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The Energy Department says a lack of pipelines is beginning to drive oil companies out of the big shale region known as the Permian Basin, as they focus investment in regions where the oil is easier to get to market.
The Energy Information Administration released its latest weekly oil analysis on Wednesday, focused on the lack of pipeline “takeaway capacity,†which translates to there being plenty of oil, but not enough ways to move it to refiners or export terminals. The report highlights the case for more spending on pipes and for easing or expediting permitting decisions.
The federal agency said it is tracking 45 publicly-traded oil companies’ investment strategies, and spotted a trend. “As a result of these constraints, some producers with a geographically diverse portfolio of upstream assets announced plans in their second-quarter earnings releases to redirect capital expenditures from the Permian Basin to other regions,†read EIA’s Week in Petroleum report.
“Outside of the Permian, Noble Energy has U.S. onshore operations in the Denver-Julesburg Basin in Colorado and in the Eagle Ford region in Texas,†the new report read.
The Permian Basin, which covers Texas and New Mexico, is one of the richest shale oil deposits in the United States. But the lack of pipelines to move the oil to market is dropping the price, and making it economically unattractive for some companies to continue production there.
Some are deciding to stay and continue production because of higher oil prices due to dwindling oil surpluses and U.S. sanctions on Iran.
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Last week’s Week in Petroleum discussed the effect of Iran sanctions on the price of oil. EIA said it was adjusting its monthly price projections upward to reflect the higher prices from U.S. oil sanctions kicking in sooner than anticipated.
But beyond the lost oil supply coming from Iran, Wednesday’s government analysis shows challenges also continue to persist domestically to get oil to market. The constraints in the Permian are expected to continue through the middle of next year, said EIA.
Nevertheless, the 45 companies that the agency tracks are on track to invest a record amount in 2018 in both the Permian region and elsewhere, according to the report.
“These 45 companies have announced $63 billion in asset purchases and corporate acquisitions through September 18 of this year,†the agency said. Total 2018 expenditures are on pace “to meet or surpass the previous high†four years ago, which saw $83 billion in drilling-related spending.
More than half of the 45 companies are spending on corporate acquisitions or purchases of oil reserves.
To be sure, a portion of the investment is going back into the Permian, with BP, for example, spending $10.5 billion to buy BHP Billiton’s onshore assets, according to the agency. Other multi-billion dollar acquisitions were common in the second quarter.
Original Article Here- Washington Examiner
Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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