News From The Oil Patch 8/1/2016
01 August 2016
Baker Hughes reported 463 active drilling rigs nationwide last week, up one from the week before. In Canada there were 119, also up one. Independent Oil and Gas Service reported nine active rigs in eastern Kansas, down two, and 17 west of Wichita, up one. There are a total of 171 INactive rigs in Kansas, including 148 that are stacked, and 23 that are shut down awaiting new contracts.
There were just 19 permits issued for new locations across Kansas last week, bringing the total so far this year to 540. There were two new permits filed east of Wichita, and 17 in western Kansas, including one in Ellis County.
Independent Oil & Gas Service reported seven newly completed oil and gas wells across the state last week. That's 688 so far this year. There was one in eastern Kansas and six west of Wichita, including one dry hole completed in Ellis County.
U.S. officials announced to speed up permitting for oil and gas drilling on federal and Indian lands to reduce delays. Applications were projected to be down 40 percent versus their historical average amid the ongoing price slump. Drilling applications would have to be filed online under the new proposal.
News out of Libya is likely to push prices lower. Libya’s state-controlled National Oil Co. said it was taking steps to restart exports from three blocked oil ports after the government reached a deal with local guards that had blocked the facilities during a pay dispute.
A big player in the patch could be chosen as part of Donald Trump’s cabinet if the Republican nominee is elected president. Sources told Reuters that Trump is considering Harold Hamm for the position of Energy Secretary. If Hamm is selected, he will be the first energy secretary to work directly in the oil and gas industry since the cabinet position was created in 1977. Hamm and his company Continental Resources are well known for pioneering the explosive growth of shale oil production in North Dakota.
The Dakota Access oil pipeline received its final federal permit approvals. The U.S. Army Corps of Engineers approved 60 river crossings in Iowa. Several lawsuits are still pending, but a company spokeswoman says they hope to have construction completed and be in service by the end of this year. The $3.8 billion pipeline will transport up to 570,000 barrels of oil per day from North Dakota to the refining cluster at Patoka, Ill. The Standing Rock Sioux Tribe is suing federal regulators for approving permits for Dakota Access. Tribal officials filed the new lawsuit last week, they oppose the pipeline because it fears a spill could contaminate drinking water on its reservation, which is home to 8,000 people. The tribe also says the project threatens sacred sites and violates federal laws.
The state of Nebraska will not appeal a judge's decision to bar a Colorado company from disposing of oil & gas wastewater in a well in the Nebraska Panhandle. A judge ruled last month that the Nebraska Oil and Gas Conservation Commission exceeded its authority when it approved the request.
Saudi Aramco's plans for a public stock offering has kicked off a scramble among banks for a role in a deal that could generate $1 billion in fees—the biggest investment-banking deal ever. The Wall Street Journal says the plan is to float as much as 5% of the Aramco, the world's largest oil company. The kingdom estimates the company has a value of between $2 trillion and $3 trillion. But the Journal says "let the buyer beware," citing the poor track record of several publicly-listed, state-run oil companies. The Aramco IPO, which could happen as soon as 2018, is part of a plan to raise funds to diversify the Saudi economy after a two-year slump in oil prices. Saudi officials said New York, London and Hong Kong are potential locations for a listing.
The Wall Street Journal calls it "the end of the US oil-train boom." Rail became a big mover of crude oil after companies began unlocking shale formations and production skyrocketed. Starting at near zero in 2009, oil-by-rail jumped to more than one million barrels per day by 2014. But those numbers began falling after oil prices started tumbling two years ago, and aren’t projected to recover anytime soon. In April, just 430,000 barrels of oil rode the rails each day, according to the latest federal figures.
Norway’s biggest oil company, Statoil, will buy an offshore oil block in Brazil from Petrobras for $2.5 billion. Bloomberg says this is Statoil's biggest acquisition since 2011. The play is estimated to hold between 700 million and 1.3 billion barrels equivalent of recoverable oil, according to a statement from the Norwegian driller.
European oil majors Royal Dutch Shell and Total reported a sharp decline in profits in the second-quarter, as the low oil price continued to weigh on earnings. CNBC tells us that Shell's second-quarter earnings totalled $1 billion, down from $3.8 billion in the same period last year, a 72 percent fall. Meanwhile, France's Total said second-quarter adjusted net income was down 30 percent year-on-year to $2.2 billion, but noted on a quarter-on-quarter basis, it actually rose.
U.S. ConocoPhillips reported a bigger-than-expected quarterly loss, and cut its 2016 budget for the third time this year. ConocoPhillips' net loss widened to $1.07 billion in the second quarter.
Exxon Mobil missed analyst estimates, reporting declining quarterly profits, as an oil glut spread to motor fuels, dragging down refinery margins. Net income dropped to $1.7 billion. Crude and natural gas prices, along with diesel and gasoline prices, slumped during the period. Exxon and other majors were deprived of the tempering effect oil refining typically provides during times of low crude prices.