Post Tagged with: "Anadarko"

U.S. crude oil production efficiency continues to improve

U.S. crude oil production efficiency continues to improve

EIA



U.S. tight oil production increased in 2017, accounting for 54% of total U.S. crude oil production, in part because of the increasing productivity of new wells. Since 2007, the average first full month of oil production from new wells in regions tracked by EIA’s Drilling Productivity Report (DPR) has generally increased. These growing initial production rates have helped tight oil production to increase despite slowdowns in drilling activity when oil prices fell.

U.S. crude oil production efficiency continues to improve - fig 1- oilandgas360

U.S. tight oil production increased in 2017, accounting for 54% of total U.S. crude oil production, in part because of the increasing productivity of new wells. Since 2007, the average first full month of oil production from new wells in regions tracked by EIA’s Drilling Productivity Report (DPR) has generally increased. These growing initial production rates have helped tight oil production to increase despite slowdowns in drilling activity when oil prices fell.

U.S. crude oil production efficiency continues to improve - fig 2 -oilandgas360

The average new well in each DPR region in 2017 produced more oil than wells drilled in previous years in those same regions, a trend that has persisted for nearly ten consecutive years. More effective drilling techniques, including the increasing prevalence of hydraulic fracturing and horizontal drilling, have helped to increase these initial production rates. In particular, the injection of more proppant during the hydraulic fracturing process and the ability to drill longer horizontal components (also known as laterals) have improved well productivity.

This increasing well productivity has supported tight oil production even in years such as 2015, when crude oil prices fell and rig counts dropped. In 2016, rig counts continued to decline sharply and total tight oil production decreased for the first time in 10 years. Fewer wells were drilled; however, those that were drilled were drilled more quickly and located in more productive areas, which led to increased per-well production and profitability.

As rig counts continue to recover from decreases that occurred during 2015 and 2016, producers have increasingly targeted the Permian region, which spans parts of western Texas and eastern New Mexico. The geological structure in the Permian region is more complicated than in other regions, and it took producers more time to advance the drilling and completion technology in the region. However, the Permian region is larger and has more potential for oil production than other regions. Total production and production per new well have increased in the Permian for 11 consecutive years.

Principal contributor: Richard Yan, Jozef Lieskovsky

February 1, 2020 - 7:19 pm Crude Oil News, EIA News That Matters
Exclusive: Occidental seeks up to $700 million for Anadarko assets in Wyoming, Colorado – sources

Exclusive: Occidental seeks up to $700 million for Anadarko assets in Wyoming, Colorado – sources

Source: Reuters


HOUSTON (Reuters) – Occidental Petroleum Corp is soliciting bids for oil and gas properties in Wyoming and Colorado that it acquired when it purchased Anadarko Petroleum, hoping the assets will fetch up to $700 million, according to people familiar with the matter.

Exclusive: Occidental seeks up to $700 million for Anadarko assets in Wyoming, Colorado - sources- oil and gas 360

Source: Reuters

Occidental offered about 200,000 acres in the Denver-Julesburg Basin of Wyoming and Colorado that produce $66 million a year in cash flow, mostly in mineral royalties, according to marketing documents.

RBC Capital Markets is handling the sale, with bids due next month.

Occidental separately has offered its own Midland, Texas, campus, according to a real estate listing bit.ly/2O1vzIU. The facility was valued at $45.7 million last year, according to county tax records. The company declined to comment on the listing. Spokeswoman Melissa Schoeb said Occidental plans to move its Midland staff to offices Anadarko was building prior to the acquisition.

The two are among a string of smaller asset sales to further reduce the debt load of about $40 billion that Occidental took on with the Anadarko purchase. It has raised about $10 billion so far through sales of properties including a liquefied natural gas project in Mozambique and production in Africa.

Still, Occidental recently put on hold plans to divest its Western Midstream Partners pipeline unit after failing to attract an attractive offer. It also needs the cash the unit generates, analysts said.

“Small assets like non-O&G minerals via (Anadarko), longer dated Permian acreage, and real estate carve offs may help,” wrote analysts at Tudor Pickering Holt in a note on Monday. “But we believe additional color from management would go a long way in helping the market ascertain how the company plans to bring down absolute leverage in a meaningful way.”

The company has been slashing costs since the deal closed. Last week, it said it would cut 2020 capital spending by about 40%, reducing outlays in Colorado and Texas shale fields.

Occidental’s shares have slid more than 40% since its interest in the shale producer became public as investors turned against the high price and risk of the deal. It was $38.69 on Monday morning, down 3.5%.

The drilling acreage offered is mostly in Wyoming and includes minerals, properties Occidental operates itself and some land that is leased to other producers. People familiar with the offer valued the properties at between $500 million and $700 million.

Occidental is the largest private landowner in Wyoming, said Pete Obermueller, president of the Petroleum Association of Wyoming. It has around 400,000 acres in the state, where it is mainly focused on development in the Powder River Basin.

 

Source: Reuters

Occidental estimates higher third-quarter production on Permian boost

Source: Reuters


Oil and gas producer Occidental Petroleum nudged its estimate for third-quarter production higher on Tuesday, helped by fewer shutdowns in Colorado’s DJ basin and strong performance in its Permian Resources unit.

https://www.reuters.com/article/us-occidental-outlook/occidental-estimates-higher-third-quarter-production-on-permian-boost-idUSKBN1WU1PO-oag360

Source: Reuters

The shale producer, which completed the purchase of rival Anadarko Petroleum in August, now expects production from continuing operations to be 1.1 million to 1.12 million barrels of oil equivalent (boe) per day.

The company’s initial forecast for combined pro-forma production from continuing operations was between 1.3 and 1.4 million boe per day but, adjusting for the close of the merger, it later lowered that to between 1.06 million and 1.10 million boe per day.

Houston, Texas-based Occidental also said it expects third-quarter domestic onshore realized prices to be $54.00 per barrel for oil and $1.20 per thousand cubic feet for natural gas.

Occidental’s merger with Anadarko closed on Aug. 8. The company is scheduled to report third-quarter results on Nov. 4.

October 15, 2019 - 12:00 pm Closing Bell Story, Crude Oil News, Energy News, Natural Gas News
Source: Occidental Petroleum

Oxy Lowers Production Guidance on Legacy Anadarko Assets

From The Houston Chronicle


With Occidental Petroleum finalizing its $38 billion acquisition of Anadarko Petroleum last week, Oxy is now lowering its oil and gas production guidance for the legacy Anadarko assets.

For the rest of this year, Oxy said Anadarko’s assets will see lower production volumes by at least a couple of percentage points than anticipated because of pipeline shortages and maintenance and weather-related downtime in the Gulf of Mexico and other regions.

Oxy pointed to Anadarko having delays in West Texas’ booming Permian Basin bringing new wells online, as well as issues in Colorado’s DJ Basin regarding temporary shortages of oil and gas processing facilities.

All of the issues are considered temporary and are unrelated to Occidental’s operations, the company said.

 

 

The 2019 capital budget for the Anadarko assets will remain at $4.1 billion, not counting Anadarko’s Africa assets, which are in the process of being sold to the French energy major Total for $8.8 billion.

For the third quarter, the legacy Anadarko assets in the U.S. will produce 585,000 to 630,000 barrels of oil equivalent a day. For the full year, the minimum average is 605,000 barrels daily with the same 630,000-barrel, upper-end estimate.

Source: Tyler Losier

Occidental Finance Chief Pledges to Act Quickly to Pare Acquisition Debt

From Reuters


Occidental Petroleum Corp (OXY.N) expects to quickly reduce the $40 billion in debt it took on with its purchase of Anadarko Petroleum, the company’s finance chief said on Monday.

Cedric Burgher, in his first public remarks since the $38 billion acquisition closed last week, told an Enercom energy conference audience, the resulting debt burden was “not that bad,” and pledged Occidental would be selective in choosing assets to sell.

He defended the purchase, which has been attacked by activist Carl Icahn as “misguided and hugely overpriced,” as providing future oil production as a good valuation. Icahn is seeking to remove and replace four directors to influence the scale and pace of asset sales.

“When the smoke clears, people will start to see what we’ve done,” Burgher said to an overflow crowd.

 

 

Occidental plans to be selective about what properties it puts on the market to help pay off the debt, he also said, saying it likes the U.S. offshore production acquired in the deal.

“We like the Gulf of Mexico (properties) we think it’s a keeper; great free cash flow, great assets,” he said. He made no mention of the Western Midstream Partners stake that it also acquired with Anadarko.

Source: Occidental Petroleum

Occidental Closes on Anadarko

By Tyler Losier, Energy Reporter, Oil & Gas 360

Occidental Petroleum completes its $55 billion takeover of Anadarko Petroleum
Occidental Petroleum Corporation (stock ticker: OXY), led by President and CEO Vicki Hollub, has completed its acquisition of Anadarko Petroleum Corporation (stock ticker: APC) in a deal worth $55 billion, including the assumption of Anadarko’s debt.

The closing of the transaction follows a special meeting held earlier today by Anadarko’s shareholders, where more than 99% of the shares voted in favor of the Occidental merger. As part of the deal, Anadarko shareholders will receive $59 in cash and 0.2934 shares of Occidental stock for every share of Anadarko common stock that they own.

“With Anadarko...

Icahn Enterprises Completes Sale of Brazilian Resource Company

Icahn Enterprises Completes Sale of Brazilian Resource Company

By Tyler Losier, Energy Reporter, Oil & Gas 360

Icahn Enterprises closes sale of Ferrous Resources to Vale S.A. for $550 million
Icahn Enterprises L.P. (stock ticker: IEP), a conglomerate company owned by American investor Carl Icahn, has closed on its previously announced sale of Ferrous Resources Limited to Brazilian mining company Vale S.A. for a total consideration of $550 million, including repaid indebtedness.

Under generally accepted accounting principles (GAAP), Icahn Enterprises, which owns 77% of Ferrous Resources, will recognize a book gain of approximately $264 million.

Icahn Enterprises acquired a majority stake in Ferrous Resources – a Brazilian iron mining company – in 2015, at a time when iron ore prices ha...

Source: Ithaca Energy Limited

Exxon Mobil Profit Sinks, Chevron Rises as Both Boost Output

From Reuters


Weaker second-quarter refining and chemicals profits offset surging U.S. shale production at U.S. oil majors Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N), the two reported on Friday.

Exxon’s topped analysts’ reduced estimates for the quarter but net fell 21% from a year earlier, its third quarter in a row of weaker year-over-year profit, despite a near doubling in Permian shale oil output.

Chevron earnings rose 26%, in line with forecasts, as it benefited from a one-time, $1-billion breakup fee from Anadarko Petroleum (APC.N), which accepted a higher bid from Occidental Petroleum (OXY.N) after agreeing to sell itself to Chevron.

Shares of both companies fell on Friday with Exxon off 1% at $71.75 a share and Chevron down a penny at $120.73 as the market fell on U.S.-China trade concerns.

Exxon’s weaker earnings mirrored those at rivals Royal Dutch Shell (RDSa.L) and Total SA (TOTF.PA), and both U.S. companies said natural gas prices and chemical margins fell from a year-earlier.

Shell’s profit was its smallest in 30 months, due to weaker chemicals, refining and tumbling natural gas prices. Total also cited weaker natural gas and refining operations for earnings that fell 19% from a year ago.

Exxon’s net income fell to $3.13 billion, or 73 cents per share, in the second quarter, from $3.95 billion, or 92 cents per share, last year. Analysts had slashed their estimates last month after the company disclosed weaker results in natural gas, chemicals and refining.

“Pretty weak quarter from them once again,” said Jennifer Rowland, analyst with Edward Jones. After spending on major projects and dividends, Exxon had a free cash flow shortfall of $2.7 billion, she said. Investors closely watch that measure as a sign of the company’s financial health.

Exxon’s chemicals business fell to a loss in the United States for the first time in at least three years and earnings have declined for five quarters in a row. It collected lower profits from refining due to higher costs and lost production at several plants.

The largest U.S. oil producer by volume has been investing in major projects to boost production at a time when investors have been pressing oil companies to cut spending and increase returns to shareholders.

 

 

In a call with analysts, Exxon Senior Vice President Neil Chapman said despite weak market conditions in three of the company’s businesses, “on the whole, our businesses performance extremely well.”

He pointed to the company’s 90% year-over-year in Permian production and a 7% overall increase in its oil and gas production.

Exxon remains on track to increase its drilling in the top U.S. shale field and had its “eyes wide open” for potential acquisitions there, Chapman said. It remains committed to selling about $15 billion in assets through 2021, although proceeds this year have totaled $140 million, down from $1.75 billion a year earlier.

Chevron’s Permian Basin production rose 50% from the same period a year ago and is overall output hit 3.08 million barrels per day, up 9% from a year ago and a record level.

Chevron does not “need to do a deal” in the Permian, said Pierre Breber, chief financial officer, who noted that the company has moved in the past when it saw an opportunity.

Source: Royal Dutch Shell

Shell Invests in New Deep-Water Gulf of Mexico Project, Sells Assets to Equinor and Noreco

By Tyler Losier, Energy Reporter, Oil & Gas 360

Shell Offshore Inc. makes final investment decision for PowerNap deep-water project in U.S. Gulf
Shell Offshore Inc., a subsidiary of Royal Dutch Shell plc (stock ticker: RDS-A, RDS-B), has reached a final investment decision (FID) for the PowerNap deep-water project in the US Gulf of Mexico, electing to move forward with an investment.

PowerNap is a subsea tie-back to the Shell-operated Olympus production hub.

The project, which is expected to begin production in late 2021, has the ability to produce up to 35,000 BOEPD at peak rates. Based on current estimates, the forward-looking breakeven price for PowerNap is $35 per barrel long-term, and it is currently estimated to cont...

Oxy Earnings Dip 25%; Anadarko Megadeal Likely to Close Aug. 8

Oxy Earnings Dip 25%; Anadarko Megadeal Likely to Close Aug. 8

From The Houston Chronicle


Occidental Petroleum reported a $635 million quarterly profit that dipped 25 percent from the year prior, but the focus still remains on Oxy’s $38 billion acquisition of Anadarko Petroleum that could close in August.

Houston-based Oxy said it plans to close the Anadarko deal next week after the scheduled Aug. 8 vote of Anadarko shareholders to approve the deal.

In a brand-new deal though, Oxy said it formed a new Permian Basin joint venture with Colombia’s state-owned oil company Ecopetrol to develop nearly 100,000 net acres in the Permian’s Midland Basin.

To help Colombia develop expertise in shale oil development, Ecopetrol will pay Oxy $750 million up front and carry another $750 million in capital into the partnership. Oxy will operate the joint venture and own 51 percent of it.

“As we move toward closing the acquisition of Anadarko and combining our two companies into an innovative and sustainable energy leader, we remain well positioned to drive profitable growth and return excess cash to our shareholders,” said Oxy Chief Executive Vicki Hollub. “Our strategic partnership with Ecopetrol is a further example of our commitment to enhancing our value proposition.”

 

 

The Ecopetrol partnership also represents another deal that can help Oxy pay down its upcoming debt from acquisition of The Woodlands-based Anadarko.

As for quarterly earnings, although net profits fell a bit because of cost hikes from merger expenses and other factors, Oxy’s revenues jumped about 8 percent from $4.1 billion a year ago to $4.5 billion.

Total oil and gas production volumes exceeded projections at 741,000 barrels of oil equivalent a day during the second quarter, up from 719,000 barrels daily in the first quarter of 2019.

Source: Occidental Petroleum

Occidental Petroleum Profit Falls on Low Gas Prices, Derivative Contracts

From Reuters


Occidental Petroleum Corp, which is battling activist investor Carl Icahn over its $38 billion purchase of Anadarko Petroleum, reported a 14% fall in core profit on Wednesday, as higher crude prices and volumes were offset by adjustments to derivatives contracts and lower natural gas prices.

Core income fell to $729 million, or 97 cents per share, in the second quarter, from $848 million, or $1.10 per share, a year earlier.

The company also said it has formed a partnership with Colombia’s state-run oil company Ecopetrol SA to develop its acreage in the Midland basin in the prolific Permian shale field for up to $1.5 billion.

In its last earnings report before shareholders vote on the sale on Aug. 8, Anadarko beat analysts’ estimates for quarterly profit as higher production offset lower prices for its oil.

 

Anadarko Petroleum Beats Profit Estimates on Higher Output

Anadarko Petroleum Beats Profit Estimates on Higher Output

From Reuters


Anadarko Petroleum Corp (APC.N), in its last earnings report before shareholders vote on its sale to Occidental Petroleum (OXY.N), on Friday reported a quarterly profit that topped analysts’ estimates, as higher production offset lower prices for its oil.

It reported a net loss on a $1 billion breakup fee paid to Chevron Corp (CVX.N). Anadarko accepted a $38 billion offer from Occidental after having initially agreed to a deal with Chevron. The deal would make Occidental the largest oil producer in the Permian Basin, the top U.S. shale field.

Anadarko’s second-quarter average daily production rose nearly 17% to 744,000 barrels of oil and gas, beating analysts’ expectations of 719,130, according to IBES data from Refinitiv.

Average oil prices fell 8.7% in the quarter, while gas prices dropped 10.2% and natural gas liquids prices tumbled 41%, Anadarko said. It received an average $66.03 per barrel for its oil compared with $68.43 a year earlier.

Billionaire investor Carl Icahn, who owns a 4.4% stake in Occidental, has launched a proxy fight seeking four seats on Occidental’s board, arguing that directors overpaid for Anadarko and failed to give shareholders a say in the proposed deal. Icahn aims to influence the pace and scale of Occidental’s post-deal asset sales.

Occidental has attacked Icahn’s slate of board nominees as inadequate for the job.

 

 

Anadarko’s net loss was $1.03 billion, or $2.09 per share, in the latest quarter ended June 30, including the breakup fee, a loss on derivatives and merger-related costs. Its shareholders are scheduled to vote on the deal on Aug. 8.

Anadarko, which has operations in the United States, South America and Africa, said adjusted net income fell 10% to $249 million, or 51 cents per share. It earned $278 million, or 54 cents a share, on the same basis a year-earlier quarter.

Analysts on average had expected 50 cents per share.

ISS Backs Icahn’s Call for More Shareholder Say After Anadarko Deal

ISS Backs Icahn’s Call for More Shareholder Say After Anadarko Deal

From Reuters


Proxy advisory firm Institutional Shareholder Services on Thursday urged Occidental Petroleum Corp shareholders to ask management to let them weigh in on board and governance issues as the company buys rival Anadarko Petroleum Corp..

The request comes one week after the takeover deal’s biggest critic, billionaire investor Carl Icahn, laid out plans to shake up Occidental’s board.

ISS issued a research note on Thursday recommending that shareholders provide consent for the request to fix a record date, which would determine which shareholders would be able to have a say on possibly electing dissident directors.

The note, written by Cristiano Guerra, who heads ISS’s Special Situations Research Group, also says ISS is not backing Icahn’s nominees or planned changes.

Occidental said it disagreed with ISS’s recommendation that shareholders should take the first step and request the fixing of a Record Date for the consent solicitation and only later focus on whether the Icahn Group’s proposals would harm or further shareholder interests.

“The Board of Directors has unanimously determined that fixing a Record Date for the Icahn Group’s planned consent solicitation and the proposals the Icahn Group intends to ask shareholders to act on are NOT in the best interests of Occidental or our shareholders,” the company said in a statement.

Shareholders were prevented from commenting on the company’s “transformational and controversial transaction” with Anadarko, the ISS note said, and should be given a voice on such issues before next year’s annual general meeting. “There seems to be sufficient reason to address these concerns now, rather than waiting until the 2020 AGM.”

 

 

A week ago Icahn, a who owns 4.4% of Occidental and has become the most vocal critic of the $38 billion takeover of Anadarko, filed a solicitation statement with U.S. regulators. He wants to replace four board members with two of his employees and two executives who have financial and oil industry expertise.

Icahn has criticized Occidental Chief Executive Vicki Hollub for the company’s financial record and for seeking outside financing for the deal from billionaire investor Warren Buffett that did not require shareholder approval.

In order to provide consent, Occidental’s investors, including mutual fund firm T. Rowe Price among others, must provide a Record Date Request Form and answer a questionnaire that includes their trading history in Occidental stock. They also must instruct their Depository Trust Company to take actions on their behalf.

Because shareholders cannot vote on this transaction, “along with the self-evident complexity of the consent solicitation process, suggests that a more open and thorough debate regarding Occidental’s strategic direction and overall governance would be beneficial,” the ISS note said.

How Big is Saudi Aramco?

How Big is Saudi Aramco?

By Tyler Losier, Energy Reporter, Oil & Gas 360


The staggering size of Aramco: Saudi Arabia’s state-owned oil company

In 1933, the government of Saudi Arabia signed a concession agreement with the Standard Oil Company of California, creating an entity known as the California Arabian Standard Oil Company. Two years later, drilling began, and in 1938, famed geologist Max Steineke discovered commercial volumes of oil from Dammam No. 7 – appropriately nicknamed “the prosperity well.”

By 1980, the Saudi government owned a 100% interest in the California Arabian Standard Oil Company, which had since been renamed as the Arabia American Oil Company, or Aramco for short. In the years that followed, Aramco grew to become one of the single largest producers of oil in the world, helping to establish Saudi Arabia as a major player in the global geopolitical landscape as a result.

Recently, Aramco released its 2017-2018 summary financial results, revealing staggering levels of revenue, income, production and reserves. But just how big is the world’s biggest oil company in comparison to other prominent supermajors and independents?

 

Revenue

How Big is Saudi Aramco? - Oil & Gas 360

ConocoPhillips has the largest market cap of any independent American E&P, and last year alone, it boasted a revenue of $36.42 billion. Aramco, on the other hand, raked in $315.24 billion, meaning it surpassed ConocoPhillips’ yearly revenue within about 42 days.

Even if you added up the collective revenues from EOG, Occidental, Anadarko, Devon, and ConocoPhillips, it would only make up about 30% of Aramco’s reported revenue from last year.

Some supermajors, such as Royal Dutch Shell, outpace Aramco slightly. In 2018, Shell’s revenue was approximately $388.4 billion.

On the other hand, smaller independents like Occidental only had a revenue of $17.82 billion. Looking at it another way, the $73.2 billion that separated the revenues of Shell and Aramco in 2018 equates to the revenue of about four Occidentals.

 

Net Income

How Big is Saudi Aramco? - Oil & Gas 360

While some supermajors, such as BP and ExxonMobil, come close to Aramco in terms of revenue, when it comes to net income, the disparity is staggering. Last year, Aramco reported a total net income of $111.07 billion.

Collectively, the supermajors – BP, Royal Dutch Shell, ExxonMobil, Chevron, Total, and ENI – had a combined total net income of only $88.39 billion. In order to close that gap, you’d need to tack on an additional 4.26 ConocoPhillips’ worth of net income to bring the other supermajors up to speed.

On the independent side of the equation, the collective net income of EOG, Occidental, Anadarko, Devon, and ConocoPhillips is $13.94 billion. That’s only about 12.6% of the reported profit generated by Aramco in 2018.

This means that theoretically, it only takes Aramco approximately 46 days to accumulate more net income than all five of the U.S.’s largest E&Ps combined.

 

Production

How Big is Saudi Aramco? - Oil & Gas 360

For 2018, Fitch Ratings estimates that Aramco’s average production was approximately 13.60 million BOEPD. In comparison, the EIA estimates that in June 2019, the average daily production for the entire Permian Basin was about half of that.

When it comes to less prolific basins such as the Anadarko, Aramco’s daily average production is roughly 7.25x greater.

In terms of companies, ExxonMobil leads the way when it comes to supermajors with an average daily production of 3.83 million BOEPD. To reach this volume, it would take Aramco only 6.77 hours.

Even if ExxonMobil joined forces with the next two largest supermajors – BP and Royal Dutch Shell – the three companies would still fall short of Aramco with only 11.18 million BOEPD in collective production.

For independent E&Ps, the gap is even wider.

ConocoPhillips leads its peers, with an average daily production of 1.28 million BOEPD. Aramco, however, would surpass this volume in approximately 2.26 hours.

Even if you combined ConocoPhillips with EOG, Occidental, Anadarko and Devon, their cumulative average daily production is about 3.86 million BOEPD, a feat achieved by Aramco in 6.81 hours.

 

Reserves

How Big is Saudi Aramco? - Oil & Gas 360

Aramco’s claimed proved reserves, at least according to Fitch Ratings, is in the neighborhood of 257 billion BOE.

To put that in perspective, ExxonMobil, which has the largest reserves of any of the supermajors, only possesses about 24.29 billion BOE. That’s just under 10% of Aramco’s total stockpile of hydrocarbons.

For the independent companies, as with the other categories, ConocoPhillips is in the lead for most proved reserves at 5.30 billion BOE. This represents only about 2% of ARAMCO’s total reserves, which at its current production rate, would take approximately 389.71 days for the company to exhaust.

Even if you took every company mentioned so far – BP, Royal Dutch Shell, ExxonMobil, Chevron, Total, ENI, EOG, Occidental, Anadarko, Devon and ConocoPhillips – and added up all their proved reserves, the total would be 101.22 billion BOE. That’s less than 40% of what ARAMCO claims to own.

In short, no matter how you cut it, when it comes to size, Saudi Aramco is in a league of its own.

Source: Occidental Petroleum

Occidental Mails Letter to Shareholders

Occidental Mails Letter to Shareholders

Source: Mach Resources

Private Equity Firm Forms Second Partnership With E&P

By Tyler Losier, Energy Reporter, Oil & Gas 360

Mach Resources and Bayou City Energy form BCE-Mach II LLC, signs two PSAs
Mach Resources, an independent E&P founded in January of 2017, and upstream-focused private equity firm Bayou City Energy, have formed BCE-Mach II LLC, representing the second partnership between the two companies.

Their first collaboration, BCE-Mach LLC, continues to own, operate and acquire properties in the Mississippi Lime.

Source: Mach Resources

In addition to forming BCE-Mach II, the two companies announced that they have signed a purchase and sale agreement (PSA) with an unnamed seller to acquire producing properties in Beckham, Custer, Dewey, Roger Mills and Washita counties, Oklahoma; an...

Source: Occidental Petroleum

New Board Member Joins Occidental

By Tyler Losier, Energy Reporter, Oil & Gas 360

Former BlackRock director Robert M. Shearer elected to OXY board
Occidental Petroleum (stock ticker: OXY), an international E&P with operations in the U.S., the Middle East and Latin America, has elected Robert “Bob” M. Shearer to its board of directors.

Shearer, a 64-year-old former managing director at BlackRock, has over 35 years of experience in securities and investment management. Before retiring in 2017, he was the co-head of BlackRock’s equity dividend team and a member of the fundamental equity platform within the company’s portfolio management group.

Occidental's 2018 production stats (source: Occidental Petroleum)

Shearer was also a portfolio manager for bot...

Source: NOAA

Intensifying Storm Cut Half U.S. Gulf Coast Oil Output, Closes Coastal Refinery

From Reuters


An intensifying tropical storm in the U.S. Gulf of Mexico on Thursday cut more than half the region’s oil output, with energy companies evacuating staff from nearly 200 offshore facilities and a coastal refinery.

Oil firms shut more than 1 million barrels per day of oil production, 53% of Gulf of Mexico’s output, and 1.2 billion cubic feet per day of natural gas production, according to a U.S. regulator.

Tropical Storm Barry, which was forecast to bring flooding and potentially become a hurricane this week, intensified on Thursday on a path through the north central Gulf of Mexico, a major oil-producing region.

Despite the production cutbacks, U.S. crude, natural gas and gasoline futures slipped Thursday after the Organization of the Petroleum Exporting Countries forecast weaker demand for its output next year.

Dozens of oil and gas producers have removed staff from 191 production platforms, according to offshore regulator U.S. Bureau of Safety and Environmental Enforcement. It said seven rigs and 11 drill ships were evacuated or moved out of the path of Tropical Storm Barry.

Phillips 66 evacuated staff and halted operations at its 253,600-barrel-per-day (bpd) Alliance, Louisiana, refinery and pipeline operator Enbridge Inc evacuated staff from offshore platforms and halted some deepwater Gulf of Mexico natural gas pipelines.

The storm prompted Anadarko Petroleum Corp , Chevron Corp , Royal Dutch Shell Plc and others to move staff out of the path of the storm and many halted production, according to company reports.

Crude futures, which rose more than 4% on Wednesday, were trading at $60.23 a barrel, down from Wednesday’s settle but near a six-week high. Gasoline futures also slipped a fraction.

The storm’s path puts a weekend landfall near two of the nation’s four operating liquefied natural gas (LNG) export terminals, Cheniere Energy Inc’s Sabine Pass and Sempra Energy’s Cameron plants.

 

 

Data provider Refinitiv said natural gas output in the Lower 48 states could drop to a seven-week low of 87.2 billion cubic feet per day (bcfd) on Thursday due to the closings, from a record high of 91.1 bcfd on July 5.

On Thursday afternoon, the storm was about 90 miles (145 km) south of the mouth of the Mississippi River, moving west at about 5 miles per hour (7 km per hour). It could make landfall on Saturday on the Louisiana coast and bring up to 15 inches (38 cm) of rain to the central Gulf Coast, forecasters said.

Barry could become a Category 1 hurricane with winds of at least 74 mph (119 kph) and drive ocean water up the Mississippi, forecasters said. The storm surge is projected to bring 3 feet to 6 feet (0.9 meter to 1.8 meters) to shore, worsening flooding from heavy rains, according to the National Weather Service.

Phillips 66’s Alliance refinery sits next to the river 39 miles (63 km) south of New Orleans. The last hurricane to flood the refinery was 2012’s Hurricane Isaac. The refinery was also shut by Hurricane Gustav in 2008 and Hurricane Katrina in 2005.

In 2017, Hurricane Nate led Phillips 66 to shut the refinery, which was restarted within days as the storm turned away from the area.

Source: Templar Energy

Two E&Ps Make Changes in the C-Suite

By Tyler Losier, Energy Reporter, Oil & Gas 360

Penn Virginia CFO to step down
Penn Virginia Corporation (stock ticker: PVAC), a pure-play independent E&P focused on Eagle Ford shale, has announced that Steven A. Hartman, current chief financial officer, senior vice president, and treasurer for the company will be stepping down in the near future.

Source: Penn Virginia Corporation

Hartman will continue to fill his current role until a successor can be found, for which a comprehensive search is currently ongoing. Penn Virginia stresses that Hartman’s departure is in no way associated with his financial decisions, accounting practices, or any other metric related to his performance as CFO.

“On behalf of the entire boa...

Source: Occidental Petroleum

Occidental Mulls Sale of Anadarko’s Western Stake

From Bloomberg


Adviser helping find buyer for stakes in pipeline operator, Occidental struck $38 billion agreement for Anadarko in May

Occidental Petroleum Corp. is seeking a buyer to take majority control of Western Midstream Partners LP, the pipeline operator that it’s poised to inherit through its takeover of Anadarko Petroleum Corp., according to people familiar with the matter.

Occidental is working with a financial adviser to solicit offers for half of Anadarko’s interest in Western Midstream and Western Midstream’s general partner, or management entity, said the people, who asked to not be identified because the matter isn’t public.

The potential buyer of those stakes would also seek to acquire the 45% of Western Midstream that is traded publicly, the people said. That would leave Occidental with a minority stake in Western Midstream, the people said, enabling it to keep financial and operational interest in infrastructure for getting its oil and gas to market.

The stakes could draw interest from private equity firms and rival pipeline operators such as Oneok Inc., Enterprise Products Partners LP and Energy Transfer LP, one of the people said. No decision has been made and Occidental could opt to not proceed with a sale, they said.

Representatives for Occidental, Anadarko and Enterprise Products declined to comment. Representatives for Oneok and Energy Transfer didn’t respond to requests for comment.

Western Midstream rose 2.2% to close at $29.37 in New York trading Monday, giving The Woodlands, Texas-based company a market value of about $13.3 billion.

Anadarko owns 55.5 percent of Western Midstream and all of its general partner, according to regulatory filings.

 

 

Anadarko Deal

Occidental is poised to acquire Western Midstream after agreeing in May to buy Anadarko for $38 billion, a deal expected to close in the second half of 2019. Occidental has said it would be open to selling Western Midstream after outbidding Chevron Corp. for Anadarko.

“We don’t really feel like we have to necessarily own infrastructure to take advantage of it,” Vicki Hollub, Occidental’s chief executive officer, said in a conference call with analysts on May 6. “We would be willing to consider the optimization, monetization, of that sooner rather than later depending on the potential buyer.”

Western Midstream controls more than 15,200 miles of pipelines and about six dozen processing and treatment facilities in the Midwestern U.S. and Texas, according to an investor presentation in May. Anadarko formed the company and took it public in 2012 as a so-called master limited partnership, or entity that gets tax breaks in exchange for doling out most of its profits to investors.

A potential sale could help Occidental meet its goal of selling $10 billion to $15 billion of assets to pay down debt over the next two years. The company has already agreed to sell Anadarko’s operations in Africa for $8.8 billion to Total SA.

Source: Gazprom. LNG Tanker

Anadarko Announces Mozambique LNG Final Investment Decision

Anadarko Announces Mozambique LNG Final Investment Decision

Source: Occidental Petroleum

Occidental Announces Early Termination of Hart-Scott-Rodino Waiting Period

Occidental Announces Early Termination of Hart-Scott-Rodino Waiting Period

Vicki A. Hollub, CEO, Occidental Petroleum

Carl Icahn Sues Occidental for ‘Misguided’ Anadarko Takeover

Rather than plunking down tens of billions of dollars on Anadarko, Icahn argued that Occidental should instead have put itself up for sale

From CNN Business

New York (CNN Business) Billionaire Carl Icahn launched a legal attack on Occidental Petroleum on Thursday, arguing the oil company paid way too much money to acquire Anadarko Petroleum.

Icahn, whose firms own about $1.6 billion of Occidental (OXY) stock, said that the “misguided” takeover of Anadarko (APC) “raises very real questions about the competence” of the company’s management and board.

Not only was the purchase price “sky high,” Icahn’s firms said in a lawsuit, but the financing costs were “astronomical as well.”

The lawsuit demands Icahn get access to “inspect” certain Occidental books and records linked to the Anadarko deal.

In a statement, Occidental said it is “committed to maximizing long-term value for all shareholders” and its board and management team “continually evaluate opportunities” to do so. Occidental said it looks forward to closing the Anadarko deal, which it expects to deliver “compelling value and returns” to investors in both companies.

The company added that it will respond “in due course” to Icahn’s demand for access to records.

Anadarko, an oil driller with prized land in the booming Permian Basin, found itself in the middle of a bidding war between Occidental and Chevron (CVX). Anadarko abandoned its takeover agreement with Chevron after Occidental swooped in with a more generous offer.

At the time of the agreement, the Occidental offer valued Anadarko at $57 billion, including debt. If completed, it will be the fourth-biggest oil and gas deal in history, according to Drillinginfo Market Research.

Chevron, a company worth nearly six times as much as Occidental, walked away from the deal because it feared overpaying.

Warren Buffett deal questioned

Icahn took particular issue with Occidental’s agreement with Warren Buffett to help finance the takeover. Buffett’s Berkshire Hathaway (BRKA) agreed earlier this month to invest $10 billion in Occidental’s preferred stock.

Analysts and other shareholders expressed concern at the time about the generous terms Buffett received in the deal. Occidental agreed to pay an 8% dividend on Berkshire’s preferred stock, compared with the common stock’s 5% dividend. And Occidental shareholders could have their position watered down because Berkshire received warrants to purchase up to 80 million shares of common stock.

Icahn called the financing from Berkshire “extraordinarily and unnecessarily expensive” financing.

Occidental has defended the deal, saying it will increase the company’s position in fast-growth regions like the Permian of West Texas.

“This exciting transaction will create a global energy leader with a world-class portfolio,” Occidental CEO Vicki Hollub said in a statement earlier this month.

To ease concerns about debt, Occidental has pledged to rapidly clean up its balance sheet. The company even preemptively reached a deal to raise cash by selling certain assets.

Occidental should be selling itself?

Still, Icahn argued that the Anadarko takeover is extremely risky due to the turbulent nature of oil prices.

The math on the deal “might work” if oil prices increase and stay there for several years, the lawsuit said. But if oil prices tumble to $45 a barrel or lower, there is a “substantial risk” that Occidental will have to cut its coveted dividend, Icahn said.

Rather than plunking down tens of billions of dollars on Anadarko, Icahn argued that Occidental should instead have put itself up for sale.

“They decided to go for growth-at-all-costs at the price of ballooning the company’s debt burden,” Icahn said.

 

Talos CEO says ‘Interested’ in Anadarko’s Gulf of Mexico Assets

Talos CEO says ‘Interested’ in Anadarko’s Gulf of Mexico Assets

From S&P Global Platts

Houston — Gulf of Mexico operator Talos Energy may be interested in buying some of Anadarko Petroleum’s deepwater Gulf of Mexico assets that Occidental Petroleum will acquire in its pending $57 billion purchase of that company, Talos’ CEO said Thursday.

In addition, Talos – the first foreign company to make a discovery in Mexico’s offshore in about 80 years – may look elsewhere in the world for another key offshore basin where it can put to use the expertise it has developed in the broader Gulf of Mexico, Tim Duncan said at the Association of International Petroleum Negotiators’ 2019 International Petroleum Summit.

Anadarko, a long-time deepwater Gulf of Mexico player, was one of the first companies to widely publicize the high-return, quick production tieback strategy that has made the US Gulf a more profitable operating arena today. That strategy contributed to a gradual comeback after years of relative inactivity during the 2015-2017 oil price downturn.

What Oxy will do with Anadarko’s US Gulf assets — which include seven operated production hubs, dozens of leases and several large producing fields — remains a question.

‘ANYTHING AND EVERYTHING’

“We’re interested in anything and everything Anadarko operates,” Duncan told reporters on the conference sidelines. “[Oxy] has a lot to digest and figure out.”

Duncan said that as a relatively small operator in the Gulf of Mexico, Talos has limits to the amount of capital it can raise and the dollar value of potential acquisitions.

Also, “we have to see what fits our core areas and where we already have production,” he said.

Oxy has been out of the Gulf of Mexico for many years, although US federal records show that it participated in bidding rounds in the late 1990s. Those records show it bid on leases in 1999, for example, with a partner in the Gulf’s Viosca Knoll area off the toe of Louisiana – which coincidentally is an area in or near two current Anadarko-owned production facilities, Horn Mountain and Marlin.

Oxy’s crown jewel in the US is the Permian Basin and it pursued Anadarko for that operation. But Duncan said that Oxy might also opt to keep Anadarko’s US Gulf assets itself and re-enter operating in the US offshore basin.

As for looking outside the Gulf of Mexico into other offshore provinces, Talos has developed knowledge of “a geology we think we understand” in the US Gulf and then “made a bet and transferred [it] to Mexico,” Duncan said.

“Can we continue to transfer that skill set to other offshore basins in the world?” he said. “We’re looking at it.”

At the moment, US Gulf of Mexico activity is beginning to rev up, while other offshore basins around the world, such as West Africa or South America, are underinvested and often mature. Even while Talos is small and must manage its capital dollars prudently, now may be the moment to enter those basins while the cost of doing so is low, Duncan said.

ZAMA SUCCESS

When Talos, founded in 2012, decided to participate in Mexico’s offshore bidding rounds in 2015, it had to make a similar bet on an unknown entity that carried a certain amount of risk, he said. But Duncan knew it would be difficult for his company, which was then privately held, to compete with larger competitors with deeper pockets.

Since Talos already had production on the US side of the Gulf of Mexico, that could help fund exploration in Mexico. Talos found success with its first Mexican well, Zama, where the company is now in the appraisal stage. It aims to bring the field online in second-half 2022.

Talos is now talking to midstream companies about pipeline and related infrastructure to bring that and potentially other discoveries to market, Duncan said.

“We’re asking what they [midstream operators] think about not only Zama but all the permits around it,” he said. “I can tell you there’s a lot of midstream interest. You can see permits to the west and north.”

“There’s a bellwether find in Zama, so what’s the plan to get to first oil quicker that’s sustainable not only for our development but others?” he added.

 

Jones Energy Logo

Jones Energy Emerges from Bankruptcy with $225 Million Borrowing Base Agreement

By Tyler Losier, Energy Reporter, Oil & Gas 360

 

On May 17, Jones Energy, Inc. (stock ticker: JONEQ) emerged from Chapter 11 after satisfying the requirements of the company’s pre-packaged plan.

The announcement came 33 days after the company filed for bankruptcy protection, and less than two weeks after the U.S. Bankruptcy Court for the Southern District of Texas confirmed the plan on May 6. According to representatives for Jones, the intended course of action should not interfere with the “ordinary course of business” at the company.

Map of Jones Energy's Acreage

As part of the agreed upon plan, all of Jones’ existing securities are to be cancelled, and the company will be issuing 4,436,130 shares of Class A commo...

Bar Rises for Shale Takeovers as Chevron Bows Out of Anadarko Fight

Bar Rises for Shale Takeovers as Chevron Bows Out of Anadarko Fight

From Reuters

Chevron Chief Executive Michael Wirth’s decision to opt out of a bidding war for Anadarko Petroleum Corp has raised the bar for deals, and dampened expectations that oil majors will drive a new wave of consolidation in U.S. shale.

Wirth last week ruled out increasing his $33 billion offer for Anadarko after being outbid by Occidental Petroleum Corp, walking away from a company he had described as a perfect match. Chevron received a $1 billion breakup fee that it will use toward share buybacks.

The decision will make rivals think twice about splurging on companies operating in the largest U.S. oilfield, but will not put an end to shale deals given the weak valuations of independents, analysts said.

Even Wirth refused to rule out another deal.

“We are always scanning the landscape for opportunities,” Wirth said in an interview on Thursday.

However, Wirth added that Chevron has a “rich queue” of existing projects.

“We have no intention to do an acquisition unless it’s exceptionally good for us,” he said.

Many companies with shale assets are trading at depressed prices and would “be accretive to the larger caps or majors,” said Geoffrey King, a portfolio manager at investment firm Macquarie Group.

Price-to-earnings ratios for producers’ Carrizo Oil & Gas, Devon Energy Corp and Cimarex Energy Co are in the single digits compared to the 14 to 17 times earnings multiple that BP Plc, Chevron and Exxon Mobil Corp trade.

Weak shares prices have chilled deal-making among similar-sized oil producers. Last quarter, the value of U.S. energy deals fell to a 10-year low.

Investor reaction to the Chevron-Occidental contest for Anadarko also may cause potential for the majors to think twice before getting involved in a bidding contest.

Occidental traded on Friday at $54.97, down 9 percent from the day it launched its bid for Anadarko and at a 10-year low. Chevron was up 3.8 percent to $121.99 since withdrawing, but is down 5.3 percent in the last 52 weeks.

Chevron has been a poster-child for spending restraint and called the bid for Anadarko a reaction to the “industrial logic” of two companies with similar operations. It pledged to restrict annual capital spending to around $20 billion through next year to return more cash to investors.

Avoiding overspending on shale is “what shareholders have been advocating for,” said Andrew Dittmar, an M&A analyst at researcher Drillinginfo. “Chevron stock got a decent pop on a lousy day for the market.”

Despite a large acreage position and the “strongest royalty position of anybody in the Permian,” Wirth said the No. 2 U.S. oil producer this year will restrict its drilling program in the top U.S. shale patch to just 20 rigs, less than half that of rival Exxon, while aiming to reach output of 900,000 barrels per day by 2023.

The issue for Chevron and other large producers thinking of expanding in the Permian is how much more production they can wring from an asset, said Kris Nicol, head of U.S. corporate research at consultancy Wood Mackenzie.

“A lot of companies are undervalued,” Nicol said.

There is more involved to making an acquisition pay off than the purchase price. “The question is, once you get that company, what can you do with it?” Nicol asked.

Still, after years of letting small independents dominate shale, the majors have “come around” to the importance of the fields’ fast-cycle production, said Matt Sallee, portfolio manager with Tortoise Capital.

Anadarko’s agreement to be acquired by Occidental for $38 billion in cash and stock “makes it more likely that others will want to do something big to compete,” he said.

Chevron Takes the Money and Runs

Chevron Takes the Money and Runs

$1 billion breakup fee makes easy payday for Chevron shareholders
By Richard Rostad, analyst, Oil & Gas 360

Chevron (ticker: CVX) announced today it will concede to Occidental (ticker: OXY) in the bidding war for Anadarko (ticker: APC).

While Chevron could theoretically outbid Oxy in its quest for Anadarko, Chairman and CEO Michael Wirth decided the price of doing so was too high.

As Wirth put it, “Winning in any environment doesn’t mean winning at any cost. Cost and capital discipline always matter, and we will not dilute our returns or erode value for our shareholders for the sake of doing a deal.” Wirth was referring to the company’s slogan.

Instead Chevron will receive the deal’s $1 billion breakup fee, a fee that Oxy w...

How Total’s CEO Pounced on Anadarko’s African Energy Assets

How Total’s CEO Pounced on Anadarko’s African Energy Assets

From Reuters

It took Total’s chief executive and a small group of advisers just days to line up the French energy major’s biggest acquisition in almost two decades when it agreed to buy the African assets of U.S. firm Anadarko.

Patrick Pouyanne pounced after Occidental Corp trumped Chevron’s $33 billion bid for Anadarko in April with an offer that includes raising financing by selling some of Anadarko’s operations worth up to $15 billion.

By keeping those in the know to a minimum, the French CEO was able to stay flexible in negotiations, take a swift decision and ensure there were no leaks until the binding deal worth $8.8 billion was announced on Sunday, a Total source said.

“Pouyanne proceeded in the same way he did with previous deals: a restricted task force, no bankers and no external counsel,” another source, close to the deal, told Reuters.

Throwing out the rulebook that expects CEOs to be surrounded by investment bankers and other advisers when dealmaking has become a trademark for the 55-year-old CEO and chairman of Total, who took the helm of the French energy major in 2014.

He has surprised investors with his acquisitions, such as buying Maersk’s oil and gas business in 2017 and Engie’s upstream LNG operations in 2018, setting one deal in motion after an unsolicited phone call with the controlling shareholder.

His strategy, which one analyst has called “opportunistic”, has rapidly lifted Total’s growth outlook. Total has made acquisitions worth almost $20 billion in the past five years, under Pouyanne’s leadership.

But the buying spree has increased debt and left its shares lagging rivals, such as Royal Dutch Shell and BP. His manner can also come across as brash, and industry sources say it was one reason a deal to buy a Libyan oilfield stake has now run into a roadblock.

HEAVENLY MATCH

Pouyanne’s move to buy Anadarko’s assets, the French firm’s biggest acquisition since taking over Elf almost two decades ago, will add 5 percent to Total’s output by 2025, said Bernstein analysts, who rate Total’s shares “outperform”.

The assets stretching from Algeria to South Africa bolster his effort to refocus Total on operations in Africa, the North Sea, deep offshore and liquefied natural gas (LNG). The deal depends on Occidental (Oxy) completing the Anadarko merger.

“Pouyanne quickly understood that it could be a match made in heaven because Oxy was mainly focused on Anadarko’s Permian assets. And Pouyanne has repeatedly said he was not interested in Permian,” a source close to the deal said, referring to the Permian Basin where the U.S. shale oil industry is concentrated.

Total has built up a strong balance sheet under Pouyanne since the 2014 oil price crash, giving him the firepower to swoop on Anadarko’s assets. But Total was also able to act swiftly because it has long had its eye on those African operations.

“Total was already familiar with Anadarko’s portfolio. At some point, they took a closer look at Anadarko’s assets, particularly in Africa. There were some discussions, but they did not go any further,” an industry source said.

Another source said Anadarko had been looking for a partner for its Mozambique LNG project to tap an estimated 75 trillion cubic feet of recoverable gas.

Two days after Occidental announced its bid for Anadarko on April 24, Oxy’s corporate jet was on the tarmac in Paris.

UNDER WRAPS

Both firms declined to comment on the reason for the jet’s flight to Paris, although an industry source told Reuters the jet was flown in for a meeting with Total.

Another source familiar with the matter said Occidental Chief Executive Officer Vicki Hollub had flown in with another executive, without telling anybody, to discuss Anadarko’s African assets with Total.

“Of course they (Total) had already thought about it. And I think they reached out to her and said ‘Hey Vicki, if you happen to win this, we would really be interested’,” the second source said. “She did not let the phone get cold. She left and flew to Paris overnight, met with them and heard their deal.”

Occidental did not comment on the account.

A banking source said this deal was not the first time Total had held talks without bankers in the room. The source said it made sense in this case because Total did not need financing and wanted to make a quick decision.

The deal is also not the first to take investors by surprise. Pouyanne first made a splash in 2017 with the purchase of Maersk’s energy business for $7.5 billion after an unsolicited bid made in a phone call to Ane Maersk Mc-Kinney Uggla, chairwoman of the A.P. Moller Foundation, which has a controlling stake, a corporate source said.

“The deal was unplanned but it was a good fit. A banker gave Patrick the idea and he made it happen,” the source said.

Maersk could not immediately be reached for comment.

But Pouyanne’s manner does not always win over partners.

When he boasted to a U.S. energy conference about the benefits to Total of his deal to buy a $450 million stake in a Libyan field from Marathon Oil last year, Libya’s state-owned National Oil Corporation sought to re-negotiate terms, concerned it was too much of a bargain, industry sources said.

Total has said it was in talks with Libyan authorities to resolve financial issues over the deal. NOC could not immediately be reached for comment.

Anadarko, Mozambique expect FID Announcement for Mozambique LNG Project on June 18

Anadarko, Mozambique expect FID Announcement for Mozambique LNG Project on June 18

Offshore Area 1: 75 Tcf await liquefaction, sales

The president of Mozambique met with Anadarko CEO Al Walker Tuesday and announced plans for Mozambique LNG to announce the final investment decision (FID) during a celebratory event on June 18, 2019 in Maputo.

Anadarko and partners in the project have discovered approximately 75 trillion cubic feet (Tcf) of recoverable natural gas resources in Offshore Area 1 and are working to develop one of the world’s largest liquefied natural gas (LNG) projects.

“We expect June 18 will become a historic day in Mozambique as we announce that one of the most important and transformational projects in our country’s history is ready to advance to the next stage,” said His Excellency President Nyusi. “We recognize Anadarko’s continued commitment to moving this project forward to becoming a reality.” It was also noted that all issues under negotiation between the Government of Mozambique and Anadarko have been satisfactorily resolved.

Anadarko, Mozambique expect FID Announcement for Mozambique LNG Project on June 18 - Oil & Gas 360

Source: Anadarko Petroleum presentation

Walker said that commitments for financing were in place, off-take secured, and all other issues under negotiation had been successfully addressed.

“Mozambique LNG is among the most significant projects that our company or any other has undertaken, given the scale of the project, size of the resource, and the potential long-term transformational benefits it represents for Mozambique. We look forward to celebrating the official sanctioning of Mozambique LNG on June 18,” Walker said in a statement.

In 2010, Anadarko made its first discovery in the Offshore Area 1 of the deepwater Rovuma Basin, launching what it calls “one of the most important natural gas discoveries in the last 20 years.”

”To date, approximately 75 Tcf of recoverable natural gas has been discovered in the Offshore Area 1–the equivalent of a 12 billion barrel oil field. The results to date of the drillstem testing (DST) program in the Prosperidade and Golfinho/Atum complexes demonstrate the outstanding flow characteristics of the reservoirs. Each flow test successfully flowed at facility-constrained rates of 90 to 100 million cubic feet per day (MMcf/d), which supports well designs of 100 to 200 MMcf/d,” the company said about the project.

The exploration contract for Offshore Area 1 with government of Mozambique began in 2007.

Calgary-based Precision Drilling Corporation (ticker: PDS) announced planned capital expenditures for 2017 of CAD$109 million.

Anadarko Accepts Occidental Bid; Chevron May Now Respond

From Bloomberg

Anadarko Petroleum Corp.’s board has declared Occidental Petroleum Corp.’s sweetened $38 billion takeover “superior,” giving Chevron Corp. until May 10 to either boost its offer or walk away from the oil industry’s biggest deal in at least four years.

The announcement by Anadarko, which had rebuffed several prior bids from Occidental, comes almost a month after it agreed to be purchased by Chevron for $33 billion. Chevron has so far refused to increase its offer, saying its proposal is a better long-term option for Anadarko shareholders. If it decides not to raise the bid, Chevron can walk away with a $1 billion breakup fee.

The takeover of Anadarko has been a rare public fight for an oil industry that hasn’t seen many bidding wars. Occidental Chief Executive Officer Vicki Hollub’s recruitment of billionaire Warren Buffett and an $8.8 billion accord to offload African oil and gas fields to Total SA appeared to have been key milestones in winning the board’s favor. Anadarko directors had previously chosen Chevron’s offer even though it was substantially cheaper than that of Occidental, which, as a smaller company, would have to take on much more leverage to do the deal.

“We think Chevron is likely to make a counter offer, but it may not be high enough to win the bid,” said Leo Mariani, an analyst at KeyBanc Capital Markets. Chevron, boosted by more valuable stock, will have to offer around $70 a share to be considered by Anadarko, costing it an extra $3.2 billion, he said.

The period for Chevron’s response may be extended under the terms of the original agreement, Anadarko said in a statement after the market closed Monday. In a separate statement, Chevron acknowledged Anadarko’s response and declined to make any further comment.

Anadarko was little changed at $75.50 at 8:50 a.m. in pre-market trading in New York, less than $1 below the value of Occidental’s offer. Occidental was also little changed at $58.65. Chevron was 0.6 percent lower at $117.70.

Chevron CEO Mike Wirth has signaled he’s willing to end his pursuit of a deal if the price gets so high that it imperils investor returns. “We strongly believe that the combination of our two companies create superior long-term value for shareholders of the combined company,” Wirth said on an April 26 earnings conference call.

While buying Anadarko would expand the producer’s presence in the Permian Basin, which is now the world’s largest oil patch, there are other operators in the region that Chevron could acquire. Chevron also has existing ambitious growth plans for the Permian.

Houston-based Occidental over the weekend pressed to alleviate any remaining concerns from Anadarko. It said Sunday that 78 percent of the deal will be paid in cash, up from 50 percent, and it got rid of the need for a shareholder vote, which had previously been cited as a sticking point for Anadarko’s directors.

“We have long been convinced that a strategic combination with Anadarko represents a compelling opportunity for the shareholders of both Occidental and Anadarko,” Occidental said in a statement after Anadarko accepted the suitor’s offer.

At least one major Occidental investor has signaled that it’s ready to break with the company’s board of directors. T. Rowe Price Group Inc. told Reuters it intends to vote against the board after the company eliminated the need for shareholder approval in its revised bid.

“With the OXY deal looking safer for APC to accept, I’d say this may force CVX to match the OXY bid or lose out on these terrific assets,” said Bill Nygren, chief investment officer of Harris Associates LP, which manages $120 billion and owns about 3 percent of Anadarko.


From The Wall Street Journal

Anadarko Petroleum Corp. APC -0.01% said Monday that a $38 billion bid by Occidental Petroleum Corp. was superior to an offer it accepted from Chevron Corp. , raising the stakes in the battle for the company.

Anadarko said it had notified Chevron that it will terminate the $33 billion deal it struck with Chevron in favor of Occidental’s offer, a day after Occidental sweetened its bid by raising the cash portion.

Chevron now has four business days to make another offer, Anadarko said, though that period could be extended. If Chevron doesn’t counter and the deal is terminated, Anadarko will owe it a $1 billion breakup fee.

A Chevron spokesman said it had received Anadarko’s notification and had no further comment at this time. Occidental said it is pleased that Anadarko determined that its offer was superior and looks forward to the next steps.

During a call with investors Monday, Occidental Chief Executive Vicki Hollub explained the company’s decision to raise the cash portion of its offer saying it sought to bolster its bid because Anadarko still hadn’t declared it superior to the agreement Anadarko struck with Chevron. The strategy appears to have worked.

“We saw the two options as increase the share price, or provide clarity of closing,” Ms. Hollub said during a call to discuss Occidental’s earnings. “We felt like clarity of closing was the lower cost.”

Ms. Hollub also discussed why the company no longer wanted shareholders to have to vote on its offer, saying she was trying to act in their best interest by removing a hurdle that Anadarko’s board saw as a stumbling block to a deal.

“We felt that our greater fiduciary responsibility from a governance standpoint for our shareholders was to make this deal happen,” Ms. Hollub said.

Occidental announced a revised offer of $76-a-share on Sunday, $59 of which will be cash, nearly two weeks after it countered the deal Anadarko previously struck with Chevron. The Chevron deal is now valued at about $62 a share as of Monday’s close but was initially considered superior by Anadarko’s board, despite being lower.

Ms. Hollub said that increasing the cash portion of the bid would provide Anadarko shareholders with more of an immediate return than Chevron’s offer. Raising the cash portion also allowed Occidental to avoid putting the issue to shareholders, which would have been required if it issued 20% or more of existing shares.

Some shareholders have expressed frustration they won’t have a vote on the deal. Ms. Hollub said that over months of talks with Anadarko, none of Occidental’s contemplated offers would have avoided such a vote. But, once Anadarko’s board cited the risk a vote would block the deal as a hurdle, Ms. Hollub felt Occidental had no choice but to remove the vote.

That decision may strengthen the company’s offer, but it also sets up a confrontation with some Occidental investors during the company’s annual meeting Friday. T. Rowe Price Group Inc. said last week that the deal would push Occidental into new business lines and weaken its balance sheet. The asset manager also signaled that if the transaction doesn’t come up for a vote, T. Rowe will vote against Occidental’s directors at the meeting.

Occidental also released its first-quarter earnings a day early on Sunday evening, reporting net income of $631 million, about 10% less than during the first three months of 2018. Production in its Permian Resources unit surged 47% to the equivalent of 261,000 barrels a day of oil and gas. The results beat analysts’ expectations, and Occidental shares rose 1.4% to $58.77 on Monday.

Ms. Hollub said she has been working constructively with Anadarko’s management team and that there were few remaining sticking points between the two sides.