 as a record number of energy companies folded. 

According to Energy and Restructuring law firm Hayes and Boone’s, a grand total of 50 energy companies filed for bankruptcy during the first nine months of the year, including 33 oil and gas producers, 15 oilfield services companies and two midstream companies.

In contrast, 43 oil and gas companies filed for bankruptcy for the whole of 2018.

The biggest oil and gas bankruptcy of the year--indeed, the biggest since 2016--was EP Energy, which filed for bankruptcy in October, unable to pay back some $5 billion in debt.

Now, some observers are warning that the shakeout will pick up serious momentum in 2020.

Bingeing on Debt

During the latest shale boom, the putative class valedictorian of the modern energy industry, American drillers binged on mountains of readily available debt as they capitalized on investors and financiers willing to gamble on the premise that fracking operations could be significantly cheaper and more efficient than conventional drillers.
Related: US Energy Secretary: The Shale Boom Is Far From Over

Before long, oil markets were flooded with a deluge of the commodity far outstripping demand. In what few could have foreseen, the US became the world’s largest oil producer, with its nearly 13 million b/d output turning it from a net importer to a net exporter of crude. Predictably, prices tanked by a sizable margin, dropping to levels well below the breakeven points of many drillers.

Suddenly, investors became wary of the shale industry and energy debt became anathema.

They have good reason to be scared.

Companies with junk-rated bonds have been defaulting on interest payments at record levels, while dozens of smaller drillers that had saddled themselves with too much debt have been dropping like flies.

Now analysts see this taking an even sharper turn, with more mergers and more debt restructurings required to get the industry back in shape.

As Ken Monaghan, Amundi Pioneer co-director of high yield, has told CNBC:

“We’re at the early stages [of the shakeout]. The problem is some of these companies still have a bit of rope to go. they don’t have [debt] maturities that are coming up in 2020 and 2021. They’re going to try to outrun the clock and hope that oil prices move higher.”

Michael Bradley, energy strategist with Tudor, Pickering, Holt, has expressed a similar sentiment, saying that the market is no longer rewarding energy companies with aggressive expansion schemes, preferring instead to see profits and money returned to shareholders.

“Most people are saying we don’t want you to spend money on growth. We want you to give the money back because you guys are dummies.”

Monaghan says there are more distressed companies in the energy sector than in any other, with energy bonds only recently moving to the green after remaining in losing territory for much of the year thanks to the latest oil price mini-rally.
Related: Iraq’s 550,000 Bpd Oil Deal Is In Jeopardy

Bradley estimates that about $30 billion- $40 billion of high-yield energy debt [bonds] is now at risk. These companies have little choice but to seek bankruptcy protection and restructure if they hope to live to see another oil boom.

Catch 22

Shale drillers face a catch 22 situation because of the very nature of their business. Young shale wells decline at notoriously fast clips, with many depleting 70 percent to 75 percent of their reserves in the first year, thus forcing shale drillers to continue drilling new wells to replace lost supply. But with a freeze-out in debt and oil prices still low, they are bound to find it increasingly hard to keep up production.

Bradley sees many mid-cap oil companies resorting to mergers in order to survive with an estimated $2B-$7B in M&A deals over the next two years.

These won’t be the usual gilt-edged mergers with fat premiums, though, as the tie-up between WPX Energy and Felix Energy has proved. This was a smart and sober $2.5-billion tie-up that reflects the fact that investors have soured on the sector.

In other words, the consolidation wave that everyone seems to expect is going to focus on smart deals, or none at all.

This also means that large-cap independent players such as Concho Resources Inc. (NYSE:CXO) and Diamondback Energy Inc. (NASDAQ:FANG) are likely to see their market shares grow.

Ultimately, the ongoing shakeout is likely to leave the industry in a much better patch, though not so much for the consumer who will have to contend with higher oil prices thanks to higher levels of production discipline.

By Alex Kimani for Oilprice.com
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 40219
    • View Profile
🛢️ The Next Ten Years In Oil Markets
« Reply #928 on: December 29, 2019, 12:55:54 AM »
The idea you can make any kind of prediction about the Oil Market for the next decade is ludicrous.   ::)

RE

https://oilprice.com/Energy/Energy-General/The-Next-Ten-Years-In-Oil-Markets.html

The Next Ten Years In Oil Markets

By Tsvetana Paraskova - Dec 28, 2019, 6:00 PM CST


An eventful 2019 wraps up a decade of turmoil in oil markets, in which Brent Crude prices fluctuated from as high as US$125 a barrel in 2012 to as low as US$30 per barrel in January 2016. 

Geopolitical turmoil, economic growth, soaring U.S. shale production, and OPEC’s various policies to try to set the trends in oil prices marked the decade which is drawing to a close.

For the decade beginning in 2020, the key factors determining the price of oil are likely to be similar to those we have seen over the past decade, Andy Critchlow, Head of News, EMEA at S&P Global Platts, writes.

The state of the global economy, U.S. oil production and exports growth, and the OPEC+ alliance between the cartel and a dozen non-OPEC producers led by Russia will continue to influence the price of oil through 2030.

Geopolitical flare-ups and U.S. sanctions policies toward major oil producers, including Iran and Venezuela, will also shape the supply side of the market over the next few years.

On the demand side, the growing share of renewables in the energy mix and the increased use of electric vehicles (EVs) will begin to displace meaningful volumes of fossil fuel demand in power generation and oil demand in transportation over the next decade, many analysts say. Growing climate concerns may also start impacting investment decisions in new fossil fuel production, including oil.

The fundamental supply and demand picture will likely be ‘more of the same’, but the push and policies toward greener economies could be the new factor shaping oil markets and influencing oil prices over the next decade.

According to S&P Global Platts Analytics, alternative energy—including renewables, higher EV penetration, and hydrogen use—“will limit the overall call on fossil fuels.

“As we enter a new decade, the energy complex feels like it is all cascading towards a race to the bottom,” S&P Global Platts Analytics said in a research note.
Related: Why This Oil Price Rally Won’t Last

Many forecasts predict oil demand peaking at around 2030 or in the 2030s. Global oil demand will reach its peak in the mid-2020s and flatten out in the 2030s, the International Energy Agency (IEA) said in its latest annual World Energy Outlook.

“Oil demand for long-distance freight, shipping and aviation, and petrochemicals continues to grow. But its use in passenger cars peaks in the late 2020s due to fuel efficiency improvements and fuel switching, mainly to electricity. Lower battery costs are an important part of the story: electric cars in some major markets soon become cost-competitive, on a total-cost-of-ownership basis, with conventional cars,” the IEA said in its outlook to 2040.

Unsurprisingly, OPEC continues to see oil as the fuel with the highest share in the global energy mix through 2040. The Organization of the Petroleum Exporting Countries expects EVs to hold a share of just 13 percent of the global car fleet in 2040 and sees the majority of the growth still coming for conventional internal combustion-engine vehicles.

OPEC has also been warning since the oil price crash in 2015-2016 that reduced investments in conventional oil after the price plunge will start to impact global oil supply in the 2020s. Through 2040, the world will need US$10.6 trillion in total investments in oil, OPEC said in its World Oil Outlook 2019 in November.

In the new decade, OPEC and its allies in the current OPEC+ pact will have to reckon with U.S. shale production, where growth is slowing these days as prices remain bound in a narrow range. But U.S. production will still grow in 2020, by more than 1 million bpd, according to nearly all major forecasts. U.S. shale production is expected to start declining in the middle or late 2020s, according to OPEC’s estimates.

The OPEC+ alliance will be tested as early as this coming March, when the partners are meeting to discuss how to proceed with their production cuts.

The coming decade will also test how (ir)relevant OPEC is on the global oil market, considering the supply growth from countries outside the production pact, the rising share of renewables and EVs amid falling technology costs, and growing concerns about climate change.

Global economic growth and recessions will undoubtedly also impact oil demand and oil prices over the next decade. So will the ever-restive Middle East with the Saudi-Iran antagonism and global powers vying for influence in a region home to one fifth of the world’s daily oil supply.

By Tsvetana Paraskova for Oilprice.com
Save As Many As You Can

Offline Surly1

  • Administrator
  • Master Chef
  • *****
  • Posts: 17526
    • View Profile
    • Doomstead Diner
Re: 🛢️ The Next Ten Years In Oil Markets
« Reply #929 on: December 29, 2019, 05:56:43 AM »
The idea you can make any kind of prediction about the Oil Market for the next decade is ludicrous.   ::)
RE

https://oilprice.com/Energy/Energy-General/The-Next-Ten-Years-In-Oil-Markets.html

The Next Ten Years In Oil Markets



No kidding. The only thing for sure...

"Do not be daunted by the enormity of the world's grief. Do justly now, love mercy now, walk humbly now. You are not obligated to complete the work, but neither are you free to abandon it."

 

Related Topics

  Subject / Started by Replies Last post
Oil Price Crash!!!

Started by RE « 1 2 ... 10 11 » Podcasts

162 Replies
42188 Views
Last post January 15, 2015, 05:57:20 AM
by MKing
1 Replies
1818 Views
Last post December 15, 2014, 05:33:25 AM
by MKing
The Crash of 2015: Day 29-30

Started by Thomas Lewis Energy

0 Replies
1283 Views
Last post February 03, 2015, 01:08:53 AM
by Thomas Lewis