Crude prices edged back under $100 during the past week on
downbeat Chinese economic reports and a bearish supply data,
while natural gas declined amid expectations of milder
temperatures with the imminent arrival of spring.
Among the newsmakers, energy majors
Royal Dutch Shell Plc
) provided a glimpse of their future business
Crude prices edged down last week amid concerns about an
economic slowdown in China - the second largest oil consumer in
the world, and an unexpected jump in Iraq's February production.
Sentiments were further dampened by the Energy Information
Administration (EIA) report that showed a significantly
higher-than-expected increase in oil inventories.
However, to some extent the bears were offset by recent
geopolitical tensions between Russia and the West over the fate
of a referendum in the Ukrainian region of Crimea. A military
standoff may threaten oil supplies in the region. Prices also got
a boost from International Energy Agency's (IEA) increased global
oil demand forecast.
As a result of these factors, by close of trade on Friday,
West Texas Intermediate (WTI) oil settled at around $98.9 per
barrel, losing 3.8% for the week.
Natural gas fell last week to their lowest level in almost 2
months on the back of tepid decrease in supplies and the imminent
arrival of soft spring temperature.
The EIA's weekly inventory release showed that natural gas
stockpiles held in underground storage in the lower 48 states
fell by 195 billion cubic feet (Bcf) for the week ended Mar 7,
failing to top the guided range (of 193-197 Bcf drawdown).
To make things worse, milder spring weather forecasts - in
bulk of the country over the next few days - are likely to limit
natural gas' demand for heating.
Influenced by these factors,
ended Friday at $4.43 per million Btu (MMBtu), down 4.2% over the
Energy Week That Was:
The week's energy coverage was dominated by the following
Chevron Lowers '17 Production Guidance
At a meeting with financial analysts in New York, U.S. energy
behemoth Chevron Corp. unveiled its business strategy. The super
major sees overall 2017 production of about 3.1 million
oil-equivalent barrels per day (MMBOE/d), as against 3.3 MMBOE/d
stated earlier, primarily due to an expected slowdown in the
natural gas price, higher costs and project delays.
The Asia-Pacific region is expected to be the major
contributor to this 2017 output, pushing North America to the
second place. Chevron also confirmed that its 2014-16 divestment
plan involves sale of assets worth about $10 billion. The company
added that over 90% of the 2014-16 upstream capital budget would
focus on oil-linked assets, with international oil comprising
Shell to Cut Outlay in the Americas
At its annual strategy update, energy major Royal Dutch Shell
plc unveiled its business policy. In particular, the company
outlined plans to slash its 2014 capital investment in upstream
activities in the Americas. Shell is expected to lower the
spending by 20% from the amount invested in 2013, as the company
has been incurring losses in the North American shale resource
plays. Moreover, Europe's largest oil company is planning to
divide its downstream portfolio into distinctive performance
segments and allocate capital accordingly to maximize
Energy XXI Buying EPL to Create GoM Giant
Domestic oil and gas explorer
Energy XXI (Bermuda) Ltd.
) has agreed to acquire smaller rival
EPL Oil & Gas Inc.
) for about $2.3 billion in stock, cash and debt. Following the
announcement, shares of EPL surged 30%, while those of Energy XXI
fell about 6%.
Both companies, based in Houston, are upstream players engaged
in the exploration and development of crude oil and natural gas
resources in the U.S. Gulf of Mexico (GoM) shelf. The deal will
create the largest publicly-owned independent oil producer in the
region's shallow water, with 10 oilfields, daily production of
approximately 65,000 barrels of oil equivalent and an enterprise
value of $6 billion.
National Oilwell Revamps Segments
Global large-cap energy equipment maker
National Oilwell Varco Inc.
) intends to restructure its reporting segments. The new segments
- Rig Systems, Rig Aftermarket, Completion & Production
Solutions, and Wellbore Technologies - will come to effect from
Apr 1. Previously, the company organized its operations in three
segments: Rig Technology, Petroleum Services and Supplies and
Distribution and Transmission.
US Lifts Ban on BP GoM Ventures
) has reached an agreement with the U.S. Environmental Protection
Agency (EPA) that allows the former to once again bid on
government contracts in the Gulf of Mexico region. The pact
resolves all matters related to the suspension, debarment and
statutory disqualification of BP following the Deepwater Horizon
accident. The ban was imposed in 2012 after the agency concluded
that BP had not completely rectified the issues that led to the
well blowout in 2010.
Performance Chart of Some Major Companies:
The following table shows the price movement of the major oil
and gas players over the past 5 days and during the last 6
Last 5 Day's Performance
6 month performance
Other Headline News on Energy:
Petrobras Finds Oil, Prices Notes
Brazil's state-run energy giant
) reported the completion of drilling wildcat well
1-BRSA-1205-RNS (Pitu Well). Petrobras also revealed the new
found existence of intermediate oil in the Potiguar Basin while
drilling the well. Petrobras reached a depth of roughly 5,353
meters while drilling the well and discovered a hydrocarbon
column of 188 meters. Earlier in the week, Petrobras announced
the pricing of its dollar denominated notes - fixed and floating
rate - that would fetch $8.5
SeaDrill to Fetch $797M from Drillship Sale
Offshore drilling firm SeaDrill Ltd. has inked a deal with
subsidiary Seadrill Partners LLC to sell West Auriga, a
dynamically positioned 6th generation drillship. Per the
agreement, SeaDrill Ltd. is selling the rig for a consideration
of roughly $797 million. Seadrill Partners is planning to offer
10.4 million common units to the public for financing the
acquisition. To support the funding, SeaDrill Ltd. will buy a
minimum of $50 million worth of common units at a price that will
be offered to the public.
Pioneer Natural Amends Sale Agreement
Energy producer Pioneer Natural Resources Co. entered into an
amendment to its sale agreement with Caelus Energy Alaska LLC.
Per the deal, the company is divesting the full stake of its
subsidiary - Pioneer Natural Resources Alaska - and will get $300
million in cash at closing, expected during the second quarter.
Moreover, the company expects to recognize an additional non-cash
loss of approximately $30 million, which will be recorded in the
first quarter of 2014.
This Week's Outlook:
Apart from the usual releases in this holiday shortened week -
the U.S. government data on oil and natural gas - market
participants will be closely tracking Wednesday's monetary policy
announcement by the Federal Reserve, together with reports on
industrial production and housing data. Energy traders will also
be focusing on developments in Ukraine.
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