Bernstein’s energy analysts have looked at the upstream costs for the 50 biggest listed oil producers and found that — surprise, surprise — “the era of cheap oil is over”:
Tracking data from the 50 largest listed oil and gas producing companies globally (ex FSU) indicates that cash, production and unit costs in 2011 grew at a rate significantly faster than the 10 year average. Last year production costs increased 26% y-o-y, while the unit cost of production increased by 21% y-o-y to US$35.88/bbl. This is significantly higher than the longer term cost growth rates, highlighting continued cost pressures faced by the E&P industry as the incremental barrel continues to become more expensive to produce. The marginal cost of the 50 largest oil and gas producers globally increased to US$92/bbl in 2011, an increase of 11% y-o-y and in-line with historical average CAGR growth. Assuming another double digit increase this year, marginal costs for the 50 largest oil and gas producers could reach close to US$100/bbl. Read more
This is one of those quintessential CNBC factoids but we may as well note it…
Apple’s market cap, just after the open on Wednesday (both charts via Google Finance): Read more
ExxonMobil has traded Rosneft minority stakes in its Gulf of Mexico operations for joint exploration of the Russian Arctic, one of the last largely untapped oil reserves in the world, the FT reports. The tie-up strikes a decisive blow against BP’s hopes of restoring its own Arctic venture with Rosneft, which collapsed earlier this year, Reuters says. Rosneft needs Exxon’s technical skills to develop the Kara Sea region, which will see $3.2bn of joint investment although the Russian prime minister Vladimir Putin said the deal could lead to $500bn of foreign investment, according to the Moscow Times. Perhaps 108bn barrels lie below the Kara Sea, the WSJ says, making Exxon’s move part of a long game. Although unlike BP, Exxon shareholders will not be diluted, Lex observes.
Alternative headline: “Roxxon! You don’t have to put on the red light.”
Reported by Reuters a few minutes ago: Read more
The governor of Montana has questioned Exxon Mobil’s assurance that an oil leak in the Yellowstone river is confined to a 10-mile area, reports Reuters. Governor Brian Schweitzer said it would be impossible to confirm the true extent of the spill until small boats were sent out. Exxon has so far used aircraft overflights to survey the pipeline leak. The company has said that ‘very little soiling’ of river banks was likely beyond the 10-mile radius, but Montana officials believe that the spill could reach the Missouri river, with floods hampering clean-up, reports the WSJ.
ExxonMobil’s chief executive has claimed that BP lost time trying solutions that would never work during last year’s Gulf oil spill, the FT reports. Rex Tillerson said his engineers had known that BP’s attempt to build a containment dome would not work, adding that this initial failure allowed the problem to become much bigger. Mr Tillerson has previously criticised BP about its assessment that there are industry-wide lessons to be drawn from the Deepwater Horizon accident. However, his latest comments about the crisis response are the most specific so far.
ExxonMobil has reported a net profit increase of 53 per cent in the fourth quarter thanks to higher income from oil production and gas outside the United States, the FT reports. Having placed a heavy bet on the US gas market through the $41bn purchase of XTO, the company depended on higher oil prices in the latest quarter as US natural gas prices continued to fall. Earnings, which rose to $1.85 per share from $1.27 per shares, were the strongest for Exxon since the peak of the oil price boom in 2008, although still well short of the underlying $2.59 per share it reported for that period.
ExxonMobil, which has bet heavily on the US gas market through the $41bn purchase of XTO, depended on higher oil prices in the latest quarter as US natural gas prices continued to fall, reports the FT. The world’s largest private sector oil company by market capitalisation has a long-term forecast of robust growth in demand for gas, expecting it to provide an increasing share of power generation at the expense of coal. In the fourth quarter, however, its net profit was lifted by higher income from oil production and gas outside the US, and improving margins at its refineries and chemicals plants.
BP has approached several UK-focused energy companies about a potential sell-off of about $1bn of its North Sea assets, reports Reuters, citing The Daily Telegraph. The report cited companies and bankers saying BP had approached them on a pre-tender basis over a portfolio of non-core fields. It added that oil giant ExxonMobil was also considering the sale of $2bn worth of North Sea assets, as the low-margin fields become less attractive to large companies with high dividend policies. Bloomberg also cites sources saying BP is weighing a North Sea asset sale, as part of plans to divest as much as $30bn in assets by the end of 2011 to help cover costs arising from its Gulf of Mexico oil rig disaster earlier this year.
India’s largest oil group is considering acquiring ExxonMobil’s and Total’s oil assets in Angola, in a new push by the state-run group to secure overseas resources, reports the FT. RS Sharma, chairman of Oil and Natural Gas Corp, told the FT on Monday that he had met members of the Angolan government to discuss opportunities, including buying some assets of the US and French oil majors. But Sharma stressed that talks were at an early stage. However the Economic Times of India reports that ONGC is in talks with Exxon’s Angolan arm to buy its stake in an oil field for about $2bn. Besides Esso’s 25% stake, BP’s Angolan arm owns 26.67% of the local oil venture, the Angolan state owns one-third while Marathon Petroleum and a subsidiary of France’s Total have the remaining 15%.
India’s largest oil group is considering acquiring ExxonMobil’s and Total’s oil assets in Angola, in the latest effort by the state-run group to secure overseas resources to help the country achieve its double-digit growth aspirations, reports the FT. R.S. Sharma, chairman of Oil and Natural Gas Corp, told the Financial Times on Monday that he had met members of the Angolan government in New Delhi to discuss a number of opportunities, including buying the assets of the US and French oil majors. However, the Indian executive stressed that talks were at a very early stage and he did not specify how much ONGC would invest.
Some of the world’s biggest oil companies reported sharply higher third-quarter results on Thursday amid stronger crude prices and improved refining margins, the FT reports. ExxonMobil, the largest US oil company, beat analyst expectations with a 55% jump in 3Q earnings to $7.4bn from a year ago. Royal Dutch Shell, Europe’s biggest oil group, said 3Q profit rose 18% to $3.5bn. The underlying result, which strips out one-off items, was up an annual 88%. Italy’s Eni, meanwhile, saw a 47.5% rise in underlying 3Q net profit to €1.7bn ($2.36bn). The results are expected to set an industry trend, with analysts forecasting strong earnings from America’s Chevron and France’s Total on Friday. Despite the bumper profits, Lex notes, only one of the three oil giants raised its dividend: Exxon.
Two of the world’s biggest oil companies reported sharply higher third-quarter results on Thursday, fuelled by stronger crude prices and better refining margins, the FT reports. ExxonMobil, the largest oil company in the US by market capitalisation, beat analyst expectations by posting a 55 per cent jump in third-quarter earnings to $7.4bn, compared with the same quarter in 2009. Royal Dutch Shell, Europe’s biggest oil group, said its third-quarter profit had risen 18 per cent to $3.5bn on a current cost of supplies base, which removes the effect of price changes on inventories. The underlying result, which strips out one-off items, was up 88 per cent on a year ago. Italy’s Eni, meanwhile, reported a 47.5 per cent rise in underlying net profit to €1.7bn ($2.36bn).
Four of the world’s biggest oil companies will announce on Thursday that they are pooling $1bn to form a joint venture to develop a deepwater Gulf of Mexico oil spill response and containment system, the FT reports. ExxonMobil, Royal Dutch Shell, Chevron and ConocoPhillips will each initially invest 25 per cent in a new standalone company, according to sources involved in the plans. BP has not been included.
Shares in BP traded over 400p for the first time in around a month on Monday – June 9 to be precise – as bid rumours swirled:
BP continued work on a new capping system for the Gulf oil spill early on Monday, FT Alphaville reports, sparking a 5.5 per cent rally in BP shares in London trading. The cap could still take several days to install, the FT says. Fixing the spill goes on even as the energy giant talks to Apache on a deal to sell stakes in its Alaska operations, people familiar with the matter have told the WSJ. BP is meanwhile preparing a strategy for defending against a hostile takeover, on speculation that ExxonMobil is preparing a bid, the Daily Telegraph reports.
BP is in talks to sell assets including its Alaska oil fields to Apache, the largest independent US oil company, reports Bloomberg, citing people close to the talks saying that Apache is negotiating for the assets for a price of less than $12bn. The Telegraph reports that BP is gearing up to unveil a $40bn defence strategy amid speculation that ExxonMobil and possibly Chevron sought White House clearance to bid for their rival. The FT meanwhile says that a bid for BP itself is unlikely but “not impossible”.
The world’s biggest oil companies are reviewing their current partnerships with BP and rethinking their willingness to agree new projects in which BP designs the oil well and runs the operations, the FT reports. ExxonMobil, Chevron, Total and Royal Dutch Shell have all willingly partnered BP over the years but have sought to distance themselves following revelations about BP’s well design and operational decisions at the Macondo well.
As BP’s oil leak disaster adds to concerns about growing regulatory and safety risks of oil, coal and other conventional energy sources, shale gas is burnishing its reputation as the sexy new energy play.
While the complex process of extracting gas from shale rock has drawn criticism about its environmental impact, the magnitude of BP’s Gulf of Mexico oil disaster might overshadow those concerns. Read more
The ignominy continues to pile up for BP, as its share price plunges and credit default protection on it blows out. That’s made a few ‘unthinkable’ scenarios rather less so, FT Alphaville writes, including one analyst’s speculation of a Chinese takeover bid. Read more
Over the last two trading sessions the two largest oil companies in the United States, Exxon and Chevron announced that in Q4 2009 they lost a combined $6.9 million day on turning crude oil into refined products. Wall Street traders reacted to this news yesterday by making NYMEX crude oil even more expensive than gasoline. To explain this seeming incongruity, an unidentified financial trader from Camp Mohawk Trading was quoted as saying. . . IT JUST DOESN’T MATTER, IT JUST DOESN’T MATTER!
That’s Stephen Schork of the widely-read Schork Report, reflecting upon the current illogical investment pattern gripping energy markets. Read more
ExxonMobil and its joint venture partners in a $15bn liquefied natural gas project in Papua New Guinea have secured $14bn in project financing, with construction to start early next year. Oil Search – which has 29% of what will be the largest-ever foreign investment in PNG – said it was able to borrow $8.3bn from export credit agencies, tap a syndicate of 17 commercial banks for $1.95bn and secure $3.75bn from ExxonMobil.
Global risk appetite surged on Monday, boosting stocks and initially denting haven assets, after Dubai said it had received $10bn from Abu Dhabi to help cover its debts. The FTSE World index rose 0.8% with financial groups particularly strong in Europe as traders bet that the loan would curb any contagion from Dubai’s woes. Sentiment was also boosted by the return of ‘mega-merger Monday’ as ExxonMobil, the giant US energy group, said it would pay $31bn in shares to buy XTO Energy.
ExxonMobil has signalled a significant shift in strategy with a deal to pay $31bn in stock for XTO Energy, which will give the world’s biggest publicly listed oil company a large position in domestic natural gas. Analysts said ExxonMobil had paid a relatively high price for XTO’s reserves, many of which lie in US shale deposits. The deal, which includes a further $10bn in XTO debt, gives Exxon an increased foothold in gas reserves and greater access to a cleaner-burning alternative to coal.
ExxonMobil has agreed to acquire a large stake in Ghana’s Jubilee oil field from its private equity owners, paying about $4bn for one of Africa’s most potentially lucrative oil discoveries. The deal, first mooted late last year, drew interest from many big oil groups but became bogged down by horse-trading with Ghana’s government. It would generate about a 400% return for Blackstone and Warburg Pincus, which together invested $800m in Kosmos Energy, owner of the Jubilee stake.
Much is being made in Australia – or rather, by the Australian government – of Petrochina’s mega-energy deal signed on Tuesday to buy $41bn worth of Australian natural gas over the next 20 years.
Anyone seeing Martin Ferguson, Australia’s energy and resources minister, at the signing ceremony in Beijing on Tuesday might have thought it was a deal personally crafted by Canberra. Read more
Petrochina, China’s largest energy company, on Tuesday signed a deal to buy $41bn worth of Australian natural gas in a ceremony designed to put a gloss on strained relations between the two trading partners. Martin Ferguson, Australia’s energy and resources minister, attended the signing in Beijing of Petrochina’s agreement with ExxonMobil to buy 2.25m metric tonnes a year of liquid natural gas from the Gorgon project off the coast of Western Australia. The deal is worth $41bn over the next 20 years, Ferguson said.
Profits at two of the world’s biggest oil companies, ExxonMobil and Royal Dutch Shell, have plummeted amid tumbling international oil prices and weaker demand for energy. Exxon, the largest US oil group, and Shell, the biggest in Europe, on Thursday unveiled post-tax Q2 profits that were roughly a third of those a year ago. Exxon saw a 66% yoy drop in Q2 net income – the steepest fall in more than a decade – to $3.95bn, while Shell suffered a 70% decline to $3.24bn.