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NEW YORK (Bloomberg) — There’s a new kind of oil coming out of West Texas.
Oil producers in the Permian Basin have started selling a new stream of light crude, said people familiar with the matter, securing a market for the increasingly less dense oil being pumped from the largest U.S. shale play.
Sales of West Texas Intermediate Light, or WTI Light, started in September with deliveries into Midland, Texas, the people said. Most of the supply for WTI Light would likely be coming from more recently drilled parts of the region, such as Loving and Culberson counties, with initial volumes estimated at around 100,000 bopd, they said.
The new stream is being primarily blended to produce so-called Domestic Sweet crude, WTI Midland or benchmark WTI for delivery at Cushing, Okla., the people said. While lighter oil is typically higher-priced, the new grade is being sold at a discount to WTI Midland, the people said.
Separating the light grades would ensure a more consistent specification for the premium crudes, said Sandy Fielden, director of research for the commodities and energy group at Morningstar Inc. There’s a lot of relatively light streams coming out of the Permian, particularly the Delaware Basin, where most of the new drilling is taking place, he said.
“Typically, people try and blend the lighter crude with heavier streams,†Fielden said. “But because there’s more light oil, the genuine WTI Midland gets a premium because that’s what refiners want.â€
WTI Light has a gravity of 45-50 API, lighter than the typical 38-42 API of WTI Midland, the mainstay sweet benchmark.
The sales began after the construction of enough tanks in the region to enable different oil grades to be separated. The new grade will be shipped from Midland in pipelines including those operated by Enterprise Products Partners, Magellan Midstream Partners, Plains All American Pipeline LP, the people said.
Enterprise can transport numerous grades of crude oil, including WTI Light, Rick Rainey, a company spokesman, said by email.
“There’s room for more segregation instead of just West Texas Sour and WTI Midland crudes,†Neil Earnest, president of industry consultant Muse Stancil & Co., said in a phone interview. “The growing production from the Permian has given rise to increasing variety of crudes.â€
Magellan spokesman Bruce Heine couldn’t immediately comment. Plains All American didn’t immediately respond to an email seeking comment.
In fact, the segregation of lighter oil might pave the way for more U.S. crude exports because steady quality of grades that are in demand would ensure regular buyers. “The U.S. has to be competitive in price, a key driver of crude exports,†Fielden said. “But it’s more convenient for producers and refiners if the U.S. can compete on quality.â€
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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