Oil Dives 4 Percent On The Week On U.S. Rigs Rise, Glut Threat
July 23, 2016
Oil prices settled lower on Friday, losing 4 percent on the week, after the fourth weekly rise in the U.S. oil rig count added to worries about a global crude glut.
Crude futures were already down, with Brent at two-month lows, on fears of more Iraqi supply before a report by energy services firm Baker Hughes showed U.S. oil drillers added 14 rigs this week to bring the total rig count to 371.
"The oil complex is already struggling with oversupply issues. More than ample inventories and upcoming refinery turnarounds and maintenance have the bulls on the defensive," said Pete Donovan, broker at Liquidity Energy in New York.
"An increase in rigs is the last thing they need."
Brent settled down 51 cents, or 1.1 percent, at $45.69 a barrel, after falling to $45.17, the lowest since May 11. For the week, Brent lost 4 percent.
U.S. West Texas Intermediate (WTI) crude closed down 56 cents, or 1.3 percent, at $44.19. It fell 3.8 percent on the week.
The dollar's rally to a more than four-month high also hurt demand for greenback-denominated oil among holders of the euro and other currencies.
Iraq's oil exports were expected to rise in July, according to loading data and an industry source. If confirmed, it would put OPEC's No. 2 producer back on track for supply growth after a two-month lag.
Fracklog In The Biggest U.S. Oilfield May All But Disappear
July 22, 2016
The number of dormant crude and natural gas wells in the U.S. stopped growing in the first quarter -- and may all but disappear in the nation’s biggest oil field should prices hold steady.
As of April 1, there were 4,230 wells left idle after being drilled, a figure little changed from January, according to an analysis by Bloomberg Intelligence. While some explorers have continued to grow their fracklog of drilled but not yet hydraulically fractured wells, others began tapping them in February as oil prices rose, the report showed.
Crude in the $40- to $50-a-barrel range may wipe out most of the fracklog in Texas’s Permian Basin and as much as 70 percent of the inventory in its Eagle Ford play by the end of 2017, according to Bloomberg Intelligence analyst Andrew Cosgrove. While bringing them online is the cheapest way of taking advantage of higher prices, the wave of new supply also threatens to kill the fragile recovery that oil and gas markets have seen so far this year.
“We think that by the end of the third quarter, beginning of the fourth quarter, the bullish catalyst of falling U.S. production will be all but gone,” Cosgrove said in an interview Thursday. “You’ll start to see U.S. production flat lining.”
ConocoPhillips Energy Corporation Plans To Fire 1,000 Workers In 2016
July 22, 2016
Houston-based ConocoPhillips plans to cut another 1,000 jobs companywide, according to reports.
Most of the cuts will come from North America, and hundreds are expected in Texas, the Wall Street Journal reports. However, the company declined to disclose how many would be in Houston, according to the Houston Chronicle.
The cuts amount to 6 percent of ConocoPhillips’ workforce, which has already been reduced by 3,400 jobs since September 2014, the WSJ reports.
A large portion of those cuts — 1,800, or 10 percent of ConocoPhillips’ workforce at the time — were announced in September 2015. Of those cuts, more than 500 were expected to come from Houston.
ConocoPhillips has been cutting back in other ways, as well. Earlier this year, the company reduced its 2016 capital expenditure guidance to $5.7 billion, the second time it was cut since December, and slashed its quarterly dividend by 66 percent to 25 cents per share.
“We have taken several steps as a company to adapt to lower and more volatile prices and strengthen our position coming out of the downturn,” ConocoPhillips spokesman Daren Beaudo told the WSJ. “Over the past couple years, we’ve significantly reduced our capital activities and finished some major projects, which left us with more organizational capacity than we need.”
Schlumberger Ltd. swung to an unexpected second-quarter loss, hurt by charges related to restructuring efforts and the oil-field services giant’s acquisition of Cameron International Corp.
Schlumberger also continued with its cost-cutting efforts, saying it had cut roughly 16,000 workers in the first half due to weakness in activity that it expects to persist throughout the year. Schlumberger’s second-quarter job cuts totaled 8,000, bringing the number to 50,000 since the company reached its peak employment in 2014, when it had 129,000 workers. Schlumberger’s current workforce is about 100,000, which includes workers it added when it bought Cameron.
“In the second quarter, market conditions worsened further in most parts of our global operations, but in spite of the continuing headwinds, we now appear to have reached the bottom of the cycle,” Chairman and Chief Executive Paal Kibsgaard said in prepared remarks.
Schlumberger’s results come a day after rival Halliburton Co.’s management predicted the sector is poised for a rebound, with a small rise in the rig count expected later this year and a significant increase anticipated next year. However, Halliburton also posted a second-quarter loss on charges related to its failed tie-up with rival Baker Hughes Inc. and said it was still working to reduce costs. Baker Hughes reports its second-quarter results next week.
Republican presidential candidate Donald Trump is considering nominating Oklahoma oil and gas mogul Harold Hamm as energy secretary if elected to the White House on Nov. 8, according to four sources close to Trump’s campaign.
The chief executive of Continental Resources would be the first U.S. energy secretary drawn directly from the oil and gas industry since the cabinet position was created in 1977, a move that would jolt environmental advocates but bolster Trump’s pro-drilling energy platform.
Dan Eberhart, an oil investor and Republican financier, said he had been told by officials in Trump’s campaign that Hamm was “the leading contender” for the position.
Eberhart said he had discussed the possible appointment with top donors at the Republican National Convention in Cleveland this week.
Three other sources close to the Trump campaign confirmed Trump was considering Hamm for the post. One of the sources said he first heard that Hamm was a contender from Trump officials on Sunday.
Hamm, 70, became one of America’s wealthiest men during the U.S. oil and gas drilling boom over the past decade, tapping into new hydraulic fracturing drilling technology to access vast deposits in North Dakota’s shale fields.
Hamm’s future was discussed at a private fundraiser organized by a Trump Super PAC, Great America PAC, in Cleveland on Monday. Hamm was there, along with major donor Foster Friess and former Republican presidential candidate Ben Carson, one of the sources said, asking not to be named.
None of the sources was aware of who else Trump may be considering for the job.
Representatives for Trump and Hamm did not respond to a request for comment.
Past heads of the U.S. Department of Energy, which is charged with advancing U.S. energy security and technology and dealing with nuclear waste disposal, have typically boasted a political or academic background.
This is not the first time Hamm has been in contention for the job.
The Republican Party’s presidential nominee in 2012, Mitt Romney, vetted Hamm to be energy secretary but ultimately decided against him because the two men have differing positions on renewable energy sources like wind.
Hamm was due to speak at the Republican convention on Wednesday night.
He made headlines in 2015 after settling a protracted divorce case and agreeing to pay his ex-wife $975 million - reported to be the biggest divorce settlement in history. His fortune is now estimated at nearly $12 billion.
Halliburton revealed that it has cut another 9 per cent of its workforce, or roughly 5,000 employees, even though the oilfield service company’s management now predicts that the global energy outlook is finally improving.
The company booked a hefty loss for the second quarter thanks to charges related to its failed tie-up with Baker Hughes Inc., its rival that also helps oil-and-gas producers drill new wells and flush out more fuel from the ground.
Halliburton’s headcount around the world now stands over 50,000 employees, down from more than 55,000 in the spring. At its peak in 2014, Halliburton employed more than 80,000 people.
Despite a loss of $US3.21 billion, or $US3.73 a share, for the period that ended June 30, Halliburton’s results beat analyst expectations. Analysts polled by Thomson Reuters had projected an adjusted loss of 19 cents a share on $US3.75 billion in revenue.
Stock in the company dropped nearly 1 per cent to $US44.58 a share in Wednesday afternoon trade.
Halliburton, which is the second largest oil-field-services company in the world behind Schlumberger Ltd., is an industry bellwether. Chief Executive Dave Lesar emphasised that the North American oil sector is poised for a turnaround in the second half of the year.
An emotional threshold was crossed in the oil patch when crude prices rebounded to $US50 a barrel during the quarter, Mr Lesar said. They have since slid back to less than $US45 a barrel, but companies are starting to think about growing again rather than just hanging on, he added.
“There’s a spring in their step I didn’t see earlier in the year,” Mr Lesar said of Halliburton’s customers. “In short, they are getting back to business.”