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US Oil and Gas Auction Yields Nearly $80 Million for Federal Coffers

The U.S. on Thursday held its first sale of oil and gas drilling rights on federal lands. This was since the passage of President Joe Biden’s landmark climate change law. It is attracting more than $78 million in high bids for leases in New Mexico and Kansas. Let’s talk more about this US Oil and Gas Auction.

The federal auction was just the second to be held in New Mexico. It is the nation’s second-largest oil-producing state since Biden became president in 2021.

Promontory Exploration LP of Midland, Texas, and Devon Energy Corp (DVN.N) of Oklahoma City were the auction’s top spenders, each picking up leases in New Mexico.

Biden’s Interior Department had attempted to suspend federal oil and gas leasing to study its environmental and climate impacts, but the Inflation Reduction Act that passed last year requires some oil and gas auctions if federal rights of way are offered for renewable energy projects.

The 19 offered parcels on 3,300 acres (1,335.5 hectares) in New Mexico garnered 99.9% of the high bid total of $78.81 million, according to sale information published by the U.S. Bureau of Land Management.

The highest price paid for a parcel was $16.2 million by Devon for 280 acres in the state’s Eddy County. It was also the auction’s highest price paid per acre at $57,901. It was Devon’s only parcel purchased in the sale.

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Source: Reuters

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Oil and Gas Employment in Texas Rose in April

The Texas Independent Producers and Royalty Owners Association said the state saw a gain in upstream oil and gas employment. This was in April and that more jobs were available with Houston offering the most opportunities. Let’s talk more about this.

The association’s analysis of data from the U.S. Bureau of Labor Statistics showed that direct Texas upstream employment last month totaled 199,400. It was an increase of 700 jobs from March and 17,600 more than a year earlier. The 12-month period ended in April saw an increase of 1,700 jobs in oil and natural gas extraction and 15,900 jobs in the services sector.

The employment data showed that there were more jobs available in the sector, the association said in a statement. There were 15,127 active job postings for the Texas oil and natural gas industry in April. The leading three cities by total unique oil and natural gas job postings were Houston (5,228), Midland (1,391), and Odessa (686).

World Fuel Services and producer Neste signed an agreement for sustainable aviation fuel, extending an existing relationship, the companies said in a statement. Neste’s U.S. operations are headquartered in Houston.

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Source: Houston Chronicle

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Crude Oil Prices Likely to Remain Elevated. Here’s Why

Crude oil prices have been fluctuating within a band. This was since the last couple of months driven by a bunch of positive and negative factors coming into play. But, investors may brace for further volatility in global oil prices due to various factors that are impacting the market.

Analysts believe that crude oil prices are likely to stay elevated in the short term amid supply concerns. It is due to a steep fall in US inventories and as production cuts by the OPEC countries begin to be felt.

US crude oil inventories shrank at their fastest pace in nearly six months over the past week. The data is from the American Petroleum Institute (API) pointed out.

The North American oil supply has already been squeezed by Canadian wildfire. Now, there are expectations of a surge in road trips in the US beginning with next Monday’s Memorial Day holiday. Both the contracts of crude oil have been rising in the run-up to the peak summer demand for travel.

“The sharp fall in US crude oil inventories, OPEC production cuts, increasing fuel consumption in the US, and Saudi Arabian energy minister’s warning against shorting oil, are all factors that are supporting the crude oil prices,” said Ajay Kedia, Director, Kedia Advisory.

The Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia are expected to consider further output cuts at a meeting on June 4.

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Source: mint

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Bank Of America Sees Oil Prices Heading Toward $90 This Year

Oil prices will return to above $80 per barrel in the second half of this year. This could continue rising toward $90 due to a deepening supply deficit at Francisco Blanch. This is what the head of commodities research at Bank of America has been telling Bloomberg Television on Friday.

This quarter will be a little weaker, with oil prices averaging in the mid-$70s, Blanch said.

“We’ll get back up over $80 in the second half of the year toward $90. The deficit is going to get deeper over the course of the next six to nine months”. This is what the BofA’s head of commodities research was mentioning.

The supply deficit becomes wide due to the OPEC+ cuts and the lack of response from U.S. shale. This is as seen in previous cycles as Blanch was noting.

“Demand will eventually turn around and get a little better in the developed markets. So those three things start to push inventories lower again into the year-end and into 2024, and that’s what gets you higher in terms of prices,” he added.

Analysts in the latest monthly Reuters survey also see prices rising toward $90 per barrel by the end of this year, driven by Chinese demand and a tightening market following OPEC+’s latest production cuts.

So far this year, Brent prices have averaged around $82 per barrel.

Earlier this week, the International Energy Agency (IEA) said that the decline in oil prices over the past few weeks contrasts with an expected tightening of the market later this year when demand is set to exceed supply by nearly 2 million barrels per day (bpd).

Since the middle of April, oil prices have lost all the gains from OPEC+’s latest announcement of new production cuts.

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Source: Oil Price

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United States Crude Oil Inventories

U.S. Crude Oil Inventories Increase by 5.0 Million Barrels

United States commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.0 million barrels from the previous week.  At 467.6 million barrels, U.S. crude oil inventories are slightly below the five-year average for this time of year, according to the EIA crude oil and petroleum weekly storage data, reporting inventories as of May 12, 2023.

U.S. crude oil refinery inputs averaged 16.0 million barrels per day during the week ending May 12, 2023, which was 245 thousand barrels per day more than the previous week’s average. Refineries operated at 92.0% of their operable capacity last week.

  • Gasoline production decreased last week, averaging 9.5 million barrels per day.
  • Distillate fuel production increased last week, averaging 4.9 million barrels per day.

Imports related to United States Crude Oil

U.S. crude oil imports averaged 6.9 million barrels per day last week, increased by 1,306,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.3 million barrels per day, 0.3% more than the same four-week period last year.

Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 844,000 barrels per day, and distillate fuel imports averaged 128,000 barrels per day.

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Source: Oil & Gas 360

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Global Investment

Global Investment In Oil And Gas Soars

Are you ready to talk more about how the global investment in oil and gas soars? Read further below.

1. Canada Wildfires Curb Gas Output

– Canada’s constant state of emergency triggered by rampant wildfires across the province of Alberta. It is taking a heavy toll on gas production in the country. It is now shedding some 15% from production levels in April.

– Seven oil and gas producers announced production curtailments totaling 319,000 barrels of oil equivalent per day. This is considering the shut-ins of gas processing plants.

– The decline in natural gas production is pushing Canadian gas prices higher. This is in both Alberta and British Columbia. Both are up 60-70 cents per mmBtu in comparison to last week and trading around 2.5 per mmBtu.

– Simultaneously, Canadian gas exports to the US have been dropping from 5.2 BCf per day to 3.9 BCf per day. This is even though there has been some upside, supplies into the Pacific Northwest depend on the weather in Alberta.

2. Lithium Merger to Create Battery Metal Major

– The $10.6 billion merger of two lithium-focused mining companies Australia’s Allkem. and the US-headquartered Livent, is set to create the world’s third-largest lithium miner.

– Livent CEO Paul Graves will become chief executive of the new company, to be US-based and listed on NYSE, while Allkem’s non-executive chairman will be its chairman.

– The deal has buoyed shares of other lithium producers as more M&A deals are now on the table, in a bid to consolidate production lines and ease sourcing for EV carmakers globally.

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Source: Oil Price

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Enterprise Products’ Oil Pipeline Volumes Rise on Permian Basin Output Growth

Enterprise Products Partners (EPD.N) first-quarter crude oil pipeline volumes increased slightly. The pipeline and storage company said on Tuesday, helped by production growth in the top U.S. shale basin.

Enterprise has remained bullish on oil production from the Permian Basin. It spread across Texas and New Mexico and is looking to build a crude oil export terminal. The target is on the Gulf Coast to help push some of those barrels into the foreign market.

The company’s Sea Port Oil Terminal (SPOT) project received a record of the decision late last year, a significant milestone in obtaining a license.

Enterprise said on Tuesday it expects the SPOT project to receive other permits and a license in the second half of 2023, Jim Teague, the company’s co-chief executive officer, told analysts on a conference call.

“Across our integrated system we continue to see crude oil, natural gas, and NGL production growth from the Permian Basin,” Teague said in a statement, adding that domestic and international demand for U.S. energy and energy products remains resilient.

Enterprise sees growth opportunities from gathering and processing in the Permian broadly, the company said.

Total crude oil pipeline transportation volumes rose to 2.3 million barrels per day (bpd) in the three months to March 31, from 2.2 million bpd a year earlier, the company said.

Crude oil marine terminal volumes rose 5.7% to 841,000 bpd.

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Source: Reuters

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U.S. Energy Development Corp. Expands Footprint in Permian Basin With $225M Investment

U.S. Energy Development Corp., an Arlington-based exploration and production company. They acquired a 25% working interest in the Mascot Project. It is stacked pay asset in core Midland Basin for $225 million cash and other considerations, the company announced.

U.S. Energy said it anticipates full development of the project to comprise another $130 million in capital expenditures. This is over the next two years. It will be bringing the total transaction value to more than $300 million.

The majority owner has a strong track record

Located in Midland County, the Mascot Project includes multiple producing properties, associated midstream assets, and upwards of 50 undeveloped locations expected to produce roughly 6,500 BOE per day during 2023.

The Mascot Project is majority-owned by Midland Petro D.C. Partners LLC, a David H. Arrington-owned business, and operated by an affiliate of MPDC, Permian Deep Rock Oil Co.

“Mr. Arrington has decades of experience operating quality projects in the basin, and we are pleased to partner with him in bringing this asset to full development,” Jayson said.

Including the Mascot Project, U.S. Energy said it has overseen the investment of $575 million over the past 24 months, focusing primarily on near-term drilling opportunities and actively producing assets.

Building a bigger footprint U.S. Energy Development Corp in the Permian Basin

In late 2022, U.S. Energy announced a planned allocation of up to two-thirds of its operating budget for projects in the Permian Basin over the next two to three years, totaling $200-$300 million annually.

The company said this deal will build upon its sizable footprint in the basin, expanding upon recent investments of over $400 million during the past 12 months. The firm said it anticipates operating a one- to two-rig program in the basin during the second half of 2023 and carrying this program into 2024.

In an article on World Oil earlier this month, Jayson wrote, “the impressive hydrocarbon output is the primary reason that U.S. Energy Development Corp places a substantial amount of our investment, manpower, resources, and assets in the Permian region.”

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Source: Dallas Innovates

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New Oil & Gas Investment Is Still Needed In The Energy Transition Per Carney

Investment in new oil and gas production will still be needed in the energy transition. This is as demand will still be there over the next few decades says Mark Carney. He is the former governor of the Bank of Canada and the Bank of England.

The world is raising investments in clean energy. However, oil and gas will still be necessary and will need investment to keep up with demand. Carney is currently head of transition investing at Brookfield Asset Management.

The energy crisis and policy actions sent global investment in low-carbon energy sources. It is soaring to a record $1.1 trillion in 2022. The money spent on the energy transition equaled for the first time investment in the supply of fossil fuels.

“We’ve moved from investment around the world of about 50 cents in clean energy five years ago relative to every dollar in fossil fuels, in conventional energy, to now, that ratio is we’re spending more on clean energy than we’re spending on fossil fuels in terms of investment,” Carney told CTV.

“But that ratio, by the end of this decade, to be on track to where the world needs to get to, needs to go to about four-to-one or five-to-one, clean to fossil fuels.”

“But it’s four-to-one, it’s not four to zero, so there still does need to be some investment in fossil fuels,” he added.

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Source: Oil Price

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Energy Deal Gathers | Steam Permian in Spotlight

Companies with a focus on the oil-rich Permian basin are likely to be at the center of the next wave of consolidation in the U.S. energy sector as favorable oil prices prompt cash-rich drillers to tap into the largest source of shale oil. Learn more about this energy deal.

Top producers have built a war chest to fund acquisitions after reaping windfall profit in 2022 from skyrocketing oil prices following Russia’s invasion of Ukraine.

The current oil prices are only making Permian assets more attractive to companies looking to quickly rebuild their depleting assets to take advantage of the world’s never-ending thirst for fossil fuel.

“I think we’re in a good spot in terms of oil pricing for M&A, somewhere around $80 per barrel is where both buyers and sellers feel comfortable,” said Andrew Dittmar, a director at consultancy Enverus.

“For all of 2023, we’re likely going to have a very active market and we’re gonna continue to see these deals hit.”

At least three analysts have identified Diamondback Energy Inc (FANG.O), Matador Resources Inc (MTDR.N), and Permian Resources Corp (PR.N) as possible takeout targets.

According to Gabriele Sorbara, managing director of equity research at Siebert Williams Shank & Co, these companies have the highest quality of remaining inventory and strong balance sheets and free cash flow, making them good picks.

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Source: Reuters

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