U.S. Oil Firms' Quarterly Reports to Show Depths of Slump
Investors are in for more bad news on the energy front in the coming weeks as a host of the sector's biggest companies report quarterly results following the historic collapse in oil prices.Forecasts for U.S. energy sector earnings this year have dropped along with oil prices, weighing on shares along with worries over debt, layoffs and possible bankruptcies.Analysts see a 58.9% year-over-year decline in energy earnings for the first quarter, steeper even than the 37.7% decline they projected at the start of the month, according to IBES data from Refinitiv.
Oxy Plans to Sell Parts of Anadarko
Occidental Petroleum snatched up some of the richest shale oilfields in Texas when it beat out rival Chevron Corp in a bidding war to acquire Anadarko Petroleum.It also quadrupled its debt - to $40 billion - at a time when investors are calling for spending cuts and higher dividends.That means the acquisition's success will depend on how quickly Occidental can sell off some of Anadarko's assets and focus on optimizing and integrating the assets it keeps - especially prime U.S. shale fields.Shedding debt will require selling assets when deals have been sluggish, said bankers and merger specialists. The number of U.S.
Hess Production Tops Estimates
Oil and gas producer Hess Corp's fourth-quarter production beat Wall Street estimates on Wednesday, driven by higher output from the Bakken shale region and the Gulf of Mexico.Total production for the quarter ended Dec. 31, excluding its Libyan operations, was 267,000 barrels of oil equivalents per day (boe/d), while analysts were expecting 265,000 boe/d, according to Wells Fargo Securities.The United States has overtaken Russia and Saudi Arabia to become the world's biggest crude producer with daily output approaching 12 million barrels.Hess's average selling prices…
More Competitive US O&G Lending Drives Down Pricing
A renewed willingness to lend to US oil and gas companies, as oil prices stabilize well above lows, is driving down pricing for borrowers after two straight years of steep increases. The volume of credit lines provided to exploration and production companies, using their oil and gas reserves as collateral, so far this year has already topped full-year 2016, although it is a shadow of the 2014-2015 tallies reached before oil and gas prices tanked, according to Thomson Reuters LPC. While some banks have left the industry, those remaining are chasing relatively low lending volumes, leading to pricing competition on the smaller pool of loans.
Oregon County Won't Block LNG Terminal
A coastal Oregon county overwhelmingly rejected a ballot measure aimed at blocking a proposed natural gas terminal dealing a blow to what was the latest in a series of efforts to thwart energy projects across the Pacific Northwest. The measure, had it passed, would have banned transport of fossil fuels not intended for local use through Coos County, located about 200 miles (322 kms) south of Portland. Around 76 percent of votes were cast against the measure, with 24 percent in favor, according to unofficial results posted on the Coos County government website late Tuesday.
Oregon County Mulls LNG Terminal Ban
A coastal Oregon county will vote Tuesday on a ballot measure to block a proposed natural gas terminal, the latest in a series of efforts to thwart energy projects across the Pacific Northwest. The measure would ban transport of fossil fuels not intended for local use through Coos County, located about 200 miles (322 kms) south of Portland. Backers have called the initiative a response to a $7.6 billion proposal by Calgary-based Veresen Inc, to build a facility in the county where natural gas would be liquefied and transferred to tanker ships for sale abroad. They have cast the measure as a local refusal to contribute to global warming.
Vanguard Natural Files for Bankruptcy
Oil and natural gas explorer Vanguard Natural Resources LLC filed for bankruptcy protection, adding to a long list of energy firms that have succumbed to weak oil prices. The company said it signed an agreement with certain bondholders that includes a $19.25 million equity investment, with some debtors backing a $255.75 million rights offering. Vanguard also said it had obtained a $50 million debtor-in-possession financing facility, underwritten by Citibank NA, JPMorgan Securities LLC and Wells Fargo Bank NA. The financing…
MEG Energy Seeks Leveraged Loan
Canadian oil and gas company MEG Energy is testing the capacity for oil-related loans with a US$1.235bn deal that will be used to refinance debt and is part of an overall capital restructuring. The company, which is rated B3/BB-/B, could open the door for other leveraged energy borrowers to tap the loan market. These issuers are considered riskier than those rated investment-grade. Access to this pool of money has been largely shut off to the sector over the last year after oil prices started plummeting in 2014. "Refinancing opportunities in the energy space are likely few and far between…
U.S. Shale Back in Business, Buoyed by OPEC, Trump
U.S. shale producers are redeploying cash, rigs and workers, cautiously confident the energy sector has turned a corner after Donald Trump's election victory and OPEC's recent signal that it plans to curb production. The downturn produced a leaner, more efficient U.S. shale industry that was forced to develop and quickly adapt new technology to compete with conventional oil supplies during a two-year period of depressed prices. "You're starting to see a little bit of light at the end of the tunnel," Ryan Lance, chief executive of ConocoPhillips , the largest independent U.S. oil producer, said in an interview last week.
Chevron Supports Director Stumpf Despite Wells Fargo Morass
Chevron Corp on Monday said it stands behind John Stumpf, a member of its board and the chief executive of bank Wells Fargo & Co, despite growing concerns about his leadership during a customer service scandal. Pressure has mounted on Stumpf in recent days to resign as CEO of Wells Fargo, the largest U.S. bank by deposits, after revelations the bank for years opened checking, savings and credit card accounts without customer approval to satisfy managers' demands for new business. Lawmakers of both major U.S. political parties in Congress have excoriated Stumpf, accusing him of creating a culture in which such a practice could thrive.
EOG to Buy Yates in $2.5 bln Deal
EOG Resources Inc said on Tuesday it would buy privately held Yates Petroleum Corp and some of its subsidiaries and other entities in a deal valued at $2.5 billion to boost its assets in the Permian and Powder River basins. Oil and gas companies, encouraged by an uptick in oil prices, have been buying up acreage in the Permian Basin in west Texas and eastern New Mexico - the nation's largest shale oil play - as the region is considered among the most cost-effective and most viable to drill. EOG will issue 26.06 million shares valued at $2.3 billion and pay $37 million in cash in exchange for Yates Petroleum…
Junk Energy Firms Still Have Market Access
Some energy companies still have access to the US high-yield market despite concerns that the dip in oil prices to around US$40 a barrel could create more stress in the troubled sector. Bankers who have been talking regularly to energy firms said at least a dozen companies are in a position to raise debt to refinance bank loans or existing bonds in coming months. One banker said the next primary deal in the sector could come as soon as next week if conditions remain supportive. Investors have generally been amenable to…
U.S. Refineries in Worst Year Since Shale Boom Started
U.S. independent refiners such as Valero Energy Corp and Phillips 66 look set to post another quarter of disappointing earnings, putting the industry on track for its worst year since the U.S. shale boom began in 2011. The companies had hoped to rebound from a weak first quarter on the back of strong U.S. gasoline demand. But while U.S. motorists have taken to the highway in record numbers, refiners have been undone by record supplies of gasoline and diesel products. High volumes of imports, combined with refiners switching to maximum gasoline output earlier than usual…
U.S. Oil & Gas Lenders Demand Liquidity Floors
Banks are increasingly requiring U.S. oil and gas companies to maintain minimum levels of liquidity, an unusual step that could help reduce the risk of being exposed to companies struggling to maintain operations and repay debt. One of the energy companies hardest-hit by so-called minimum liquidity covenants is Chesapeake Energy Corp, according to a Reuters review of regulatory filings. Chesapeake must maintain $500 million in cash and other assets that can be easily converted to cash at all times, even as it posts losses and could be faced with nearly $1 billion in collateral calls.
Ithaca Energy Completes RBL Redetermination
Ithaca Energy Inc. announced having successfully completed its planned semi-annual reserves based lending (“RBL”) facilities review and continues to maintain in excess of $100 million of funding headroom ahead of planned first hydrocarbons from the Greater Stella Area in the third quarter of 2016. The Company commenced deleveraging the business in 2015 with net debt reducing from a peak of over $800 million in the first half of 2015 to $630 million at 31 March 2016. Following the RBL redetermination process the Company’s available bank debt capacity is over $430 million prior to Stella start-up.
Hueneme Port Expands Ship Pollution Reduction Program
The Port of Hueneme launched the second phase of its Grid-Connected Shore Power System, celebrating another next step forward in reducing air emissions and minimizing environmental impact. Among the community leaders attending the ribbon cutting were Congresswoman Julia Brownley, County Supervisor Kathy Long, Ms. Sabiha Khan with Senator Dianne Feinstein’s office, Port Hueneme Mayor Douglas Breeze, and VCTC chairman Keith Millhouse. By connecting to the Port’s Grid-Based Shore Power System, refrigerated cargo vessels calling…
Shale Firm's Bankruptcy Exit Doesn't End Struggle
Magnum Hunter Resources Corp and its founder Gary Evans are emblematic for the U.S. shale revolution: it started small, borrowed heavily to snap up land and rivals and then crumbled under the weight of debt when prices crashed. Now, the oil and gas company is among the first casualties of the energy slump to exit bankruptcy and Evans has a message for its peers: even once you are debt-free you cannot take survival for granted if energy prices do not recover soon. With little chance of seeing hundreds of millions of dollars in debt repaid…
Yen Drops on Rate Cut Talk; Oil Climbs
The U.S. dollar rose to a three week high against the yen on Friday, on a report of likely further monetary policy easing from the Bank of Japan, while a rise in crude oil prices was offset by poor technology sector earnings, leaving Wall Street stocks steady. The dollar rose more than 2.0 percent against the yen to 111.80 yen, its highest level since April 1 after a media report said the BOJ is considering expanding its negative rate policy to bank loans and could cut rates further. A rise in oil prices helped energy stocks…
Private Equity Emerges as Last Resort Energy Lender
U.S. energy companies facing a likely cut in their bank loans are seeking a costly alternative - borrowing from private equity firms at hefty interest rates to stay alive for longer. In a sign of the times, U.S. oil and gas producer Clayton Williams Energy Inc said this month it was borrowing $350 million from private equity firm Ares Management LP to replace an equivalent loan from a group of banks. The loan from Ares is the first publicly-known deal of its kind, and does not come cheap. Ares will charge interest rates more than triple that collected by banks…
BNP Paribas Exits US Energy Loan Market on Oil Price Rout
France's largest bank BNP Paribas (BNPP.PA> is pulling out of a niche U.S. energy lending business for the second time in four years after plunging oil prices dragged what was once seen as some of the safest energy loans into losses. "Given the current environment in the oil and gas markets and the short to medium term outlook, BNP Paribas has decided to halt the redevelopment of its reserve-based lending business," BNP said in a statement. BNP shut its reserve-based lending business in New York two weeks ago after 13-year-low oil prices stoked concerns of rising loan defaults among borrowers, according to two sources.
