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Author Topic: Fossil Fuel Profits Getting Eaten Alive by Renewable Energy!  (Read 5828 times)

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AGelbert

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Fossil Fuel Industry Risks Losing $33 Trillion to Climate Change

by  Joe Ryan July 11, 2016

Companies may be forced to leave gas, oil and coal in ground

Task force drafting guidelines for companies to disclose risk

The fossil fuel industry risks losing $33 trillion in revenue over the next 25 years as global warming may drive companies to leave oil, natural gas and coal in the ground, according to a Barclays Plc energy analyst.

Government regulations and other efforts to cut carbon emissions will inevitably ;D slash demand for fossil fuels, jeopardizing   traditional energy producers  , Mark Lewis, Barclays’s head of European utilities equity research, said Monday during a panel discussion in New York on financial risks from climate change.

His comments are part of a growing chorus calling for more transparency from oil and gas companies about how their balance sheets may be affected by the global shift away from fossil fuels. As governments adopt stricter environmental policies, there’s increasing risk that companies’ untapped deposits of oil, gas and coal may go unused, turning valuable reserves into stranded assets of questionable value.

“There will be lower demand for fossil fuels in the future, and by definition that means lower prices” Lewis said.

Stranded Assets

The meeting Monday was organized by the Task Force on Climate Related Disclosures, a group established last year by Bank of England Governor Mark Carney. It seeks to bring transparency and consistency to how companies warn investors about dangers they face from climate change. The group, led by Bloomberg LP founder and majority owner Michael Bloomberg, is drafting voluntary guidelines for companies to disclose risks related to coastal flooding, carbon-dioxide emissions and shifting global energy policies.

Quote
A “child with an abacus” can calculate that there are tremendous amounts of gas and oil that will need to be left in the ground
, said Anne Simpson, investment director of global governance at the California Public Employees’ Retirement System, the largest U.S. public pension fund.

“Yet we have boards of directors who will not talk to their shareholders about this issue,” Simpson said.

http://www.bloomberg.com/news/articles/2016-07-11/fossil-fuel-industry-risks-losing-33-trillion-to-climate-change
 
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AGelbert

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Ensco Sells Drilling Rigs for Scrap

Published July 20, 2016
 
UK-based Ensco  announced it has sold various drilling rigs for scrap value, including semi-submersible rigs, drill ships and jack-up rigs.

According to the offshore drilling contractor’s latest fleet status report, two semi-submersible drilling rigs built in 2004  :o  – Ensco 6003 and 6004 – have been sold for scrap value with the sale price in line with net book value of the rig. 
 

As well as this, the company’s two drill ships Ensco DS-1 and Ensco DS-2, with a DP Gusto 10,000 design and built in 1999, have also been sold for scrap value.



Ensco Sells Drilling Rigs for Scrap


Ensco also sold two jack-up drilling rigs – Ensco 91 ad Ensco 58. While the first is of a DP Gusto 10,000 design and was built in 1989, the second is of an F&G L-780 Mod II design and was built in 1981.

Additionally, two DP3 Samsung drillships – Ensco DS-4 and Ensco DS-5 –, built in 2010 and 2011   :o  , have been cold stacked in Spain.


Ensco Gets New Contracts in Gulf of Mexico

The company has been reportedly awarded short-term contracts in the Gulf of Mexico.

The contracts awarded include one for jack-up Ensco 75 with Talos Energy, as well as the lease of Ensco 8506 semi-submersible rig to Deep Gulf Energy.

Castex also awarded a contract for jack-up rig Ensco 87 with a duration of one month, while the contract for the semi-submersible rig Ensco 5006 has been extended by 15 months.

As well as this, Ensco has allegedly received the termination of a longer contract by Marubeni, for the semi-submersible rig Ensco 8605 with effect from August 16.

The original contract was expected to last from December 2015 to January 2018 and no reason has been disclosed for the terminal, Ensco reported.

http://www.offshorepost.com/ensco-sells-drilling-rigs-for-scrap/

 
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AGelbert

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Grid and renewables to be new pillars of EnBW’s energy business

With 967.5 million euro, German utility EnBW has achieved a 24.2 percent lower operating result in the first six months of 2016 than in the same period in 2015. The company expects results for the whole year to be five to 10 percent lower than last year.

The most successful parts of the business were its grids and renewable energies segments which, according to the company’s 2020 targets, will become the main pillars of the business. The renewables segment showed an adjusted EBITDA of 153.1 million euros, 75 percent more than during the first six months of 2015.

The share of renewables in the company’s adjusted EBITDA rose from 6.9 percent to 15.8 percent. The adjusted EBITDA in the generation and trading segment fell year-on-year by around 73 percent to 148.6 million euros.

https://www.enbw.com/company/press/press-releases/press-release-details_137988.html
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AGelbert

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Back to where we were at the start of the year, outlook negative:

About three months ago, Palloy "concluded" that the price of oil would go up. I told him he was wrong. I predicted that the price would NOT go up, but go DOWN because of demand destruction and efficiency improvements.

I was right. But don't expect Palloy to admit he was wrong OR that I was right. He is not into admitting his flawed conclusions, especially about fossil fuels and their price.

But it is nice to see Palloy face reality for a change. 

Fri Jul 29, 2016 3:05pm EDT  Related:  Global Energy News 

Oil rout erodes second-quarter profits for U.S. majors Exxon, Chevron
HOUSTON  |  By Ernest Scheyder

http://www.marketbeat.com/stories.aspx?story=http%3a%2f%2ffeeds.reuters.com%2f%7er%2freuters%2fbusinessNews%2f%7e3%2fPSEkMg3xd0Y%2fus-oil-results-idUSKCN1091QU





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AGelbert

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Tue Jul 19, 2016 2:05am EDT

Oil traders lose millions as LPG glut shocks market

LONDON/BEIJING  |  By Julia Payne and Chen Aizhu
 
Traders in the liquefied petroleum gas (LPG) market face a "career-ruining" glut  that has led to millions of dollars in losses as Chinese buyers, far from coming to the rescue, are in a stand-off with oil companies to cancel deals.

LPG, a historically niche and dislocated market, has ballooned with the advent of U.S. exports due to the shale boom. The United States went from an importer to the largest single exporter of propane in just a few years, rivaling the Middle East Gulf producers.

"I can't remember it being this bad  . There was massive new production out of the U.S. and people hoped the Chinese market might absorb it," one LPG trader said.

"There was strong buying in the first four months of the year with low oil prices but that stopped and the market is now a few million tonnes long."

A glut was expected  , but its severity caught most by surprise and will likely serve as a warning to those trading liquefied natural gas, which is increasingly oversupplied.  ;D

LPG is the collective term for propane and butane. The United States exports mostly propane used for heating and in the petrochemical industry to make propylene, a base for plastics manufacturing.

Traders have been left scrambling to mitigate losses as China has failed to be the driver of demand.

At least five companies — Vitol, Gunvor, Shell, BP and EDF Trading — canceled July-loading cargoes out of the two major Texas LPG terminals, preferring to pay penalties of up to $1 million per cargo.
 
Many LPG traders signed up for multi-year contracts but premiums to the U.S. benchmark on a spot basis sunk by about $40 a tonne this year, undercutting the term lifters.

The contracts were also signed when the U.S. benchmark was around a $150 to $200-per-tonne discount to the European benchmark and Saudi Arabia's official selling price. But spreads shrunk dramatically in 2016, making U.S. exports suddenly unappealing to Asia.

Chinese end-users are now cancelling or renegotiation their term contracts, taking advantage of product overhangs in the Middle East and a cheaper alternative feedstock, naphtha.

Asian demand slowed earlier this year on weak propylene margins, which led to run cuts and delayed new plant start-ups. After hitting a trough, the market is expected to rebalance by the year-end though supply will continue to outpace demand.

"Non-associated gas output means there will be a steady rise in natural gas liquids output despite the oil price doldrums. This trend will continue in the medium term," Al Troner, head of Asia Pacific Energy Consulting in Houston, said.
 

SHOWDOWN IN COURT

The disputes have in some cases devolved into open altercations and tanker stand-offs.

At an LPG conference earlier this year in China, one trader said he saw "serious arguments between the Chinese and the U.S. suppliers outside the hall at the café ... Everyone pretended not to be eavesdropping but stopped chatting and just stood still".
 
Targa Resources, operator of an export terminal in Texas, has been stung by contracts with Chinese buyers and is seeking "damages in excess of $1,000,000" from China Soft Packaging Group, documents filed by Targa at a Texas county court showed.

China Soft Packaging declined to comment and Targa did not respond to requests for comment.   


"The U.S. suppliers already made fat margins earlier (in 2015) and they should be ready for price negotiations," a senior source with one of the east China-based LPG buyers said.

Hong Kong-based Oriental Energy International Trading has also had disputes with Targa and Greek LPG trader Naftomar. Targa let Oriental's Kikyo tanker languish for weeks offshore Texas in June. Naftomar's Constellation ship is now stuck outside China's Ningbo port, a senior trader at Naftomar said.

Singapore-based SK Chemical Trading recently canceled contracts with Naftomar, Petredec and Shell after its end-user Zhejiang Shaoxing Sanyuan Petrochemical Co reneged on its orders. The companies did not respond to requests for comment.

One trader    said the price rout was ruining careers and had "gunfight at the O.K. Corral-type implications", referring to one of the most famous shootouts from the days of the American Wild West.   

Agelbert OPINION
of fossil fuel trader(s) (infamous for being empathy deficit disordered crooks and liars - possibly the lowest form of life in our "civilization") threats of a 'shootout at the O.K. Corral': 


(Additional reporting by Libby George in London, Florence Tan and Seng Li Peng in Singapore and Liz Hampton in Houston; Writing by Julia Payne; Editing by Dale Hudson)

http://www.reuters.com/article/us-usa-lpg-china-idUSKCN0ZZ0EO

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AGelbert

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Offshore Services Firm Goes Bankrupt

Published at 03:20PM - 28/07/16
 
Swiber Holdings Limited, an offshore services company based in Singapore, has made an application to wind up the company following demands from credits.

The company also filed an application to place it in provisional liquidation, media sources reported.

“While business sentiment in the oil and gas industry remains depressed, the Group believes that the impact on shallow water field development and production activities, where Swiber is an established provider, will be lower,” the company’s Group President, Darren Yeo, had said in its first quarter results report.

Offshore Services Firm Goes Bankrupt

The company announced it made the application to Singapore’s High Court on Wednesday and the hearing is set for August 19, 2016.

The High Court of Singapore has appointed Cameron Lindsay Duncan and Muk Siew Peng, care of KordaMentha Pte, as the joint and several provisional liquidators of the company.

Following the application, the company’s Executive Director and Vice Chairman Francis Wong, Executive Director and Group Chief Financial Officer (CFO) Leonard Tay and its Executive Director Nitish Guptal, all resigned.

In the first quarter of the year, the company reported a net loss of US$200,000, while the Group revenue rose by 16% compared to the first quarter of 2015, mainly due to new contracts secured in the last 12 months despite depressed market conditions.

2,700 Oil Workers Left Jobless

Swiber is a global provider of engineering, procurement, installation and construction (EPIC) services to the offshore industry.

According to Swiber’s 2015 annual report, the company has nearly 2,700 employees worldwide and some 10,250 shareholders, a total of US$1.43 billion in liabilities and total assets of US$1.99 billion.

The company owns 51 vessels, but it is not certain whether it will be able to convert these into cash given the current downfall in oil prices.

Across the industry, the pace of bankruptcies is picking up, especially in the US, where 11 oil and gas firms had filed for bankruptcy this year, until May.

Quote
According to analysts, more bankruptcy filings are expected to take place throughout the year, with approximately a third of global oil and gas firms at risk of insolvency.

http://www.offshorepost.com/offshore-services-firm-files-goes-bankrupt/

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AGelbert

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ExxonMobil Posts $4.7bn Loss in H1

Published at 05:11PM - 29/07/16

http://www.offshorepost.com/exxonmobil-posts-4-7bn-loss-h1-2016/

Agelbert NOTE: Has ANYBODY claimed this is an absolute death sentience for them? NO.

WHY NOT? Because there is a fossil fuel industry mind block  at Wall Street!  If ANY other corporation (not part of the fossil fuel industry welfare queen gang) had these kind of loses, the stock would be in free fall well past a 15% drop.

Consider, for a moment, the totally unrealistic way this oil major (polluting pig) is ridiculously considered a 'going concern' and a 'good investment' by Wall Street brokers, despite this devastating loss. Yes, Exxon has their buyback scam in high gear to try to keep the stock from cratering by draining corporation capital. Tillerson has been DOING THAT for over TWO YEARS! That alone is enough to have them downgraded to SELL, even before the devastating loses they have been incurring were reported.

But all you hear is talk of their 'sound' decision to maintain the dividend yield. HELLO?!!! They have MASSIVE LOSSES. That means you are supposed to SELL and stop your stubborn, irrational and stupid fossil fuel worship like that which governs most of the idiots at ZeroHedge.   
 
If Musk had a loss like this, do you think TESLA stock would only be down by two percent or so? Of course not! Every brain dead fossil fueler and his mother 'energy expert' crook and liar pal would be screaming that TESLA was a dead corporation walking and much deserving of instance death!   

The bottom line is that Exxon is a SELL. If you do not believe that, then go ahead and BUY, BUY, BUY. When you lose your shirt, it will be well deserved.  ;D


Quote
“We are all born ignorant, but one must work hard to remain stupid.” - Benjamin Franklin
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AGelbert

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Transocean Profits Dwindle as Customers Cut Offshore Drilling
August 3, 2016 by Bloomberg

 

Transocean drillship Deepwater Champion  ::). Photo: Transocean

By David Wethe

(Bloomberg) — Transocean Ltd.’s profit dwindled in the second quarter as the world’s largest offshore driller struggles to win contracts and keep rigs busy during an oil industry downturn.

Net income fell to $77 million, or 21 cents a share, from $342 million, or 93 cents, a year earlier, the company based in Vernier, Switzterland, said Wednesday in a statement. Excluding one-time items, the 17-cent per-share profit was better than the average 2-cent loss estimated by 33 analysts surveyed by Bloomberg.

Offshore rig contractors have been among the hardest hit in the industry, with customers slashing spending while new drilling vessels continue to enter an oversupplied market. Transocean announced on Monday it agreed to buy out the public stakes in Transocean Partners LLC for $249 million in an effort to cut costs and boost liquidity.

“Utilization is still declining at almost 5 percent per quarter, and contracting is essentially next to zero,” Marc Edwards, chief executive officer at Diamond Offshore Drilling Inc., told analysts and investors Monday on a conference call. “Before we can declare a bottom, we at least need to see a level of fixture awards that matches a number of contracts that are reaching the end of their term. And for our industry sector, this has yet to happen.”

Brent crude, the global benchmark, is still down by more than half since the downturn began in the middle of 2014. Roughly around the same time that oil prices began falling, Transocean announced plans to create Transocean Partners, selling stakes in three deepwater rigs for the tax-free partnership.

“Transocean Partners was formed so that Transocean would be able to monetize drilling contracts by selling the ownership interests,” Andrew Cosgrove, analyst at Bloomberg Intelligence, said in an interview. “Under the current conditions, it’s not economic to use Transocean Partners for the reason it was created.”

The earnings were released after the close of regular trading in New York.

(Transocean is scheduled to hold an earnings conference call Thursday at 9 a.m. New York time, accessible at EVTS.)

© 2016 Bloomberg L.P

https://gcaptain.com/transocean-profits-dwindle-as-customers-cut-offshore-drilling/

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AGelbert

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Diamond Offshore Starts Rig Stack and Scrap

Agelbert NOTE: TWO Diamond Offshore semi-submersible rigs like the one above to be SCRAPPED.   

Published at 05:40PM - 01/08/16

Diamond Offshore announced in its second quarter results that it has decided to cold stack one semi-submersible drilling rig and one jack-up rig as well as scrap two semi-submersible rigs.

The drilling contractor’s decision follows an attempt to cut costs associated with the drilling rigs while ensuring the facilities remain preserved in a way that enables a quick reactivation as soon as the market recovers, the company informed.

“Although the market continues to be challenged, our focus is on striking a balance between controlling costs and laying the foundation to ensure Diamond Offshore is well positioned for the recovery,” Diamond Offshore President and Chief Executive Officer, Mark Edwards, said.

 
Diamond Offshore Starts Rig Stack and Scrap

The rigs to be cold stacked will be Ocean Endeavour, built in 2007 and located in Italy, and the Ocean Scepter, built in 2008 and located in the US Gulf of Mexico.

The two semi-submersible rigs to be scrapped will be Ocean Questand, built in 1973 and located in Malaysia and Ocean Star, built in 1997 and located in the US Gulf of Mexico.

As well as this, the company announced it has received a three-month extension for its contract with Woodside Energy in Australia, for the semi-submersible drilling rig Ocean Apex.

The rig was built in 2014 and represents a day rate of US$205,000 (£155,206) from mid-November 2017 until mid-February 2018.

     
 
Diamond Offshore Falls to a Loss

The company reported a difficult first half of the year, falling to a loss over the second quarter as a result of impairment charges and related taxes.

The company’s revenue also dropped during the quarter, by 17%, mostly as a result of the carrying value of eight semi-submersible rigs and associated inventory, the company explained.

There was also a slight decline in Diamond Offshore’s operational efficiency, mainly due to issues experienced within the ultra-deepwater floater category related to four unplanned retrievals of blowout preventers.

http://www.offshorepost.com/diamond-offshore-starts-rig-stack-scrap/

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AGelbert

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Oil Prices Cut AGAIN by Saudis
Published at 09:19AM - 01/08/16

Saudi Aramco just announced it has lowered the price of its Arab Light crude by the most since October 2015, showing it does not intend to change its plans amid Iran’s strong revival.

Over this year, Iran has seen its production go up by 25% in an attempt to get back to pre-sanction levels, while Brent crude prices have shown a 17% rise mostly due to supply disruptions.

“We expect slightly higher oil prices for the second half of 2016 as oil market oversupply diminishes. However, inventories remain very large and will take some time to be drawn down,” World Bank’s Commodities Markets Outlook report lead author, John Baffes, said.

Oil Prices Cut by Saudi Despite Oversupply


Iran is trying to reach a daily output of 4 million barrels by the end of 2016, after a heavy drop caused by the international sanctions.

Just last month, Saudi Aramco CEO Amin Nasser told media sources the company was not worried   about rival producers like Iraq, Iran and Russia gaining ground on Asia, its main export market.

However  , the recent move could be showing otherwise. In 2014, Saudi Arabia led OPEC’s decision to maintain production levels.

In the meantime, despite this year’s climb in Brent crude oil prices, these are still 20% lower than in 2015.

The rise follows a downfall in crude production in Nigeria, as militants resume pipeline attacks in the Niger Delta, as well as the Canadian wildfire that led the oil-sands industry to shut down more than 1 million barrels a day of production.

Oil Majors  Suffer from Supply Glut 

This oversupply and the continued drop in crude prices has severely affected the industry, which was left clear in the latest second quarter results announced over the past week.

In fact, ExxonMobil and Shell reported their lowest profits since 1999 and 2005, while Chevron reported its deepest fall in 27 years.
       

“Energy exporting emerging and developing economies have struggled to adjust to persistently low prices. (…) Both energy and agricultural commodity exporting countries need to step up economic diversification efforts to bolster resilience to commodity price fluctuations,” Director of the World Bank’s Development Prospects Group, Ayhan Kose, said.

http://www.offshorepost.com/oil-prices-cut-by-saudi-despite-oversupply/

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AGelbert

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Threat to Oil Price Recovery Rises from the Seas?  ??? 

Published at 12:31PM - 09/08/16

There is a general consensus amongst industry analysts   that the oil oversupply creating the current market downturn will narrow by the end of 2016. 


Douglas-Westwood (DW) data support this view, with our World Drilling & Production Market Forecast showing the first oil production decline in 2016 since 2009 – when OPEC strategically cut output in order to support prices. This is largely due to considerable reductions in oil production from the US shale plays as well as widespread outages in Nigeria as a result of militant attacks in the Niger Delta.

Therefore, the oversupply will be eroded  from the supply side with the demand side stuttering as a result of slowing Chinese economic growth and uncertainty surrounding the future of European markets.

DW’s 2017 view is less positive for the oversupply. The implementation of a host of offshore developments sanctioned before the oil price crash will lead to a 1.8 million barrels per day (mmbbl/d) increase in offshore oil output and a 2.1 mmbbl/d increase overall.

Such projects include the ill-fated Kashagan project in the Kazakh Caspian. Kashagan alone is expected to contribute nearly 300 thousand barrels per day (kbbl/d) in 2017. Significant additions are also expected from the Middle East in the form of condensate output from the 24-phase South Pars development and around 300 kbbl/d Khafji field – previously shut-in due to environmental infringements and disagreements between joint operators Kuwait and Saudi Arabia.

This pattern is expected to be seen globally
, even mature plays in the North Sea and south-east Asia seeing increased output in 2017 as a result of the lag effect of offshore developments (the time between project sanctioning and first oil can be many years).

Demand outlooks from BP, EIA and IEA suggest 2017 demand growth around 1.2 mmbbl/d to 1.5 mmbbl/d, therefore it is highly likely the oversupply will increase once again next year.


Whilst this is not certain to push oil prices down once more, it is likely to dampen the recovery until later this decade when a lack of project sanctioning in the last two years leads to a significant drop in offshore oil output additions towards to the end of the decade.

This will cause offshore oil production to peak at 29.1 mmbbl/d in 2019 before declining slowly into the 2020s. Onshore oil production is unlikely to sufficiently offset this trend to keep pace with demand growth later this decade, therefore, this may be the point the market reaches equilibrium.

http://www.offshorepost.com/analysis/threat-oil-price-recovery-rises-seas/

Agelbert NOTE:
The wishful thinking happy talk from the fossil fuel industry about "rising prices soon, soon, soon" is normal and expected from these masters of mens rea mendacity.  Therefore, this article is a breath of fresh air.   

Although I certainly do not agree that the fossil fuel pigs will have a recovery a decade from now, I do agree that that there is not a snowball's chance in hell that oil and gas prices will increase before 2019.   

THAT delay should bankrupt quite a few of these polluting bastards if the speculators don't pull another head fake, ignoring both supply and demand reality, and jack up the oil & gas commodities market with futures gaming and funny money rigging.


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Agelbert NOTE: The BABYING of Oil & Gas Corporations by the BANKS  in our fossil fuel corrupted economy is FINALLY starting to end.  :emthup:

If these TORRENTS of losses was being experienced by ANY of the Renewable Energy corporations, Wall Street would have destroyed them over a YEAR ago. But the oil and gas welfare queens have been BABIED for over TWO YEARS. 

So the next time some brain dead, biosphere math challenged defender of fossil fuels whines about Tesla cars or some "wasted" government/bank loans to a solar panel manufacturer that went bankrupt, REMIND them Renewable Energy Corporations were (and are) NOT given the TIME or the RESTRUCTURING babying in Chapter 11 fun and gaming bankruptcy that the fossil fuel irresponsible polluting welfare queens ARE given TO THIS DAY.

Fossil fuel corporations have no business being in business, PERIOD.

Quote
... at $40 a barrel, they’re still well below the $60 to $80 drillers  need to break even.

Investors Have $100 Billion to Spend on Oil Assets No One Else Wants
David Carey
Laura J Keller
Vamburkar meenal_v

August 11, 2016 — 5:00 AM EDT Updated on August 11, 2016 — 9:10 AM EDT

Buyout firms target soured loans with eye on taking ownership

Drillers    unload assets to stay afloat as cash crunch deepens

The long wait may finally be over.

Since the great crash of oil in mid-2014, more than $100 billion has been raised by buyout firms and distressed-debt funds eager to scoop up energy assets on the cheap. But as the months rolled by, few opportunities cropped up as cash-starved drillers limped along with the help of their bankers

Not any more.
  What started out as a trickle has now turned into something much more, with Blackstone Group LP, Apollo Global Management LLC and WL Ross & Co. all jumping in this year to buy a grab bag of assets at discounted prices. Precise numbers are hard to come by, but in conversations with investors, bankers and analysts across the industry, there’s little doubt that private equity firms are ramping up their investments in everything from undrilled and developed oil and gas acreage to troubled loans.
 
“We’ve gone very aggressively into the market” after holding back for most of last year, said Shaia Hosseinzadeh, who oversees energy-focused distressed-debt investing at WL Ross, the namesake firm of billionaire dealmaker Wilbur Ross. “You’ll see more deals in the second half.”

Deals are picking up for a few key reasons. Oil prices are no longer in a free fall, but at $40 a barrel, they’re still well below the $60 to $80 levels many drillers need to break even. 

Wall Street has started to turn away the weakest borrowers after extending more than $2 trillion in loans and commitments during the boom.


And with the cash crunch causing a surge in bankruptcies this year, many firms are looking to unload assets to stay afloat.

Much of the action is unfolding in distressed debt, where buyers have targeted loans and bonds with an eye on seizing ownership in bankruptcy or restructuring.
 
Billionaire Leon Black’s Apollo, WL Ross and EIG Global Energy Partners have snapped up more than half of the $1.6 billion in unsecured debt of Permian Resources, an oil and gas producer started in 2014 by the late Aubrey McClendon, people familiar with the matter have said.

McClendon set up Permian Resources with backing from Houston-based private equity shop Energy & Minerals Group. The explorer has leaseholds to 85,000 net acres in the Permian Basin of west Texas, one of the most prolific oil and gas fields in the country. While the company has top-flight assets and bought itself time by selling some, its debt load is unsustainable and is on track to default within a year   
:
, said Carin Dehne-Kiley, an analyst at S&P Global Ratings. 

Representatives for all the firms declined to comment.   

Banks, for their part, are finally getting serious about cutting off the energy industry’s weakest borrowers and selling loans -- after more than two years of foot-dragging  .   In the first half of 2016, the eight biggest U.S. banks reduced loans and loan commitments by 6.3 percent after stepping up the percentage they lopped off their books last quarter, according to data compiled by Bloomberg from the lenders’ filings and other disclosures.

As of June 30, they had lent or committed to lend $2.19 trillion, including some derivatives positions, compared to $2.34 trillion at the end of 2015, filings show. Bank of America Corp. reduced its exposure last quarter by a record 7 percent to $40.5 billion. Morgan Stanley has slashed its lending to the energy industry by 22 percent -- the most among the group -- since it ballooned to a peak in the third quarter of 2015.
 
Much of what’s left is souring . At Wells Fargo & Co., energy loans that are considered “non-accruals,”    or those that aren’t expected to be fully repaid, have soared to $2.55 billion from just $35 million less than two years ago.

Representatives at the banks declined to comment.  

Many troubled firms are tapped out anyway. At least a dozen oil and gas producers had used more than 90 percent of their credit lines at the end of the first quarter, according to Bloomberg Intelligence. Half of those are effectively overdrawn after their bank credit lines were cut.

While executives at Wells Fargo and other banks have met with buyout firms to unload their energy loans in recent months, according to people familiar with the matter, some private equity players are also snapping up assets directly from operators that are short on cash.

In July, Blackstone paid about $500 million for acreage in the Permian. This month, it expects to wrap a deal to buy a partly developed oil field in the North Sea. The firm, which didn’t make a single investment for 15 months after it raised a $4.5 billion fund in early 2015 for energy assets, has spent $1.8 billion between the fund and its main buyout pool on oil and gas plays this year.

“One thing we’re focused on is to provide capital to complete large, oil-field development projects,” said David Foley, the head of energy investing at Blackstone, which manages $356 billion. “In many cases, it is possible to buy in at a significant discount to replacement cost.” He didn’t identify the sellers.

Some buyout firms like EIG are helping financially sound companies bankroll purchases of ailing rivals. In February, the firm agreed to invest as much as $500 million by buying preferred shares from a unit of Rice Energy Inc., a natural gas explorer in the Appalachian Basin, to back Rice’s acquisition program and expansion.
“We want to finance the big guys with preferred so they have liquidity to go on the attack,” EIG President Bill Sonneborn said at a conference in May.

That suggests dealmaking may accelerate. This year, $36 billion of acquisitions involving U.S. oil and gas companies have been announced -- ahead of last year’s pace but behind 2014. And while some producers have sold equity, Anadarko Petroleum Corp., Devon Energy Corp. and others are also boosting efforts to unload assets and raise cash. Devon, which sold off less than $200 million of assets in 2015, announced $3.2 billion in sales this year.

On Wednesday, Chesapeake Energy Corp., which has suffered more than $17 billion in losses over the past six quarters, announced it will give away its Barnett Shale holdings to an operator backed by First Reserve Corp., an energy-focused private equity firm.

“The thawing is underway,” said James Row , the chief executive officer of The Oil & Gas Asset Clearinghouse , which brokers oil and gas deals.

Even as the market heats up, there are still plenty of risks -- a lesson that was driven home painfully last year.
After oil prices briefly rebounded in the first half of 2015 and flirted with $60 levels, Blackstone’s GSO credit unit , KKR & Co. and Oaktree Capital , as well as mutual-fund manager Franklin Resources Inc. , among others, spent billions of dollars on cash-strapped explorers betting the industry would recover.

 


It proved to be too early. Many of the investments soured as oil descended into the mid-$20s. At least 90 producers, including SandRidge Energy Inc., Linn Energy LLC and Breitburn Energy Partners LP, filed for bankruptcy since the start of 2015, according to law firm Haynes and Boone LLP.

And while oil is up more than 60 percent from its low in February, prices have once again retreated and sunk back into a bear market this month. This year, bankruptcies are being filed at double the pace in 2015.

“There’s a long list of companies that are going to disappear,” said EIG’s Sonneborn. “You’ve got to be very, very careful investing in this space.”

The recent flurry of dealmaking has left fewer bargains as well. Outside the Permian, where operators can profit from $40-a-barrel oil, the supply of top-grade acreage is spotty. And traders see oil prices stuck below $60 -- a key level many producers need to boost drilling and profits -- until at least 2020.

“I don’t think you’ll see a tidal wave of deals, not good deals anyway,” said Blackstone’s Foley. “Firms raised too much money. They may get it invested over six years, but not in the next few.”

Agelbert NOTE: SEVERAL eye opening charts and graphics  included in this story at link.

http://www.bloomberg.com/news/articles/2016-08-11/oil-busts-leery-bankers-and-100-billion-for-distressed-deals
« Last Edit: August 13, 2016, 09:43:47 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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August 19, 2016

https://www.cleanenergywire.org/news/grid-operators-fight-reduced-capital-returns-never-again-cheap-fuels

SNIPPET:

#Fossil fuels #Utilities

WirtschaftsWoche


Uniper: Risky bet on electricity from gas

Troubled German energy company E.ON is listing its conventional power division Uniper but the move lacks a convincing plan, Angela Hennersdorf writes in WirtschaftsWoche.

Uniper comprises commodity trading operations and more than 300 coal and gas power plants worldwide fossil fuel-burning assets that have no place in the post energy transition era, Hennersdorf adds.   

She describes E.ON’s plan to list 53 percent of the unit in September as “shaky,” pointing out that electricity produced by gas plants is profitable at prices of at least 45 euros per kilowatt hour, but recent wholesale prices for gas-generated electricity were at less than 30 euros.

Agelbert NOTE: And then there is the water use problem in a world of increasingly expensive (due to Global Warming caused scarcity) fresh water that fossil fuel power plants have, that wind and PV solar do NOT have.



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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Climate| Aug 26, 2016

Big Oil’s Nightmare Comes True   ;D

By Carl Pope

SNIPPET:

Quote
"This was retail politics and oil lost,"
was how Adrienne Alvord of Union of Concerned Scientists summed up the stunning environmental victory Tuesday in the California legislature, a victory which cemented the state's commitment to a 40 percent reduction in climate pollution by 2030.''

http://www.ecowatch.com/california-climate-policy-1988157045.html

 
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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Crude Oil Prices Start Downward Trend

Published at 08:14AM - 23/08/16
 
Crude oil prices have ended a short rally of gains over hopes that members of the Organisation of Petroleum Exporting Countries (OPEC) would soon agree on a production freeze to balance prices.

Crude oil prices fell by more than 1% this morning. On Monday, Brent was already down by 2.5% to $49.59, while WTI was off 2.1% from the previous $47.9.

According to media sources, Goldman Sachs has sent out a warning that the rebound in prices had been merely caused by the news on the potential output freeze and the weakening dollar.

 
Crude Oil Prices Start Downward Trend

Analysts are saying that the downfall in prices has been a result of an overreacting market  and not caused by changes in oil fundamentals.    *

According to Goldman Sachs, the potential proposal by OPEC members and non-OPEC producers to cut down on oil production would result in record highs.

As a result, it would not be expected to bring more balance to supply and demand levels.

As well as this, the deal is actually not that likely, the bank adds, as previous disputes between Saudi Arabia and Iran are bringing some uncertainty regarding Russia’s actual willingness to cooperate with OPEC members.

Crude Oil Prices React to Market Uncertainty

Crude oil prices had gone up by more than 20% in the beginning of August until last week, when they started a downfall by more than 3.5%.

The beginning of the month marked the time when prices crossed the $50 per barrel threshold, an increase of more than $10 since the beginning of August.

At the time, this reaction was blamed on Saudi Arabia’s oil minister Khalid al-Falih’s comments that OPEC may act on oil production at its next meeting.

However, a freeze proposal had been on the table earlier this year but efforts fell through due to differences between the members and non-members about market share.

http://www.offshorepost.com/crude-oil-prices-start-downward-trend/


* Agelbert NOTE: Well yeah, I have been saying, FOR YEARS, that supply and demand does not have squat to do with the price of crude. The analysts are quick to correctly point out that the drop is unrelated to fundamentals but SILENT AS DEATH  ;) about the FACT that the rocketing rise of the price of Oil from February to June of 2016 was due ALSO to an 'overreacting'  ;) market (SEE: rigged Oil & Gas commodities futures SPECULATION ),  ALSO unrelated to supply and demand.

How absent minded of them.


How cherry picking convenient of them. How mendacious, duplicitous and perfidious of them.

At any rate, it is rather pleasant to see the Fossil Fuel Industry Crooks and Liars have to deal with ACTUAL cause and effect, instead of profiting from rigged speculation.

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

 

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