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Oil and Gas Companies Increase Production Plans for Permian Basin

Oil and gas companies in the Permian Basin are planning to ramp up production of fossil fuels. This is despite a slight dip in crude oil production expected this month. Chevron reported record Permian Basin production during the second quarter of 2023. It has an 11% increase compared to the same period last year. The company produced 772,000 barrels of oil equivalent per day (boe/d) during that time. Chevron attributed its success to recent operations and growth in the Permian. This is leading them to plan further investments in the area.

Matador Resources is also increasing its operations in the Permian’s western Delaware sub-basin. The company reported “record” oil and gas production in the second quarter after acquiring Advance Energy Partners. The acquisition included 18,500 acres and 406 horizontal drilling locations. Matador averaged about 130,000 boe/d in the second quarter and expects to increase production. An estimate to 140,000 boe/d by the end of the year.

Although the Energy Information Administration (EIA) predicts a dip in oil production in the Permian Basin, the region is still producing more oil than all other major shale regions combined. The Permian is expected to lead in natural gas production growth, with an estimated increase of 36 million cubic feet per day (cfd) to about 23.4 billion cfd.

The Permian Basin continues to be a hub of activity for the oil and gas industry. New Mexico and Texas, which share the Permian, have the second- and first-highest oil and gas rig counts in the U.S., respectively. The region is also leading in mergers and acquisitions (M&A) among oil and gas companies, with $24 billion in deals during the second quarter.

Despite fluctuations in production and market conditions, oil and gas companies remain committed to expanding operations in the Permian Basin.

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Source: Energy Portal

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U.S. Crude Gains Weight Against Global Oil Benchmarks

A surge in United States crude gains made oil exports change the face of the global market and how oil is priced. This is with the price of U.S. crude gaining weight against other benchmarks.

This is what traders and analysts have observed this year. Now, as Europe became a major destination for U.S. oil as it sought to replace sanctioned Russian barrels. But Asia has been receiving more U.S. oil, too, because of its competitive pricing, Reuters reported, citing trade industry insiders.

Earlier this year, in February, the number of oil swaps linked to oil produced in Texas hit a record. As of early 2023, the number of such swaps in total also sat at a record. It has likely increased further since.

These developments were made possible by the shale revolution that turned the United States into the world’s biggest oil producer and a major exporter, especially since last year when the European Union embargoed Russian crude oil and fuels. And because U.S. crude is so competitive, it is probably going to gain further ground on international markets.

“As Midland becomes more and more important in the dated Brent assessment, it has a knock-on effect on other grades having to price themselves lower to compete with WTI Midland,” Reuters quoted Vortexa market analyst Rohit Rathod as saying.

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Source: Oil Price

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Oil Prices

Why Oil Prices Strongest Run Since Before Russia Invaded Ukraine

Global oil prices strongest run have gained more than 16% since late June. Moreover, it is heading for their fifth-straight week of gains. It is the longest rally since before Russia’s full-scale invasion of Ukraine upended energy markets.

The price of Brent crude, the global benchmark, ticked down 0.1% to $84 a barrel in Friday. However, it is still up 3.9% this week. The winning streak is the longest since an eight-week rally ended in early February 2022.

US oil prices are also set for a 3.9% gain this week. They have chalked up their longest rally since April 2022. That has spurred a jump in US gasoline prices, which hit an average of $3.73 a gallon on Friday, their highest level since mid-November 2022.

Fears of a global recession have swirled for months. Moreover a lackluster economic recovery in China had dampened prospects for energy demand. So why are oil prices climbing?

Oil output cuts

According to the International Energy Agency, global oil demand is expected to rise by 2.2 million barrels per day. It will be to a record 102 million this year. But global oil production is forecast to rise by only 1.5 million barrels per day to 101.5 million, the agency said in a report this month.

That supply gap has been exacerbated by production cuts by OPEC+, an alliance of the world’s major producers.

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Source: CNN

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Oil on Track for Fifth Week of Gains

Oil prices were steady on Friday but on track for a fifth straight week of gains. This is with investors optimistic healthy demand and supply cuts will keep prices buoyant.

Risk appetite in wider financial markets has been fuelled by growing expectations. The expectation is that central banks are nearing the end of policy tightening campaigns. What banks? The Fed and European Central Bank. It is boosting the outlook for global growth and energy demand.

Both oil benchmarks are on track for a 3.6% weekly increase – a fifth straight week of gains. This is bolstered by supply cuts from the OPEC+ alliance announced earlier this month.

By 1229 GMT, Brent crude slipped 9 cents to $84.15 a barrel, while U.S. West Texas Intermediate (WTI) crude dipped 3 cents to $80.06 a barrel.

Bullish demand expectations were boosted on Thursday after U.S. second-quarter gross domestic product grew at a forecast-beating 2.4%, supporting Federal Reserve Chairman Jerome Powell’s view that the economy can achieve a so-called “soft landing.”

Investors are warming up to the idea of peak rates getting ever closer, while it is looking increasingly probable that the United States will avoid recession, said PVM analyst Tamas Varga.

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Source: Oil & Gas 360

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Oil Bulls Are Cautiously Optimistic As Brent Holds Above $82

Oil prices have been slowly but surely edging higher in July as rising optimism around Chinese demand combines with supply concerns to boost bullish sentiment. Oil bulls are optimistic now?

Chinese authorities have reformed natural gas pricing in the country, linking retail residential gas prices to distributors’ purchasing costs to avoid squeezing the margin of power-generating companies too much.

The deregulation of natural gas prices in China has almost immediately engendered a wave of retail price increases, mostly between 10%-15%, with China Gas expecting its gross margin to increase 30% in 2023.

– The pricing reform is expected to boost two areas: coal-to-gas projects that were previously suppressed by the price caps and LNG imports as passing on purchasing costs to customers becomes the norm.

– LNG prices in Northeast Asia hit an all-time high of $69.9 per mmBtu last August, but weaker-than-expected Chinese buying and higher LNG supplies have depressed the JKM marker to $11 per mmBtu currently.

Market Movers

– French oil major TotalEnergies (NYSE:TTE) intends to take full control of Total Eren, a power producer with hydro, wind, and solar plants, buying the remaining 70% and bringing Total Eren’s total enterprise value to $4.2 billion.

– UK-based energy firm Shell (LON:SHEL) agreed to sell its 35% stake in the Masela natural gas block in offshore Indonesia to Malaysia’s Petronas and Indonesia’s Pertamina for a consideration of $650 million.

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Source: Oil Price

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Oil Price Expections | Will Rise to $100 per Barrel by Late 2023

Experts’ oil price expectations are that it could rise to $100 per barrel by the fourth quarter.

The price per barrel currently sits at $74.

The demand for oil is high right now and more production is needed to meet it. This is according to Judy Stark, the president of Panhandle Producers and Royalty Owners Association.

“There’s a lot of factors involved in that and the majority of it is what’s taking place in the world,” Stark said.

The $100 prediction is based on a variety of factors. Stark says global events, like China’s reopening after COVID and the war in Ukraine affect the price, as well as a global reduction in production and the Biden administration’s deterrence in production.

Mostly, it comes down to supply and demand, said Michael Lozano, government affairs and communications at the Permian Basin Petroleum Association.

“[It’s] not terribly surprising. We’ve seen declining inventories of crude in production in other places around the world,” Lozano said. “And [when] we have higher demand and less supply of anything, you’re gonna see prices rise.”

The price increase has benefits and costs. More production could mean more jobs in the Permian Basin. Since oil is a product of gas production, prices at the pump could rise.

“For as much as operators produce oil and gas in the Permian Basin, we’re also customers of the product we produce as well,” Lozano said. “So this does create some of those challenges when it comes to price.”

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Oil Prices Gain More Than 1% as Investors Eye U.S. Crude Supplies

Oil prices gain on Tuesday as investors weighed a possible tightening of U.S. crude supplies against weaker-than-expected Chinese economic growth.

Both benchmark contracts had fallen more than 1.5% on Monday following lackluster economic data from China, the world’s largest oil importer, as well as the partial restart of some Libyan oilfields.

Brent crude was up 1.3% to $79.52 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 1.6% to $75.34 a barrel in relatively muted trading, with the contract set to expire on Thursday.

“With the manufacturing sector languishing and inflation showing encouraging signs of slowing, the widely-anticipated July Federal Reserve interest rate hike may be the last,” analysts at Bank ING said in a note.

Higher interest rates increase borrowing costs and can slow economic growth and reduce oil demand.

After posting sluggish gross domestic product data earlier in the week, China’s top economic planner pledged it would roll out policies to “restore and expand” consumption without delay.

Energy traders expect “the oil market will remain tight as Russian shipments drop and as China prepares to provide more support to households,” said Edward Moya, senior market analyst at data and analytics firm OANDA.

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Source: CNBC

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Oil And Gas Well Intervention

Oil And Gas Well Intervention Spending Set To Skyrocket

As oil and gas production companies look for efficient and cost-effective methods of increasing their output. With that, the well-intervention market is set to get a healthy boost. Spending on interventions is a way to extract additional resources from an existing well. This is instead of drilling a new one. The projection is for it to jump by almost 20% this year and total $58 billion. Rystad Energy’s modeling shows this is just the start of a surge in the coming years. It is as the focus on efficiency intensifies.

The intervention rate

How many oil and gas wells go through the intervention process? The forecast is that it will reach 17% in 2027. This would total about 260,000 wells globally.

More than $11 billion of the total expenditure will be directed to the wireline & perforating segment. Intervention units and oilfield chemicals sectors will represent 35%. In addition, the sum of the investments in coiled tubing, water management, and intervention tools is expected to close in 2023 surpassing $20 billion.

To boost production rather than drill new wells, operators are more likely to undertake intervention into mature assets that have been producing for more than five years, with relatively high production rates which are starting to show signs of decline. Onshore interventions in Asia, South America, and Africa will lead the 9% growth in activities related to intervention during 2024, a year expected to be significant for the good intervention market. North America is projected to account for 64% of the total oil and gas wells ready for intervention in 2027, whereas Asia and South America will reach their maximum in 2026, with respectively 41,413 and 9,703 wells.

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Source: Markets Insider

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Oil and Gas lease sale

First Oil and Gas lease sale of 2023 nets estimated $14.7 million in Wyoming

The Bureau of Land Management’s first oil and gas lease sale in over a year netted roughly $14.7 million in Wyoming — about $1.8 million more than last year’s sale.

Wyoming will receive 48% — roughly $7 million — of that revenue.

While Gov. Mark Gordon applauded the lease sale in a Monday statement, he noted that it represents “not even a quarter of a loaf.”

“The fact that our producers participated to the degree they did is a credit to the Wyoming oil and gas industry,” Gordon said. “Their efforts mean Wyoming will continue to provide energy for the Nation, even though they do so with increasing pressure from Washington, DC, to give up.”

Federal law requires the Bureau of Land Management to hold lease sales each year on a quarterly basis. But in 2021, President Joe Biden signed an executive order to pause these sales as part of his plan to address climate change by making the environmental review process for sales more stringent.

The higher mandatory fees required by the Inflation Reduction Act mean higher fuel prices at the pump. Since Wyoming receives 48 percent of royalty rates, bonus bids and rental payments, the State will receive more revenue due to the increased federal fees, which comes at a cost to consumers and the oil and gas economy.

The Wyoming oil and gas industry has yet to regain the number of drilling rigs or employees it had in 2019. The number of drilling rigs for 2023 has hovered around 20, slightly more than half of the number in 2019.

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Source: Casper Star-Tribune

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Oil Giants

Oil Giants Invest in Exploration as Profits Trump Climate

Oil and gas companies are reinvesting record profits from the fossil fuel price surge driven by the Ukraine war to intensify the hunt for new deposits despite repeated calls by the United Nations to phase out hydrocarbons to avoid a climate crisis. What will these oil giants do?

Data and industry executives found the exploration revival responds to pressure from a majority of investors to maximize their oil and gas profits rather than invest in lower-margin renewable energy businesses.

The International Energy Agency forecasts global upstream oil and gas investments to increase by about 11 percent to $528bn in 2023, the highest level since 2015.

Barclays said it expected the number of offshore projects to get approval this year to reach a 10-year high.

The renewed appetite for oil and gas reserves and production – among European majors in particular – comes after Shell and BP slowed down plans to shift away from their legacy business and invest in renewables as part of the energy transition.

Upstream oil and gas have historically had returns of 15 to 20 percent while most renewables projects have delivered up to 8 percent.

An analysis of data from oil services firm Baker Hughes showed the number of offshore drilling vessels used to explore and produce oil and gas recovered in May to pre-pandemic levels, rising by 45 percent from October 2020 lows.

Wood Mackenzie analysts predicted a continued increase in activity, forecasting offshore exploration and drilling activity to grow by 20 percent by 2025.

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Source: ALJAZEERA

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