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FT: Energy earnings run dry in Americas
Article by Nick Cunningham published 22 April 2015 by OilPrice.comThe largest oil and gas companies are employing different strategies to weather the downturn and plan for the future. Each strategy has its risks, and not all may work out. Which companies will emerge stronger after an oil price rebound and which will fall further behind because of bad decisions?
There are different ways to play a down cycle. With oil prices half of what they were in 2014, revenues are significantly lower for everyone across the board. As a result, the oil industry has collectively implemented an estimated $114 billion in spending cuts. But oil executives are also trying to figure out how to grow over the next five or ten years.
By Mark Robinson, 17 April 2015
The severity of crude oil’s collapse meant that its effects were always likely to be felt far beyond petrol station forecourts. Reduced assumptions on future pricing convinced oil and gas majors, already given over to renewed capital discipline, to also accelerate the reduction in exploration and appraisal commitments.
The effect on valuations for oil companies and their ancillary industries has been well documented by the Investors Chronicle, but the trouble doesn’t end there. The fall-away in valuations across the wider industry has also made tertiary finance more difficult to attain for mid-tier and smaller oil companies. It also means that secondary capital issues are more expensive to complete – even for oil companies with existing production. The end result is that there are a lot of distressed energy assets up for grabs at knockdown prices.
The energy sector looks set for a round of mergers and acquisitions. Illustration: David Simonds for the Observer
By: MICHEAL KAUFMAN
Published: Feb 18, 2015 at 6:36 am EST
Extracts
Crude oil price have dramatically decreased more than 50% since June 2014. Amid the low-price scenario, Barron’s Asia believes that new investors should avoid placing their bets on the four Big Oil companies, comprising, Royal Dutch Shell plc (ADR) (NYSE:RDS.A), Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), and ConocoPhillips (NYSE:COP).
Barrion’s Asia terms these stocks as the most defensive energy stocks mainly due to minor changes in the value of these stocks since mid-October. The West Texas Intermediate has fallen more than 35% over the same period.
By: MICHEAL KAUFMAN: Published: Feb 8, 2015 at 8:40 am EST
According to the quarterly results announced during the past few weeks, major oil companies have reported a mediocre performance for last year, as far as exploration and production of crude oil and natural gas reserves is concerned. At the same time, companies have also reduced their capital spending budgets for this year, which might exacerbate their lower production problem.
Over the last decade, some of the biggest oil companies have seen their production drop and their growth of reserves stutter, even though oil price was going up for the most part. Royal Dutch Shell plc (ADR) (NYSE:RDS.A), BP plc (ADR) (NYSE:BP), ConocoPhillips (NYSE:COP), Exxon Mobil Corporation (NYSE:XOM), and Chevron Corporation (NYSE:CVX) are five of the biggest global oil and gas companies, which saw their production drop 3.25% year-over-year (YoY) on average last year, while failing to replace the crude oil and natural gas – they extracted last year – with new reserves.
With more than $110 billion of oil and gas assets on the block as companies big and small count the cost of the collapse in oil prices, it is now a question of who will blink first to set the M&A scramble in motion.
* Half of the assets on sale are in North America
* North Sea could prove a hard sell
* Potential buyers holding out for further price falls
* Wave of deals expected within three to six months
By Ron Bousso
LONDON, Jan 30 (Reuters) – With more than $110 billion of oil and gas assets on the block as companies big and small count the cost of the collapse in oil prices, it is now a question of who will blink first to set the M&A scramble in motion.
Energy groups with spare cash, venture capital funds and multinational and state oil companies are eyeing assets with valuations that have largely tracked the halving of the oil price to less than $50 a barrel since last June.
…a major deal over the next year that will bring together two of the super majors, or see one of their smaller rivals swallowed up, is highly likely – and almost a certainty if historical precedent is anything to go by. Certainly, if the oil rout of the late 90s is anything to go by, a major deal among the industries big “sisters” is just around the corner.First there were the “Seven Sisters”, a term coined in the 1950s to describe a cabal of the world’s biggest international oil companies (IOCs), which at that time controlled the supply of fossil fuels with a vice-like grip.
Then came the Yom Kippur war of 1973 and the subsequent Middle East oil crisis, which would gradually see their power over more than three-quarters of the world’s crude wrestled back by newly independent states in the Persian Gulf.
By the late 1990s – with oil prices at around $20 (£13.20) per barrel – the original seven had grown much bigger and been morphed into new giants, which consumed their smaller rivals in a race to acquire what little of the world’s oil and gas reserves still remained open to them.
26 JAN 2015
(Bloomberg) — The U.S. Interior Department will lay a framework as soon as Tuesday for oil exploration in the nation’s coastal waters in a five-year plan that is expected to withdraw areas off Alaska while possibly adding parts of the Atlantic.
Republican Lisa Murkowski said the head of the offshore energy office told her the agency will place areas of the energy-rich U.S. Arctic off limits. Those areas had been previously deferred from new leasing. Current leases in the Arctic, such as those held by Royal Dutch Shell Plc, won’t be affected.
The meltdown in oil prices has wiped out more than $200 billion in market valuation among the 10 largest oil and natural gas companies in the S&P 500. To combat depressed prices, oil companies are hitting the brakes on spending and laying off workers. Investors are saying “enough.” They are dumping their energy stocks as the outlook for profits and dividends has diminished significantly.
“Brent crude oil price dips below $50 a barrel”The price of Brent crude oil has fallen below $50 a barrel for the first time since May 2009.
It fell more than a dollar to $49.92 a barrel in early trading on Wednesday before edging back above the $50 mark.
Slowing global growth and increased supply of oil and gas have pushed prices sharply lower in recent weeks.
The price of oil traded in the United States, known as West Texas Intermediate crude, has already fallen below $50.
Many observers expect the price of oil to fall further as North American shale producers continue to supply increasing quantities of oil and gas, and the oil-producing group Opec resists calls for cuts in production to support prices.
By: MICHEAL KAUFMAN
Published: Dec 19, 2014 at 11:21 am EST
Royal Dutch Shell Plc. (ADR) (NYSE:RDS.A) is uncertain over its plans to drill in the US Arctic. The final decision regarding the company is expected to come in March, 2015. During this time the company is likely to consider various factors before taking a decision.
How crude oil prices have moved in the last six months seems will be a factor in any decision taken by management. Oil exploration and production (E&P) activities have fallen globally because of the dip in prices.
By John Donovan
Royal Dutch Shell is expected to announce by March if it will go forward with plans to drill for oil in Arctic waters offshore Alaska in 2015, a decision which may have more to do with the outcome of court cases and U.S. government reviews than global market fundamentals.
Shell’s decision is widely seen as a potential turning point for the company’s long-range Arctic plans, with billions already spent and rival companies putting their own Arctic drilling plans on hold; if Shell does not pursue drilling off north Alaska in 2015, it may abandon the region indefinitely.
After a solid 10 hours locked in secret briefings at the Langham Hotel in London this week, 100 of BP’s top investors emerged into the crisp winter evening air to the grim news that oil prices had sunk to a new five-year low.
Given the challenges facing big oil producers, the mood at the briefing, led by BP’s upstream chief executive Lamar McKay, was described as being “serious” by those present. However, the thought of US crude crashing below $60 (£38) per barrel, a baseline level that most oil majors use to stress test the profitability of their future projects, will have pushed sentiment to a new low.
“Royal Dutch Shell is another company with a doomed oil sands project, according to the Carbon Tracker Initiative. Its Carmon Creek project needs oil prices to hit $157 per barrel in order to be profitable. On top of that, Royal Dutch Shell is seeking to drill for oil in the Arctic, which has already wasted $5 billion of investors’ capital and would waste more money if drilling restarted.”By John Donovan
According to an article by Matt DiLallo published by The Motley Fool on 23 August, former US VP Al Gore believes that the balance sheets of ExxonMobil, Royal Dutch Shell Plc, ConocoPhillips, Total SA and BP plc include $7 trillion of worthless ‘unburnable” carbon assets.
Extract
“This unburnable carbon is the oil, gas, and coal that is still in the earth that, if extracted and burned, would push the globe over the edge in terms of climate change. Because this is an edge we can’t cross, it would suggest that the companies owning the assets are all but doomed.”
Some of Shell’s big shareholders are said to be frustrated by the company’s continued spending on expensive far-flung projects that fail to yield healthy returns. Alongside its profit warning at the start of this year, Shell announced that it was halting a controversial exploration programme off the coast of Alaska because the costs had far outweighed the results. Some $4.5bn had been ploughed into exploring in the region since 2005. Rumours continue to swirl that an activist investor is circling Shell with a view to taking a stake and forcing it adopt a more radical strategy.
Extracts from a Los Angeles Times article by Paresh Dave published 24 April 2014In the ongoing battle over offshore drilling, a federal judge in Alaska told regulators Thursday to redo an environmental impact study that underestimated the amount of recoverable oil and, potentially, the risks to delicate Arctic habitat. The decision by U.S. District Judge Ralph Beistline stopped short of scrapping the $2.6 billion in leases, however. In light of the new analysis, the Bureau of Ocean Energy Management will have to decide whether to move forward with or cancel the agreed-upon leases with Royal Dutch Shell, ConocoPhillips and other companies.
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