Expectations of an improving economy and bullish supply data
strengthened crude prices. However, natural gas was little
changed, as an encouraging inventory report was negated by
predictions of below-normal temperatures.
Among the newsmakers, shares of
Exxon Mobil Corp.
) hit a 52-week high, while
) reported its first major find since the Deepwater Horizon rig
Crude prices increased last week on Federal Reserve's measured
Taper announcement Wednesday afternoon. The central bank -
asserting that the U.S. economy was strong enough - stated that
it will reduce bond repurchases by $10 billion, bringing its
monetary stimulus to $75 billion a month from Jan 2014. This has
fuelled hopes for robust fuel and energy demand in the worlds
biggest oil consumer. The bullish momentum was propelled by
Friday's positive revision to third quarter GDP numbers.
Sentiments were further brightened by the Energy Information
Administration (EIA) report that showed a big fall in
As per the EIA's weekly 'Petroleum Status Report,' crude
inventories dropped by 2.94 million barrels for the week ending
Dec 13 to 372.31 million barrels. What's more, storage at the
Cushing terminal in Oklahoma, the key delivery hub for U.S. crude
futures traded on the New York Mercantile Exchange, was also down
As a result of these factors, by close of trade on Friday,
West Texas Intermediate (WTI) oil was firmly in the black and
settled at $99.32 per barrel, gaining 3.2% for the
Investors continue to focus on temperature patterns to
understand the fuel's economic dynamics. As it is, natural gas
fundamentals look uninspiring with supplies remaining ample in
the face of underwhelming demand. In fact, it is expected to take
many years for the commodity's demand to match supply in the face
of newer projects.
Coming to last week, natural gas stayed flat, as a massive
decrease in supplies was offset by forecasts of a break in cold
The EIA's weekly inventory release showed that natural gas
stockpiles held in underground storage in the lower 48 states
fell by 285 billion cubic feet (Bcf) for the week ended Dec 13,
higher than the guided range (of 260-264 Bcf drawdown). Moreover,
the decrease was significantly higher than both last year's
withdrawal of 70 Bcf and the 5-year average reduction of 133 Bcf
for the reported week.
However, milder weather forecasts - in the central and eastern
regions over the next few days - are likely to limit the
commodity's demand for heating.
Influenced by these factors, natural gas spot prices ended
Friday at $4.42 per million Btu (MMBtu), essentially flat over
Energy Week That Was:
The week's energy coverage was dominated by the following
XOM Shares Hit 52-Week High
Shares of Exxon Mobil Corp. hit a 52-week high of $99.95 on
Dec 18. In fact, the Irving, TX-based energy behemoth has seen
its stock price climb some 12% during the past three months. This
price appreciation can be attributed to its strong operational
and financial position on the back of solid business portfolio
and prudent investment approach.
Exxon Mobil is the world's best run integrated oil company
given its track record of superior return on capital employed and
has long been a core holding for investors seeking a defensive
name with continued dividend growth.
BP Hits Oil in GoM Since '10 Blowout
Oil major BP plc along with its partner
) made a huge find at its Gila prospect, in the deepwater U.S.
Gulf of Mexico (GoM).
The discovery represents the first major find by BP since the
massive rig outburst that caused the worst environmental tragedy
in the U.S. history. After the Macondo well blowout, the U.S.
regulators lifted a five-month ban on deepwater drilling in 2010.
The latest find is the third discovery in recent years in the
emerging Paleogene trend in the Gulf. The previous finds were
Kaskida in 2006 and Tiber in 2009.
BP hit oil at depths of around 9,150 meters (30,000 feet) in
the Gila prospect by an exploration well on Keathley Canyon Block
93, about 300 miles southwest of New Orleans, in around 4,900
feet of water.
Hess Anticipates Lukewarm 4Q
) has slashed its production guidance for the first two months of
the fourth quarter of 2013 and overall guidance for the same
quarter. The cascading trend in global oil prices prompted the
Hess reduced its fourth quarter daily production guidance to
310,000 barrels of oil equivalent per day (BOE/d) from 320,000
BOE/d guided previously. The decrease reflects the closure of
sale of its interest in the Natuna A Field in Indonesia and
higher production downtime due to maintenance activities.
At the same time, having faced a global slump in realized
selling prices for crude oil during the first two months of the
fourth quarter, the company anticipates sequentially lower
COG Revises '13 Output Growth Outlook
Independent oil and gas exploration company
Cabot Oil & Gas Corp.
) reported that it has revised its 2013 production growth
The Houston, TX-based upstream operator has set its new
production growth guidance at 50% to 55%, up from the previous
outlook of 44% to 54%. Cabot added that recently it has produced
roughly 1.5 billion cubic feet per day of natural gas from
Marcellus shale operations, reflecting a year-over-year hike of
50%. This record production has encouraged the company to lift
its 2013 production growth outlook. However, Cabot has retained
its production growth guidance for 2014 at 30% to 50%.
Encana, SBM Offshore Sign Contract
Canadian natural gas producer
) reported that it has entered into an agreement with SBM
Offshore, a marine service provider. Per the contract, SBM
Offshore will operate the Deep Panuke platform on behalf of
Encana. The platform is located in the Deep Panuke natural gas
field, offshore Nova Scotia, Canada. The field consists of four
operating wells. Encana reveals that the platform has been
constructed for producing roughly 300.0 million cubic feet of
natural gas from the wells every day.
Encana added that the natural gas produced from the Deep
Panuke development will likely be sold to Spanish oil and gas
company, Repsol SA.
Performance Chart of Some Major Companies:
The following table shows the price movement of the major oil
and gas players over the past week and during the last 6
Last Week's Performance
6 month performance
Other Headline News on Energy:
Comstock to Invest $450M in 2014
Domestic energy explorer
Comstock Resources Inc.
) has allocated roughly $450 million for drilling and completion
operations in 2014. The earmarked capital will, however, not be
utilized for drilling natural gas wells. A further $28 million
will go towards leasing activities.
Out of the total budget, the Frisco, Texas-based upstream
operator is expected to invest $80.0 million to complete the
drilling of 29 wells in the South Texas-based Eagle Ford shale
and $264 million to drill 59 wells at South Texas located Eagle
Ford shale. Another $50 million will be used for drilling 10
wells at East Texas-based Eagle Ford shale. Additionally, $27
million will likely be spent to drill 2 wells at the Tuscaloosa
Marine shale. The remaining $29 million will be utilized for
other capital developments.
Petrobras Confirms Moita Bonita Find
Brazilian state-run energy giant, Petroleo Brasileiro SA, or
Petrobras has confirmed the presence of gas and light oil in the
extension well, 3-BRSA-1194-SES, commonly known as Moita Bonita
The ultra-deepwater well is located in the Sergipe-Alagoas
Basin, in the Moita Bonita area, in the state of Sergipe. It is
located 7 km from 1-BRSA-1088-SES or the Moita Bonita discovery
well at a water depth of 2,800 meters on the concession
BM-SEAL-10. Petrobras has a 100% holding in BM-SEAL-10 and also
acts as its operator.
Patterson-UTI to Incur $37.8M Cost
Onshore contract driller Patterson-UTI Energy Inc. reported
that it might bear a significant cost for its mechanically
powered rig fleet. The Houston, TX-based company has estimated
the pre-tax non-cash expenses of roughly $37.8 million.
Out of the total charge, $7.9 million can be attributed to the
retirement of Patterson-UTI's 48 mechanical drilling rigs during
the current quarter. The rigs - having capacity of roughly 731
horsepower - are not expected to work again due to lower demand
in the international market. The company reveals that a portion
of the parts of those rigs will likely be auctioned, while the
major remaining components will be utilized for maintaining other
rigs. The residual $29.9 million will be borne by the company, as
presently 55 mechanical rigs are out of contract.
This Week's Outlook:
Apart from the usual releases - the U.S. government data on
oil and natural gas - market participants will be closely
tracking key data on durable goods orders, new home sales numbers
and jobless claims.
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BP PLC (BP): Free Stock Analysis Report
CABOT OIL & GAS (COG): Free Stock Analysis
CONOCOPHILLIPS (COP): Free Stock Analysis
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