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Chevron’s acquisition of Noble Energy launched an ongoing M&A frenzy in the U.S. shale patch as companies look to consolidate to cut costs while adding immediately cash-flow-positive resources to their portfolios. For Chevron, the US$5-billion all-stock deal to take over Noble Energy was not only about adding acreage in the DJ and Permian basins.

Through the transaction, the U.S. supermajor is gaining more exposure to natural gas assets in the Eastern Mediterranean, including a large stake in Israel’s biggest gas field, which started production in December 2019.

The already producing Leviathan gas field, the biggest energy project in Israel ever, is diversifying Chevron’s portfolio with more natural gas resources and a position in the eastern Mediterranean very close to the Middle East and European gas markets.

The timing of the U.S. supermajor’s bet on natural gas in the Eastern Mediterranean coincides with expectations that gas will play a major role in supporting the growing share of renewables in Europe amid the European Union’s (EU) push to bet heavily on renewable energy sources to reach carbon neutrality by 2050 under the European Green Deal.

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Source: Oil Price

Selling Mineral Rights in Texas

The worst of the oil market is behind us, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said on Monday at CERAWeek’s India Energy Forum.

“We are still vigilant. I think there is a big shift all together in terms of where we are today and where we were in April and May,” bin Salman added.

But it is unclear what part of the worst is in the rearview.

If the Energy Minister is referring to oil demand, the largest importer of crude oil—China—is expected to slow its imports after the oil-thirsty nation bought extra crude over the last few months to take advantage of the ultra-low prices in the market. So much so had China taken extra crude, it created a backlog in customs, which is now clearing up—a sign that it is slowing.

This is to be expected now that oil prices have rebounded to nearly double what they were in April.

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Source: Oil Price

1031 exchange Biden

Dan Doyle speaking: To talk about a Biden-Harris administration let’s first talk about the Obama-Eric Holder/Loretta Lynch administration. Back in 2015 and 2016, Holder and Lynch were President Obama’s Attorney Generals. A frack company was beset with an IRS audit, an International Fuel Tax (“IFTA”) audit.

In addition to that, there has been a Department of Labor investigation. Let’s talk more about the 1031 Exchange Biden effect on U.S Oil and Mineral Rights in this article.

IRS Audits

Without exclusion, I undergo personally an audit by the IRS. Fortunately, I and my company gain clearance from the IRS audit without penalty (other than paying our accountant). The Department of Labor audit got us for something less than $250, based on some arcane back of the book calculation on arbitrarily given bonuses. But the IFTA audit did some damage with a $40,000 paperwork-related fine even though all our taxes were paid at the pump. All three agencies and all four audits were federal, and all came at roughly the same time.

When I asked the Department of Labor attorney how she even found our little basement office, she kept mum. There was no point in her answering—we both knew why she was there. Her 18,000-employee strong department, like the IRS and IFTA, had been weaponized to undermine the oil and gas industry. AGs Holder and Lynch, likely with President Obama’s blessing, were picking and choosing and I and they chose my industry.

On March 1st, 2016, coming home from work, I tell my wife my worry about Aubrey McClendon. He is the founder of Chesapeake Energy and American Energy Partners. The following morning, there was an arraignment in Oklahoma for violations of the Sherman Anti-Trust Act.

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Source: Oil Price / Photo: Wikipedia Creative Commons

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Saudi Arabia Oil

There is no expectation that oil prices will rise much next year.  It will stay in the $40-50 a barrel range. This will put additional pressure on the oil exporters in the Middle East, the International Monetary Fund (IMF). This was a report on Monday in its update on the Regional Economic Outlook for the Middle East and Central Asia.

Gross domestic product in the region is will drop by 4.1 percent this year. There is a downward revision of 1.3 percentage points in comparison with IMF’s forecast in April 2020. There is a expectation that the economies of the oil exporters in the Middle East and North Africa to suffer more and shrink by 6.6 percent this year, according to the IMF.

The six countries in the Gulf Cooperation Council (GCC)—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE)—will see their economies slump by 6.0 percent in 2020, before rising by 2.3 percent in 2021.

In Q2, the economy of Saudi Arabia shrank by 7 percent. This is with the unemployment rate hitting a record high as the combined effect of the oil price crash. The coronavirus pandemic hit the world’s largest oil exporter hard.

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Source: Oil Price

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Morgan Stanley

Oil prices will struggle to rise above $50 a barrel because of the technological shift in U.S. shale that has unlocked more production in recent years, and because of the growing importance of environmental considerations in investing, Morgan Stanley says.

According to the investment bank’s most recent market insight on crude oil, the market moved from a ‘peak oil supply’ narrative back in 2008 to concerns about peak demand in 2020.

“How we got here is a story of technology and environmental advocacy, and one that has material cross-asset implications,” Andrew Sheets, Chief Cross-Asset Strategist for Morgan Stanley, said.

Technology, especially fracking, allowed U.S. producers to dramatically raise oil production in recent years, while investments in green energy and technology are already becoming a major investment theme, according to M.Stanley.

Expectations that oil demand may be closer than thought before the pandemic and the environmental policies have significant implications on the oil market, the investment bank said.

“Coupled with the near-term challenges our analysts see for the oil market, we think prices will really struggle to move above $50/barrel, as levels above this will encourage producers to hedge much more aggressively at these prices. As such, oil prices should lag other ‘reflationary’ assets in this cycle that we like a lot more,” Morgan Stanley’s Sheets said.

The Wall Street bank is more bullish on natural gas producers than it is on oil producers because of more favorable fundamentals in the gas markets.

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Source: Oil Price

hurricane

U.S. energy companies were returning workers and restarting operations at storm-swept production facilities along the U.S. Gulf Coast on Sunday, two days after Hurricane Delta barreled through the area.

Chevron Corp, Royal Dutch Shell Plc and BHP Group all said workers were headed back to production platforms in the U.S.-regulated northern Gulf of Mexico.

BHP expects to complete the return of workers to its Shenzi and Neptune production platforms on Sunday, spokeswoman Judy Dane said, adding that resuming flows will depend on how quickly pipelines return to service.

It can take several days after a storm passes for energy producers to evaluate facilities for damage, return workers and restore offshore production. The companies that operate oil and gas pipelines and process the offshore output also shut ahead of the storm.

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Source: Reuters

oil industry

Their budgets just don’t add up anymore. That’s why natural gas offers the lifeline of distressed gulf oil giants.  Oil-rich Arab nations are in the throes of a deep economic crisis and facing gaping holes in their finances. Saudi Arabia needs the price of Brent crude to rise to $76 dollars a barrel while UAE needs it to hit $69, Bahrain $96, and Oman $87 to balance their books. Save for tiny Qatar, no Arab oil producer can balance its books at the current price of $40/barrel. GCC nations are now facing huge fiscal deficits, with Kuwait’s deficit of ~40% of GDP the highest in the world.

To make matters worse, once free-flowing credit lines have started to shut down for some. A good case in point is Oman, which is struggling to borrow after credit-rating agencies listed its debt as junk. Jordan had to plead to receive a $2.5bn aid package from the Gulf, only half of what it got eight years ago. Meanwhile, no one from the Gulf appears willing to bail out cash-strapped Egypt or Lebanon.

In short, the countries are being forced to take pretty drastic steps.

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Source: Oil Price

Premier Oil

Premier Oil Plc will be acquired by Chrysaor Holdings Ltd. in a reverse takeover, creating the largest listed independent oil and gas producer in the UK North Sea.

The deal marks the end of the road for one of the oldest independent oil explorers. After years laboring under a mountain of debt Premier has finally bowed to pressure from creditors, with CEO Tony Durrant abandoning his plan to acquire some of BP’s North Sea assets and agreeing to step down.

The transaction will create a stronger company, pumping more than 250,000 barrels of oil equivalent day. Yet Premier’s current shareholders will end up with just a sliver of the combined group — no more than 5.45%, while Chrysaor’s backers will get at least 77% and Premier’s other stakeholders the rest.

After “years trying to recover Premier from its debts and set the company back toward growth,” the company had few other options, Arden Partners Ltd analyst Daniel Slater said in a note. Recommending the merger is a decision “we don’t believe it would have done lightly.”

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Source: Bloomberg via World Oil

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Alaska oil and gas industry

Jennifer Starck was all set to head to medical school after finishing her degrees in chemistry and chemical engineering. Then she encountered a BP recruiter at a job fair who is in the Alaska oil and gas industry. Before she knew it, she had a job offer and a choice to make.

“They said ‘Houston or Alaska?’ and I said ‘Alaska,’” Starck recalled. “And they said ‘No, seriously — Houston or Alaska?’”

She insisted, and she never looked back. After 21 years, Alaska — and the petroleum industry — has become her home.

Starck is just one of the many women who help keep Alaska’s oil and gas flowing. And just like Starck, many other women in the petroleum industry made their way there on unexpected paths. Jacki Rose planned to work in mining; she now handles regulatory permitting and compliance for Bluecrest Energy. Laura Green started her career in fire protection systems; she is now the regional safety manager for Hilcorp Alaska.

None of these women imagined they’d end up in the oil and gas industry — or that they’d love it as much as they do.

‘You aspire to be what you see’

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Source: ADN.com

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gas flaring

A significant cooldown has arrived, with the jet stream from Canada plunging this weekend, which will allow the eastern United States to experience its first taste of fall for much of next week.
The ten-day outlook in terms of the thermal aspect shows a cold airmass will encompass all U.S. Plains, Midwest, Southeast, and Northeast, where temperatures could hover 8 to 15 degrees below normal through the first week of October.

E.C. Operational Forecast (with gray 32 degrees Fahrenheit line) shows the blast of cold air pouring in from Canada this weekend and will cover much of the eastern U.S. through Oct. 6.

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Source: Oil Price