Both crude and natural gas prices moved up during the past
week on falling stockpiles.
Among the newsmakers,
) reported strong fourth quarter earnings but
Royal Dutch Shell plc
) cautioned investors about sub-par performance.
Crude prices increased last week on encouraging U.S. economic
reports that fuelled hopes for robust demand in the worlds
biggest oil consumer. In particular, a positive manufacturing
data - the New York State factory report - and robust December
retail sales reading bode well for future fuel demand growth.
Sentiments were further brightened by the Energy Information
Administration (EIA) report that showed a big fall in
inventories, the seventh in a row.
As per the EIA's weekly 'Petroleum Status Report,' crude
inventories fell by a much larger-than-expected 7.66 million
barrels for the week ending Jan 10 to 350.23 million barrels.
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 $94.37 per barrel, gaining 2.1% for the
Natural gas rallied last week on the back of a record decrease
in supplies and forecasts of freezing cold weather
The EIA's weekly inventory release showed that natural gas
stockpiles held in underground storage in the lower 48 states
fell by a massive 287 billion cubic feet (Bcf) for the week ended
Jan 10. Though slightly below the guided range (of 300-304 Bcf
drawdown), the decrease was significantly higher than both last
year's withdrawal of 156 Bcf and the 5-year average reduction of
159 Bcf for the reported week.
Chilly weather forecasts - in the key U.S. consuming regions
over the next few days - are likely to further spur natural gas'
demand for heating.
Influenced by these factors, natural gas spot prices ended
Friday at $4.33 per million Btu (MMBtu), up 9.6% over the
Energy Week That Was:
The week's energy coverage was dominated by the following
Schlumberger Sees Q4 Earnings Growth
The world's largest oilfield services provider Schlumberger
Ltd. reported strong fourth quarter results, boosted by strong
international exposure (mainly Middle East and Asia), focus on
execution and integration capabilities. The company's adjusted
earnings of $1.35 per share (excluding special items) beat the
Zacks Consensus Estimate of $1.32 and came well ahead of the
$1.04 per share earned a year ago. Total revenue of $11.9 billion
was in line with the Zacks Consensus Estimate and up 7.4% from
the year-earlier level of $11.1 billion.
Shell Foresees Weak Q4 Profit
Europe's oil giant Royal Dutch Shell has reported that it
expects adjusted earnings in fourth quarter 2013 to be
substantially lower than both the sequential and year-ago
period's total adjusted profit. Hike in exploration costs, lower
oil and gas output along with weak performance by the company's
refining unit resulted in the tepid projection.
Based on current cost of supplies (CCS) and after adjusting
one-time items, Shell anticipates its Oct-Dec 2013 earnings to be
$2.9 billion. The figure reflects a significant decrease of 35.6%
and 48.2% from $4.5 billion and $5.6 billion adjusted profits
reported in the previous quarter and fourth-quarter 2012,
Apache Offers Q4 Operational Update
) said that its fourth quarter volumes were hurt by extreme
weather in Oklahoma, Texas and New Mexico. However, the company
did not provide any output projection for the three months.
Further, Apache informed that owing to the sale of several
non-core assets in the Gulf of Mexico, Canada and Egypt last
year, total production for the Oct-Dec period is likely to
decline from the previous quarter.
Chevron to Develop Alder Field
Chevron North Sea Ltd. - the U.K. subsidiary of the U.S.
) - has taken a final investment decision to develop the Alder
Field in North Sea. The British government has given the nod on
the project, which is expected to come online in 2016.
The project is expected to process 14,000 barrels of
condensate and 110 million cubic feet of natural gas per day.
Located 17 miles from the operating Britannia field, it will be
developed using a single subsea well tied to the Britannia
Petrobras Sets Pre-Salt Yield Record
Brazilian state-run energy giant
) provided an update on its proven reserves in the pre-salt
region that comprise over a quarter of the company's total proven
reserves. The pre-salt reserves saw a 43% year-over-year
growth in 2013 from the 42 wells drilled in the region, in
addition to the strong results from the platforms at the Campos
and Santos Basins. Petrobras also announced that it set a new
pre-salt production record of over 390,000 barrels of oil per day
(Bbls/d) on Jan 14, breaking the previous record of 371,000
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:
Core Labs Hikes Q1 Dividend
Oilfield service company
Core Laboratories NV
) raised its first quarter 2014 cash dividend payment by 56.25%
to $0.50 per share, up from $0.32 paid during fourth quarter
2013. The new dividend will be paid on Feb 21, 2014, to
shareholders of record as on Jan 24, 2014. If the revised
dividend is maintained for the rest of the year, then the
annualized dividend payout of the company would be $2.00 per
Cimarex Unveils 2014 Capital Budget
Cimarex Energy Co.
) provided a glimpse of its 2014 capital expenditure plan. The
oil and gas exploration and production (E&P) firm plans to
invest roughly $1.8 billion this year. Cimarex intends to invest
$1.4 billion in the Permian Region in 2014, up 40% from 2013
capital expenditures of approximately $1 billion. Of this, $1.2
billion will be invested in drilling and completing wells,
including $600 million in the Wolfcamp shale.
Divests Chaparral Energy
Natural gas producer Chesapeake Energy Corp. completed the
divestment of 100% of its ownership interest in Chaparral Energy
Inc. to an unnamed buyer for $215 million. This sale of the
Oklahoma City-based independent energy explorer is compatible
with Chesapeake's current focus of refinement and building up a
portfolio around core assets.
This Week's Outlook:
Apart from the usual releases - the U.S. government data on
oil and natural gas - market participants await reading on
jobless claims and Chinese GDP.
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