Fulcrium news Archives - Page 2 of 4

For their part, US light tight oil (LTO) producers saw striking cost reductions of 30% in 2015 and 22% in 2016. This gives a clear indication that many are capable of positioning themselves to raise production in a lower price environment.

“We are witnessing the start of a second wave of US supply growth, and its size will depend on where prices go,” said Dr Fatih Birol, the IEA’s Executive Director. “But this is no time for complacency. We don’t see a peak in oil demand any time soon. And unless investments globally rebound sharply, a new period of price volatility looms on the horizon.”

The largest contribution to new supplies will come from the United States. The IEA expects US light tight oil (LTO) production to make a strong comeback and grow by 1.4 mb/d by 2022 if prices remain around USD 60/bbl. Expectations for US LTO are higher than last year’s forecast thanks to impressive productivity gains.

In the next few years, oil supply is growing in the United States, Canada, Brazil and elsewhere but this growth could stall by 2020 if the record two-year investment slump of 2015 and 2016 is not reversed. While investments in the US shale play are picking up strongly, early indications of global spending for 2017 are not encouraging.

Global oil and gas upstream investment fell by 25% in 2015 and by another 26% in 2016, affecting the major oil companies and smaller independents alike. In 2017 there are modest signs of recovery led by higher investment in the US light tight oil region. Alongside falling prices, costs have dropped significantly: we estimate that global upstream costs declined by 15% in 2015 and 17% in 2016.

The Opec oil cartel is waking up to a surprise. Shale output from the Permian Basin in Texas is expanding faster than the world thought humanly possible. The scale threatens to neutralise output cuts agreed by Saudi Arabia and a Russian-led bloc last November, and ultimately threatens to break their strategic lockhold on the global crude market for a generation.

“People just don’t seem to realise how big the Permian is. It will eventually pass the Ghawar field in Saudi Arabia, and that is the biggest in the world,” said Scott Sheffield, founder of Pioneer Natural Resources and acclaimed ‘King of the Permian’.

Read the full story at:

http://www.telegraph.co.uk/business/2017/03/05/permian-shale-boom-texas-devastating-opec/

Raju Patel of Fulcrium and LBS Energy Club Alumni Board Director welcomes opening Keynote Speaker Spencer Dale, BP’s Group Chief Economist at the London Business School Global Energy Summit 2015.

Teaching points and insights from the London Business School Alumni Energy Club @ www.lbsaec.org and www.london.edu

Royal Dutch Shell has struck the energy industry’s biggest deal in more than a decade by agreeing to buy BG Group for 47 billion pounds ($70 billion), making Europe’s largest oil company the pre-eminent player in global natural gas and adding fields in Brazil.

Falling barrel price was always likely to spark wave of acquisitions and mergers which could rival the mega-takeovers of the late 1990s.

Royal Dutch Shell’s agreed takeover of BG sent shares of other oil and gas companies up on Wednesday as investors bet that there would be further moves by big companies to snap up smaller competitors.

The last round of energy industry takeovers was in the late 1990s when new production in the North Sea, Alaska and Mexico caused the oil price to collapse. In response, BP bought Amoco and Arco, Exxon snapped up Mobil to form the world’s biggest oil company and Chevron merged with Texaco.

The merged company, led by Shell Chief Executive Officer Ben van Beurden, 56, will boast a market value twice the size of BP and surpass Chevron. Shell, struggling to rebound from its worst production performance in 17 years, will swell its oil and natural gas reserves by 28 percent with the combination and inherit a management team that carved out a unique niche in liquefied natural gas, or LNG.

Buying BG also brings Shell a share in Brazil’s largest deepwater fields, consolidates its position in Australia’s gas industry and allows more participation in the U.S.’s emergence as a LNG exporter.

According to ExxonMobil’s Investor Presentation 4 March 2015, ExxonMobil’s and Chevron’s earnings / barrel are highest in the industry ….

While Chevron and Shell production cost / barrel is 50% higher than the most efficient supermajors.

Source: ExxonMobil

Fulcrium’s Chief Executive Raju Patel has joined the SPE London Conference Committee and will moderate the session 1 Panel on 9 June 2015.

Session 1: Embracing Strategic Opportunities presented by the Low Oil Price Environment

Session Chair: Raju Patel, Fulcrium

Crude oil prices have fallen with breathtaking speed as a result of geopolitics, significant oversupply and the unwillingness of any market player to readily act as the world’s swing producer. Taken by surprise, nations, governments and indeed the whole industry are scrambling to adapt to this new cycle of depressed oil prices.

This session will discuss:

How governments and industry players responded to previous oil price collapses
Strategic response options available to industry players and governments in different regions
The competitiveness of fiscal regimes around the world and key trends
The oil price outlook

Shell full year 2014 update: Balancing growth and returns

29 Jan 2015

Shell’s CEO Ben van Beurden today updates on 2014 performance and his priorities for the company, in presentations to financial markets.

Ben van Beurden commented: “Shell has delivered where it counts in 2014. We are stepping up our drive for stronger capital efficiency, whilst being careful not to over-react to the recent fall in oil prices.

Shell full year 2014 update: Balancing growth and returns

Successful delivery of 2014 programme. Improved financial and operating performance including $25 billion free cash flow: strengthening of the balance sheet; $15 billion of dividends and share buybacks; reduction of capital investment; early completion of $15 billion divestment target; and implementation of tighter performance management. 2015 to see continuation of 2014 drive to balance growth and returns. New restructuring programmes in world-wide resources plays and upstream engines, leveraging oil price downturn to capture multi-billion supply chain cost opportunities world-wide, and plans to reduce Shell’s operating costs in 2015. Organic capital investment in 2015 is expected to be lower than 2014 levels, and we have curtailed over $15 billion of potential spending over the next three years. Shell has options to further reduce spending, but we are not over-reacting to current low oil prices and keeping our best opportunities on the table.

Shell’s strategy is founded on disciplined capital investment, integrated operations, technological expertise and large scale. This is underpinned by an unrelenting focus on safety. Investment in long term opportunities is balanced with short term delivery.

Van Beurden continued: “We set out an agenda in 2014 to balance growth and returns in Shell, and our results in 2014 show that this strategy is impactful where it matters: at the bottom line. By successfully delivering against our three key priorities of better financial performance, enhanced capital efficiency and continued strong project delivery, we are improving Shell’s competitive position in the oil & gas industry.”

Delivery in 2014 included:

Improved earnings and returns, including $25 billion of free cash flow, underpinning $15 billion of dividends and share buybacks.
Tighter performance management and accountability implemented across the company, including increased shareholding requirements for senior management to further align interests with shareholders.
Restructuring programmes and cost reduction in North America resources plays, where major portfolio changes are now complete; and in Oil Products, where substantial progress has been made and new cost programmes were launched at the end of 2014.
Increased asset sales – some $15 billion in 2014, completed before markets weakened across the end of the year, and reduced capital spending, as we make decisions on portfolio to improve Shell’s capital efficiency.
Successful delivery of new projects including deep water, and successful integration of the LNG portfolio purchased from Repsol, which delivered over $1 billion to CFFO in 2014.
A firm uptick in the 2014 exploration performance, with 10 material discoveries in frontier and heartland basins, and a further 41 near-field discoveries.

Van Beurden continued: “Our strategy is delivering, but we’re not complacent. Weaker oil prices underline that there’s a lot more to do. The three themes of financial performance, capital efficiency and project delivery will remain as Shell’s priorities in 2015.”

In 2015, these priorities will include a focus on the following:

Financial performance

This will include a continued drive to improve performance in Oil Products and North America resources plays, and new restructuring programmes in Upstream engines and International resources plays.
Cost competitiveness is integral to our tighter performance management drive. Our established programmes and new initiatives are expected to move operating costs down in 2015.

Capital efficiency

Given Shell’s rich portfolio funnel and today’s lower oil prices, investment levels are under severe pressure in the near term. Today’s lower prices are creating opportunities to reduce our own costs and to take costs out of the supply chain, where there is multi-billion dollar savings potential for Shell.
In addition, the company is deferring spending in many areas, without compromising on HSSE, exiting selective growth positions, and driving costs down in the supply chain. This should result in reduction of potential capital investment for 2015-17 of over $15 billion.
2015 organic capital investment is expected to be lower than 2014 levels. Shell is considering further reductions to capital spending should the evolving market outlook warrant that step, but is aiming to retain growth potential for the medium term.

Project delivery

2015 should see further ramp-up from the new fields brought on line in 2014. The company continues to invest in a competitive suite of new oil & gas fields and LNG, with the next wave of significant start-ups in the 2016-18 timeframe.

Van Beurden continued: “The agenda we set out in early 2014 to balance growth and returns has positioned us well for the current oil market downturn. However, lower oil prices and the impact of our 2014 divestments will likely reduce this year’s cash flow.”

Shell announced dividends of $12 billion in 2014 and repurchased $3.3 billion of shares. We slowed our buyback program at the end of 2014 to conserve cash, and near-term oil prices will dictate the buyback pace.

Van Beurden concluded: “We are taking a prudent approach here and we must be careful not to over-react to the recent fall in oil prices. Shell is taking structured decisions to balance growth and returns.”

In its fourth quarter earnings announcement on Thursday, oilfield services company Schlumberger announced that it will cut 9,000 jobs, or about 8% of its workforce.

The company said the job cuts come, “In response to lower commodity pricing and anticipated lower exploration and production spending in 2015.”

Schlumberger is a provider of equipment and services to oil and gas companies, and over the last six months shares of the $100 billion company have declined more than 30% amid the crash in oil prices.

Profits slid 82 per cent to $302m, or 23 cents a share. Adjusting for certain items, Schlumberger said it earned $1.50 a share, ahead of estimates. Sales climbed 6 per cent to $12.64bn.

OSLO, Jan 14 (Reuters) – Norway’s Statoil handed back three out of its four Greenland offshore oil and gas exploration licenses, it said on Wednesday, in yet another sign of cost cuts by energy firms following the recent plunge in oil prices.

Statoil earlier said that it would slow its Arctic exploration efforts, one of its priority areas, to control capital spending. Statoil has Arctic licences from Greenland to Russia.

Britain’s Cairn Energy has been the biggest explorer in Greenland so far but its eight-well, $1.2 billion campaign in 2010 and 2011 yielded no commercial finds.

Statoil’s three licenses off the west coast of Greenland were handed back by the end of 2014, but the company kept one license off the island’s east coast where the deadline for drilling is longer.

“We have now completed the working programme and have no further obligations, and we don’t see any potential in taking on further obligations in these licenses,” spokesman Knut Rostad said.

French utility GDF Suez said it has handed both of its Greenland licenses back as it did not see any prospects of actually drilling any wells.

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