November 30, 2016
OPEC in First Joint Oil Cut with Russia Since 2001, Saudis Take “Big Hit”
Posted on: November 30, 2016, Reuters
By Rania El Gamal, Alex Lawler, and Ahmad Ghaddar | VIENNA
Non-OPEC Russia will also join output reductions for the first time in 15 years to help the Organization of the Petroleum Exporting Countries prop up oil prices.
Brent crude jumped over 9 percent to more than $50 a barrel as Riyadh reached a compromise with Iran and after fast-growing producer Iraq also agreed to curtail its booming output.
“OPEC has proved to the sceptics that it is not dead. The move will speed up market rebalancing and erosion of the global oil glut,” said OPEC watcher Amrita Sen from consultancy Energy Aspects.
Iran and Russia are effectively fighting two proxy wars against Saudi Arabia, in Yemen and Syria, and many skeptics had said the countries would struggle to find a compromise amid frosty political relations.
Saudi Energy Minister Khalid al-Falih said ahead of the meeting that the kingdom was prepared to accept “a big hit” on production to get a deal done.
“I think it is a good day for the oil markets, it is a good day for the industry and … it should be a good day for the global economy. I think it will be a boost to global economic growth,” he told reporters after the decision.
OPEC produces a third of global oil, or around 33.6 million barrels per day, and under the Wednesday deal it would reduce output by around 1.2 million bpd from January 2017.
Saudi Arabia will take the lion’s share of cuts by reducing output by almost 0.5 million bpd to 10.06 million bpd. Its Gulf OPEC allies – the United Arab Emirates, Kuwait and Qatar – would cut by a total 0.3 million bpd.
Iraq, which had insisted on higher output quotas to fund its fight against Islamic State militants, unexpectedly agreed to reduce production – by 0.2 million bpd.
For a table on the cuts, click on [L8N1DV5SZ]
Iran was allowed to boost production slightly from its October level – a major victory for Tehran, which has long argued it needs to regain market share lost under Western sanctions.
“Russia will gradually cut output in the first half of 2017 by up to 300,000 barrels per day, on a tight schedule as technical capabilities allow,” Russian Energy Minister Alexander Novak told a briefing in Moscow.
Novak, who spoke an hour after OPEC announced its deal, did not say from which output levels Russia would cut.
A combined output reduction of 1.8 million bpd by OPEC and non-OPEC represents almost 2 percent of global output and would help the market clear a stocks overhang, which had sent prices crashing from levels as high as $115 a barrel seen in mid-2014.
Non-OPEC Azerbaijan and Kazakhstan have said they might also cut.
OPEC suspended Indonesia’s membership on Wednesday since the country, a net importer, could not cut output, Qatar said.
The move will not affect OPEC’s overall reduction as Indonesia’s share of cuts will be redistributed among other members.
Bob McNally, president of Washington-based consultancy Rapidan group, said on Twitter that compliance with cuts would be key: “In deals with Russia, OPEC is like (the late U.S.) President (Ronald) Reagan used to say: ‘Trust but verify’.”
OPEC will hold talks with non-OPEC producers on Dec. 9. The organization will also have its next meeting on May 25 to monitor the deal and could extend it for six months, Qatar said.
(Additional reporting by Vladimir Soldatkin, Shadia Nasralla and Lisa Barrington; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)
November 29, 2016
Trudeau says “yes” to Trans Mountain, Line 3 Pipeline Projects, rejects Northern Gateway
Posted on: November 29, 2016, EnergyNow Media
(By: The Canadian Press)
OTTAWA — Prime Minister Justin Trudeau is approving Kinder Morgan’s proposal to triple the capacity of its Trans Mountain pipeline from Alberta to Burnaby, B.C. — a $6.8-billion project that has sparked protests by climate change activists from coast to coast.
Trudeau is also effectively killing the proposed Northern Gateway pipeline across northern British Columbia, but giving a green light to Enbridge’s lesser-known $7.5-billion Line 3 pipeline expansion from Alberta to Wisconsin.
The Liberals had promised a decision on Kinder Morgan by Dec. 19 but decided to announce all the pipeline decisions at once ahead of a Dec. 9 meeting between Trudeau and the provincial and territorial premiers.
“We are under no illusions that the decision we made today will be bitterly disputed by a number of people across the country who would rather we had made another decision,” Trudeau — flanked by a number of his senior cabinet ministers — told a news conference in Ottawa.
“We took this decision today because we believe it is in the best interests of Canada and Canadians. And as long as Kinder Morgan respects the stringent conditions put forward by the National Energy Board, this project will get built — because it’s in the national interest of Canadians, because we need to get our resources to market in safe, responsible ways, and that is exactly what we’re going to do.”
Trudeau, who described spending much of his childhood on Canada’s west coast and living for a number of years in British Columbia while working as a teacher, insisted his government was making the right call.
“Others will be opposed to this project for their own reasons,” he said. “We respect that … but to them and to all Canadians, I want to say this: If I thought this project was unsafe for the B.C. coast, I would reject it.”
He said the project would create 15,000 new middle-class jobs, the majority of them in the trades, and would meet stringent environmental standards while also adhering to the federal government’s national climate plan.
That includes 157 binding conditions set out by the National Energy Board, he added, noting that the project would not have been approved without the government of Alberta’s own carbon-pricing efforts and cap on oilsands emissions.
The decision to close the book on Northern Gateway came as a surprise to no one. But Trudeau added a corollary: a moratorium on crude oil tanker shipping on B.C.’s north coast, something the Liberals promised in the 2015 election campaign.
Alberta’s NDP premier Rachel Notley, who met earlier in the day with Trudeau, lauded the prime minister for his leadership as she promised her own constituents a brighter day ahead as a result of the approval.
“Today we are finally seeing some morning light,” she said in a statement.
“We are getting a chance to break our landlock. We’re getting a chance to sell to China and other new markets at better prices. We’re getting a chance to reduce our dependence on one market, and therefore to be more economically independent…. of equal importance, we are building the economy within a strong new national environmental policy.”
Indigenous leaders and environmental leaders who spoke earlier in the day appeared resigned to the government’s decision, but far from prepared to give up their fight.
“The struggle will simply intensify,” said Grand Chief Stewart Phillip of the Union of British Columbia Chiefs. “It will become more litigious, it will become more political and the battle will continue.”
There are no conditions under which the chiefs would have been willing to agree to the project, Phillip added.
“The risks are just too grave. The tanker traffic in Burrard Inlet will increase by 700 per cent and it’s inevitable that there will be a collision in a very congested inlet.”
Grand Chief Derek Nepinak of the Assembly of Manitoba Chiefs said the federal government simply doesn’t have the blessing of Canada’s aboriginal community to approve the project.
“They’re not going to exclude us the second time. They don’t have consent to come through our treaty lands without us,” he said.
“Now’s our opportunity to send a clear message that we demand that we’re listened to. The standard of consent is one of consensus amongst our people. And I don’t see a day where our people will consent to destruction of the land, to destruction of the water. I just don’t see it.”
Earlier Tuesday, the broad strokes of a year-long Liberal government effort to position the government between fossil fuel development advocates, indigenous groups and climate policy hawks played out during question period in the House of Commons.
Rona Ambrose, the Conservative interim leader, said it is not enough for the Liberals to approve major pipelines; it must then “champion them through to the end” in order to see that they actually get built.
NDP Leader Tom Mulcair, by contrast, accused the Liberals of a “Goldilocks approach” that has browbeat the Liberal party’s own environmentally conscious, anti-pipeline MPs into silence.
Trudeau was happy to claim the middle ground.
“One side of this House wants us to approve everything and ignore indigenous communities and environmental responsibilities,” he said.
“The other side of the House doesn’t care about the jobs or the economic growth that comes with getting our resources to market.”
The stalled Northern Gateway oil pipeline from Alberta through the Great Bear Rain Forest to Kitimat, B.C., had so far been thwarted in the courts for lack of proper indigenous consultation.
The less prominent Enbridge project will see the half-century-old Line 3 pipeline from Alberta through southern Saskatchewan and Manitoba to the United States replaced by an entirely new line about twice the current pipeline’s working capacity.
The Trans Mountain and Line 3 expansions alone would boost pipeline capacity by more than 1.1 million barrels per day.
The pipeline decisions follow weeks of Liberal government announcements designed to show it is serious about combating climate change, including an accelerated coal phase-out and a national floor price on carbon emissions starting in 2018.
Trudeau confirmed Tuesday that he’ll be holding a first ministers meeting with provincial and territorial premiers as well as indigenous leaders on Dec. 9 in Ottawa, where the pan-Canadian climate plan will be the main focus of the agenda.
U.S. Vice-President Joe Biden will also be making a visit to Ottawa on Dec. 8-9 to meet with the first ministers — perhaps one last opportunity for the Liberals to showcase their environmental policy entente with outgoing President Barack Obama before president-elect Donald Trump’s inauguration in January.
— Follow @BCheadle on Twitter
Bruce Cheadle , The Canadian Press
November 9, 2016
Oil Erases Losses as Market Turmoil Abates After Trump Victory
Posted on: November 9, 2016, EnergyNow Media
Oil erased losses as global markets adjusted to Republican Donald Trump’s election as the 45th U.S. president.
Futures were little changed in New York, reversing an earlier decline of 4.3 percent. Turbulence in financial markets calmed and a knee-jerk selloff of risky assets abated as Trump, 70, promised to try to unite America’s divided political factions after his victory over Hillary Clinton.
The result nonetheless rattled markets that had banked on a continuation of economic and trade policies under a Democrat president. Most polls had shown Clinton ahead of Trump going into the vote and websites that took bets on the victor had put her odds of winning at 80 percent or more.
Read more: Commodities in turmoil as Trump’s victory shocks investors
“The market’s first reaction to Trump’s victory is risk-off, with the liquidation of positions built up on Monday on expectations of a Clinton win,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “But Trump’s acceptance speech sounded bipartisan, pro-growth and diplomatic, so some of the negative fears have waned.”
West Texas Intermediate for December delivery fell 1 cent to $44.97 a barrel on the New York Mercantile Exchange at 11:14 a.m. London time, after dropping as much as $1.91 to $43.07. Total volume traded was almost four times the 100-day average.
Brent for January settlement rose 14 cents, or 0.3 percent, to $46.18 a barrel on the London-based ICE Futures Europe exchange. The contract declined 11 cents to $46.04 on Tuesday. The global benchmark traded at a 54-cent premium to WTI for January delivery.
Trump was pushed over the 270 Electoral College votes needed to become the president-elect and the Republicans also retained control of Congress. Trump has pledged to clamp down on immigration to the U.S. and renegotiate free-trade agreements with countries including Mexico.
In a special report on Nov. 7, Societe Generale SA said the election outcome wouldn’t have a profound impact on oil, while analysts at Nomura Holdings Inc. had said a Clinton victory combined with an OPEC deal could trigger sharp price rebounds.
In the longer term, the reaction in oil markets to the election result would likely take a back seat to questions over whether OPEC will be able to complete a deal to restrain output at its late-November meeting in Vienna.
“Oil prices are in for some volatility until the dust settles,” said Tushar Tarun Bansal, director at industry consultant Ivy Global Energy in Singapore. “It does add to the long-term uncertainty about the global markets.”
Oil has retreated below $45 a barrel following the Organization of Petroleum Exporting Countries’ failure to agree on output quotas for member countries on Oct. 28. The group must reach a consensus before finalizing its September deal to cut production. OPEC’s chief warned of prolonged market instability if there is no agreement to limit supply.
Other raw materials and the companies that produce them were whipsawed by Trump’s shock victory. Agricultural commodities declined while industrial metals rebounded from earlier losses and gold surged with haven assets.
In other oil market news:
Militants blew up the Forcados oil pipeline in Nigeria, Niger Delta Avengers’ spokesperson Mudoch Agbinibo wrote on Twitter. U.S crude supplies rose by 4.4 million barrels last week, the American Petroleum Institute was said to report Tuesday. Government data Wednesday is forecast to show stockpiles gained 2 million barrels. Energy companies led declines in Asia. Australian producer Santos Ltd. dropped 7.5 percent, the most since May. China Petroleum and Chemical Corp., the world’s biggest refiner known as Sinopec, slumped as much as 7.8 percent during intraday trading in Hong Kong. Trump may turn U.S. energy policy on its head, as his plans are “basically the antithesis of the current administration’s and Ms. Clinton’s planned pro-clean energy proposals,” JBC Energy said in an e-mailed report.
November 1, 2016
Want to Start a Junior Oil Company? It’ll Cost You $100 Million
Posted on: November 1, 2016, EnergyNow Media
Juniors are getting larger, better capitalized and will soon only work in the very best production areas
BY MARKHAM HISLOP
Like everyone else in the global oil patch, Canadian junior oil and gas companies have had a rough time of it. The oil price rout engineered by the Saudis and OPEC that began in the second half of 2014 left a trail of failed juniors in its wake. But not often discussed is the additional pressure of low natural gas prices caused by the “shale gale”—as industry veterans call it—out of the U.S. With few exceptions for the best-managed firms, those juniors clinging to life after two years of bust are suffering battered and bruised balance sheets. And when the inevitable upturn arrives, juniors may be confronted with a transformed industry that is not as hospitable as in years past.
“I think the juniors and intermediates will reflect a smaller group of companies that have survived and thrived through this difficult period and come out stronger on the other side”
– Gary Leach
Most Canadians think of 2014 as the start of the downturn in the energy sector. But Gary Leach, CEO of the Explorers and Producers Association of Canada, says natural gas-weighted juniors were already suffering since prices dropped in response to the flood of cheap gas unleashed by U.S. shale producers. After peaking at almost US$14 per Mbtu in 2008, prices plummeted and today they remain under $3. Canadian exports to the U.S. peaked in 2007 at well over 4,500 Bcf and last year were under 3,000 Bcf, according to the U.S. Energy Information Administration. “The entire business model for Canadian natural gas producers, especially those weighted more toward gas, was in trouble,” says Leach.
Juniors adapted by switching to more liquids-rich natural gas because propane, butane, ethane, and condensate were priced off oil benchmarks, which were much more robust. And as the gap between gas and oil prices widened, investors pressured management teams to chase more oil. “The initial wave of transition was through the natural gas side of the business and it forced a lot of companies to change their business model,” says Leach. “The world we had five years ago was marked by a big difference between those fortunate enough or clever enough to be liquids and oil-weighted and those that were dry gas-weighted.”
Another change that marked the new business model for juniors was a shift away from raising capital on public markets and, instead, tapping private equity. “A point of departure between the Canadian oil patch and other countries has been the heavy reliance by Canadian companies on public capital markets,” says Leach. Even less than a decade ago the TSX and TSX Venture exchanges were full of micro-caps and juniors. All that changed after the financial collapse of 2008 dragged on for two years and sent investors fleeing into T-bills and bonds. After the carnage stopped, investors’ appetite for scrappy management teams with an inside play or a technological advantage rapidly diminished. Only 20 publicly traded juniors remain, says Patrick O’Rourke, an analyst with AltaCorp Capital, who follows junior and mid-cap producers. Fortunately, private equity stepped up. Managers recognized the opportunity to build value, especially after oil prices took off after 2011. “A lot of Canadians don’t realize it but the Canadian Pension Plan, the Ontario Municipal Employee’s Pension Plan, the Ontario Teacher’s Pension Plan, all of these big government and union pension plans are big investors in the Canadian oil patch,” says Leach.
And then the second shoe dropped in the fall of 2014. Saudi Arabia opened the taps wide, flooding global oil markets and sending prices into free fall. West Texas Intermediate briefly dipped below $30 at one point last winter—with Western Canadian Select languishing in the lower $20s—sending a chill over an already struggling junior sector. Junior companies began failing left and right. By the summer of 2016, the Land Integrity Foundation estimated as many as 230 juniors were teetering on the brink of bankruptcy. Companies shifted to survival mode, sometimes ripping up service contracts and asking vendors to rebid, or even using reverse auction websites to drive suppliers to the lowest possible price, says Mark Salkeld, CEO of the Petroleum Service Association of Canada.
The upturn isn’t far off, as oil markets slowly rebalance during the fall of this year and appear poised to test $60 per barrel—or perhaps much higher, according to some economists—sometime in 2017, and gas looks to be headed north of $3 per Mbtu based on supply concerns. What might the Canadian junior oil and gas sector look like in a revitalized oil patch? Much different, according to Leach, Salkeld and O’Rourke.
For starters, companies will likely be much bigger. No one agrees on a precise definition of the proper size of a junior, but 500 to 10,000 boe/d is a common yardstick, which will likely become quite a bit longer in the next five to 10 years. “I think the juniors and intermediates will reflect a smaller group of companies that have survived and thrived through this difficult period and come out stronger on the other side,” says Leach. “They’ll be larger, better capitalized, and probably only working in the very best production areas because marginal production areas with high costs just won’t be economic.”
One of the reasons for higher costs will be government regulations. The election of the NDP in Alberta and the Liberals nationally has dealt industry a double-whammy, according to Leach. Canada has always been a high-cost place for the oil and gas industry to do business, he argues, but the past 18 months have compounded the problem. The Alberta carbon tax, with perhaps a national version tacked on for good measure; fugitive methane emission reduction; the cost of addressing abandoned wells…the list goes on. Add to it delay—or even non-approval—for new pipeline projects and the prospects look daunting. “The cost of doing business in Western Canada is very high, and I’ve worked all over the world,” says Leach. “Canada and provincial governments have got to provide investment and regulatory certainty.”
Change is certainly coming to the Canadian oil and gas services sector, which could be both good and bad for juniors, says Salkeld. Good because as producers shed staff and expertise, service providers are expanding their technical offerings, allowing customers to remain lean and competitive with less overhead. “The service providers took on more and more of the technology to deliver successful wells,” he says. “Now, producers are looking to the service companies for their hydraulic fracturing or cementing or well completion or optimization expertise. The relationship between small producer and service company is going to be different coming out the other side of this downturn.” But Salkeld also worries that juniors that burned bridges with service companies to drive down costs and survive may not be the highest priority when good times return. “If the small guys ripped up contracts or wheedled us down to nothing, but bigger customers didn’t, our members are going to stick with the customers that stuck with them,” he says.
Even if a service company is willing to forgive a junior’s survival tactics, it may not have enough trained workers to provide the services. Salkeld and Leach warn that oil and gas lost tens of thousands of trained and skilled workers over the past two years, many of whom have left the industry; quite a few won’t be coming back. “It’s going to take a long time to ramp back up. We’ve passed the point of rebounding quickly. It’ll be a while now, we just lost too many people,” says Salkeld, who notes that the West drilled 10,000 to 12,000 new wells annually before the downturn, but current levels are only a quarter of the peak. Ramping up, he says, will be a “long, slow process.”
One bright spot in the near-term is the role new technologies and techniques have played since 2014 in driving down costs. U.S. shale producers have been particularly aggressive given their steep decline rates, but the flow of expertise across the border is pretty much seamless, says Leach. Producers are refracking wells, experimenting with fewer and more strategically placed frack stages, lowering the number of days required to drill, adopting Big Data/analytics strategies, and managing supply chains better, to name a few approaches. “The technologies that we’re using in the oilfield services for drilling, completions, hydraulic fracturing, multi-well pads, economies of scale—that’s all grown significantly in the past four or five years,” says Salkeld. Juniors can expect to benefit from the innovations, but some take a less technology-intensive approach, according to O’Rourke: “For the companies that are exploring, they’re taking exploratory risks and in some cases want to minimize technology risk.”
O’Rourke adds that going forward, investors will support juniors that have the same ingredients they’ve always looked for: a high quality management team, “good rock,” and a strong balance sheet. But there is no denying juniors will face headwinds. “You’re no longer doing the friends and family round and raising a million or two. At the very low end I’d say you need $50 [million] to $100 million, maybe even more than that,” he said.
The days of plucky upstart Canadian juniors starting with a shoestring budget and a smart management team, then selling out to a larger company or maybe growing to be a thriving mid-cap, appear to be over. The “lower for longer” price environment coupled with much higher capital requirements and the need for ever more technology favor bigger players. Not that there won’t always be dozens of juniors trying, say experts, but the odds are getting longer and longer that they will be successful.
For information on how to subscribe to Alberta Oil Magazine CLICK HERE
October 18, 2016
OPEC Reversal Is Gift to Oil Majors After 2 Years of ‘Hell’
Posted on: October 18, 2016, EnergyNow Media
When the bosses of the world’s biggest oil companies gather in London on Tuesday, they might have the urge to track down the Saudi energy minister and shake him by the hand.
After two years pursuing a Saudi-led strategy to pump without limits, pummeling industry earnings, OPEC has unexpectedly come to the aid of the oil majors. Last month, it surprised the market by deciding to cut production and put a floor under volatile crude prices.
The question now is how soon they will resume drilling. Prices are near levels where many majors have said they can start investing again after billions of dollars of spending cuts and thousands of job losses sent discoveries to the lowest level in 70 years. In U.S. shale fields, explorers are already adding rigs, boosting oilfield work to the highest since February.
“After all the hell we’ve had, there should be a pick-up now,” said Danilo Onorino, a portfolio manager at Dogma Capital SA, which owns oil companies’ bonds. “The industry has been damaged in the past two years and things need to start improving.”
Saudi Arabia’s Energy Minister Khalid Al Falih has said getting explorers to start drilling again is one of the reasons behind the OPEC deal. He’ll be joined at the Oil and Money conference by company bosses that include BP Plc’s Bob Dudley, Rex Tillerson of Exxon Mobil Corp. and Chevron Corp.’s John Watson.
“He needs to convince everyone to start investing again else there is a big supply crisis coming,” Onorino said. “If prices remain at these levels for about six months, the industry’s spending should start moving higher.”
Oil’s slump has forced Saudi Arabia, OPEC’s de facto leader, to cut fuel subsidies and even borrow money to finance its budget. Though the kingdom needs higher prices, it will be wary of a jump that could spur development of alternative energies and limit demand for its vast resources of crude.
While Brent has climbed as high as $53.73 a barrel since oil producers announced a preliminary deal in Algiers on Sept. 28, prices remain at less than half their mid-2014 level. Still, if crude holds above $50, it may be enough to encourage spending by an industry made leaner by two years of cost cuts. The global benchmark added 0.5 percent to $51.80 at 10:09 a.m. London time.
Total SA, France’s largest oil company, is “almost happy” to see crude at $50 to $55, Chief Executive Officer Patrick Pouyanne said in Istanbul on Oct. 11. The CEO welcomed OPEC’s decision to limit supply, saying that investment cuts in the industry had blocked new projects, threatening to cause an oil shortage by 2020.
Investments are coming back, but only for the best projects, BP’s Dudley said at the Oil & Money conference Tuesday. For now, the company is unlikely to invest in costly deepwater or frontier exploration projects, he said.
BP has said it will be able to balance cash flow with shareholder payouts and capital spending at $50 to $55 a barrel next year. The company is taking on more debt to maintain dividends and is keeping investments low, cutting to below $17 billion this year from $23 billion in 2014. Dudley aims to get about 75 percent of the cost reductions from the lean times to “ stick,” he said on Tuesday.
“We can’t lose our discipline on costs at any time, or let capital expenditure slide out of tight control,” Dudley said in a speech last week in Istanbul. In the past, “we have let costs drift up when prices are high, then cut back when prices fall.”
OPEC’s policy of pumping at full throttle in spite of low prices to defend market share punished drillers. At the same time, it drove down operating expenses and compelled companies to find creative ways to save money. Because the majors have succeeded in pushing costs so low, they’re well-positioned to benefit if prices rise, said Iain Armstrong, a London-based analyst at Brewin Dolphin Ltd., which owns shares in both Shell and BP.
“Shareholders have been united in forcing cash conservation, project cancellations and the preservation of dividends,” said Alex Blein, a portfolio manager at Amundi, which manages more than $1 trillion of assets, including shares in Exxon and Chevron. “Higher prices will help cash generation and repair damaged balance sheets.”
For companies to start spending, the recent oil rally must be sustained. Even at the OPEC meeting at Algiers, fractures within the group emerged that threaten to derail a final agreement on quotas, expected in Vienna on Nov. 30. The deal, the first to cut output in eight years, will probably exempt some members, including Iran, Libya and Nigeria, which want to boost production after prolonged output disruptions.
“OPEC’s apparent change of heart is a big surprise, and the market is naturally skeptical as OPEC is notoriously non-compliant with its own targets,” Blein said. “What is interesting this time round is, firstly, the consistency of Saudi support for lower production and, secondly, their willingness to exclude Iran from the cuts.”
There’s also the question of whether any cut by OPEC will be made irrelevant by a potential increase in non-OPEC production. Russia, currently pumping at a record pace, hasn’t said whether its commitment is to an output cut or just a freeze. In any case, it hasn’t made good on previous pledges to cooperate with OPEC.
In the U.S., the recent slide in output could quickly swing to growth as shale drillers, encouraged by higher prices, have increased the number of oil rigs for seven consecutive weeks to the highest level since February.
For now at least, the OPEC deal means the specter of $30 or even $40 crude is gone, and the oil companies have emerged stronger from their ordeal, said Brewin Dolphin’s Armstrong.
“These are profound changes that mean we need to be competitive in a way that’s different from the past,” BP’s Dudley said. “From now on, the challenge is to build — and sustain — businesses that are good through all cycles.”
October 6, 2016
Saudi Aramco IPO Will Offer Stake in All of Company’s Operations
Posted on: October 6, 2016, BOE Report
The world’s biggest oil company is planning to sell shares in the entire business and not just in its refining or distribution operations, its chief executive officer said in an interview.
Saudi Arabian Oil Co., known as Saudi Aramco, will announce “very soon” a list of investment banks and consultants advising it on the initial public offering, CEO Amin Nasser said in Bahrain. without specifying a date. It plans to list shares on the Saudi stock market and is also considering foreign bourses in London, Hong Kong and New York, he said. Its plan to sell a stake of about 5 percent could value the company in trillions of dollars.
“We need to do a lot of internal work to prepare for this listing,” Nasser said. “We are listing a part of the entire company, and not just downstream,” he said, referring to operations including refining and distribution.
Saudi Arabia, under pressure from lower crude prices, wants to sell shares in Aramco in early 2018 as part of an effort to generate revenue and reform its economy. The government hopes to raise about $100 billion from the planned IPO of its flagship asset.
“There are no obstacles for the IPO of Aramco,” Nasser said. “It’s going very smoothly, and we are on target. We achieved a lot of progress so far. People have to appreciate the size of Aramco and its complexity.”
September 23, 2016
Oil Rebounds as Saudi Arabia Said to Offer Output Deal to Iran
Posted on: September 23, 2016, EnergyNow Media
Oil rebounded to head for a weekly gain after Saudi Arabia was said to have offered to reduce production if Iran agreed to freeze its output.
Futures were little changed after earlier declining as much as 1.9 percent in New York. The kingdom would be willing to reduce its output if Iran were to agree to freeze at its current production level of 3.6 million barrels a day, according to two people familiar with the situation who asked not be identified because the talks were private. The talks between the two nations ended without agreement Thursday. Now is the right time for a deal, according to Falah Al-Amri, Iraq’s governor to OPEC. Prices are unlikely to climb above $50 a barrel unless the group reduces production, he said.
Oil has fluctuated since August’s rally on speculation the Organization of Petroleum Exporting Countries and Russia will agree on ways to stabilize the market when they meet Sept. 28. While Venezuelan President Nicolas Maduro said members are close to a deal, all but two of 23 analysts surveyed by Bloomberg said an agreement to limit production is unlikely. Freezing output was proposed in February, but a meeting in April ended with no final accord.
“There is unlikely to be a voluntary limit to production,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “Such an agreement would be at odds with OPEC’s current strategy of defending its market shares.”
West Texas Intermediate for November delivery was at $46.41 a barrel, 9 cents higher on the New York Mercantile Exchange at 12:15 p.m. in London. The contract advanced 98 cents to $46.32 on Thursday, the highest close in two weeks. Total volume traded was about 39 percent below the 100-day average. Prices are up 7.8 percent this week.
Brent for November settlement gained 37 cents to $48.02 a barrel on the London-based ICE Futures Europe exchange after rising 1.8 percent to $47.65 on Thursday. Prices are up 4.9 percent this week. The global benchmark was at a $1.60 premium to WTI.
For a story on the supply challenge pressuring OPEC to act, click here.
Saudi Arabia and Iran met at OPEC headquarters in preparation for informal talks in Algiers, according to two people briefed on the discussions. OPEC Secretary-General Mohammed Barkindo visited Qatar and Iran this month to build consensus before the gathering. Russian President Vladimir Putin said Sept. 2 that the producers can overcome their divisions to reach a deal.
Market conditions are better than they were in April, Iraq’s Al-Amri said at an energy event in Fujairah in the United Arab Emirates. Nigeria’s planned output boost gathered pace as the African country issued programs to load two grades of crude that have been blocked for months following militant attacks on pipelines. Canada is sending a record amount of oil to the U.S., filling pipelines to capacity and threatening to push more crude into rail cars.
August 17, 2016
Posted on: August 17, 2016, EnergyNow Media
OPEC is on course to strike an output-freeze deal with fellow oil producers in Algiers next month because its biggest members are already pumping flat-out, the group’s former president said.
While a similar initiative failed in April, an agreement can now be reached as Saudi Arabia, Iran, Iraq and non-member Russia are producing at, or close to, maximum capacity, Chakib Khelil said in a Bloomberg Television interview. Khelil steered OPEC in 2008, the last time it implemented an output cut, which was announced in Algeria in December of that year. In a separate interview, former Qatari Energy Minister Abdullah bin Hamad al-Attiyah was convinced there is a need for an accord.
“All the conditions are set for an agreement,” Khelil said from Washington. “Probably this is the time because most of the big countries like Russia, Iran, Iraq and Saudi Arabia are reaching their top production level. They have gained all the market share they could gain.”
While oil prices have advanced since OPEC announced it would hold informal talks in the Algerian capital next month, analysts from UBS Group AG to Commerzbank AG doubt any freeze deal will be completed, and comments from Saudi Arabia and Nigeria have kept expectations low. Talks collapsed in April as Saudi Arabia insisted Iran would have to limit its production, a condition the country rejected as it ramped up exports previously curbed by sanctions.
As producers are almost pumping at full-tilt, the impact of any accord to prevent further increases would essentially be “psychological,” Khelil said. That would nonetheless have a benefit for the market, according to the Algerian, who was also the country’s energy minister from 1999 to 2010. The global crude oversupply is already diminishing, and markets will probably reach “complete equilibrium” next year, Khelil said.
Qatar’s Al-Attiyah, speaking by phone, said the re-balancing is proceeding slowly and there is a need for global producers to act together and speed up the process. He said it’s “really hard to say” whether anything will be agreed in Algiers.
“OPEC and other producers need to do something because for the market to rebalance on its own that will take a lot of time,” Al-Attiyah said. “Even next year, we have to be cautious and not expect that the market will rebalance quickly.”
Still, both former ministers agreed that a freeze, even if it’s only symbolic, would revive the bullish mood among oil investors and traders.
“The freeze deal will not have a huge impact on fundamentals but it will help improve the market sentiments,” Al-Attiyah said. “At the end, a step taken is better than doing nothing.”
July 12, 2016
Alberta to Cut Royalty Rates in Effort to Squeeze Out More Oil, Gas Production
Posted on: July 11, 2016, EnergyNow Media
By: The Canadian Press
CALGARY — The Alberta government is introducing two new royalty programs to encourage the energy sector to spend more on developments in their early stages and squeeze more oil and gas from underutilized existing operations.
Under the programs, companies would pay reduced royalty rates on those projects for a longer period.
CEO Tim McMillan of the Canadian Association of Petroleum Producers says the new royalty system recognizes the higher risks and greater costs of drilling associated with emerging developments and wringing out as much oil and gas from ongoing operations.
The changes were recommended by the provincial royalty review advisory panel in January.
They are to take effect as of Jan. 1, at the same time as Alberta’s overall new royalty framework.
The Canadian Press
June 23, 2016
Saudi Arabia Declares Cease-Fire in Oil War
By Leonid Bershidsky on 6/23/2016 (Bloomberg)
The new Saudi oil minister, Khalid Al-Falih, says the oil glut is over. That means the kingdom’s war against U.S. shale producers is coming to an end, too. Who won it is a tough question to answer; on balance, it’s probably the Saudis, but they have paid a huge price, and the surviving U.S. frackers have also benefited.
In September 2014, Saudi Aramco, the kingdom’s state oil company, simultaneously increased output and discounts to Asian customers, making it difficult for producers with higher costs to compete. The U.S. shale industry responded with desperate bravado, cutting costs, perfecting technologies and pumping like crazy to avoid defaulting on its debts. Yet, according to Haynes and Boone’s Oil Patch Bankruptcy Monitor, 81 North American oil and gas companies have filed for bankruptcy since the beginning of 2015. In Texas alone, there have been 41 bankruptcies, representing $24.3 billion in debt.
As a result, U.S. oil production has declined to late 2014 levels, while Saudi Arabia has defended and indeed increased its market share. Last year, it maintained its export volume to the U.S., while sales to China grew by 4.5 percent and to India by 18 percent.
The North American shale industry knows now that it’s at the mercy of Saudi Arabia. The kingdom has more than two million barrels a day — perhaps even three million if necessary — of spare production capacity that it can use to flood the market again, drive down prices and render any ambitious American plans useless.
This is Our Patch
Saudi Arabia and Russia increased their crude oil output (in thousands of barrels a day), while the U.S. retreated.
Al-Falih takes a long-term view and expects the oil market to grow, not decline, in absolute terms in the next two decades, despite adverse changes in the energy mix. “Even if the share of oil goes down from, say, 30 to 25 percent, 25 percent of a much bigger global demand means a much higher absolute number of barrels that will be in demand by 2030 or 2040,” he told The Houston Chronicle. So it makes more sense to fight for long-term market share rather than a momentarily high price. In that regard, the Saudis have won the oil war.
The repercussions and costs of this victory, however, are harsh. The monetary loss is the most obvious one: At its current output level of 10.2 million barrels a day, Saudi Aramco is making $600 million a day less than if the oil price had stayed above $100 a barrel. The U.S. shale business is missing out on about as much revenue, considering it has lost 1 million barrels a day of production compared with its peak, but the U.S. economy has, on balance, benefited from lower oil prices, while the Saudi one has suffered because it’s almost entirely oil-dependent. This is prompting the big policy rethink in Riyad. As Al-Falih, an ally of reform architect Prince Mohammed bin Salman, said in the Houston Chronicle interview, “Nobody has the intention of turning off the oil economy in Saudi Arabia. We’re trying to build it up. But what we hope while we’re doing this is the non-oil economy will grow even faster.”
The Saudi victory is also hollower than it might be because some of the kingdom’s competitors did not retreat — on the contrary, they, too, boosted production. While private U.S. companies responded as expected to overwhelming market pressure — they consolidated, worked on costs, cut investments or went belly up — the Saudis’ major competitor, Russia, redoubled efforts to pump as much oil as it could, because most of the production is concentrated in government hands and the government needed the revenue. Also, Iran, Saudi Arabia’s perennial rival, got a free ride after international sanctions against it were lifted. With production costs not much higher than those for the Saudis, it ratcheted up production quickly, filling in for output drops elsewhere caused by the Saudi policy.
Saudi Arabia can live with these results of its war. The current price level of about $50 a barrel is acceptable, and Al-Falih admits that attempts to target specific price levels by regulating output have failed in the past. Russia and the surviving U.S. shale producers are not at death’s door at this price point, either: The former’s economic decline will probably end this year, and the latter can start making cautious plans for the future rather than fighting for survival.
The equilibrium is fragile: the market’s rebalancing has been accelerated by unexpected disruptions that won’t be permanent. So Al-Falih is signaling that his country won’t tip the scale by increasing production. According to him, Saudi Arabia would like to “maintain that balance while also giving heed to moderate prices for producers and consumers.”
Any number of accidents could disrupt this attempt to stabilize the oil price at the current level. Yet Saudi Arabia’s willingness to accept $50 as the new normal should reduce volatility, making the market more boring for speculators but friendlier to oil producers and consumers.
May 30, 2016
Oil at $60 Gains More Backers on Forecast for Higher U.S. Demand
By MAHMOUD HABBOUSH, MANUS CRANNY on 5/30/2016
ABU DHABI (Bloomberg) — The United Arab Emirates’s economy minister joined forecasters looking for $60 crude this year with demand and production moving more in line.
“It’s possible for oil prices to reach $60 or more during this summer” as demand increases in the U.S., U.A.E. Economy Minister Sultan Bin Saeed Al Mansoori said at a conference in Abu Dhabi on Monday. Crude will end the year higher than $60/bbl, Mario Maratheftis, global chief economist at Standard Chartered Plc, said on Bloomberg TV. SEB Bank forecast last week that Brent would touch $60 at times in 2016.
Oil futures jumped 31% this year, climbing above $50/bbl last week, as U.S. crude stockpiles declined, trimming a glut. Robust demand in India and other emerging nations led the International Energy Agency in May to reduce its estimate of the global oil surplus for the first half. Brent last traded above $60 in July.
“We’ve always been incredibly bullish on oil,” Maratheftis said. “We expected supply to collapse. Demand is still very strong. I would expect oil prices to keep rising.”
Brent for July settlement fell 0.3% to $49.15/bbl by 2:25 p.m. in Dubai, after trading at $50.51 last Thursday.
May 16, 2016
Oil Rises to Six-Month High as Goldman Sees Demand Above Output
Posted On May 16th
By : EnergyNow Media
Tag: US and International News
May 16, 2016
Oil climbed to a six-month high as Goldman Sachs Group Inc. said the market moved into a deficit earlier than expected following supply disruptions in Nigeria and an increase in demand.
Futures rose as much as 2.6 percent in New York. The shift to a supply deficit this month happened one quarter earlier than forecast, Goldman Sachs said in a report. The bank raised its price forecasts, while projecting a return to surplus early next year. Militant attacks and pipeline outages have cut Nigerian volumes by at least 30 percent, its petroleum minister said last week.
After falling to a 12-year low earlier this year, oil has rebounded on signs the worldwide glut will ease amid production cuts. The supply surplus in the first half is proving to be smaller than estimated, the International Energy Agency said last week, citing robust demand in India and other emerging nations. Morgan Stanley, Barclays Plc and Bank of America Corp. joined Goldman Sachs in noting that supply losses are leading markets to rebalance.
“The oil market looks set on a course for rebalancing much faster than previously expected,” Barclays analysts Miswin Mahesh and Kevin Norrish said in a report. “Fresh catalysts in the form of large and extended supply outages in Nigeria are supporting upward price momentum in oil, just when it seemed about to fade.”
West Texas Intermediate for June delivery increased as much as $1.19 to $47.40 a barrel on the New York Mercantile Exchange, the highest since Nov. 4, and was at $47.22 by 8:37 a.m. local time. Total volume traded was near the 100-day average. Prices have climbed more than 75 percent from their February low.
Brent for July settlement increased as much as $1.25 to $49.08 a barrel on the London-based ICE Futures Europe exchange. The contract declined 25 cents to close at $47.83 on Friday. The global benchmark crude was at a premium of 96 cents to WTI for July.
Goldman increased its WTI price forecasts for the second quarter through the fourth, while raising its full-year 2016 projection to $44.60 a barrel from $38.40. There’ll be a more gradual decline in inventories in the second half than previously estimated and a return to a production surplus in the first quarter of 2017, with low-cost output continuing to grow, the bank said.
“The physical rebalancing of the oil market has finally started,” Goldman analysts Damien Courvalin and Jeffrey Currie wrote in the report dated May 15. “The market has likely shifted into deficit in May.”
China reduced crude production in April by 5.6 percent from a year earlier to 16.6 million metric tons, the lowest level since February 2015, according to data from the National Bureau of Statistics. The decline rate was the most since November 2011. Refining at Chinese plants increased 2.4 percent from a year earlier to about 10.93 million barrels a day last month, the data show. Rigs targeting crude in the U.S. fell to 318 after 10 were idled last week, Baker Hughes Inc. said Friday. Explorers have cut more than 1,000 machines since the start of last year. The Organization of Petroleum Exporting Countries kept forecasts for global supply and demand unchanged in its last monthly assessment before members meet to review the market on June 2. Supplies of four key Nigerian crude grades — Bonny Light, Qua Iboe, Forcados and Escravos — have been disrupted as a result of sabotage and accidents.
May 8, 2016
(Bloomberg) Saudi Arabia replaced its central bank chief and long-time oil minister as part of sweeping economic changes led by Deputy Crown Prince Mohammed bin Salman to reduce the nation’s reliance on hydrocarbons. King Salman appointed Ahmed Alkholifey to head the Saudi Arabian Monetary Agency, as the central bank is known, succeeding Fahad Al Mubarak, who had been in the role since 2011. Also out is Oil Minister Ali Al-Naimi, the architect of the 2014 switch in OPEC policy that’s since roiled crude markets, replaced by Saudi Aramco Chairman Khalid Al-Falih. Saudi Arabia is undergoing its biggest ever economic shakeup, led by the the deputy crown prince and second-in-line to the throne, as it prepares for the post-oil era following the plunge in crude prices that started in 2014. The kingdom’s energy industry, as well as its central bank, will play a “critical role in the economic transformation” plans, said Simon Kitchen, head of macro-strategy at Cairo-based investment bank EFG-Hermes. “The deputy crown prince has now put his stamp on both institutions,” he said.
Al-Naimi, 80, retired after heading the oil ministry for almost 21 years. His departure is another sign of Prince Mohammed’s growing influence. At the April 17 meeting in Doha where producers discussed a possible output freeze to curb the global glut, al-Naimi lacked the authority to complete any deal, according to his Russian and Venezuelan counterparts. The view of Prince Mohammed, who had insisted that no accord was possible without Iran, eventually prevailed and the talks collapsed. As part of Saturday’s royal decrees, the name of the oil ministry becomes the Ministry of Energy, Industry and Mineral Resources, and will undertake tasks and responsibilities related to electricity.
Prince Mohammed’s plans, outlined in the so-called “Vision 2030” blueprint announced on April 25, include setting up the world’s biggest sovereign wealth fund, transforming Aramco into an energy and industrial conglomerate, and generating an additional $100 billion in non-oil revenue by 2020. Saudi Aramco Chairman Al-Falih Replaces Al-Naimi as Oil Minister Your Guide to Saudi Arabia’s Plan for Life After Oil One of the government’s biggest challenges, though, will be navigating the worst economic slowdown since the global financial crisis as authorities cut spending to plug a budget deficit that reached about 15 percent of gross domestic product in 2015. The benchmark Tadawul All Share Index rose 0.2 percent at the close in Riyadh. The measure has dropped 32 percent over the past year, compared with a 23 percent decline for the MSCI Emerging Markets Index. The economy will expand 1.5 percent this year, according to the median estimate of a Bloomberg survey, the slowest since 2009, complicating efforts to reduce what is already among the region’s highest levels of youth unemployment. The International Institute of Finance said in a report published May 3 that it expects “sharply slower growth in the next few years due to the serious fiscal consolidation.”
While Saudi banks are “well placed to weather the slump in oil prices,” they will come under pressure as borrowing costs climb because of increased government borrowing and the decline in private-sector deposits, IIF economists Giyas Gökkent and Garbis Iradian wrote in the report. Alkholifey, deputy governor before the king promoted him to central bank chief, takes office as the government prepares to borrow more through local and global debt markets. The central bank is also considering reducing the reserves banks are required to hold against customer deposits to release more funds for lending, the IIF said. The central bank’s net foreign assets fell by $115 billion in 2015, fueling speculation that the kingdom will abandon the dollar peg. Along with Al Mubarak, a former Morgan Stanley banker, Alkholifey reiterated Saudi Arabia’s commitment to the policy. “The peg will stay. A strong nominal anchor is important during a time of major economic change,” said Kitchen of EFG-Hermes.
The king’s government reorganization on Saturday is the third major change since he took power in January 2015. The previous two reshuffles helped propel a younger generation of the Al Saud ruling family, mainly his son Prince Mohammed, closer to the throne of the world’s top oil exporter. The prince was named defense minister, leading the kingdom’s war effort in Yemen against rebels it says are backed by its rival Iran. He also oversees the economy and oil through the Council for Economic and Development Affairs. The prince’s rapid rise to power and fast-paced policy changes have stunned diplomats and analysts alike. His economic plans, which include selling shares in Aramco as well as cutting subsidies, were received with skepticism by some foreign analysts who predict he may face domestic resistance. “Vision 2030 represents a Saudi plan for economic leadership in a world where oil is no longer dominant,” Simon Henderson, the Baker Fellow and director of the Gulf and Energy Policy Program at The Washington Institute, wrote in a report. “If it succeeds, it will also bring about much broader changes within the kingdom.”
April 25, 2016
KANANASKIS, Alta. – Prime Minister Justin Trudeau and his 30 ministers holed up Sunday at a luxury mountain resort in Alberta to discuss the devastation wrought by plunging oil prices on the province’s economy. Premier Rachel Notley met privately with Trudeau and then gave a detailed presentation to about half the cabinet in the evening at which she drove home the message that a healthy Alberta economy is a necessary precondition for robust national economic growth. She spoke of the desperate need for a pipeline to get the province’s oil sands crude to tidewater and for a quick start to job-creating infrastructure projects. And she reiterated her objections to a recent boost in Employment Insurance benefits for hard-hit regions of the country, which wound up excluding Edmonton. “I think that the interests of Alberta were well-served today,” she said following her presentation. “I made the case again that Alberta’s economic health really is linked to Canada’s economic health.” However, she got no specific promises on any of the issues she raised. And not all cabinet ministers attended the detailed session with Notley, choosing instead to attend other presentations being given at the same time or to flit from one to another. Among those who didn’t plan to attend Notley’s presentation was Finance Minister Bill Morneau, whose maiden budget last month introduced the EI changes and promised billions in infrastructure funding. “I’m going to another presentation right now. I think hers is over-subscribed,” Morneau told reporters during a brief break. Nevertheless, he said the mountain location of the three-day retreat was “very much on purpose because we wanted to be here in Alberta … to understand better the challenges.” Morneau defended the formula by which the federal government calculated which regions of the country are entitled to beefed up EI benefits but appeared to leave the door open a crack to modifying it. “That’s where we’re at right now and I appreciate that Premier Notley, you know, is anxious to make sure that people across the province are well served.” On pipelines, Natural Resources Minister Jim Carr said the federal government understands “how important the energy sector is for Canada and for Alberta; we know that the sector is going through a very difficult time at the moment.” But he offered no new hope for speedy approval of any of the three proposed pipelines that are currently mired in the environmental review process and facing stiff uphill battles with public opinion. “We want to move our natural resources to tidewater sustainably and we’ve announced a set of principles that will guide us along that way,” Carr said. Notley said she agrees with the approach the Liberal federal government is taking, which she argued is more likely to produce results eventually than the pipeline cheerleader approach taken by the previous Conservative governments in Ottawa and Edmonton. “You know, two Conservative governments — both at a federal level and at a provincial level — came together to fail on the issue of getting a pipeline approved because they paired that with a refusal to deal with climate change and a refusal to deal with the fact that people distrusted the process that was in place,” she said. Like Trudeau, she argued that Canadians are more likely to support a pipeline if they have faith in a beefed up environmental review process. Notley spent some time during her presentation educating federal ministers on her own government’s climate change plan, including a cap on greenhouse gas emissions. Infrastructure Minister Amarjeet Sohi, a former Edmonton city councillor, said he talks weekly with his Alberta counterpart and is hopeful that infrastructure money can start flowing soon. “We are working with them to sign bilateral agreements as quickly as possible and our goal is not to lose this construction season,” he said. Earlier Sunday, as the prime minister and his ministers arrived for the retreat, Trudeau said the gathering would give cabinet a chance to focus on the “challenges and opportunities” facing Alberta. It’s also a chance for his cabinet to take stock of what they’ve accomplished in their first six months in power and “all the hard work” that lies ahead, he said. This is the second cabinet retreat Trudeau has held. The first, at a seaside resort in New Brunswick in January, cost almost $150,000 and the price tag for this one is likely to be similar. But Trudeau said it’s important for him and his ministers to get out of the Ottawa bubble. “One of the things we talked about a lot during the … election campaign was the need to get out and be strong voices for our communities in Ottawa,” he said after strolling through a chilly rain with his ministers shortly after arriving at the Delta Lodge at Kananaskis, a spectacular resort nestled in the Rocky Mountains about 80 km. west of Calgary. “And that requires us, MPs and ministers, to be engaged on the ground, connecting with people and that’s exactly what we’re doing.”
February 19, 2016 Check out this article on EnergyNow.ca: http://energynow.ca/90-minute-meeting-earns-saudi-arabia-1-billion-a-month/ January 26, 2016 LONDON (Bloomberg) — Pierre Andurand, the founder of the $615 million Andurand Capital Management who correctly predicted the slump in oil prices, said the commodity has probably hit bottom and will end the year higher. The price of oil will probably rise to $50/bbl this year and $70/bbl in 2017, though investors should expect heightened volatility along the way, he said Friday in an interview on Bloomberg TV. “We are in a world where we see very low prices followed by very high prices,” Andurand said in the interview. “I actually think it has bottomed.” Andurand’s hedge fund made 8% in 2015 and 38% in 2014, chiefly on wagers that oil would fall. As recently as December, he predicted that oil could touch $25/bbl this quarter. West Texas Intermediate fell as low as $26.19 on Jan. 20, before rebounding 20% to $31.56 at 11:56 a.m. in New York. “There is very little spare capacity in the system,” he said, citing declines in production that began three months ago in countries that aren’t members of the Organization of Petroleum Exporting Countries. Andurand’s previous hedge fund, BlueGold Capital, which managed about $2.2 billion at its peak, had generated a 240% return over four years. That fund closed in 2012 after losses the year before. January 25, 2016 http://energynow.ca/oil-drops-as-saudis-to-maintain-spending-china-diesel-use-falls/
(Bloomberg) — Oil gave up its gains after the world’s biggest crude exporter said it’s keeping up investments in energy projects and diesel consumption in China dropped for a fourth consecutive month, signaling an industrial slowdown.
Futures dropped as much as 4.1 percent in New York. Saudi Arabian Oil Co., also known as Saudi Aramco, hasn’t reduced its investment capacity amid lower crude prices, Chairman Khalid Al- Falih said Monday. Diesel use in China dropped 5.6 percent in December compared with a year earlier and gasoline consumption grew at the slowest pace in more than two years.
Oil resumed its decline after the biggest two-day rally in more than seven years as concerns persist over U.S. stockpiles, production from Saudi Arabia and Russia and Iran’s return to the market following the end of sanctions. Slowing demand in China is adding to oil’s bearish sentiments, according to Danske Bank A/S Senior Analyst Jens Pedersen. Prices may take as long as three years to normalize, according to Bank of Montreal Chief Executive Officer William Downe.
“The China demand figures is a stark reminder that consumption growth may not be stellar in 2016,” Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB, said by phone. “Prices needs to stay weak for some time in order to keep excess production out and help rebalance the market later.”
November 13, 2015 War of words intensifies between Suncor and Canadian Oil Sands October 06, 2015 News Release: Stormhold Energy Ltd. Shareholders and Related Parties The Board of Directors are pleased to announce the appointment of Mr. Kallum McIvor, as Consulting Geologists to Stormhold Energy Ltd. Kallum McIvor, B.Sc., GIT: Kallum majored in Geology at the University of Calgary. He began his career in the oilfield service sector working with Weatherford. While at Weatherford Kallum was able to complete several open and cased hole logging courses and become acquainted with numerous log based and geological software programs. Throughout his academic career, Kallum focused on sedimentary, carbonate and log based courses. Some academic highlights include; petrophysical techniques, well logging and formation evaluation, subsurface methods of petroleum geology, sedimentary petrology, sequence stratigraphy, stratigraphy and sedimentation. Kallum is a registered Member in Training (MIT) with the Association of Professional Engineers and Geoscientists of Alberta (APEGA). September 28, 2015 President’s Message Shareholders of Stormhold Energy Ltd. Since my previous address, the markets for junior resource companies has not improved; if anything they may be even worse, but I am not here to dwell on bad news and present explanations for low commodity prices under a promise that the future will be better. I am here to discuss our accomplishments, share some of my insight into the future of Stormhold Energy Ltd. and our future development strategy. In this past year, we have drilled 3 pilot wells that are under completions and future updates will follow when available. We have successfully expanded our land position and revised our exploration and development program within our limited budget. We have hired additional professional Consultants, increasing our industry experience and area knowledge. We have done this in what could be deemed the worst market scenario for the junior resource sector ever. We are currently finalizing details and corporate structures for our joint venture projects in order to move these forward with even greater efficiency. As these are now near complete, we believe it is time to refocus our attention to growing opportunities for the company and its shareholders. Despite the current decline in commodity prices, we know the demand for energy resources is set to increase in the near future. Our corporate Team has developed considerable expertise in all aspects of our play and our technical Team has become well versed in the exploration, development and completions techniques necessary to move forward. The mineral exploration and development industry is seeing virtually no cash injected into funding, advancing and developing new deposits to meet this future demand. Unlike most, Stormhold Energy Ltd. has taken the necessary steps to assure our exploration and development program is successful while jumping over many hurdles as we have in the past. The next step is to find additional strategic partners to assist us financially and technically to develop Stormhold Energy Ltd. further. We started this company with the vision to bring sustainable upside for our Shareholders, partners, family and friends and we continue to work toward that goal. Regards, Chadd Radke President/ CEO September 17, 2015 News Release: SEL announces the acquisition of 15 sections (3,885 hectares or 9,600 acres) of mineral rights in east central Alberta. Stormhold Energy Ltd. is pleased to announce that Stormhold Energy Ltd. (SEL) was successful at the September 16, 2015 Alberta Land Sales Auction and secured Crown Lease Mineral Rights on 15 sections across multiple zones. These lands are also located between two historically producing areas of Alberta, the Provost Field & the Fenn Big Valley Field. That brings the SEL land position in the area to a total of 152 plus sections (97,280 acres) of multiple low risk zone potential. August 20, 2015 Subject: Two oil expert says things are about to turn the corner once again, and Brent crude is going to surge to $71 a barrel by the end of the year Oil has been demolished over the past year, falling from $100 a barrel to the low 40s. http://www.bloomberg.com/news/articles/2015-08-19/economist-three-reasons-oil-will-surge-past-70-by-the-end-of-the-year But one oil expert says things are about to turn the corner once again, and Brent crude is going to surge to $71 a barrel by the end of the year. Credit Suisse energy economist Jan Stuart spoke on Bloomberg TV yesterday, giving the reasons behind his big target. July 07, 2015 Stormhold Energy Ltd. Shareholders and Related Parties The Board of Directors are pleased to announce the appointment of Mr. Bernie Dumanowski, as an Senior Engineering Consultant to Stormhold Energy Ltd. Bernie Dumanowski, P.Eng., Senior Drilling & Completion Engineer for Stormhold Energy Ltd, has over 27 years of engineering experience in the oil & gas industry which includes: drilling, completions, facilities construction, pipeline construction, production operations, exploitation and special projects. His experience is garnered from a broad range of technical and management roles. The majority of his experience has been in the Western Canada Sedimentary Basin in addition to HPHT (high pressure-high temperature) experience in the San Joaquin Basin, California USA. Recent experience has been in Southern Alberta with development of Mannville tight oil and tight gas plays utilizing horizontal drilling and multi stage hydraulic fracturing. Bernie started his career with Renaissance Energy Ltd. spending over 13 years in various positions with increasing responsibility. He has assisted in the advancement and use of innovative technologies with respect to drilling, completions and production operations. His current engineering special interests are thermal spallation drilling, deep geothermal wells, toroidal engines and CHP (combined heat power) units. Bernie is a registered member of A.P.E.G.A. (Association of Professional Engineers and Geoscientists of Alberta), PTAC (Petroleum Technology Alliance Canada) and CanGEA (Canadian Geothermal Energy Association) Bernie received his B. Sc. degree in Petroleum Engineering in 1987 from the University of Wyoming. March 17, 2015 Stormhold Energy Ltd. Shareholders and Related Parties The Board of Directors are pleased to announce the appointment of Mr. Richard Bartlett, as a Consultant to Stormhold Energy Ltd. Mr. Richard Bartlett, president of Hydro-Fax, has over 35 years of D.S.T application and hydrodynamic experience, having established Hydro-Fax in 1987. He has extensive hydrogeological experience in the N.W.T. and Western Canadian sedimentary basin. Richard has given talks at the CSPG on a couple of hydrodynamic evaluations. Richard also has taught D.S.T. interpretation and the application of hydrodynamics’ in the industry. Value of Hydrodynamics
- Determine the disposition of a reservoir’s aquifer and its relation to hydrocarbons within
- Define pressure compartment’s distribution within the respective reservoir
- Define direction of preferential migration through application of potentiometric surface mapping
- Determine where your prospect fits. Is it a new find or an extension of the known play
- Determine where your reservoir’s pressure is now
- Define the reservoir’s pressure, and through D.S.T. mapping, the quality of your reservoir and how it behaved while testing
March 13, 2015 News Release: SEL announces the acquisition of 61 sections (15,424 hectares or 39,177 acres) of mineral rights in east central Alberta. Chadd Radke, CEO & President is pleased to announce that Stormhold Energy Ltd. (SEL) was successful at the March 11, 2015 Alberta Land Sales Auction and secured Crown Lease Mineral Rights on 61 sections across multiple zones. These lands are also located between two historically producing areas of Alberta, the Provost Field & the Fenn Big Valley Field. That brings the SEL land position in the area to a total of 240 sections of multiple low risk zone potential. March 10, 2015 Stormhold Energy Ltd. Shareholders and Related Parties Wells presently licensed, two of which are drill ready (Wells 4 of 18) STL Hz Halkirk 6-6-38-16 (surface location at 1-6-38-16) Well License #0470653 as a Pika/ElkPoint/Camrose well Surface lease acquired. STL Hz Halkirk 15-14-38-17 (surface location at 1-14-38-17 Well License #0470702 as a Pika/ElkPoint/Camrose well Surface lease acquired. STL Hz Provost 12-36-37-16 (from surface 16-36-37-16W4); Well License #0474820 as a Mannville/Camrose/Pika.
- Padsite survey at 16-36-37-16W4 completed. Surface lease acquired.
STL Hz 102 Provost 4-36-37-16 (from surface 16-36-37-16W4); Well License #0474821 as a Mannville/Camrose/ Pika.
- Padsite survey at 16-36-37-16W4 completed. Surface lease acquired.
March 03, 2015 Stormhold Energy Ltd Shareholders and Colleagues, Please find two new Well Licenses (STL Hz 102 Provost 4-36-37-16 and STL Hz Provost 12-36-37-16) These locations are part of our 18 Well Program February 04, 2015 Oil is on a Gigantic Tear Either a short squeeze or expectations of lower supply has caused the price of oil to boom by more than 20 percent http://www.bloomberg.com/news/articles/2015-02-03/oil-is-on-a-gigantic-tear After plunging for months, the price of oil has boomed over 20 percent in just the last three trading days. Last Friday it was just over $44 per barrel. Today it’s selling at nearly $54 per barrel. There are various theories for why oil is moving so hard: Short covering is one possibility, meaning bearish traders have been caught in a squeeze by the turnaround. There’s also hope that supply will rapidly come offline, bringing the market into balance. Last Friday saw a big drop in the number of active U.S. oil rigs. Regardless of what’s driving it, this is a major turnaround! January 17, 2015 Stormhold is raising $50,000,000.00 in flow-through shares Stormhold Energy Ltd. is pleased to report that we are currently drilling three locations in the Stettler Halkirk area. These are TIGHT HOLE WELLS and no results will be released due to the competitive nature of the industry in this area. These first wells are part of a twelve well program, at which time, in conclusion of the drilling program, the results will be tabulated, assessed as to total reserves and the Company will conclude its mandate; engineer reserves and market the Company further. Consequently, Stormhold is offering flow-thru shares at $1.00 per flow-thru share with the renunciation of 100% of the Canadian Exploration Expenses (CEE) incurred, up to a total of $50,000,000.00. The funding for the balance of the drilling program has been sourced with outside Industry Partners. These shares are available on a first come, first serve basis. We look forward to drawing this project to a successful conclusion and thank all for your continued support. “SIGNED” THE BOARD OF DIRECTORS October 17, 2014 Shareholders Stormhold Energy Ltd. The Board of Directors of Stormhold Energy Ltd. are pleased to announce we have added Mr. Douglas Biles to our Team of Technical Consultants. Mr. Biles is a senior engineer with over 40 years of domestic and international experience in corporate and project development and in the management of numerous multi-billion dollar domestic and international Companies. Doug has been a senior executive or operations manager for numerous oil and gas Companies operating in Alberta (Hudson’s Bay Oil and Gas; Home Oil; Kerr McGee Canada; Murphy Oil Canada) and numerous senior roles internationally including Operations Director, TransOcean Drilling Ltd., as well as CEO of Wescorp Energy Inc. and CEO of Atlantic Caspian Resources PLC. September 19, 2014 Stormhold Energy Ltd. Shareholders Please be advised all services are in place including the drilling rig, consultants and well site preparation. We are reshaping the well pad/ site next week pending the rain and moving the drilling rig as well. In addition, our Board of Directors are pleased to announce Mr. Dave Fream, has joined our Team of Consultants. Mr. Dave Fream has over 30 years’ experience in upstream and midstream sectors of the oil & gas industry. Dave works as a Consultant to Stormhold Energy Ltd. coordinating field services and operations. Over the course of his career, Dave has worked in senior roles for several multinational energy and energy services companies, most recently as Canadian Consultant for IOT Infrastructure & Energy Services of Mumbai, India and prior as Vice President and General Manager of Newsco International Energy Services. Dave also founded and developed three energy industry companies in the areas of commodity marketing, engineering and downhole well-drilling tools and has extensive international experience. Dave received a Master of Arts degree in International & Intercultural Communications in 2014 from Royal Roads University. June 03, 2014 : http://www.leadstonegroup.com/oilfield-hub/service-supply/ April 07, 2014 Foreign investment in Oil Sands. http://business.financialpost.com/2014/04/04/oil-sands-investment-slowing-because-of-tough-market-not-new-soe-rules-execs-say/?__lsa=e410-a09c March 26, 2014 http://www.oilfieldpulse.com/magazine/current-issue/#sthash.vRvLmN9W.dpbs March 24, 2014 http://www.calgaryherald.com/business/energy-resources/Ewart+Optimism+drives+upturn+oilpatch+deals/9648587/story.html February 18, 2014 Heavy Oil from an Ancient Reef New data from the northern terminus of the Leduc reef trend in western Canada shows a karsted carbonate reservoir with exceptionally high porosities and permeabilities and, in places, bitumen-filled caves. This area is a prime prospect for bitumen development and a new technique, thermal assisted gravity drainage, is being used to recover the hydrocarbons. This article appeared in Vol. 9, No. 6 – 2013 February 11, 2014 http://www.forbes.com/sites/christopherhelman/2013/11/20/a-new-billionaire-emerges-from-devon-energys-6-billion-deal-for-geosouthern/ A New Billionaire Emerges From Devon Energy’s $6 Billion Deal For GeoSouthern
January 21, 2014 China Gas Holdings Shares Ease From Record, Chairman Still In Billionaire Terrain http://www.forbes.com/sites/russellflannery/2014/01/20/china-gas-holdings-shares-ease-from-record-chairman-still-in-billionaire-terrain/ January 15, 2014 According to Chinese-language economic reports on China’s scaling-up energy strategy, Canadian oil and gas assets are a hedge against risky Middle Eastern investments. And yet, concerns over regulation linger. http://www.albertaoilmagazine.com/2014/01/seekingthedragon-going-up/ January 09, 2014 Shale gas and fracking News and analysis from the Guardian on drilling for shale gas using the technique known as hydraulic fracturing or ‘fracking’ http://www.theguardian.com/environment/shale-gas December 16, 2013 http://www.bloomberg.com/news/2013-12-12/natural-gas-rises-for-fourth-day-on-outlook-for-stockpile-drop.html#! November 07, 2013 Page 22. http://www.oilfieldpulse.com/magazine/current-issue/#sthash.20tJ1gFa.hBDvAT3W.dpbs November 06, 2013 Why junior oil and gas companies still struggle to find cash. For juniors today, capital is expensive and equity financing difficult to access. http://www.albertaoilmagazine.com/2013/11/why-junior-companies-still-struggle-to-find-cash/ October 17, 2013 The attached is a recap of anticipated M & A trends for 2013. A great deal of difficulty was apparent by Junior and Intermediate Oil and Gas Companies at the Calgary Dealmakers Prospect and Properties Expo on October 8, 2013. The Expo had over 60 exhibitors and 400 attendees. Will M&A activity improve in 2013? Ten trends (attached) that will have an impact on the answer to that question. http://www.stikeman.com/2011/en/pdf/EnergyMATrends_2013.pdf It’s generally agreed that 2012 was a difficult year for the oil and gas industry in Canada. No part of the industry was spared from challenging times. Indications of these difficulties included:
- Persistent wide differentials in prices for Canadian oil and gas production compared to North American and international benchmarks;
- Decreases in capital spending by producers; and
- Declines in Alberta land sale bonuses and aggregate drilling days from 2011 levels.
In this difficult environment, the share prices of oil and gas companies declined during the year. The average for small and mid-cap companies was down 19% in 2012. In some cases, lower share prices can result in increased M&A activity as opportunistic acquirer’s look for bargains. However, in 2012 the number of acquisitions of oil and gas producers actually dropped compared to 2011 activity levels. There were some very large deals, but fewer other transactions. The drop in 2012 continued a three year trend of reduced numbers of M&A transactions in the Canadian oil and gas industry. Will M&A activity improve in 2013? “Ten Trends attached” October 15, 2013 When it comes to shales and tight formations, it’s no secret that industry is more and more shunning pure gas plays. Anemic pricing is driving them to the more lucrative oil and liquids plays. Especially oil: the National Energy Board notes tight oil production in Canada started with the Saskatchewan and Manitoba Bakken in 2005; by 2010 Alberta led all provinces. But the NEB cautions it’s still too early to confidently estimate the ultimate impact of exploiting tight oil plays in Western Canada. Helping fill that lacuna are these five plays. http://gchandler.ehclients.com/index.php/graham/oilweek2/five_hot_plays/ September 18, 2013 CNOOC says it is seeking “new technology” to overcome complex geology. It is not yet clear, industry analysts say, where that technology will come from. “Long Lake is one of the key assets that is going to have to perform better for the Nexen acquisition to make financial sense over the long term, according to a senior banker with ties to both CNOOC and Nexen told Reuters, it is becoming clear that CNOOC overpaid. “The only question now is by how much. The banker “conservatively” estimates that Nexen was more fairly valued at $11 to 12 billion – three to four billion dollars less than CNOOC paid. http://mobile.reuters.com/article/idUSBRE99600720131007?feedType=RSS&irpc=935 September 18, 2013 Could this be the problem in China. http://www.bloomberg.com/news/2013-09-04/graft-probe-threatens-petrochina-as-executives-targeted-energy.html September 18, 2013 The study by the analytics firm IHS nevertheless warned that development is likely to be slower than has been witnessed in the United States, held back by above-ground reasons including government policy and regulation, lack of access to specialized kit and skilled labor, and land-access constraints. Other studies making similar forecasts have also highlighted such barriers and the potential for higher costs. According to the Financial Times, the IHS study puts the cost of the average well outside North America at $8 million compared with $5.6 million inside North America, ranging from $6.5 million in Australia to more than $13 million in parts of the Arabian Peninsula. http://mobile.reuters.com/article/idUSBRE98G0B520130917?feedType=RSS&irpc=935 September 17, 2013 Eagle Ford to see $28 billion in investment (2013) The oil and gas industry will continue zeroing in on the Eagle Ford Shale, investing an estimated $28 billion in the South Texas region next year. The industry has shifted drilling away from “dry gas” shale plays and towards liquids-rich fields, and that’s one reason companies plan to spend so much in the Eagle Ford, the report says. The Eagle Ford generally produces more oil on its northern arc; more natural gas, or dry gas, on its southern arc; and more natural gas liquids such as propane and butane in-between. Eagle Ford wells generally bring up a bit of everything, but those that bring up a higher percentage of liquids are much more profitable. Natural gas prices are below $4 per million British thermal units, down from $12 in 2008. And dry gas sits at greater depths, making those wells more expensive to drill than liquids wells. McMahon also said the best spots of the Eagle Ford produce a light crude oil that flows at a good rate from the well. “Think of it like a sponge. If you have water in a sponge, you can get the water out more easily,” he said. “If you have honey in a sponge it’s a lot more difficult to extract.” http://www.mysanantonio.com/news/energy/article/Eagle-Ford-to-see-28-billion-in-investment-4100658.php#ixzz2ErJr9uqg September 04, 2013 Recently posted online yet again. Please open the below “link” http://cawidgets.morningstar.ca/ArticleTemplate/ArticleGL.aspx?s=Acquire&r=ASW_Accesswire_399443MSN&culture=en-CA