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Higher oil prices this year boosted U.S. oil production, and the U.S. oil industry played a large part in America’s impressive second quarter economic growth—the fastest growth since the third quarter of 2014.
Real U.S. gross domestic product (GDP) rose at an annual rate of 4.1 percent in the second quarter of 2018, according to the ‘advance’ estimate released by the Bureau of Economic Analysis (BEA) on Friday. The first quarter of this year, by comparison, saw real GDP increase by 2.2 percent.
The increase in real GDP in the second quarter of 2018 reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, federal government spending, and state and local government spending that were partly offset by negative contributions from private inventory investment and residential fixed investment, BEA said.
Nonresidential private fixed investment in mining exploration, shafts, and wells jumped to US$129.4 billion this past quarter, from US$109.2 billion in the first quarter of 2018. On an annual basis, the rise in investment in exploration, shafts, and wells soared by 97 percentfrom the second quarter of 2017. This surge was the second-highest annual gain on record, with the largest booked in 1987, according to Bloomberg calculations.
The ‘mining exploration’ subcategory includes all types of mining, but petroleum and natural gas account for 96 percent of it.
Private investment in petroleum and natural gas jumped to US$123.7 billion in Q2 2018 from US$103.8 billion in Q1, and up from the US$90.5 billion investment in the second quarter of 2017, BEA figures show.
Meanwhile, U.S. oil production continues to set records. Over the past two weeks, American crude oil production has hit 11 million bpd after having sustained production of 10.9 million bpd over the previous four weeks, according to EIA figures.
In the biggest U.S. shale regions, production is expected to jump to 7.470 million bpd in August, up by 143,000 bpd from an estimated 7.327 million bpd in July, EIA’s latest Drilling Productivity Report says.
Not only is U.S. shale production growing, but the shale industry as a whole is expected to become profitable this year for the first time in history, according to estimates by the International Energy Agency (IEA).
“Several companies expect positive free cash flow based on an assumed oil price well below the levels seen so far in 2018 and there are clear indications that bond markets and banks are taking a more positive attitude to the sector, following encouraging financial results for the first quarter,†IEA Senior Programme Officer Alessandro Blasi and IEA Energy Investment Analyst Yoko Nobuoka wrote in an analysis last week.
“On this basis, we estimate that the shale sector as a whole is on track to achieve, for the first time in its history, positive free cash flow in 2018. This result is all the more impressive given the context of rising investment,†IEA’s analysts say, noting that there are downside risks associated with above-ground constraints such as the Permian takeaway capacity bottlenecks, and competition from other sources of oil.
Regarding the U.S. economic growth, some economists doubt that the pace from the second quarter can be sustained.
“Personal consumption would need to keep up with this impressive pace to see a solid second half,†Ian Lyngen at BMO Capital Markets told CNBC.
S&P Global—which had expected the U.S. economy to have grown by 3.9 percent in Q2—sees growth likely slowing down closer to 3 percent in the second half of this year, “as financial conditions have tightened a bit (short-term rates are higher, the dollar exchange rate is stronger, stock prices are range bound with an uptick in volatility, and interest rate spreads are slowly rising, aside from Treasuries), taking some momentum away from growth.â€
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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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