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Author Topic: Fossil Fuel Profits Getting Eaten Alive by Renewable Energy!  (Read 5855 times)

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AGelbert

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Sounds about right, considering the drop off in overall activity.

And they'll still be around when the next upswing arrives. Just like they were in 2009. And in 2000. And in 1991. And in 1977. And so on and so forth, back before my time.


I guess you are talking about the Schlumberger gamed stock price, not what Antonia Juhasz said about BP's "settlement".   ;)

Does that mean you are no longer "all in cash"? Tell us, what percentage of your retirement 401K is tied up in  fossil fuel industry stocks?

I was THERE in 1977, 1991, 2000 and 2009. I wish you would stop trying to pretend nobody was there but your highness. Your assumption of being the only one privy to fossil fuel industry stock valuations is tiresome.

You believe fossil fuels have a future and are profitable. You claim that is based on thermodynamics, ERoEI and the energy use history of human civilization over the last 150 years or so. I claim your BELIEF is based on cherry picking facts out of the whole fossil fuel energy enchilada from exploration to exploitation to distribution and use. 

Furthermore, the fossil fuel energy based world you BELIEVE worked for "all of us" is actually a world that worked to degrade our biosphere while it diminished democracy. IOW, the truth is that it worked for a few of us to the detriment of most life forms on the planet, including those humans who endured the wars for oil, coal power plant burning diseases, flaring toxic gases from refineries, land and ocean based oil rigs, the methane leaks from EVERY whole punched in the ocean bottom looking for oil and of course the CO2 global warming.

You have this amazing capacity to ignore all that reality and all the costs associated with that reality as if, according to you, it would have been "a lot worse" if we had not gone the fossil fuel route in 1880 or so.

It's possible. But you cannot claim that is anything but a theory on your part. We DIDN'T go the Renewable Energy route in 1880. We DID go the fossil fuel route. ALL the polluting downsides from fossil fuels are justified by people like you because you escaped poverty and coal mines by working for big oil and becoming a fracker later on.

You did great. Good for you. In your shoes, I might have done the same. I was every bit as much a fossil fueler as you are until the 1980's when I went back to college and studied for a BS with a major in biology (pre-med).

Unlike me, you got subsidy babied by Reagan and Bush and Clinton and Shrub AND Obama! So all those time periods you mention, when things got a little slow but came back, were subsidy BAIL OUTS not based on truly competitive energy product economics or actual ERoEI (with environmental cause and effect math energy costs figured in) numbers whatsoever.

You made money so your belief system was bolstered while the environment got steadily more degraded.   

The fact is that the polluting product you continue to defend never has done great, when all the ACTUAL costs are figured in.

But back to Schlumberger, 5 will get you ten that the repurchases done to pad the stock price were done on margin and with interest rate terms NOT available to you or I.  Considering how involved the banks are with the fossil fuel industry, they might even be negative interest giveaways.

You probably know about fun and games like that but think it's all part of the 'proper' price discovery mechanism. 

I don't think so.

Meanwhile, when you consider the future of the fossil fuel industry profits in the light of their flaring HABIT, I suggest you look into the background noise going on with the flaring issue  ;D. Your beloved industry is going to get some very inconvenient rules strapped on them within a year that will force them to severely curtail flaring.

You KNOW how THAT is going to hurt their bottom line.   

You may claim it will not and everything is going to be hunky dory.

I don't think so. Have a nice day. 

« Last Edit: May 02, 2016, 07:19:16 pm by AGelbert »
Hope deferred maketh the heart sick: but when the desire cometh, it is a tree of life. Pr. 13:12

AGelbert

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Halliburton slashes 6,000 more jobs

Nicolas Torres  April 25, 2016
Halliburton confirmed Friday that it cut another 6,000 jobs during the first quarter.

Halliburton chairman and CEO David Lesar said the company cut the jobs in response to low oil prices and falling rig counts.

“Responding to the reality of the market, we force-fit our employee headcount to available activity levels. This provides sustainable structural savings without compromising our ability to add personnel to serve the market when it recovers,” Lesar said.

 

Since oil prices began falling in late 2014 Halliburton has reduced its global headcount by about one-third.


Houston-based Halliburton
has also closed, or is currently in the process of closing, over one hundred different service points worldwide.

“These closures ranged from elimination of underutilized stock points to the consolidation of individual service centers,” Lesar said.

Lesar added that Halliburton will also reduce infrastructure it had maintained in anticipation of its pending merger with Baker Hughes.

“We are not making any decisions that would permanently impair our logistical infrastructure, or ability to flex back up, but we see no scenario in the current market where we need this additional infrastructure,” Lesar said.  ;)
Quote
Earlier this month, the U.S. Department of Justice filed a civil antitrust lawsuit to block the proposed $35 billion merger between Halliburton and Baker Hughes.   

The DOJ said in a statement that the proposed transaction would eliminate “important head-to-head competition in markets for 23 products or services” used for onshore and offshore oil exploration and production in the United States.

Halliburton and Baker Hughes  said they “intend to vigorously contest the U.S. Department of Justice’s effort” to block the merger.

The companies previously agreed to extend the time period under the merger agreement to obtain regulatory approvals to no later than April 30, 2016.

After that time, the companies can continue to seek relevant regulatory approvals or either of the parties may terminate the merger agreement.

Halliburton’s total company revenue fell to $4.19 billion for the first quarter of 2016, down from $7.05 billion a year ago.

The company’s Completion and Production segment booked an operating income of $30 million, down from $462 million in the year ago quarter  :o  ;D, on $2.32 billion in revenues.

The Drilling and Evaluation segment saw its operating income fall to $241 million in the first quarter compared to $306 million a year ago as the segment’s revenues dipped to $1.87 billion from $2.80 billion in the year ago quarter.

North America operating income fell to a loss of $39 million on $1.79 billion in revenues.

Latin America operating income dropped to $48 million, down from $122 million a year ago, on $541 million in revenues.

Europe/Africa/CIS operating income fell to $57 million on revenues of $778 million, down from $1.09 billion in the first quarter of 2015.

Middle East/Asia operating income ticked down to $205 million on $1.08 billion in revenues.

Halliburton has pushed its first quarter conference call back from April 25 to May 3.    


http://petroglobalnews.com/2016/04/halliburton-slashes-6000-jobs/


Hope deferred maketh the heart sick: but when the desire cometh, it is a tree of life. Pr. 13:12

AGelbert

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Could Chevron  be headed for a cash crunch   

Staff Writers  April 27, 2016


Chevron could be headed for a cash crunch after years of big spending when oil prices were high are now catching up with the firm.

According to Seeking Alpha, Chevron’s dividend currently costs about $8.1 billion per year but available cash has declined from about $20 billion in 2012 to just over $11 billion currently.

Chevron reported  a loss of $588 million fourth quarter loss, or $0.31 per diluted share, down significantly from earnings of $3.5 billion in the fourth quarter of 2014.

Quote
Full year 2015 earnings fell to $4.6 billion, or $2.45 per diluted share, down from $19.2 billion, or $10.14 per diluted share, in 2014.

While low oil prices are partially to blame for Chevron’s cash woes mounting debt could also pose a problem.    

Quote
The company added $10.7 billion to its debt load last year, three years after its debt level surpassed its cash level, Seeking Alpha said.


Dividend payments could also start to weigh on Chevron’s bottom line. 

Chevron’s dividend payout ratio currently stands at 175 percent if the company doesn’t cut its dividend, Seeking Alpha said.

At that ratio, Chevron will have to pay out nearly double its 2015 earnings in dividends.

CEO John Watson acknowledged in Feburary that earnings were “down significantly from the previous year” and said the company is “taking significant action to improve earnings and cash flow in this low price environment.”   


Chevron earned $6 billion in proceeds from asset sales in 2015 and has said it has planned further sales for 2016 to 2017.

The company confirmed in Feburary that it will speed up divestitures from its mature shallow water assets in the Gulf of Mexico as it looks to trim expenses and focus on deepwater assets.

Quote
The privately held fund founded by famed investor George Soros confirmed that same month that it sold all of its shares in Chesapeake Energy, Chevron and NRG Energy in the fourth quarter 2015.

News of the sell off came just two weeks after T. Boone Pickens revealed that he has exited all of his oil and gas holdings.

http://petroglobalnews.com/2016/04/chevron-headed-cash-crunch/


Hope deferred maketh the heart sick: but when the desire cometh, it is a tree of life. Pr. 13:12

AGelbert

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BP sinks to $583 million Q1 loss 

icolas Torres  April 27, 2016

BP reported a $583 million loss in the first quarter as low oil prices continued to squeeze upstream profits.

The company reported a $583 million loss in the first quarter compared to a $2.60 billion profit a year ago and a replacement cost (RC) loss of $485 million, down from a RC profit of $2.10 billion in the first quarter of 2015.

RC loss per ordinary share came in at $2.63, down from an $11.54 per share profit in the same quarter last year.

First quarter underlying replacement cost profit fell to $532 million from $2.57 billion in the first quarter of 2015.

Underlying replacement cost profit per ordinary share stood at $2.88, down from $14.14 per share in the year ago quarter.

Cumulative restructuring charges from the beginning of the fourth quarter of 2014 totaled $1.9 billion by the end of the first quarter of 2016, BP said.

All amounts, including finance costs, relating to the Deepwater Horizon were treated as non-operating items, with a net pre-tax charge of $917 million for the first quarter.

BP said it has agreed to simplified and accelerated procedures for processing business economic loss claims tied to the Deepwater spill that is reflected in the quarter’s charge.

“It is still not possible to reliably estimate the remaining liability for these claims and BP continues to review this each quarter,” the company said.

Net cash provided by operating activities for the first quarter held steady from year ago levels at $1.9 billion.

Excluding amounts related to the Deepwater spill, net cash provided by operating activities for the first quarter was $3 billion, up from $2.5 billion for the same period in 2015.

The company’s upstream unit fell to a $1.23 billion loss before interest and tax compared to a $390 million profit in the first quarter of 2015.

Downstream profits before interest and tax climbed to $1.78 billion in the first quarter, up from a $644 million loss in the fourth quarter of 2015 but still down compared to a $2.78 billion profit a year ago.

BP earned a $62 million profit before interest and tax from its stake in Russia’s Rosneft in the first quarter, down from $221 million in the same period last year.

Production for the quarter climbed 5.2 percent year-over-year to 2.428 million barrels of oil equivalent per day.

BP said it expects second quarter 2016 reported production to be lower than the first quarter, reflecting PSA entitlement impacts and seasonal turnaround and maintenance activity.

“Market fundamentals continue to suggest that the combination of robust demand and weak supply growth will move global oil markets closer into balance by the end of the year,” BP CEO Bob Dudley said.
 


http://petroglobalnews.com/2016/04/bp-sinks-583-million-q1-loss/
Hope deferred maketh the heart sick: but when the desire cometh, it is a tree of life. Pr. 13:12

AGelbert

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Exxon’s Rating and Credibility Gets a Downgrade: Standard & Poor’s cut ExxonMobil’s AAA rating on Tuesday, a move that the oil giant had been fighting against since S&P's warning in February.

The downgrade follows a series of decisions under CEO Rex Tillerson  that set the company back, including a making major bet on natural gas before the market collapsed, a partnership with a Russian crude driller that left $1 billion stranded, and $54 billion spent on stock buybacks despite the company's growing debt load.

Yet these missteps were secondary to concern that Exxon isn’t finding new discoveries to replace its oil production.  ;D

“In our view, the company’s greatest business challenge is replacing its ongoing production,” said S&P. 

Quote

Adding to Exxon’s bad day, DeSmogBlog also revealed that the Canadian affiliate of Exxon knew since the late 1970s that CO2 pollution was a global threat and yet Exxon continued to actively fuel climate change denial.

Documents published yesterday reveal the strongest warnings about the dangers of fossil fuels yet, saying, “there is no doubt that increases in fossil fuel usage…are aggravating the potential problems of increased CO2 in the atmosphere.” The memo was distributed internationally to managers across Exxon’s corporate offices. ( DeSmogBlog, National Observer, Bloomberg, Wall Street Journal $, USA Today, Forbes, Reuters, CNBC)

As you saw with the Schlumberger stock repurchase SCAM to keep the stock price from cratering, Exxon is even deeper in this effort to fool the stock market. A glance at the year to date performance of Exxon compared with just about every oil pig out there is proof that they have been gaming the price. $54 billion can do a LOT of gaming!   

The EXXON stock price has been ARTIFICIALLY PADDED    to keep it from dropping about 25%  (just look at the one year performance of all the other oil pigs to see what I mean).




In Other Words, EXXON is a (see below):


   

Hope deferred maketh the heart sick: but when the desire cometh, it is a tree of life. Pr. 13:12

AGelbert

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Quote
"A world in which “peak oil demand,” rather than “peak oil,” will shape the consciousness of major players" - Michael T. Klare

The Beginning of the End of the Old Oil Order   

Michael Klare, TomDispatch | April 28, 2016 10:42 am

Michael T. Klare, a TomDispatch regular, is a professor of peace and world security studies at Hampshire College and the author, most recently, of The Race for What’s Left. A documentary movie version of his book Blood and Oil is available from the Media Education Foundation. Follow him on Twitter at @mklare1.


Sunday, April 17 was the designated moment. The world’s leading oil producers were expected to bring fresh discipline to the chaotic petroleum market and spark a return to high prices. Meeting in Doha, the glittering capital of petroleum-rich Qatar, the oil ministers of the Organization of the Petroleum Exporting Countries (OPEC), along with such key non-OPEC producers as Russia and Mexico, were scheduled to ratify a draft agreement obliging them to freeze their oil output at current levels. In anticipation of such a deal, oil prices had begun to creep inexorably upward, from $30 per barrel in mid-January to $43 on the eve of the gathering. But far from restoring the old oil order, the meeting ended in discord, driving prices down again and revealing deep cracks in the ranks of global energy producers.    

Whatever the fate of the Saudi royals, if predictions of a future peak in world oil demand prove accurate, the debacle in Doha will be seen as marking the beginning of the end of the old oil order.

It is hard to overstate the significance of the Doha debacle .

At the very least, it will perpetuate the low oil prices that have plagued the industry for the past two years, forcing smaller firms into bankruptcy and erasing hundreds of billions of dollars of investments in new production capacity. It may also have obliterated any future prospects for cooperation between OPEC and non-OPEC producers in regulating the market. Most of all, however, it demonstrated that the petroleum-fueled world we’ve known these last decades—with oil demand always thrusting ahead of supply, ensuring steady profits for all major producers—is no more. Replacing it is an anemic, possibly even declining, demand for oil that is likely to force suppliers to fight one another for ever-diminishing market shares

The Road to Doha

Before the Doha gathering, the leaders of the major producing countries expressed confidence that a production freeze would finally halt the devastating slump in oil prices that began in mid-2014. Most of them are heavily dependent on petroleum exports to finance their governments and keep restiveness among their populaces at bay. Both Russia and Venezuela, for instance, rely on energy exports for approximately 50 percent of government income, while for Nigeria it’s more like 75 percent. So the plunge in prices had already cut deep into government spending around the world, causing civil unrest and even in some cases political turmoil.

No one expected the April 17 meeting to result in an immediate, dramatic price upturn, but everyone hoped that it would lay the foundation for a steady rise in the coming months. The leaders of these countries were well aware of one thing: to achieve such progress, unity was crucial. Otherwise they were not likely to overcome the various factors that had caused the price collapsein the first place. Some of these were structural and embedded deep in the way the industry had been organized; some were the product of their own feckless responses to the crisis.

On the structural side, global demand for energy had, in recent years, ceased to rise quickly enough to soak up all the crude oil pouring onto the market, thanks in part to new supplies from Iraq and especially from the expanding shale fields of the United States. This oversupply triggered the initial 2014 price drop when Brent crude—the international benchmark blend — went from a high of $115 on June 19 to $77 on November 26, the day before a fateful OPEC meeting in Vienna. The next day, OPEC members, led by Saudi Arabia, failed to agree on either production cuts or a freeze, and the price of oil went into freefall.

The failure of that November meeting has been widely attributed to the Saudis’ desire to kill off new output elsewhere—especially shale production in the U.S.—and to restore their historic dominance of the global oil market. Many analysts were also convinced that Riyadh was seeking to punish regional rivals Iran and Russia for their support of the Assad regime in Syria (which the Saudis seek to topple).

The rejection, in other words, was meant to fulfill two tasks at the same time: blunt or wipe out the challenge posed by North American shale producers and undermine two economically shaky energy powers that opposed Saudi goals in the Middle East by depriving them of much needed oil revenues. Because Saudi Arabia could produce oil so much more cheaply than other countries—for as little as $3 per barrel—and because it could draw upon hundreds of billions of dollars in sovereign wealth funds to meet any budget shortfalls of its own, its leaders believed it more capable of weathering any price downturn than its rivals.

Today, however, that rosy prediction is looking grimmer  ;D as the Saudi royals begin to feel the pinch of low oil prices, and find themselves cutting back on the benefits they had been passing on to an ever-growing, potentially restive population while still financing a costly, inconclusive, and increasingly disastrous war in Yemen.

Many energy analysts became convinced that Doha would prove the decisive moment when Riyadh would finally be amenable to a production freeze. Just days before the conference, participants expressed growing confidence that such a plan would indeed be adopted. After all, preliminary negotiations between Russia, Venezuela, Qatar, and Saudi Arabia had produced a draft document that most participants assumed was essentially ready for signature. The only sticking point: the nature of Iran’s participation.

The Iranians were, in fact, agreeable to such a freeze, but only after they were allowed to raise their relatively modest daily output to levels achieved in 2012 before the West imposed sanctions in an effort to force Tehran to agree to dismantle its nuclear enrichment program. Now that those sanctions were, in fact, being lifted as a result of the recently concluded nuclear deal, Tehran was determined to restore the status quo ante. On this, the Saudis balked, having no wish to see their arch-rival obtain added oil revenues. Still, most observers assumed that, in the end, Riyadh would agree to a formula allowing Iran some increase before a freeze. “There are positive indications an agreement will be reached during this meeting… an initial agreement on freezing production,” said Nawal Al-Fuzaia, Kuwait’s OPEC representative, echoing the views of other Doha participants.

But then something happened.  ;D According to people familiar with the sequence of events, Saudi Arabia’s Deputy Crown Prince and key oil strategist, Mohammed bin Salman, called the Saudi delegation in Doha at 3:00 a.m. on April 17th and instructed them to spurn a deal that provided leeway of any sort for Iran. When the Iranians—who chose not to attend the meeting—signaled that they had no intention of freezing their output to satisfy their rivals, the Saudis rejected the draft agreement it had helped negotiate and the assembly ended in disarray.    

Geopolitics  to the Fore

Most analysts have since suggested that the Saudi royals simply considered punishing Iran more important than lowering oil prices. No matter the cost to them, in other words, they could not bring themselves to help Iran pursue its geopolitical objectives, including giving yet more support to Shiite forces in Iraq, Syria, Yemen, and Lebanon. Already feeling pressured by Tehran and ever less confident of Washington’s support, they were ready to use any means available to weaken the Iranians, whatever the danger to themselves.

“The failure to reach an agreement in Doha is a reminder that Saudi Arabia is in no mood to do Iran any favors right now and that their ongoing geopolitical conflict cannot be discounted as an element of the current Saudi oil policy,” said Jason Bordoff of the Center on Global Energy Policy at Columbia University.

Many analysts also pointed to the rising influence of Deputy Crown Prince Mohammed bin Salman, entrusted with near-total control of the economy and the military by his aging father, King Salman. As Minister of Defense, the prince has spearheaded the Saudi drive to counter the Iranians in a regional struggle for dominance. Most significantly, he is the main force behind Saudi Arabia’s ongoing intervention in Yemen, aimed at defeating the Houthi rebels, a largely Shia group with loose ties to Iran, and restoring deposed former president Abd Rabbuh Mansur Hadi. After a year of relentless U.S.-backed airstrikes (including the use of cluster bombs), the Saudi intervention has, in fact, failed to achieve its intended objectives, though it has produced thousands of civilian casualties, provoking fierce condemnation from U.N. officials, and created space for the rise of al-Qaeda in the Arabian Peninsula. Nevertheless, the prince seems determined to keep the conflict going and to counter Iranian influence across the region.

For Prince Mohammed, the oil market has evidently become just another arena for this ongoing struggle. “Under his guidance,” the Financial Times noted in April, “Saudi Arabia’s oil policy appears to be less driven by the price of crude than global politics, particularly Riyadh’s bitter rivalry with post-sanctions Tehran.” This seems to have been the backstory for Riyadh’s last-minute decision to scuttle the talks in Doha. On April 16, for instance, Prince Mohammed couldn’t have been blunter to Bloomberg, even if he didn’t mention the Iranians by name: “If all major producers don’t freeze production, we will not freeze production.”

With the proposed agreement in tatters, Saudi Arabia is now expected to boost its own output, ensuring that prices will remain bargain-basement low and so deprive Iran of any windfall from its expected increase in exports. The kingdom, Prince Mohammed told Bloomberg, was prepared to immediately raise production from its current 10.2 million barrels per day to 11.5 million barrels and could add another million barrels “if we wanted to” in the next six to nine months. With Iranian and Iraqi oil heading for market in larger quantities, that’s the definition of oversupply. It would certainly ensure Saudi Arabia’s continued dominance of the market, but it might also wound the kingdom in a major way, if not fatally.

A New Global Reality

No doubt geopolitics played a significant role in the Saudi decision, but that’s hardly the whole story. Overshadowing discussions about a possible production freeze was a new fact of life for the oil industry: the past would be no predictor of the future when it came to global oil demand. Whatever the Saudis think of the Iranians or vice versa, their industry is being fundamentally transformed, altering relationships among the major producers and eroding their inclination to cooperate.

Until very recently, it was assumed      that the demand for oil would continue to expand indefinitely, creating space for multiple producers to enter the market, and for ones already in it to increase their output. Even when supply outran demand and drove prices down, as has periodically occurred, producers could always take solace in the knowledge that, as in the past, demand would eventually rebound, jacking prices up again. Under such circumstances and at such a moment, it was just good sense for individual producers to cooperate in lowering output, knowing that everyone would benefit sooner or later from the inevitable price increase.

But what happens if confidence in the eventual resurgence of demand begins to wither?  Then the incentives to cooperate begin to evaporate, too, and it’s every producer for itself in a mad scramble to protect market share.    This new reality—a world in which “peak oil demand,” rather than “peak oil,” will shape the consciousness of major players—is what the Doha catastrophe foreshadowed. 


At the beginning of this century, many energy analysts were convinced that we were at the edge of the arrival of “peak oil”; a peak, that is, in the output of petroleum in which planetary reserves would be exhausted long before the demand for oil disappeared, triggering a global economic crisis. As a result of advances in drilling technology, however, the supply of oil has continued to grow, while demand has unexpectedly begun to stall. This can be traced both to slowing economic growth globally and to an accelerating “green revolution” in which the planet will be transitioning to non-carbon fuel sources. With most nations now committed to measures aimed at reducing emissions of greenhouse gases under the just-signed Paris climate accord, the demand for oil is likely to experience significant declines in the years ahead.

Quote
In other words, global oil demand will peak long before supplies begin to run low, creating a monumental challenge for the oil-producing countries.


This is no theoretical construct. It’s reality itself.  ;D Net consumption of oil in the advanced industrialized nations has already dropped from 50 million barrels per day in 2005 to 45 million barrels in 2014. Further declines are in store as strict fuel efficiency standards for the production of new vehicles and other climate-related measures take effect, the price of solar and wind power continues to fall, and other alternative energy sources come on line. While the demand for oil does continue to rise in the developing world, even there it’s not climbing at rates previously taken for granted. With such countries also beginning to impose tougher constraints on carbon emissions, global consumption is expected to reach a peak and begin an inexorable decline.  ;D

Quote
According to experts Thijs Van de Graaf and Aviel Verbruggen, overall world peak demand could be reached as early as 2020.

In such a world, high-cost oil producers will be driven out of the market and the advantage—such as it is—will lie with the lowest-cost ones. Countries that depend on petroleum exports for a large share of their revenues will come under increasing pressure to move away from excessive reliance on oil. 

This may have been another consideration in the Saudi decision at Doha. In the months leading up to the April meeting, senior Saudi officials dropped hints that they were beginning to plan for a post-petroleum era and that Deputy Crown Prince bin Salman would play a key role in overseeing the transition.

On April 1, the prince himself indicated that steps were underway to begin this process. As part of the effort, he announced, he was planning an initial public offering of shares in state-owned Saudi Aramco, the world’s number one oil producer, and would transfer the proceeds, an estimated $2 trillion, to its Public Investment Fund (PIF). “IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil,” the prince pointed out. “What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”

For a country that more than any other has rested its claim to wealth and power on the production and sale of petroleum, this is a revolutionary statement. If Saudi Arabia says it is ready to begin a move away from reliance on petroleum, we are indeed entering a new world in which, among other things, the titans of oil production will no longer hold sway over our lives as they have in the past.

This, in fact, appears to be the outlook adopted by Prince Mohammed in the wake of the Doha debacle. In announcing the kingdom’s new economic blueprint on April 25, he vowed to liberate the country from its “addiction” to oil.” This will not, of course, be easy to achieve, given the kingdom’s heavy reliance on oil revenues and lack of plausible alternatives. The 30-year-old prince could also face opposition from within the royal family to his audacious moves (as well as his blundering ones in Yemen and possibly elsewhere). Whatever the fate of the Saudi royals, however, if predictions of a future peak in world oil demand prove accurate, the debacle in Doha will be seen as marking the beginning of the end of the old oil order.

http://ecowatch.com/2016/04/28/end-of-the-old-oil-order/

Hope deferred maketh the heart sick: but when the desire cometh, it is a tree of life. Pr. 13:12

AGelbert

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Business  |  Fri Apr 29, 2016 2:04pm EDT

Refining's silver lining loses luster at Exxon
and Chevron


HOUSTON
  |  By Ernest Scheyder
 
Exxon Mobil Corp and Chevron Corp on Friday reported their most dismal quarterly results in more than a decade on low oil prices and an oversupplied fuel market that hurt what had been lucrative refining margins.

As crude prices slid 60 percent from mid-2014, large integrated energy companies have touted the virtues of a business model that both produces oil and refines it. Refiners typically see profitability increase when the price of their main feedstock - oil - falls.

But growing fuel inventories
and weak demand  are now hammering the refining industry, turning a typical advantage for integrated oil companies on its head.  ;D

First-quarter pain in the downstream units, which came after major U.S. refiners slashed the amount of cheap crude they were processing in February, is a sign the road ahead for oil majors may turn even rockier. Their upstream exploration and production units have been reeling for months from the crude price crash.

Both Exxon and Chevron sought in Friday conference calls with investors and analysts to downplay the weakness in their refining units.

Chevron Chief Financial Officer Pat Yarrington acknowledged lower worldwide refining margins on the call.

Jeff Woodbury, Exxon's vice president of investor relations, blamed the weak results on lower demand and high inventories of refined gasoline and other products after a relatively warm North American winter.
 
Lower profits from Exxon and Chevron's refining divisions contributed to weaker overall results for both companies.

Exxon's net income fell 63 percent to $1.81 billion, its lowest since 1999, although analysts had expected a bigger drop.

Chevron, the second-largest U.S. oil company behind Exxon, reported a net loss of $725 million, compared with a year-earlier net profit of $2.57 billion. The loss was the biggest since 2001, and earnings before special items missed Wall Street estimates.

Exxon shares were up 0.2 percent at $88.20 in afternoon trading, while Chevron fell 0.8 percent to $101.59.
 
For the past six years, U.S. refiners from Texas to Philadelphia have bought every barrel of crude they could lay their hands on to cash in on a golden era of healthy margins.

But those are fast disappearing. Among refiners, Marathon Petroleum Corp barely eked out a profit in the first quarter, and Phillip 66's consolidated earnings fell by more than half a billion dollars to $385 million.

Profits were down by nearly half at $906 million at Exxon's refining unit and at $735 million at Chevron's.
 
In February, at least five U.S. refiners have voluntarily reduced output of fuels in the most widespread cuts since the global financial crisis.

Independent refiners including Valero Energy Corp, PBF Energy Inc, Philadelphia Energy Solutions and Monroe Energy, a unit of Delta Air Lines Inc, have curbed output, capitulating to record stockpiles and sluggish demand.

Exxon has also cut the amount of crude it processes at one Texas refinery.

While so-called run cuts are common for maintenance, they are rare for purely economic reasons.

If the closures gather pace and refineries curb their purchases of crude further, this will heap further pressure on oil prices exploration and production companies can command.

(Reporting by Ernest Scheyder; Editing by Terry Wade and Lisa Von Ahn)

http://www.marketbeat.com/stories.aspx?story=http%3a%2f%2ffeeds.reuters.com%2f%7er%2freuters%2fbusinessNews%2f%7e3%2fbKvs-Tw74k8%2fus-oil-results-idUSKCN0XQ1SI
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AGelbert

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Maritime NewsgCaptain

Samsung Heavy Industries Loses $4.6 Billion Order

April 28, 2016 by Bloomberg

By Kyunghee Park

(Bloomberg) — Samsung Heavy Industries Co., the world’s third-largest shipbuilder, said an order to build three floating liquefied natural gas production facilities was canceled after the energy development project was scrapped amid a plunge in oil prices.

The contract, valued at 5.27 trillion won ($4.6 billion), from Royal Dutch Shell Plc   was voided because of the current difficult  market conditions, the Sungnam, South Korea-based company said in a regulatory filing Thursday. The shipbuilder won the deal in June on the condition that the project will start only after the client is ready to proceed.

Oil prices that have more than halved in the last two years have forced energy companies and rig owners to cancel offshore projects and delay deliveries. As a result, shipyards in Asia such as Samsung Heavy and Singapore’s Sembcorp Marine Ltd. reported losses or smaller profits last year.

Woodside Petroleum Ltd. scrapped plans in March to develop the Browse LNG project in Australia with partners, including Shell and BP Plc, saying it won’t go ahead with the floating LNG development after completing detailed engineering and design work. The Browse partners will prepare a new plan and budget for developing the gas resources, it said.

Samsung Heavy is currently building two other floating LNG facilities for Shell and Petroliam Nasional Bhd. of Malaysia. The first project is expected to complete work at the shipyard in the second half of this year, the company said.

© 2016 Bloomberg L.P

https://gcaptain.com/samsung-heavy-industries-loses-4-6-billion-shell-order/

Agelbert NOTE: Message to anyone (e. g. wishful thinkers) who labors under the belief the fossil Fuel Fascists are not a MASSIVE Credit Risk and will "recover" their "profitability" and "pay their debts": Hang on to your wallet.




Fossil Fuel Industry accountant
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AGelbert

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Freeport-McMoRan cutting 25 percent of oil, gas workforce

Nicolas Torres  April 29, 2016

Mining giant Freeport-McMoRan (FCX) said Tuesday that it will cut a quarter of its oil and gas workforce after posting a $4.2 billion first quarter net loss.

The company said the decision follows a formal process conducted during the first quarter “involving multiple third-party oil and gas industry and financial participants to evaluate alternatives” for its oil and gas business.

“Further weakening in oil and gas prices and negative credit and financing market conditions during first quarter had a significant unfavorable impact on the process,” the company said.

While the process did not identify a buyer for the entire oil and gas business, FCX said a number of parties have interest in select assets.

The company said it will continue to engage in discussions with parties who are interested in potential asset or joint venture transactions.

FCX said that, in the interim, it is taking immediate steps to reduce oil and gas costs further.

The Arizona-based company confirmed that it will cut its oil and gas workforce by 25 percent.

According to the Wall Street Journal, the headcount reduction plan will eliminate 325 jobs.

FCX expects to record a charge of $40 million in second quarter associated with workforce reductions and other restructuring costs.

The company is also implementing a new management structure for its oil and gas business.

“The newly structured oil and gas management team is actively engaged in managing costs and developing plans to preserve and enhance asset values,” the company said.

FCX’s cash production costs for its oil and gas operations fell to $15.85 per barrel of oil equivalent in the first quarter, down from $20.26 per BOE in first-quarter 2015 thanks to increased production from the deepwater Gulf of Mexico and ongoing cost reduction efforts.

FCX’s cash operating margin per BOE had realized revenues of $23.79 per , down from $43.71 per BOE in the year ago quarter.

Cash operating margin per BOE fell to $7.94 in the first quarter, down from $23.45 per BOE a year ago.

Capital expenditures for oil and gas operations in first quarter totaled $480 million in the United States, including $258 million incurred for deepwater GOM and $225 million associated with the change in capital expenditure accruals along with $43 million primarily associated with prior period costs in Morocco.

Capital expenditures for oil and gas operations for 2016 are estimated to total $1.5 billion, excluding $800 million in idle rig costs that are expected to reduce operating cash flows.

About 90 percent of the 2016 capital budget is expected to be directed to the GOM.

FCX booked a first quarter net loss attributable to common stock of $4.2 billion, or a loss of $3.35 per share.

After adjusting for net charges totaling $4 billion, or $3.19 per share, first quarter adjusted net loss attributable to common stock totaled $197 million, or $0.16 per share.

Quote

“We believe the quality and scale of our assets provide opportunities for significant debt reduction while retaining a substantial business with attractive low-cost, long-lived reserves and resources that will enable our shareholders to benefit from improved conditions in the future,” FCX president and CEO Richard C. Adkerson said. 

http://petroglobalnews.com/2016/04/freeport-mcmoran-cutting-25-percent-of-oil-gas-workforce/

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AGelbert

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New Report Shows ‘Natural Gas Increasingly Becoming an Unnecessary Bridge to Nowhere’

SUN DAY Campaign | April 28, 2016 10:13 am

Setting a new lopsided quarterly record, renewable sources (i.e., wind, solar, biomass and hydropower) outpaced—in fact, swamped    —natural gas by a factor of more than 70:1 for new electrical generating capacity placed in-service during the first three months of calendar year 2016.

“While often touted as being a ‘bridge fuel,’ natural gas is increasingly becoming an unnecessary bridge to nowhere,” noted Ken Bossong, executive director of the SUN DAY Campaign.

According to the latest just-released monthly Energy Infrastructure Update report from the Federal Energy Regulatory Commission’s (FERC) Office of Energy Projects, nine new “units” of wind provided 707 megawatts (MW), followed by 44 units of solar (522 MW), 9 units of biomass (33 MW) and 1 unit of hydropower (29 MW). By comparison, only two new units of natural gas (18 MW) came on line. There was no new capacity reported for the quarter from coal, oil, nuclear power or geothermal steam.

Further, solar (75 MW), wind (72 MW) and biomass (33 MW) accounted for 100 percent of new generating capacity reported by FERC for just the month of March. Solar and wind were the only sources of new capacity in January as well.

Renewable energy sources now account for 18.11 percent of total available installed generating capacity in the U.S.: water—8.58 percent, wind—6.39 percent, biomass—1.43 percent, solar—1.38 percent and geothermal steam—0.33 percent. For perspective, when FERC issued its very first “Energy Infrastructure Update” in December 2010, renewable sources accounted for just 13.71 percent.

Moreover, the share of total available installed generating capacity now provided by non-hydro renewables (9.53 percent) not only exceeds that of conventional hydropower (8.58 percent) but is also greater than that from either nuclear power (9.17 percent) or oil (3.83 percent).*

“While often touted as being a ‘bridge fuel,’ natural gas is increasingly becoming an unnecessary bridge to nowhere,” noted Ken Bossong, executive director of the SUN DAY Campaign. “As renewables continue to rapidly expand their share of the nation’s electrical generation, it’s becoming clear that natural gas will eventually join coal, oil and nuclear power as fuels of the past.” 


* Note that generating capacity is not the same as actual generation. Electrical production per MW of available capacity (i.e., capacity factor) for renewables is often lower than that for fossil fuels and nuclear power.

According to the most recent data provided by the U.S. Energy Information Administration (EIA), actual net electrical generation from utility-scale renewable energy sources totaled about 14.3 percent of total U.S. electrical production as of January 31, 2016 (see: http://www.eia.gov/electricity/monthly).

However, this figure understates renewables’ actual contribution because neither EIA nor FERC fully accounts for all electricity generated by  distributed, smaller-scale renewable energy sources such as rooftop solar (e.g., FERC acknowledges that its data just reflect “plants with nameplate capacity of 1 MW or greater”).
 
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AGelbert

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Chevron
cutting 1,000 more jobs after missing earnings target  ;D

Staff Writers  May 2, 2016

Chevron said Friday that it will cut another 1,000 jobs after posting a $725 million first quarter loss.

According to the Wall Street Journal, the company will cut 1,000 jobs later this year, bringing Chevron’s total number of job cuts to 8,000 workers, or about 12 percent of its workforce.

Chevron has not disclosed further details about the cuts.

Chevron reported a loss of $0.39 per diluted share for first quarter 2016, compared with earnings of $2.6 billion, or $1.37 per diluted share, in the 2015 first quarter.

According to Seeking Alpha, Chevron was expected to post a $0.20 loss per share.

The company’s Upstream segment reported a loss of $1.45 billion, compared to $1.56 billion in earnings in the first quarter of 2015.

U.S. upstream operations incurred a loss of $850 million in first quarter 2016 compared to a loss of $460 million from a year earlier due to lower crude oil and natural gas realizations that were partially offset by lower operating expenses.

International upstream operations incurred a loss of $609 million in first quarter 2016 compared with [b]earnings of $2.02 billion a year ago[/b].

The company’s Downstream segment reported earnings of $735 million, down from $1.42 billion in earnings a year ago.

U.S. downstream operations earned $247 million in first quarter 2016 compared with earnings of $706 million a year earlier.

International downstream operations earned $488 million in first quarter compared with $717 million a year earlier.

Net charges in first quarter 2016 were $1 million, compared with $416 million in the year ago period.

Foreign currency effects decreased earnings in the quarter by $319 million, compared with an increase of $580 million a year earlier.

Sales and other operating revenues in first quarter 2016 were $23 billion, compared to $32 billion in the year-ago period.

Capital and exploratory expenditures in first quarter 2016 were $6.5 billion, compared with $8.6 billion in the corresponding 2015 period.

The board of directors of Chevron Corporation declared a quarterly dividend of $1.07 per share.
Quote

“Our efforts are focused on improving free cash flow. We are controlling our spending and getting key projects under construction online, which will boost revenues,” Chevron chairman and CEO John Watson
said.


http://petroglobalnews.com/2016/05/chevron-cutting-1000-jobs-missing-earnings-target/

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AGelbert

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Markets  |  Mon May 2, 2016 4:08pm EDT
Oil down 3 percent  :D on OPEC output hike, speculative ramp-up in Brent
NEW YORK  |  By Barani Krishnan Reuters     
 
Oil prices fell about 3 percent on Monday as production from the Organization of the Petroleum Exporting Countries neared all-time peaks and record speculative buying in global benchmark Brent sparked profit-taking on last month's outsized rally.

OPEC's crude production climbed in April to 32.64 million barrels per day, close to the highest in recent history, a Reuters survey showed.

Iraq's April exports from southern fields increased, as did seaborne exports from Russia, the biggest exporter outside OPEC.

Traders also cited market intelligence firm Genscape's report of a 821,969 barrel rise in stockpiles at the Cushing, Oklahoma delivery point for U.S. West Texas Intermediate (WTI) crude futures during the week to April 29.

Brent's new front-month contract, July LCOc1, settled down $1.54, or 3.3 percent, at $45.83 per barrel, hitting a session low at $45.72.
 
WTI CLc1 closed down $1.14 cents, or 2.5 percent, at $44.78 a barrel, after hitting an intraday low at $44.54.

"Our high side parameters for both WTI and Brent have been achieved and we would strongly suggest against purchases anywhere across the energy spectrum, especially off the weekly EIA data," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.

The U.S. Energy Information Administration (EIA) will issue on Wednesday weekly supply-demand data on oil. Cushing stockpiles aside, U.S. crude inventories as a whole likely rose by 1.4 million barrels last week, a Reuters poll of analysts found.
 
Speculator bets on higher Brent prices reached record highs last week as Brent futures gained 21.5 percent in April, their largest monthly advance in seven years.  >:( Bets on WTI futures and options also rose  , to 10-month highs, feeding investor views that prices may have risen too far, too fast
Quote


"The recent rally in oil prices that took WTI above $46 a barrel appears to have little to do with fundamentals 
, only partially with financial factors, and possibly more to do with sentiment  ;)," BNP Paribas oil strategists Harry Tchilinguirian and Gareth Lewis-Davies said.

Morgan Stanley said it expected the drop in the U.S. rig count that helped crude prices recover to end soon as shale oil producers increase drilling. "History suggests a rig count bottom is imminent and increases are coming," it said in a note. [RIG/U]
 
In Brent, Monday's volume was just about half of levels seen last week, with the market in London closed for the May Day holiday.

Brent's previous front-month contract, June, settled on Friday at $48.13 a barrel, after setting a six-month high at $48.50.

With its June contract expiry, the premium for Brent's front-month versus second LCOc1-LCOc2, known as "backwardation," ended. The new front-month, July, is now at a discount, or "contango," to the second-month, August.

(Additional reporting by Libby George in LONDON; Editing by Bernadette Baum and Tom Brown)

http://www.marketbeat.com/stories.aspx?story=http%3a%2f%2ffeeds.reuters.com%2f%7er%2freuters%2fbusinessNews%2f%7e3%2fKRsJG-pnYz0%2fus-usa-puertorico-default-idUSKCN0XT171

Agelbert NOTE:
The alleged "sentiment" that caused the recent oil price rally that stalled is REALLY speculation software aided and abetted by fossil fuel fascist money. A brief look at the BILLIONS of dollars  :o the oil majors are desperately throwing at stock "repurchase" programs to keep stock prices from cratering (as they should) will give you a hint of how these crooks are attempting to game the price of their stock AND the price of oil.

It worked back in the 1980s.

It's NOT going to work this time.


OIL GLUT PLUS MORE RENEWABLE ENERGY ADDED EVERY DAY = LOWER OIL PRICE   ;D







 
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AGelbert

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It’s Off: Halliburton, Baker Hughes abandon $28 billion merger  ;D

Nicolas Torres  May 2, 2016

After months of regulatory delays the pending merger between Baker Hughes and Halliburton has collapsed.

In a statement issued on Sunday, Halliburton confirmed media reports that the merger agreement has been terminated.

“While both companies expected the proposed merger to result in compelling benefits to shareholders, customers and other stakeholders, challenges in obtaining remaining regulatory approvals and general industry conditions that severely damaged deal economics led to the conclusion that termination is the best course of action,” Halliburton chairman and CEO Dave Lesar said.

In connection with the termination of the merger agreement, Halliburton will pay Baker Hughes the termination fee of $3.5 billion by May 4.

“Today’s outcome is disappointing because of our strong belief in the vast potential of the business combination to deliver benefits for shareholders, customers and both companies’ employees,” Baker Hughes chairman and CEO Martin Craighead said.

The merger was valued at $35 billion when the deal was signed in November 2014 and was initially slated to close in the second half of 2015 before that deadline was extended to April 30.

The U.S. Department of Justice filed a civil antitrust lawsuit on April 6 to block the proposed merger between Halliburton and Baker Hughes.

The deal also faced opposition from European regulators who said they were concerned that the deal would harm competition.

Halliburton said it will discuss the termination during its previously scheduled conference call on May 3.

After the termination was announced, Baker Hughes outlined a plan to reduce costs and simplify its business.

Baker Hughes said its “taking immediate steps to remove significant costs that were retained in compliance with the former merger agreement,” with the initial phase of the cost reduction efforts is expected to result in $500 million of annualized savings by the end of 2016.

The Houston-based company also plans to use the proceeds from the breakup fee to buy back $1.5 billion worth of shares and debt totaling $1 billion.

Baker Hughes  also intends to refinance its $2.5 billion credit facility that expires in September 2016.

The company said it has also decided to “retain a selective footprint in its U.S. onshore pressure pumping business, while preserving the flexibility to expand for the right opportunities.”

Halliburton 
confirmed Friday that it cut another 6,000 jobs during the first quarter, citing low oil prices and falling rig counts.

http://petroglobalnews.com/2016/05/off-halliburton-baker-hughes-abandon-28-billion-merger/

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AGelbert

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Bankruptcies spread through oil patch, more than 175 companies are ‘high risk’   ;D

ztaff Writers  May 4, 2016

The number of U.S. oil firms filing for bankruptcies is swiftly approaching levels last seen during the telecom bust.

According to Reuters, 59 U.S. oil firms have filed for bankruptcy since prices began falling in 2014, just nine filings shy of the 68 bankruptcies filed during the telecom bust in 2002 and 2003.

Oklahoma-based Midstates Petroleum and Houston-based Ultra Petroleum became the latest firms to file for bankruptcy protection earlier this week.

A report published by Deloitte in February found that nearly 35 percent of pure-play E&Ps listed worldwide, or about 175 companies, are at a “high risk” for insolvency.

Thirty-five U.S. E&P firms with a cumulative debt of under $18 billion filed for bankruptcy protection from July 2014 to December 2015, according to Deloitte.

According to data collected by Dow Jones U.S. Oil and Gas Index and seen by Reuters,
Quote
the valuation of U.S. energy companies has declined by as much as $1.02 trillion since oil prices began sliding in 2014.   

However, the wave of bankruptcies has not put a large dent in U.S. production as most companies continue to operate under Chapter 11 protection.  ;) 


Crude production dipped 3.4 percent year-over-year in April to 9.129 million barrels per day, according to the U.S. Energy Information Administration.

According to Deloitte, more than 80 percent of U.S. E&P firms that have filed for bankruptcy since July 2014 are still operating under Chapter 11 protection.

Deloitte said the majority of those restructuring plans were approved when oil prices were around $55 to $60 per barrel.

http://petroglobalnews.com/2016/05/oil-bankruptcies-nearing-high-seen-telecom-bust/

Agelbert NOTE: Since the "restructuring" WISHFUL THINKING babying by the courts ASS-U-MEd that oil prices would continue at $55 to $60 per barrel, more than 80 percent of U.S. E&P firms that have filed for bankruptcy since July 2014 CANNOT SURVIVE at present prices, PERIOD.






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AGelbert

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Agelbert NOTE: I explain the question mark I stuck in the headline after the story.  8)

Billionaire’s Bargain Reveals Risks for Offshore Oil Creditors 

May 6, 2016 by Bloomberg

By Luca Casiraghi and Mikael Holter

(Bloomberg) — A bargain for shipping tycoon George Economou is bad news for creditors holding $24 billion of distressed offshore-drilling bonds.

The Greek billionaire snapped up a drillship called Cerrado for less than 10 percent of its 2011 new-build price, showing how a collapse in crude has driven down the value of offshore equipment. The industrywide slump, which stretches from helicopters to oil rigs, means lenders could end up holding collateral worth a lot less than they are owed.

“It’s shocking,” said Alex Brooks, an analyst at Canaccord Genuity Group Inc. in London. “Creditors can’t ignore anymore that the value of the assets on their loans and bonds may be lower than they previously thought.”

The sector’s financial cracks have spread in recent weeks, with Seadrill Ltd. seeking to restructure the largest debt load among offshore drillers, and Harkand Global Holdings Ltd., which is owned by Oaktree Capital Group LLC, defaulting. Helicopter operator CHC Group Ltd. has also followed rig owners Sete Brasil Participacoes SA, Hercules Offshore Inc. and Grupo Schahin into bankruptcy, as oil companies cut exploration and production.

“These are very demanding times,” said Kristin Holth, global head of shipping, offshore and logistics at DNB ASA, Norway’s biggest bank. “Liquidity will be the essential factor.”

Economou bought the Cerrado for $65 million through Ocean Rig UDW Inc., according to a statement last week. He’s chairman and chief executive officer of the New York-listed company. The vessel was sold by Schahin creditors, who seized it after the Brazilian driller filed for bankruptcy last year.

A spokesman for Ocean Rig didn’t reply to requests for comment on the deal, or to requests for an interview with Economou.

The Cerrado sale may “reverberate” across the offshore industry because it was the “first true acquisition” of an uncontracted drillship of its type during the downturn, Barclays Plc analysts led by J. David Anderson said in an April 25 note to clients. The vessel cost $680 million about five years ago, they said. Drillships are used to bore undersea oil wells.

“It’s bad news for rig operators who need to sell assets,” said Nordea Bank AB analyst Janne Kvernland. “The Cerrado deal may be used as a blueprint for similar fire-sales.”

Another drillship, the Deepsea Metro II, failed to draw any bids in an auction with a $175 million reserve price in March, according to an Evercore ISI research note. The final sale price, $210 million, is unrepresentative because the vessel was bought by a creditor, the Barclays analysts said.


Crude’s Tumble 

Demand for drillships, rigs and helicopter services has slowed due to an about 60 percent tumble in crude prices since 2014. Only 325 offshore wells will be drilled worldwide this year, down from 410 last year and 595 in 2014, according to data compiled by Bloomberg Intelligence analyst Andrew Cosgrove. That’s caused rates for deepwater drillships to fall about 50 percent in the past two years to less than $300,000 a day, he said.

For companies and investors with cash, the slump may provide opportunities. The low price for Cerrado means the ship could generate an “attractive return of capital” at charter rates of little more than $200,000 a day, depending on upgrade costs, according to Fitch Ratings. Still, Ocean Rig faces a “challenge” finding a multiyear contract for the vessel because of the drilling slowdown, the ratings company said.


Distressed Rigs

Shipping billionaire John Fredriksen set up a company called Sandbox  ;)  in December to buy rigs at distressed values, according to comments he made to Norwegian newspaper Dagens Naeringsliv in December. Oslo-based Pareto Securities AS approached investors with similar plans last year, two people familiar with the matter said at the time.

A spokesman for Fredriksen’s Seadrill declined to comment on offshore-equipment prices.

Such opportunities are little comfort to creditors holding discounted industry debt. Defaulted September 2022 bonds issued by Schahin, the former owner of the Cerrado, last traded at 14 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Such a deal! 

Quote
The Deepsea Metro II’s previous owner told second-lien bondholders in March that they are unlikely to get any money back.
The owner of a sister ship, the Deepsea Metro I, is in talks with holders of its October 2019 notes. The company has said interest payments may be missed. Calls to Odfjell Drilling Ltd., which helped set up the companies that originally bought the ships, weren’t answered. 

“It’s getting increasingly tough for operators who can’t afford to keep ships out of contract,” said Clarksons Platou Securities AS credit analyst Eirik Rohmesmo. “In the event that ships are sold through a forced sale, there may be limited recovery for creditors.”

 

–With assistance from Michael Bellusci.

https://gcaptain.com/billionaires-bargain-reveals-risks-for-offshore-oil-creditors/

Agelbert NOTE: The alleged "bargain" for shipping tycoon George Economou (buying the drillship called Cerrado for less than 10 percent of its 2011 new-build price) is nothing of the kind.     

Also that corporation called "SANDBOX" set up by the other billionaire without a brain  ;D to do a little bargain sandbagging of rigs at distressed prices is a really stupid move. 



WHY? ???

First of all, because the people  in the oil business are not known for giving stuff away.

A transfer of ownership will give the former owner or original creditor a threadbare, but possibly legal (in the current corrupted state of the courts) excuse to default on bonds purchased based on the projected Cerrado (or other rig or drillship) oil swag revenue stream.

Those that are not happy campers with 14 cents on the dollar (or less), who wish to sue for lost bond revenue, may then be forced to go after the billionaire George Economou or the Sandbox sandbagger billionaire John Fredriksen.

IOW, the oil business is passing the buck to shipping billionaires either lacking brains or brainwashed to believe the oil prices will rebound.

I'm sure those billionaires believe the "good old days" of high oil prices will return so they can rake in a massive return on investment from their "bargain" drillship purchases.



If the oil business actually believed that, the Cerrado would not have been sold for a 90% discount.




Hope deferred maketh the heart sick: but when the desire cometh, it is a tree of life. Pr. 13:12

 

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