The tumult of war and climate breakdown has proved lucrative for the world’s leading oil and gas companies, with financial records showing 28 of the largest producers made close to $100bn in combined profits in just the first three months of 2022.

Buoyed by oil commodity prices that soared following the turmoil caused by Russia’s invasion of Ukraine, major fossil fuel businesses enjoyed a bonanza in the first quarter of the year, making $93.3bn in total profits.

Shell made $9.1bn in profit from January to March, almost three times what it made in the same period last year, while Exxon raked in $8.8bn, also a near threefold increase on 2021.

Chevron upped its profits to $6.5bn and BP revealed in its highest first-quarter profits in a decade, making $6.2bn. Coterra Energy, a Texas-based firm, had the largest relative windfall of the 28 companies, with a 449% increase in profits on last year, to $818m.

The rocketing profits, at a time when inflation has surged in many countries, has prompted several of the companies to return billions of dollars to shareholders via share buybacks and dividends.

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Source: The Guardian

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The benchmark of current US oil prices, WTI Crude, hit its highest level since November 2014 early on Tuesday. This is after OPEC+ on Monday called off its third attempt to reach an agreement. Discussed is over oil policy management for the coming months.

In Asian trade earlier in the day, WTI Crude touched $76.50 a barrel, narrowing the WTI/Brent Crude spread significantly.

There has been intense talks late last week and attempts at mediation during the weekend. The standoff between the United Arab Emirates (UAE) and Saudi Arabia over the Emirati baseline production level has no resolution.

Then, OPEC Secretary-General Mohammad Barkindo said in a concise statement on Monday that the OPEC+ meeting was called off. The date of the next meeting has not been decided yet.

The oil market immediately jumped on the news. As participants weighed the notion that no deal about how to proceed with oil supply management. It would mean no additional supply from the OPEC+ alliance for August. This is at a time when global oil demand is bouncing back with summer travel and re-opening of economies.

Insights of Analysts

Most analysts expect oil prices to continue rising until OPEC+ meets again, which, according to reports and analyst estimates, could come at some point over the next one to three weeks. There is already talk about whether this will lead to another break-up in the OPEC+ union, after the collapse in March last year. Currently, a complete collapse of the deal is more of a fringe scenario of extremes, rather than a distinct possibility.

“The fallout within OPEC+ means increased uncertainty in the months ahead if a quick resolution is not found, which suggests increased volatility in prices,” said Warren Patterson, Head of Commodities Strategy at ING.

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Source: Oil Price

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Oil production from the seven largest U.S. shale regions is set to decline by 46,000 barrels per day (bpd) in April, but output in the biggest and most prolific basin, the Permian, is expected to eke out a production gain next month, EIA data showed.

According to the EIA’s Drilling Productivity Report, shale production is set to drop by 46,000 bpd to 7.458 million bpd next month. All oil-producing regions except for the Permian are expected to see their production drop in April, but the Permian basin should see output rise by 11,000 bpd to 4.292 million bpd, EIA’s latest estimates show.

While the Permian is expected to increase its oil production, the Niobara and Eagle Ford regions are set for the biggest declines, by 15,000 bpd each, next month. Production in the Anadarko region is seen down 14,000 bpd from March to April, while production in the second most prolific region, the Bakken, is expected down by 12,000 bpd to 1.116 million bpd, the lowest level since July last year. Output in the Appalachia region is forecast slightly down by 1,000 bpd, and production in the Haynesville formation is set to remain flat.

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Source: Oil Price

As predicted, a second wave of COVID-19 is wreaking havoc on the world economy with many European nations contemplating new shutdowns. It looks like it will be a tough winter for the oil prices and markets.

In a recent article carried in Reuters, two energy trading firms, Vitol, and Trafigura offered dour forecasts for the next few months. Trafigura’s Executive Chairman, Jeremy Weir offered a demand forecast of a decline of a million BOPD in the U.S. and up to 1.5 mm in Europe as a result, with global demand through the winter at 92 mm BOPD. He made an additional general comment in assessing the bleak near-term outlook.

“As we move now into what we consider the second wave, our anticipation is to see for further demand destruction… So it’s really not looking good for the foreseeable future.”

Demand at 96 mm BOPD for the Winter months affecting Oil Prices

Another energy trader, Vitol was a little less pessimistic, pegging demand at 96 mm BOPD for the winter months.

In this article we will summarize what we see as the key drivers outside the impact of the virus for oil in the next six to nine months, and how we are playing market opportunities to capitalize on this current weakness.

Expectations are for another major draw when they report this week, driving the inventory overhang down toward ~470 mm as of the last week of October, 2020. That’s a decline rate over the year of roughly 7-mm bbls per month.

Keeping that constant (we think the decline will begin to accelerate a bit actually), we should exit 2020 with ~450 mm bbls in storage, and bring the tally comfortably back into the 5-year average for this time of year. 450 mm bbl may sound like a lot, but it’s less than a 1-month supply, to put it in perspective for you.

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Source; Oil Price

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Fee Simple vs Leasehold, Leased Fees in Oil and Gas

There are many different kinds of transactions associated with the buying, selling, and leasing of property. Mineral rights are no different. Whenever you buy or you sell or lease mineral rights, you may be entering into one of several kinds of agreements. In this article, we are going to define and explain some of the most common types of mineral rights ownership such as fee simple vs. leasehold.

Fee Simple Estate and Fee Simple Interests

A fee simple estate, which is also known as an “estate in fee simple” or “fee-simple title,” is traditionally viewed as the highest form of real estate ownership. In a fee simple estate, a person or entity owns both the surface rights and mineral rights of a piece of land.

When a fee simple agreement is made, the new owner is said to have a “fee simple interest” in the property. The type of ownership is considered “freehold,” which is a term that is most commonly used in European countries like England and Wales.

Leasehold Ownership and Leased Fees

In a leasehold, pieces of land are often divided into what is known as a “split estate.” Within a split estate, the landowner retains ownership of the property’s surface rights, while leasing out the mineral rights below the surface. In an oil and gas lease, a property’s full ownership is usually split between the surface rights owner and an oil or gas company.

In this split, the “leasehold” is the interest of the lessee and the “leased fee” is the amount of money or capital that is provided to the property owner. In oil and gas leases, mineral rights owners are often granted upfront leased fees for the rights to explore the property for precious minerals.

When referring to the property itself, it is common for owners and lessee’s to refer to their assets as “leased fee estates” and “leasehold estates” accordingly.