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The federal government's EIA report revealed that domestic crude production climbed to yet another record high of 12.8 million barrels per day.
Philippine oil and shipping group Udenna Corp said on Wednesday it has signed a deal to acquire the 45% interest of a Chevron unit in the country's Malampaya gas-to-power project, subject to regulatory approvals. Udenna, which controls fuel retailer Phoenix Petroleum Philippines Inc and shipping and logistics firm Chelsea Logistics and Infrastructure Holdings Corp, said it has signed a sale and purchase agreement with Chevron Malampaya LLC. Phoenix, together with Chinese partner CNOOC Gas and Power and state-owned Philippine National Oil Company (PNOC), is looking to build a $2 billion liquefied natural gas hub in the Philippines.
(Bloomberg) -- Offshore oil production is expected to hit a peak in 2020 before joining the shale industry in a slowdown that could dramatically rewrite market supply predictions.A report by analysts at Sanford C. Bernstein & Co. sees projects in the Gulf of Mexico and off of South America significantly boosting output next year. After that, though, the odds drop for any further growth gains, the report found. Meanwhile, two well-known shale pioneers last month forecast a downturn ahead for their sector.Together, the warnings could signal a new era for a commodity that’s selling for about half the price reached just five years ago. The catalyst is a shareholder push for spending discipline. The result: Potentially a “tempting scenario” for investors where oil prices rise even as costs and demand fall, said Bob Brackett, a Bernstein report author.Three crude sources have seen substantive growth this century -- deepwater, shale and oil sands, according to Brackett. “The first peaks in 2020,” he wrote in an email. “The second peaks a few years later (and is slowing). And the future of oil sands is in question from a sustainability/CO2 impact.”The offshore industry has struggled to maintain growth since oil prices plunged to less than $30 a barrel in 2016 after reaching more than $100 in mid-2014.The high prices spurred a flurry of expensive projects between 2010 and 2014. But today those projects are “barely able” to generate value, according to industry consultant Rystad Energy, which evaluated offshore oil fields sanctioned since 2010 in an Oct. 30 report and ranked them by estimated value per barrel of oil.While newer deepwater projects are less expensive, they still take longer to develop than shale wells and they can’t compete on costs. Over the last few years, roughly $100 billion in spending has shifted to shale work as a result, according IHS Markit.Royal Dutch Shell Plc’s decision last month to pull the plug on a pair of projects in Kazakhstan because of their high costs points to offshore’s changing status. The latest example hit last week when Brazil failed to draw bids from the world’s oil majors in its auction of deep-sea deposits that could hold 15 billion barrels of oil, almost twice as much as Norway’s reserves.“The pipeline of things that have been discovered just won’t get sanctioned,” Brackett said.Shale industry pioneers Scott Sheffield, Pioneer Natural Resources Co.’s chief executive officer, and Mark Papa, who built Enron Corp. castoff EOG Resources Inc. into one of the world’s biggest independent oil explorers, are sounding the alarm on shale growth.Across the shale industry, output growth will slow next year, Sheffield said on Nov. 5. That will provide a boost for prices through the early 2020s, he said.“U.S. shale production on a year-over-year growth basis will be considerably less powerful in 2021 and later years than most people currently expect,” Papa said during an earnings call for Centennial Resource Development Inc., his current company.To be sure, both the shale and offshore sectors will continue to produce. Sheffield sees about 700,000 barrels a day being added next year in U.S. shale fields while the Energy Information Administration predicts daily production will expand by 910,000 barrels. Even that, though, would be half of last year’s increase.In early 2020, Exxon Mobil Corp. is expected to begin producing oil from deepwater wells off the coast of Guyana that have the potential to produce more than 6 billion barrels. Meanwhile, eight new projects are opening in the Gulf of Mexico this year and in 2020, according to an Oct. 16 report by the U.S. Energy Information Administration.Even so, the Gulf’s share of U.S. production overall is expected to shrink, the EIA report said, to about 15% from 23% in 2011. In 2014, the industry had 245 floating rigs working globally, according to Evercore ISI. Now there are less than half that number, and contractors are trying to manage through the downturn. Valaris Plc, one of the biggest owners of offshore rigs, announced Tuesday a new round of cost cuts adding up to at least $100 million as executives “fully recognize the continued pressures in the current market environment,” according to a statement.Some workers in the industry see few silver linings ahead.“The fracking technology has just opened up so much more oil,” said Chip Keener, a former manager of the global rig fleet for Transocean Ltd., the biggest owner of deepwater rigs. “Deepwater I think is going to be on the skids for a very long time.”(Updates with comment from Valaris in 15th paragraph.)To contact the reporters on this story: David Wethe in Houston at firstname.lastname@example.org;Allison Mccartney in New York at email@example.comTo contact the editors responsible for this story: Simon Casey at firstname.lastname@example.org, Joe Carroll, Carlos CaminadaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Credit Suisse Group AG’s investment bank chief stepped down, adding to months of turmoil at the top that started with the departure of its wealth management head and culminated in a spying scandal.Jim Amine decided to resign as chief executive officer of the investment banking and capital markets division and leave the executive board, taking the role as head of private credit opportunities based in New York. The bank appointed David Miller, a 22-year Credit Suisse veteran, to succeed Amine and join the executive board.The move is the third change at the top of the Swiss bank in less than five months, coming just weeks after the departure of Pierre-Olivier Bouee in the wake of a spying scandal and the abrupt exit of Iqbal Khan as head of the wealth-management unit in July. Amine’s division, which covers investment banking out of New York and London, reported its second quarterly loss of the year in the third quarter. Revenue for the nine months through September fell 27% from a year earlier to 1.24 billion francs.Slumping revenue at the investment banking and capital markets unit has become a growing issue for Chief Executive Officer Tidjane Thiam in recent quarters, while global markets trading -- a long-term straggler -- has made surprise profit gains. Following the bank’s earnings in late October, KBW analyst Thomas Hallett said that questions remain on the underperforming capital markets unit.The bank lost out this year as a string of deals collapsed or didn’t get off the ground, including the planned initial public offering of Swiss Re AG’s U.K.-based Reassure unit and Chevron Corp.’s abandoned bid for Anadarko Petroleum Corp. Still, the bank has managed to retain it’s global top 10 spot for mergers and acquisitions and it’s a global coordinator on Saudi Aramco’s mammoth share sale.Executive ReshuffleAmine steps down from the executive board after leading investment banking and capital markets for more than a decade. Eric Varvel, who is based in New York and heads Credit Suisse’s asset management business, was appointed chairman of the investment and capital markets unit and Harold Bogle will be the division’s vice chairman. Amine will report to Varvel in his new role, the bank said.Miller was most recently global head of credit and part of the leadership team at global markets, the bank’s main trading unit. Previously he was global head of leveraged finance capital markets and U.S. co-chief of the syndicated loan group.“I want to thank Jim Amine for his invaluable contributions in building our leading investment banking footprint over many years,” Thiam said in a statement. “His insight and knowledge across all aspects of investment banking have been, and will continue to be, of huge benefit to the firm.”Bouee, Thiam’s chief lieutenant at three companies for more than 10 years, stepped down as Credit Suisse’s COO last month after ordering detectives to shadow former wealth-management head Khan in a spying scandal that gripped Zurich financial circles. The bank’s internal investigation concluded that the CEO had no knowledge of the spying.(Adds analyst comment on results in fourth paragraph.)To contact the reporter on this story: Patrick Winters in Zurich at email@example.comTo contact the editors responsible for this story: Dale Crofts at firstname.lastname@example.org, Ross LarsenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Energy group Centrica and Stadtwerke Muenchen (SWM) Group have launched the sale of Spirit Energy, one of the North Sea's biggest oil and gas producers, according to a document sent to prospective buyers seen by Reuters. Spirit Energy currently produces around 130,000 barrels of oil equivalent per day (boed) which is set to taper off to around 100,000 boed by 2025, although it also comes with 270 million boe in so-called 2P reserves, the document showed. Such yet-to-be-exploited barrels can be attractive to some of the private-equity backed firms that have bought aging North Sea assets from oil majors in recent years, looking for future growth ahead of a potential stock market listing or sale.
Israel's Delek Group said on Sunday its Ithaca subsidiary, which it plans to spin off via a London listing, completed a deal to buy most of Chevron's British North Sea oil and gas fields for $2 billion. Delek said the deal, backdated to Jan. 1, will quadruple Ithaca’s pro-forma production to 80,000 barrels of oil equivalent per day and raise the company's proven reserves by 150% to 225 million barrels. Delek, which is a partner in large natural gas projects off Israel's Mediterranean coast, paid $1.68 billion, with the rest coming from cash flow accumulated coming from the sale of oil and gas at Chevron's North Sea fields after the start of 2019.
Ending the Trade off Between Engine and After Treatment Systems Protection, Chevron Unveils a Revolutionary New Additive Technology and Product Line
Angola expects to announce the winners of its 2019 oil and gas licence auction round in April as part of a multi-year plan to boost declining output, a senior executive at the National Agency of Petroleum, Gas and Biofuels (ANPG) said on Thursday. "By April 2020 we expect to award the contracts for the current licensing rounds in the Benguela and Namibe basins," ANPG board member Belarmino Chitangueleca said. "Next year we do all onshore (blocks) and by December 2020 we will be signing contracts," Chitangueleca told Reuters on the sidelines of an African oil and gas conference in Cape Town.
(Bloomberg Opinion) -- Royal Dutch Shell Plc made a big investment in offshore energy this week — wind energy, that is. The very next day, Brazil announced the results of a more traditional energy auction in the waters off its coast. They were not good.The country’s biggest-ever sale of oil deposits flopped on Wednesday morning. Only two out of four blocks were sold, and only one of those involved foreign bidders, with China’s CNOOC Ltd. and China National Oil and Gas Exploration and Development Co. taking all of 10% of the Buzios field. Petroleo Brasileiro SA took the other 90% and all of the Itapu block. Western oil majors, such as Shell or Exxon Mobil Corp., were nowhere to be seen.Offshore oil investment was all the rage among Big Oil during the supercycle, with capital expenditure almost quadrupling in the decade up to 2014. That is the problem. The majors poured money into large, multi-year projects prone to delays and, because of their often bespoke engineering, spiraling budgets. The result: tumbling return on capital and an inability to dial back investment quickly when the oil crash hit in 2014. Roughly 3,000 new offshore projects sanctioned between 2010 and 2014 have either barely generated any value for oil companies or are expected to generate none at all, according to a recent study published by Rystad Energy, a consultancy:More recent investments score better, mostly because the boom tailed off, with offshore capex falling by more than half between 2014 and 2018. That took the heat out of industry inflation; and, because of the bonfire of returns in the prior decade, oil majors got smarter about such things as standardizing offshore equipment design to cut costs and shorten schedules. The pace of new projects has picked up again after the slump. Exxon, for example, has effectively opened up an entire new offshore zone with its Guyanese fields.Still, one look at the stock prices of oilfield services firms, especially offshore-focused types such as Transocean Ltd. and Noble Corp. Plc, tells you this investment wave is nothing like the tsunami of yesteryear. Bad memories combined with unease about both near- and long-term oil demand make bold bets on big, multi-year offshore projects a tough sell with investors more interested in payouts. Even Exxon’s success in Guyana gets overshadowed by the fact that the company’s capex bill leaves it borrowing to pay its dividend. And Exxon, like Chevron Corp. and other majors, has swung more of its spending toward shorter-cycle onshore fracking in North America.Brazil’s brush-off is an ominous sign the investment discipline demanded by energy investors is choking off one of the world’s biggest sources of oil-supply growth. In its latest World Oil Outlook published this week, OPEC cited Brazil as being second only to the U.S. in terms of medium-term growth, and number one in terms of projected long-term non-OPEC growth. Bob Brackett, an analyst at Sanford C. Bernstein, published a report a couple of weeks ago pondering if global offshore oil supply would peak next year, perhaps for good.The implications are profound. There is a wide range of views on when global oil demand will slow or peak altogether. If it is later than sometime next decade, then the decline in offshore production that will inevitably follow a mass exodus from this part of the business could stoke another upcycle in prices. The Brazil auction suggests, however, that such possibilities play second fiddle to expectations on the part of many investors that oil has entered its twilight years.Such results are ominous for offshore services providers, of course, and for the countries involved. Brazil’s currency slumped Wednesday morning as the market digested the lack of foreign capital targeting the country’s choicest oil resources.Another country that should take note is Saudi Arabia. Like Brazil, it’s trying to tempt foreign buyers to pay up for a piece of its black gold. On the same morning, reports emerged that Saudi Arabian Oil Co. is seeking commitments from Chinese state-owned entities to invest in its IPO. Such strategic buyers do provide cash. But as Brazil could tell Aramco, turning to them also says a lot about the broader appetite for what you’re selling.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Chevron today announced a contribution of $100,000 from the Chevron Global Community Fund to the American Red Cross to support relief efforts for wildfires in California. Chevron, with operations all around California and 140 years of history in the state, is committed to being a strong and reliable partner in the communities where its employees live and work. “So many people in the state have felt a devastating impact from these fires,” said Chevron Chairman and CEO Michael Wirth.
(Bloomberg Opinion) -- Occidental Petroleum Corp.’s swing from aggressive offense to deep defense has taken about six months. In May, it elbowed aside much bigger Chevron Corp. to capture Anadarko Petroleum Corp. On Tuesday, it laid out plans to cope with the aftermath.The messiness of Oxy’s third-quarter results, the first to include Anadarko, was their saving grace. Earnings missed consensus estimates by a mile, but the panoply of moving parts, including merger expenses, makes the number almost meaningless. Far more important is Oxy’s plan for 2020, which can be summed up in one word: austerity.The company took the unusual step of providing details about spending plans for next year, something it normally saves for the fourth-quarter call. There is a simple reason for this: The stock yielded north of 7% for much of the period since the Anadarko deal closed in early August. There is a fine line between a yield that looks unusually attractive and one that just looks unsustainable, and Oxy has been walking it.So while the mantra of favoring free cash flow over growth can be heard pretty much everywhere in the oil business these days, Oxy is shouting it a little louder. Analysts were forecasting capital expenditure of $7.5 billion in 2020, according to figures compiled by Bloomberg. Oxy’s target is at least $2 billion lower than that, a figure that happens to cover three quarters of the annualized dividend payment.Lower capex comes with a catch: guidance for production growth in 2020 is now set at 2% compared with the 5% target mentioned during the Anadarko pursuit. That said, the budget still implies a productivity gain of roughly 16% compared with the consensus forecast, assuming the latter includes capex for Western Midstream Partners LP; Oxy’s budget does not. Such synergies are, of course, the basis of Oxy’s argument for buying Anadarko in the first place, and much of Tuesday’s call was taken up with emphasizing early realizations of those and further benefits to come. As has been the case with many other E&P acquirers in the past year or so, however, Oxy isn’t getting the benefit of the doubt. As of lunchtime Tuesday in New York, the stock was down almost 6%, making it the worst performer of any size in the sector apart from Chesapeake Energy Corp. — which trumped everyone with a going-concern warning.The fact remains that Oxy stretched itself enormously to win Anadarko just as the outlook for oil soured. In doing so, it also took on high-priced financing from Warren Buffett that looks set to swallow 40% of the current value of the deal’s cost savings (see the math here). Payments on Buffett’s preferred stock took almost half of Oxy’s adjusted net income in the third quarter. Having begun the year trumpeting reasonable growth balanced with high payouts, Oxy now offers low growth to protect payouts.In short, having hurt its credibility with investors, Oxy still has a lot to prove in winning it back. And as next year’s guidance shows, that finely balanced dividend yield will have to do much of the work in the meantime.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Venezuelan state oil company PDVSA and Chevron Corp plan to turn their joint venture Petropiar plant back into a crude upgrader, after months operating as a less complex blending facility, three people familiar with the operation said. The companies plan to begin producing Hamaca-grade synthetic crude for export at the plant early next year, said the people, who spoke on condition of anonymity this week.
It seems that bullish sentiment is finally returning to oil markets with trade war discussions making progress and OPEC suggesting that it will cut deeper in December
ExxonMobil and Chevron released their Q3 earnings results on November 1. While Berenberg has raised ExxonMobil's target, it has lowered Chevron's.
(Bloomberg) -- Activists inside Google are calling on management to ditch deals with oil and gas companies, the latest flare-up inside the technology giant.In a letter published on Monday, more than 1,100 workers asked Google Chief Financial Officer Ruth Porat to release a “company-wide climate plan” that commits to cutting carbon emissions entirely. The letter also asks Google to drop contracts that “enable or accelerate the extraction of fossil fuels.”Since 2017, Google’s cloud-computing unit has disclosed contracts with oil-services giant Schlumberger Ltd., Chevron Corp. and French energy company Total SA. Saudi Arabia’s Aramco, the world’s largest oil company, announced a tentative cloud deal with Google last year, although the internet giant has never confirmed the partnership.“If Google is going to confront its share of responsibility for the climate crisis, that means not helping oil and gas companies extract fossil fuels,” Ike McCreery, an engineer in Google’s cloud division, said in an email. “This is a moment in history that requires urgent and decisive action.”A Google spokeswoman declined to comment, but pointed to comments Porat made in a September blog. "As our business continues to grow, we have expanded the breadth of our efforts to drive positive environmental impact, and make smarter and more efficient use of the Earth’s resources," the CFO wrote in the post.The energy sector is a growing market for cloud providers, which offer tools for storing and analyzing data. Tech’s ties to the industry have prompted protests elsewhere. Some staff at Amazon.com Inc. and Microsoft Corp. have called on their employers to cancel contracts with oil and gas companies. Staff outcry over a Pentagon cloud deal last year caused Google to exit that contract.Alphabet Inc.’s Google has touted its green credentials for years. The company announced the largest ever corporate purchase of renewable energy in September. Starting in 2017, the company has matched the electricity bill from its massive data centers with equal purchases from renewable energy sources.The Google employee letter also asks the company not to do business with U.S. immigration authorities, arguing that more people are being forced to move across borders due to climate change. Google hasn’t disclosed contracts with these agencies, but Business Insider reported that U.S. Customs and Border Protection is testing a Google cloud service called Anthos, which lets organizations use multiple cloud providers at once.McCreery, who helped spearhead the letter, works on Anthos. “It’s devastating to think the infrastructure I’ve helped build over the last five years would be used to help incarcerate climate refugees,” they said.(Updates with CFO comments in sixth paragraph.)To contact the reporter on this story: Mark Bergen in San Francisco at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Alistair Barr, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Chevron stock (XOM) closely relates to oil prices, so investors sometimes use this highly liquid, well-regarded stock as a trading vehicle for oil.