Tag Archive for: oilandgasindustry

American oil and gas companies have cut back on methane emissions even as production reached record heights, a new analysis shows.

US oil and gas industry is emitting less carbon than it used to

The US oil and gas industry continues to extract record amounts of fossil fuels, despite climate activists’ calls to ​“keep it in the ground.” But while oil and gas extraction has increased in recent years, the carbon emissions from that industrial activity have actually fallen, a new analysis has found.

Even as fossil gas production rose by 40 percent from 2015 to 2022, methane emissions from gas extraction fell by 37 percent, according to a study of Environmental Protection Agency data published today by climate nonprofits Ceres and the Clean Air Task Force. That finding suggests that when energy companies want to, they can effectively reduce emissions of methane, a potent greenhouse gas with 82 times the global warming potential of carbon dioxide over 20 years, and 30 times the warming potential over 100 years. Overall greenhouse gas emissions, which count the industry’s considerable carbon dioxide releases, also fell, but by a more modest 14 percent.

There’s a clear playbook for tackling the planet-warming emissions that result from combusting fossil fuels in power plants or vehicles. But the extraction of those fuels happens farther from public view, and adds up to a major source of industrial emissions. Indeed, oil and gas extraction and refining emitted more greenhouse gases into the atmosphere than any other industrial subsector last year, the Rhodium Group reports. And while power and transportation emissions are falling, heavy industry is on track to become the largest emitting sector within the next decade.

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Source: Canary Media

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Like every industry now, the oil and gas sector is trying to figure out how to adopt and deploy artificial intelligence.

How will AI be applied to oil and gas? One company has some answers

So How will AI be applied to oil and gas? The oil and gas sector is trying to figure out how to adopt and deploy artificial intelligence. They see the enormous profit potential in fit-for-purpose AI tools to help optimize processes. It will also control costs on a granular level that just a few years ago would have been unimaginable.

Few companies so far have in-house expertise in this arena. So for now they will rely on third party contractors. As I sought to learn more about the subject, I recently interviewed Jimmy Fortuna. He us the chief product officer at Enverus. He is also one of the oil industry’s biggest providers of SAAS-based data analytics and consulting.

Enverus recently introduced an AI tool it calls Instant Analyst. It is product that works in conjunction with generative AI technologies from Amazon Web Services (AWS). It enables Enverus to analyze vast data streams to enable real-time decision-making.

“When a user asks the Enverus Instant Analyst an open-ended question, the AI-powered system searches exclusively through Enverus’ vast repository of proprietary research and analytics,” Fortuna says. “This curated content, housed within the Enverus Intelligence Vault, includes tens of thousands of documents containing valuable insights and data points specific to the energy industry. By using solely Enverus proprietary content, the Instant Analyst ensures that the answers it provides are highly relevant, accurate, and easily verifiable.”

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Source: Forbes

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As a group, the oil and gas industry’s free cash flow-to-capital expenditures ratio rose to 1 last year from 0.4 in 2020, and it’s forecast to approach 1.4 by 2030.

Gas & Oil companies are swimming in so much cash that they’re cutting back on borrowing at a faster pace

Demand for Loans

Last year, the demand for loans from Gas & Oil companies or fossil-fuel companies fell 6% year-on-year and that followed a decline of 1% in 2022.

From a climate perspective, this may sound like good news because the drop in bank lending to oil, gas and coal companies should mean less investment and less production over time.

The reality, however, is that oil and gas companies don’t need a lot of loans because they’re generating so much money these days from their underlying businesses, said Andrew John Stevenson, senior analyst at Bloomberg Intelligence. And that trend is likely to continue through the end of the decade, he said.

Its Fair Share of Ups and Downs

The oil and gas industry has seen its fair share of ups and downs in recent years, marked by cycles of booms and busts. However, the current landscape seems to be favoring a more prosperous outlook, with companies reporting healthy balance sheets and increased cash flow.

This financial stability can largely be attributed to the upward trend in oil prices, which have been driven by a combination of factors such as strong global demand and coordinated production cuts by OPEC and its allies under the OPEC+ agreement.

A Much-Needed Boost

The resurgence in oil prices has provided a much-needed boost to companies within the industry, enabling them to capitalize on the improved market conditions. With a steady stream of revenue coming in, many firms are now in a stronger position to invest in exploration, production, and technological advancements.

This influx of capital not only benefits the companies themselves but also has a ripple effect on the broader economy, as it creates jobs, drives innovation, and contributes to overall economic growth. As the industry continues to navigate through this period of relative stability, it will be interesting to see how companies leverage their newfound financial strength to drive long-term growth and sustainability.

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Source: FORTUNE

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Smaller regional U.S. banks have boosted significantly their lending to oil and gas firms over the past two years.

Small banks significantly boost loans to oil and gas firms

While major European banks are competing to announce new policies limiting funding to oil and gas projects, smaller regional U.S. banks have boosted significantly their lending to oil and gas firms over the past two years.

Regional banks BOK Financial, Citizens Financial, Truist Securities, Fifth Third Securities, and US Bancorp have seen their combined loans to the fossil fuel industry jump by over 70% on an average annualized basis since the beginning of 2022, compared to the previous six years, according to data compiled by Bloomberg.

These five banks are now among the world’s top 35 banks in terms of the number of deals they have signed with the fossil fuel industry, Bloomberg’s data showed.

Total global financing for fossil fuels since the Paris Agreement has been led by the biggest U.S. banks, with JP Morgan Chase, Citi, Wells Fargo, and Bank of America placing #1 through #4, respectively, with billions of U.S. dollars of financing for oil and gas between 2016 and 2022, according to research by environmental campaigners.

Regional U.S. banks are also seeing a growing pool of customers in the fossil fuel industry. This comes as European banks are re-evaluating their funding for oil and gas, and energy-rich U.S. states are leading an anti-ESG drive to blacklist major financial corporations and asset managers, which they believe are discriminating against the oil and gas industry.

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Source: Oil Price

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Energy shares jumped 124% so far since Biden took over at the Oval Office vs. a 65% decline for the comparable period under Trump.

Against all odds American oil soars under Biden

After a sharp decline in the final quarter of 2023, U.S. gasoline, American oil soars prices are surging again in a pivotal election year, offering Republicans a fresh chance to pin the blame on President Biden’s green agenda much to the chagrin of the White House. According to Bloomberg, citing new data from AAA Automobile Club, U.S. gas prices are now on course to hit the dreaded $4-a-gallon mark in the coming months, thanks to rising crude prices amid tightening supplies.

But here’s the kicker: under most key metrics, the U.S. oil and gas industry has flourished under the Biden administration despite its push towards a carbon-free future, proving that not even Washington has sufficient power to single-handedly sway large, globally interconnected markets like oil and gas. GOP White House hopefuls were quick to lambast Biden and his energy policies in the post-Covid oil price rally that hit its zenith shortly after Russia invaded Ukraine.

Yet, Big Oil investors were hardly complaining. According to data compiled by Reuters, profits of the top five publicly traded oil companies, namely Exxon Mobil Corp, Chevron Corp, BP Inc, Shell Plc and TotalEnergies SE rocketed to $410 billion during the first three years of the Biden administration, a 100% increase compared to the corresponding period of Donald Trump’s presidency.

Not surprisingly, oil and gas investors have been handsomely rewarded under the Biden administration, with energy shares jumping 124% so far since Biden took over at the Oval Office vs.-65% decline for the comparable period under Trump.

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Source: Oil Price

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US Oil Rig Count Rises: The oil rig count was 510 in the week ended Mar 15, increasing from the week-ago figure of 504.

Permian oil rig count increases in 3 of prior 5 weeks

In its weekly release, Baker Hughes Company BKR stated that the U.S. Permian oil rig count was higher than the prior week’s figure. The rotary rig count, issued by BKR, is usually bring out in major newspapers and trade publications.

Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry. The number of active rigs and its comparison with the week-ago figure indicates the demand trajectory for the company’s oilfield services from exploration and production companies.

Rig Count Data in Detail

Total U.S. Rig Count Rises: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 629 in the week ended Mar 15. The figure is higher than theweek-ago count of 622. Although the figure increased in three of the prior five weeks, there has been a slowdown in drilling activities. Many analysts believe that shale producers are getting more efficient, requiring fewer rigs, while some doubt whether certain producers have enough prospective land to drill. The current national rig count is, however, lower than the year-ago level of 754.

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Source: yahoo!finance

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Discover the pros and cons of leasing vs. owning oil and gas rights. Make informed decisions aligned with your goals in the lucrative energy sector.

Leasing vs. owning oil and gas rights: Which is better?

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DISCLAIMER: We are not financial advisors. The content on this website is for educational purposes only and merely cites our own personal opinions. In order to make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a licensed financial advisor if necessary. Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won’t experience any loss when investing. Always remember to make smart decisions and do your own research!

The oil and gas industry is one of the most lucrative sectors in the world, attracting both seasoned investors and landowners with valuable subsurface resources. However, when it comes to oil and gas rights, individuals and entities face a significant decision: should they lease or own these rights? In this comprehensive guide, we will explore the differences between leasing and owning oil and gas rights, the advantages and drawbacks of each approach, the legal and financial aspects, and considerations for landowners and investors. By understanding the nuances of leasing and owning, you can make an informed decision aligned with your goals in the oil and gas industry.

Understanding Oil and Gas Rights

Oil and gas rights, often referred to as mineral rights, are property rights that grant ownership over valuable subsurface resources. These resources can include oil, natural gas, coal, metals, and various minerals. Mineral rights are typically separate from surface rights. Meaning one party owns the surface property while another owns the subsurface minerals.

Leasing Oil and Gas Rights

Leasing oil and gas rights involves granting a third party (usually an energy company) the exclusive right to extract, produce, and sell valuable resources from beneath your property. The owner of the mineral rights receives royalty payments, lease bonus payments, or a combination of both, depending on the terms negotiated.

Owning Oil and Gas Rights

Owning oil and gas rights means you retain exclusive control and ownership of the subsurface resources on your property. You have the right to extract, produce, and sell the resources directly, enter into leases with energy companies, or participate directly in the drilling and extraction processes.

Advantages of Leasing

Leasing oil and gas rights offers several advantages:

  • Passive Income: Lease holders receive royalty payments without the responsibility of managing the extraction process.
  • Reduced Risk: Leasing transfers the operational and financial risks to the energy company. Which must adhere to environmental regulations and manage expenses.
  • Immediate Payment: Lease bonus payments provide an immediate financial benefit to the mineral rights owner.
  • Diversification: Leasing allows landowners to diversify their income without investing substantial capital.

Advantages of Owning

Owning oil and gas rights provides its own set of advantages:

  • Full Control: Owners have complete control over the extraction and production process, which can be advantageous in terms of strategy and timing.
  • Revenue Potential: Owners may potentially earn higher revenue if they can effectively manage and optimize the extraction process.
  • Ownership of All Revenue Streams: Owners retain all revenue streams, including royalty payments and the proceeds from the sale of extracted resources.
  • Asset Value: Owning mineral rights adds to the overall value of the property, potentially increasing its resale value.

Drawbacks of Leasing

Leasing oil and gas rights comes with some potential drawbacks:

  • Limited Control: Lease holders relinquish control over the extraction process, which means they must trust the lessee’s expertise and integrity.
  • Long-Term Gains: Royalty payments may provide a steady income, but lease agreements often span several years, delaying the realization of significant gains.
  • Market Volatility: Royalty payments can fluctuate with market conditions, affecting the overall income.

Drawbacks of Owning

Owning oil and gas rights also has its drawbacks:

  • Operational Responsibilities: Owners bear the full burden of managing the extraction process, including the costs and potential environmental and regulatory issues.
  • Financial Risk: The owner is exposed to financial risk, which includes operational expenses, commodity price fluctuations, and potential resource depletion.
  • Environmental and Regulatory Compliance: Oil and gas operations are subject to strict environmental regulations, which the owner must adhere to.

Legal and Financial Considerations

When making the decision to lease or own oil and gas rights, consider the following legal and financial aspects:

  • Legal Expertise: Consult with legal professionals who specialize in mineral rights to navigate the legal intricacies.
  • Due Diligence: Conduct thorough research and due diligence regarding the geological potential of your property and the reputation and financial stability of the lessee or operator.
  • Negotiation Skills: Hone your negotiation skills to secure favorable terms and agreements when leasing or selling your mineral rights.

Tax Implications

Oil and gas rights transactions have tax implications, including capital gains taxes and potential deductions. Consult a tax advisor to understand the tax treatment and strategies for minimizing tax liability.

Making the Decision: Lease or Own?

The choice between leasing and owning oil and gas rights. It depends on your financial goals, risk tolerance, and the specifics of your property. Consider factors like your level of expertise, willingness to manage operations, and the potential for long-term gains. Each approach has its merits and challenges, so make your decision based on your unique circumstances.

 

Deciding whether to lease or own oil and gas rights is a critical decision for landowners and investors in the energy sector. Each approach has its advantages and drawbacks, so it’s essential to carefully evaluate your goals, risk tolerance, and property specifics. By understanding the legal, financial, and tax implications of both options. You can make an informed choice that aligns with your long-term objectives in the oil and gas industry.

 

 

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The US oil & gas industry's recent success underscores its resilience and ability to thrive in the face of political, environmental challenges

US oil and gas companies profits skyrocket as the US becomes the energy supplier of choice

US Oil and Gas Companies

Despite the Biden administration’s ambitious climate goals. The US oil and gas companies in the United States has seen unprecedented growth and profitability. The top 10 listed oil and gas producers in the US have reported a combined net income of $313 billion in the first three years of President Biden’s term (Financial Times). This is three times the $112 billion generated during the same period under President Trump.

This surge in profitability can be attributed to several factors. Including record-high production levels as well as significant cost reduction particularly in the oil rich Gulf of Mexico. In December 2023, US oil production reached 13.5 million barrels per day, surpassing all previous records. According to the US Energy Administration. By 2024 the US will reach the daily production of 14 million barrels per day. Additionally, natural gas production exceeded 105 billion cubic feet per day for the first time. These achievements have solidified the US as a global energy leader, with the country now ranking as the second-largest exporter of crude oil and the largest exporter of liquefied natural gas (LNG), overtaking Qatar.

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Source: BENZINGA

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The EIA estimated that US crude oil production reached “an all-time high in December of more than 13.3 million barrels per day.

Record oil and gas production makes America more secure

Record oil and gas production

America’s oil and natural gas producers are innovating to produce more than ever. We’re also easing emissions and bringing reliable, affordable energy to Americans and our global allies.
In its latest short-term energy outlook, the Energy Information Administration estimated that U.S. crude oil production reached “an all-time high in December of more than 13.3 million barrels per day.”

The production of oil and natural gas in the United States plays a crucial role in stabilizing prices for consumers. These commodities are traded on global markets, and their prices can be influenced by a myriad of factors, including geopolitical events and decisions made by stakeholders across the world.

In times of turmoil or disruption in the global oil market, such as supply disruptions or political tensions in major oil-producing regions, having a robust domestic production capacity helps mitigate the impact of these external shocks on American consumers. By reducing the reliance on foreign sources and increasing domestic output, the U.S. is better equipped to weather fluctuations in global oil prices, providing a sense of stability and security for consumers.

Particularly Evident

The significance of strong U.S. oil and gas production is particularly evident when considering the potential actions of “bad actors” in the global market. In an interconnected world where energy markets are highly sensitive to external events, the actions of rogue states or non-state actors can have profound consequences on oil prices and supply chains.

By bolstering domestic production, the U.S. can insulate itself to some extent from these external risks and maintain a degree of control over its energy security. This not only helps in ensuring a stable supply of energy for American households and businesses but also contributes to the country’s overall economic resilience in the face of global uncertainties.

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Source: Fremont Tribune

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Chevron Corp. beat earnings estimates and raised dividends after posting record oil and natural gas production.

Chevron beats earning estimates following “record” oil and gas production

Chevron beats earnings estimates and raised dividends after posting record oil and natural gas production, boosting Chief Executive Officer Mike Wirth’s effort to rebound from a year of missed performance targets.

Adjusted earnings of $3.45 a share exceeded the Bloomberg Consensus estimate by 23 cents. Chevron raised its dividend by almost 8% to $1.63 a share, also ahead of forecasts.

The No. 2 U.S. oil and gas operator incurred $3.7 billion of charges stemming mostly from assets in its home state of California and the dismantling of decades-old infrastructure in the Gulf of Mexico. Annual production climbed 4%, primarily boosted by rising output in the Permian basin and other U.S. fields.

Shell Plc was the first member of the oil and gas industry to post fourth-quarter results, announcing on Thursday $7.31 billion in adjusted net income that was more than $1 billion higher than the average forecast.

Chevron had a tough 2023 in some respects, when its stock underperformed rivals, dropping 17% amid production disappointments and cost overruns from the Permian basin to Kazakhstan. The company already has a challenged growth outlook compared to competitor Exxon Mobil Corp., and operational missteps only added to investor concerns.

CEO Wirth has raised share buybacks and orchestrated the Hess Corp. takeover to acquire, among other things, a 30% stake in Exxon’s offshore Guyana project, one of the world’s fastest-growing oil provinces.

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Source: World Oil

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