Showing posts with label Hess. Show all posts
Showing posts with label Hess. Show all posts

Friday, May 16, 2014

New LNG Plant in North Dakota will Supply Oil and Gas Producers

A new natural gas liquefaction plant is slated to come online this summer in North Dakota to reduce the flaring of gas in the Bakken Formation and provide fuel for Bakken oil and gas operations. The developer, Prairie Companies LLC subsidiary North Dakota LNG, announced earlier this month that the plant would provide an initial 10,000 gallons per day (gal/d) of liquefied natural gas (LNG), and could expand to 66,000 gal/d. Assuming a 10% processing loss, the plant would take in a maximum of 6 million cubic feet per day (MMcf/d) once expanded. In 2012, North Dakota vented and flared 218 MMcf/d of natural gas because of record high oil production and insufficient pipeline takeaway capacity for natural gas produced as a byproduct.

Hess Corporation will supply the natural gas for liquefaction at Prairie's Tioga natural gas processing location. After the LNG is produced, it will be sent via truck to storage sites at drilling locations, where – once regasified – it can be used to power rigs and hydraulic fracturing operations as well as LNG vehicles. LNG itself cannot burn; in its liquefied state, its temperature is minus-260 degrees Fahrenheit. However, as a liquid, it takes up only 1/600th of its volume as a gas, so LNG is an excellent form to store or transport natural gas. Currently, most drilling operations run on diesel, and converting to natural gas provides potentially significant cost savings given the current differential between diesel and natural gas prices. In 2012, EIA estimated that nationally oil and gas companies consumed more than 5 million gal/d of diesel in their operations, representing a significant expense.

While conversion to natural gas might not be possible in many cases, in the past few years, several companies have developed and are marketing technologies that would allow drilling rigs and fracturing pumps to run in both dual fueled and or single fueled modes.

Although the liquefaction plant will be the first LNG project in the Bakken, some producers have begun using natural gas to power their operations, citing cost savings, access to natural gas, and environmental benefits. Statoil uses compressed natural gas (CNG) to fuel some of its drilling equipment. The natural gas is produced in the Bakken and compressed using General Electric's CNG in a Box system.

Additionally, outside of the Bakken, other companies have successfully used natural gas to power drilling operations. In 2012, Seneca Resources and Ensign Drilling installed GE LNG fired engines on drilling rigs in the Marcellus Shale. Apache, Halliburton, and Schlumberger have successfully used CNG and LNG to power hydraulic fracturing operations in the Granite Wash formation in Oklahoma.

Some of these companies have estimated fuel savings on the order of 60% to 70% compared to diesel, as well as payback on the conversion investment in about a year. The basic economics that have driven the recent interest in converting or manufacturing more heavy duty trucks to run on LNG are driving some of the interest in converting to natural gas for fueling stationary oil and gas operations.

Posted courtesy of the EIA


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Wednesday, July 31, 2013

Hess Reports Second Quarter 2013 Earnings

Hess [HES] today reported net income of $1,431 million for the quarter ending June 30th 2013. Hess beats by $0.09, misses on revenue. 2nd quarter EPS of $1.51 beats by $0.09. Revenue of $4.11B misses by $0.95B

Hess says proceeds from $3.5B in asset sales made so far in 2013 have allowed it cut debts by $2.4B and add cash to its books. Will book $933M income from the $2.05B sale of Samara-Nafta to Lukoil made in April; without the sale, Q2 net income fell to $520M from $549M in the year-ago period.

The Russian divestment and other sales sent Q2 production falling to 341K boe from 429K boe a year ago, but output was within 340K-355K boe guidance.

Read the entire Hess earnings report

 
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Wednesday, April 24, 2013

More earnings....Cabot Oil and Gas [COG] and Hess [HES]

Cabot Oil & Gas Corporation (NYSE: COG) today reported its financial results for the first quarter of 2013. Highlights for the quarter include:

*    Production of 89.3 billion cubic feet equivalent (Bcfe), an increase of 50 percent over last year's comparable quarter and 13 percent over the fourth quarter of 2012.
*    Net income of $42.8 million, or $0.20 per share.
*    Net income excluding selected items of $54.2 million, or $0.26 per share.
*    Cash flow from operations of $212.7 million and discretionary cash flow of $234.4 million.

"The success of our drilling program in the Marcellus continues to drive record operating and financial metrics for the Company, including all-time highs for quarterly production, revenues, operating cash flows and discretionary cash flows, despite historically low realized natural gas prices," said Dan O. Dinges, Chairman, President and Chief Executive Officer......Read the entire Cabot Oil and Gas earnings report.


Hess Corporation (NYSE: HES) today reported net income of $1,276 million for the quarter ended March 31, 2013. Adjusted earnings, which exclude gains on asset sales and other items affecting comparability of earnings between periods, were $669 million, or $1.95 per common share, representing a 30 percent increase on a per share basis over the same quarter last year.

The Corporation generated net cash flow from operations of $819 million during the first quarter while reducing capital and exploratory expenditures by $355 million, a reduction of 18 percent in the year over year period. The Company continues to make progress on its asset sales.

In the first quarter, the Corporation completed the sales of its interests in the Beryl area fields in the United Kingdom North Sea, the Azeri-Chirag-Guneshli (ACG) fields in Azerbaijan, and announced the sale of its acreage in the Eagle Ford shale play in Texas, relieving Hess of approximately $500 million of future capital requirements over the next three years......Read the entire Hess earnings report.



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Tuesday, October 25, 2011

Phil Flynn: The Dead Spread

Trying to explain the impact of the death of Moammar Ghadfi on oil might best be described as what I guess can now be called the "Dead Spread". Oh sure, you used to be able to call it the Brent crude oil West Texas intermediate spread but the way the spread has come in since the death of the murderous dictator, I guess "The Dead Spread" might be entirely appropriate.

The Brent/WTI spread almost became a household word in the conflict between Gaddafi loyalists and the Libyan rebels. Libyan crude is of a very high quality oil that found its nitch in Europe subbing for the production challenged North Sea brent crude. The loss of that crude created a void because European refiners accustomed to a regular flow of light crude failed to have the type of units needed to refine those heavier grades. The loss of that crude caused the Brent/WTI spread to go to a record high. Now coincidentally or not, the spread has come in dramatically since Mr. Gaddafi's demise.

In fact the spread has come in from an all time high of approximately $28.07 to a mere $18.97 as of this writing. With Gaddafi out of the way the hope is that Libyan oil will once again fill that void. Well early on that is even going beyond hope. Yesterday ENI told Dow Jones that the big elephant in the room, or Libya's giant Elephant oil and gas field in Libya, could restart as early as next month and that there was "no big damage". That field accounts for almost 25% of Libya's natural gas output. A resumption of that much oil that soon obviously could ease concerns that it will take "years" to get Libyan oil production back up to normal.

That not to say that there are not some tensions as Dow Jones reports of a strike at Waha Oil Co., Libya's largest oil partnership with foreign companies, is entering its eighth week after a failure to reach an agreement over the dismissal of Gaddafi era managers, staff at the company said. Dow Jones says, "Unrest at Waha, on which U.S. partners Marathon Oil Corp. (MRO), Hess Corp (HES) and ConocoPhillips (COP) have previously declined to comment, is part of broader strife at some oil operations. It underscores the challenges still facing the country's oil industry despite the death of former ruler Moammar Gadhafi last week."

Yet at the same time the WTI has found strength as the US economy looks stronger than Europe and the decline of crude stocks at Cushing, Oklahoma, the delivery point for the Nymex WTI futures. While the world waits for Europe, data seems to suggest that the sparing over Greek haircuts (no, I am not talking about Telly Savalas) and bank rescue funds has zapped the confidence of Europe, increasing the odds of a recession.

It seems that market are also reacting to the spread sending light sweet crude to Europe as opposed to the formally oversupplied US. Gas and Oil Daily says, "Oil stockpiles in Cushing dropped 760,000 barrels to 28.1 million. The Energy Department said last week that Cushing inventories, including floating and fixed tanks, totaled 31.1 million barrels as of October 14th, down 26% from a peak of 41.9 million on April 8th." Bloomberg News says that crude oil inventories in Cushing, Oklahoma, dropped 2.6 percent on Oct. 21 from Oct. 18, according to data compiled by DigitalGlobe Inc.

They say that stockpiles held in floating roof tanks at the hub fell 760,000 barrels to 28.1 million, satellite images taken by the Longmont, Colorado based company show. In other words, the market forces are starting to correct the anomaly between the spread as oil is seeking higher prices. That is reducing Cushing supply and more than likely increasing European supply.

What is also helping is that we are seeing an increase in Nigerian exports as well. Nigeria also has the very desirable light sweet grade of crude oil. Dow Jones says that Nigeria will export 7,950,000-barrel cargos of Bonny Light in December, one more cargo than in November. They report a total of 214,516 barrels a day of QuaIboe crude will be available in December, compared with 157,000 barrels a day in November, the program shows.

This should put more pressure on "The Dead Spread" as well. It also put the WTI market in backwardation for the first time since the financial crisis began. It seems that the market is worried that with all the oil ending up in Europe, supplies may tighten in the US. It is also showing a vote of confidence in the US economic growth outlook or at least a more pessimistic outlook for Europe.

Also with oil on fire yesterday William Dudley of the Fed, fed into the flames talking about QE3D! QE is bullish for oil and with the Dead spread out of whack we could see WTI try to attract supply. While WTI flies gas prices were mute as the Brent crude should help US imports of products. Mr. Dudley is sending a signal to the market that QE is back in play and most likely will be in the form of printing money to buy back mortgage backed securities. Very bullish for WTI oil!

The Energy Information Agency has some good news I suppose. They said that the national average retail price of regular gasoline is down 1.4c to $3.462 a gallon. Yahoo! Now not that I want to ruin that god feeling you had but they also want to remind you that prices are still 64.5c a gallon, or 22.9%, higher than they were a year ago.

Want some news that might warm your heart? Reuters News points out that the average of the first 12 months of New York Mercantile Exchange natural gas futures contracts slid to its lowest in nine years on Monday as growing supplies and moderate weather weighed on the complex. The 12 month futures fell 2.3 cents to settle at $3.923 per million British Thermal Units, the lowest settle since Nov. 15, 2002, when the average closed at $3.926, Reuters data showed. Despite record heat this summer that drove NYMEX front month gas to its 2011 peak near $5, record high gas production, primarily from shale, has been the main factor pressuring price expectations.

Phil Flynn

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Monday, August 15, 2011

Barclays' Favorite Oil Companies

From Barclays Capital's "Global Energy Outlook" report published on Aug. 11, 2011, the following exploration, production, integrated oil and refining companies are ranked overweight with a positive sector outlook. Barclays' energy experts are bullish on oil long-term and that could help out the equities of the following 10 undervalued names.



Chevron (CVX) is one of Barclays' favorite big oil overweights. Price target: $135. Upside potential: 45%.

Hess Corporation (HES) is trading under 7 times forward earnings. Barclays price target: $108. Upside potential: 93%.

Murphy Oil Corp (MUR) is mainly U.S. dependent. But Barclays likes them. Price target: $77. Upside potential: 49%.

Canada's Imperial Oil (IMO) has a price target of $57 with a potential upside of 44%, according to Barclays' estimates.

Sunoco (SUN) is a household name in the U.S. And the bain of the average America's existence when gasoline prices hit $4 a gallon. Barclays price target: $54. Upside potential: $74.

Tesoro (TSO) is a national refiner headquartered in Texas. Barclays price target: $38. Upside potential: 95%.

Headquarterted in the UK, Afren PLC (LON: AFR) drills for oil off the coast of Africa. Barclays price target: $200. Upside potential: 111%.

BowLeven (LON: BLVN) is another UK based oil and gas exploration and production company with most of its assets off coastal Africa. Barclays price target: $515. Upside potential: 312%.

Max Petroleum (LON: MXP) explores and produces oil in Kazakhstan. Is nice! Barclays price target: $45. Upside potential: 275%.

Premier Oil (LON: PMO) maintains oil and gas exploration and production ops in the North Sea and on land in Pakistan and the Middle East. Barclays price target: $631. Upside potential: 86%.

Posted courtesy of Forbes.Com

Wednesday, November 24, 2010

Toby Shute: 3 Oil Deals Shaking the Market

This week, I've spotted at least three billion dollar oil deals that should be of interest to investors (all this as of Tuesday!). Combined with other activity in recent weeks, this suggests that there's plenty more M&A mayhem to come as we approach the end of the year.

A big splash in the Gulf
First off, Energy XXI (Nasdaq: EXXI) agreed to pick up a bunch of ExxonMobil's (XOM) shallow water Gulf of Mexico properties for $1 billion. This follows similar moves by Apache (APA), which grabbed Devon Energy's (DVN) shallow Gulf assets for an identical sum, and McMoRan Exploration (NYSE: MMR), which picked up the pieces from Gulf dropout Plains Exploration & Production (PXP).

Energy XXI is picking up 66 million barrels of oil equivalent (Boe) of proved and probable reserves, and 20,000 Boe per day of production. The cash flow multiple paid is 3.2. Apache got more reserves with its purchase (83 million boe), slightly less production (19,000 boe/d), and paid 3.7 times estimated cash flow. In both cases, oil and natural gas production is split roughly 50/50, so I assume the lower Energy XXI cash flow multiple is largely a reflection of higher oil prices. Any way you slice it, the purchase price looks reasonable.

With this purchase, Energy XXI becomes the third largest oil producer on the Gulf of Mexico shelf, leapfrogging W&T Offshore (WTI) in terms of reserves, and both McMoRan and Stone Energy (SGY) in terms of production. The assets acquired have the potential to deliver around 720 million Boe at a development cost of around $15 per barrel.

That would be a really compelling figure, if a large component of that total resource potential was oil. The potential oil mix, surprisingly, is only around 10%, however, alongside 3.9 trillion cubic feet of gas. So the big upside appears to be in deep and ultradeep gas prospects, such as the ones Energy XXI is exploring in partnership with McMoRan elsewhere on the Gulf of Mexico shelf.

Incidentally, Exxon walked away from one of these ultradeep drilling projects a few years ago. This week's sale confirms that the company lacks an appetite for this activity. Given the likely difficulties in securing future permits to drill these extremely high-pressure wells, I can't really blame it. I'm a decided fan of wildcat drilling in the Gulf, but my preference is for companies sizing their bets more conservatively.

Yet another Bakken buy
Last week we saw Williams (WMB) make a $925 million purchase in prime Bakken territory up in North Dakota. This week, Hess (HES) edges it out with a $1.05 billion buy of privately held TRZ Energy. This follows closely on the heels of the company's acquisition of American Oil & Gas (AEZ) earlier this year.

The 167,000 acres acquired in this latest deal bring 4,400 barrels of daily production to the table. That's a pretty massive $238,600 per flowing barrel purchase price. At under $6,300 per acre, though, this purchase comes at a discount to those executed by Williams and Enerplus Resources Fund (NYSE: ERF). From what I can piece together, TRZ is active in Dunn and Williams County. You may recall that Dunn County is the location of Kodiak Oil & Gas' (AMEX: KOG) core development area. This should be very prospective acreage, suggesting that Hess may have gotten a great deal here.

Another Asian oil sands suitor
Over the past year or two, one of the most active players in the Canadian oil sands has been China. PetroChina (PTR) took a big stake in a pair of Athabasca Oil Sands' projects last September. More recently, Sinopec (SHI) snapped up ConocoPhillips' (COP) 9% stake in Syncrude, and a Chinese sovereign wealth fund snapped up a stake in some Penn West Energy Trust (NYSE: PWE) properties.

Showing that China isn't the only one salivating over the security of long term oil sands supply, Thai energy company PTTEP has also stepped forward. The company is picking up 40% of Statoil's (STO) Kai Kos Dehseh oil sands project for $2.3 billion. The entry looks low-risk, as first production is slated for early 2011.

Thanks to heady oil prices, the oil sands have made a roaring comeback since the dark days of 2008. As long as you believe that the world economy will continue to support $70 plus oil prices, the oil sands are indeed an interesting place for your money. Cenovus Energy (CVE) continues to be my favorite operator in that realm.


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Tuesday, November 23, 2010

Hess Extends Bakken Footprint with TRZ Energy Deal

Hess has agreed to acquire 167,000 net acres in the Bakken oil shale play in North Dakota from TRZ Energy for $1.05 billion in cash. The properties being acquired are located near Hess' existing acreage and have current net production of approximately 4,400 boe/d.

"This acquisition strengthens our leading land position in the Bakken, leverages our operating capabilities and infrastructure and will contribute to future reserve and production growth," said Greg Hill, President of Worldwide Exploration and Production at Hess. The transaction has an effective date of October 1, 2010 and is expected to close by December 28, 2010.

Posted courtesy of Rigzone.Com

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