A Stunning Move by the World’s Largest Oil Company

By Justin Spittler

Oil still can’t find a bottom. As Dispatch readers know, the oil market is in crisis. Since June 2014, oil has plunged 69%. It dropped 31% in 2015 alone. So far, 2016 has been even worse. The price of oil has fallen every day this year. On Friday, it closed at $32.88 a barrel, its lowest price since February 2004. Oil is already down 11% this year.

In October, Doug Casey predicted lower oil prices at the Casey Research Summit in Tucson, Arizona. I don't know how long [oil prices] will stay low. But they're going lower for the time being. Production is stable to up, but consumption is headed down with a slowing economy.…I'm still short oil at the moment.

The world has too much oil…..
As you likely know, new technologies like “fracking” have unlocked billions of barrels of oil that were impossible to extract before. U.S. oil production has nearly doubled since 2008. In June, U.S. oil production hit its highest level since the 1970s. Global oil output hit an all time high in 2014.

Falling oil prices have slammed the world’s largest oil companies…..
The world’s five largest publicly traded oil companies – Exxon Mobil (XOM), Chevron (CVX), Royal Dutch Shell (RDS-A), BP (BP), and Total S.A. (TOT) – lost $205 billion in value last year, according to The Wall Street Journal. Shell, the worst performer of the five, dropped 24% in 2015. Total, the best performer, dropped 3%.

Oil services companies, which sell “picks and shovels” to the oil industry, have also tanked. The Market Vectors Oil Services ETF (OIH), which holds 26 oil service companies, has plunged 59% over the past 18 months. Schlumberger (SLB) and Halliburton (HAL), the two largest oil services companies, are down 39% and 44% in the same period.

Eventually, this cycle will end with absurdly low prices for oil stocks. We’ll get an amazing opportunity to buy oil stocks at fire sale prices. But, for now, we recommend staying away until the world works through some of its oversupply of oil.

Saudi Arabia is in crisis…..
Saudi Arabia depends more on oil revenues than any other country. Oil makes up 83% of its exports. And about 80% of the country’s government revenue come from oil sales. Last year, the Saudi government spent $98 billion more than it took in…its first budget deficit since 2009.

The International Monetary Fund (IMF) expects the Saudi government to post a budget deficit as high as -19% of GDP in 2016. For comparison, the U.S. government has not posted a deficit higher than -9.8% since World War II. The IMF says Saudi Arabia could burn through its $650 billion cash reserve by 2020 if oil prices stay low. Since oil crashed in the summer of 2014, the country has already withdrawn at least $70 billion from its cash reserve.

To raise cash, the Saudi government may sell its crown jewel…..
Saudi Aramco is Saudi Arabia’s government owned oil company. As the world’s largest oil company, it owns the biggest oil fields in the world, and produces 13% of the world’s oil. The Saudi government has controlled the country’s oil industry since the 1970s. Last week, Financial Times reported that Saudi Arabia is considering an initial public offering (IPO) for Aramco. An IPO is when a company sells shares to the public.

According to Financial Times, an IPO would likely value the company “in the trillions of dollars.” To put that in perspective, Apple (AAPL), the world’s largest publicly traded company, is worth just $538 billion. Some estimates put the value of Saudi Aramco at more than 10 times that of Exxon Mobil – the world’s largest publicly traded oil company.

Switching gears, the U.S. automobile industry is setting record highs..…
U.S. automakers sold an all time record 17.5 million vehicles in 2015. The industry sold 5.7% more vehicles last year than it did 2014. Auto sales have now grown six years in a row. Despite record sales, U.S. automaker stocks are struggling. Ford (F) was down 9.1% in 2015, and has only gained 17% since the beginning of 2012.

General Motors (GM) was down 2.6% in 2015, and has gained 46% since the beginning of 2012. Both stocks have performed worse than the S&P 500, which has gained 53% since the beginning of 2012. Companies that sell parts and services in the auto industry have done much better. Tire maker Goodyear (GT) has climbed 99% over the past four years. Repair and parts shop AutoZone (AZO) is up 119%.

Cheap credit has fueled the boom in the auto industry…..
Forbes reported last month: During the third quarter of 2015, Experian determined the average amount financed for a new vehicle was $28,936, which is up $1,137 from the same period in 2014. What’s more, 44 % of buyers are now taking out loans for between 61 and 72 months, with 27.5% extending their new-vehicle indebtedness to between 73 and 84 months, with the latter representing an increase of 17.1 percent over the past year.

As Casey readers know, the Federal Reserve has made it incredibly cheap to borrow money. In 2008, the Fed cut its key interest rate to effectively zero to fight the financial crisis. It has held its key rate at extremely low levels ever since. Today, its key rate is just 0.25%...far below the historical average of 5%. The average interest rate on a car loan is just 4.3% today. In 2007, the average car loan rate was 7.7%.

E.B. Tucker, editor of The Casey Report, isn’t surprised by the auto industry’s record year..…
Here’s E.B.: Of course the auto industry had a record year…how could it not? I've seen auto rates as low as 0% for 84 months. When money is free, people buy now and think later. The U.S. auto loan market has grown 18 quarters in a row. Last year, it topped $1 trillion for the first time ever. There is now 47% more auto debt outstanding than credit card debt in the U.S.

E.B. says this will end badly. The auto leasing market is also booming because of easy money. Leasing made up 27% of car sales during the first quarter of 2015. Those leases will expire 40 months from now. And someone has to buy those vehicles. This year, over 3 million leased cars will hit the market. Even more will hit the market next year and the year after. All these used cars will create a huge glut. If the free money dries up at the same time, things will get ugly fast. That’s how booms built on easy money come to an end.

Chart of the Day

Oil has plunged to its lowest level in 12 years. Today’s chart shows the price of oil going back to 2004. As you can see, oil has sunk to its lowest level since February 2004. It’s now down 77% from the all time high it set in 2008. As we’ve explained, the world simply has too much oil. Oil is now cheaper than it was during the worst of the global financial crisis in 2008-9.

The article A Stunning Move by the World’s Largest Oil Company was originally published at caseyresearch.com.

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Crude Oil, Divorce, and Bear Markets

By Tony Sagami

Everybody loves a parade. I sure did when I was a child, but I’m paying attention to a very different type of parade today. The parade that I’m talking about is the long, long parade of businesses in the oil industry that are cutting jobs, laying off staff, and digging deep into economic survival mode. The list of companies chopping staff is long, but two more major players in the oil industry joined the parade last week.

Pink Slip #1: Houston-based Dresser-Rand isn’t a household name, but it is a very important part of the energy food chain. Dresser-Rand makes diesel engines and gas turbines that are used to drill for oil.
Dresser-Rand announced that it's laying off 8% of its 8,100 global workers. Many Wall Street experts were quick to point the blame at German industrial giant Siemens, which is in the process of buying Dresser-Rand for $7.6 billion.

Fat chance! Dresser-Rand was crystal clear that the cutbacks are in response to oil market conditions and not because of the merger with Siemens. The reason Dresser-Rand cited for the workforce reduction was not only lower oil prices but also the strength of the US dollar.

If you’re a regular reader of this column, you know that I believe the strengthening US dollar is the most important economic (and profit-killing) trend of 2015.

Pink Slip #2: Oil exploration company Apache Corporation reported its Q4 results last week, and they were awful. Apache lost a whopping $4.8 billion in the last 90 days of 2014.

No matter how you cut it, losing $4.8 billion in just three months is a monumental feat.

Of course, the “dramatic and almost unprecedented” drop in oil prices was responsible for the gigantic loss, but what really matters is the outlook going forward.

CEO John Christmann, to his credit, is taking tough steps to stem the financial bleeding, and that means:

• Shutting down 70% of the company's drilling rigs.

• Slashing it's 2015 capital budget to between $3.6 and $5.0 billion, down from $8.5 billion in 2014.

Those aren’t the actions of an industry insider who expects things to get better anytime soon.

I don’t mean to bag on Dresser-Rand and Apache, because they’re far from alone. Schlumberger, Baker Hughes, Halliburton, Weatherford International, and ConocoPhillips have also announced major layoffs. And don’t make the mistake of thinking that the only people getting laid off are blue-collar roughnecks. These layoffs affect everyone from secretaries to roughnecks to IT professionals.

In fact, according to staffing expert Swift Worldwide Resources, the number of energy jobs lost this year has climbed to well above 100,000 around the world.

From Global to Local

Sometimes it helps to put a local, personal perspective to the big-picture national news.

In my home state of northwest Montana, a huge number of men moved to North Dakota to work in the Bakken gas fields. Montana is a big state; it takes about 14 hours to drive from my corner of northwest Montana to the North Dakota oil fields, so that means those gas workers don’t make it back to their western Montana homes for months.

Moreover, the work was six, sometimes seven days a week and 12 hours a day, so once there, they couldn’t drive back home even if they wanted to. This meant long absences… and a good friend of mine who is a marriage counselor told me that the local divorce rate was spiking because of them.

Now the northwest Montana workers are returning home because the once-lucrative oil/gas jobs are disappearing. That news won’t make the New York Times, but it’s as real as it gets on Main Street USA.

From Local to National

Of course, the oil industry's woes aren’t a carefully guarded Wall Street secret. However, I do think that Wall Street—and perhaps even you—are underestimating the impact that low oil prices are going to have on economic growth and GDP numbers going forward.

Let me explain.

Industrial production for the month of January, which measures the output of US manufacturers, miners, and utilities, came in at a “seasonally adjusted" 0.2%.

A 0.2% gain isn’t much to shout about, but the real key was the impact the mining component (which includes oil/gas producers) had on the industrial-production calculation.

The mining industry is the second-largest component of industrial production, and its output fell by 1.0% in January. It was the biggest drag on the overall index.

However, the Federal Reserve Bank said, “The decline [was] more than accounted for by a substantial drop in the index for oil and gas well drilling and related support activities.”

How much did it account for? The oil and gas component fell by 10.0% in January.

Yup, a double-digit drop in output in just one month. Moreover, it was the fourth monthly decline in a row.
Last week’s weak GDP caught Wall Street off guard, but there are a lot more GDP disappointments to come as the energy industry layoffs percolate through the economy. Here’s how my Rational Bear readers are getting ready for GDP and corporate-earnings disappointments that are sure to rattle the markets.
Can your portfolio, as currently composed, handle a slowing economy and falling corporate profits? For most investors, the answer is “no.” Click above to find out how to protect yourself.



Tony Sagami

30 year market expert Tony Sagami leads the Yield Shark and Rational Bear advisories at Mauldin Economics. To learn more about Yield Shark and how it helps you maximize dividend income, click here.

To learn more about Rational Bear and how you can use it to benefit from falling stocks and sectors, click here.

The article Connecting the Dots: Oil, Divorce, and Bear Markets was originally published at mauldineconomics.com.

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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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Sterne Agee Selects its Four Favorite Oil Services Stocks

Sterne Agee believes non conventional and deepwater drilling will rise steadily during the next few years, and it encourages investors to have exposure to both trends via the highest quality names and in companies with specific catalysts.

The firm thinks WTI crude prices will remain in a fairly stable $85-$95 range over the next two years, rig growth will rise slightly in 2014 and accelerate in 2015, and deepwater drilling visibility will remain strong for several years.

The firm's favorites are Halliburton (HAL), Schlumberger (SLB) and Oceaneering (OII), with Tetra Technologies (TTI) the top pick among sector small caps.


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Fridays Earnings...Schlumberger and Baker Hughes SLB BHI

Schlumberger (SLB) reports 1st quarter EPS of $1.01, beats by $0.02. Revenue of $10.67B misses by $0.08B. “The outlook for North America remains uncertain, with lower than expected rig activity and continuing pricing weakness," CEO Paal Kibsgaard says. Oilfield services revenue from North America, the region which generates most of the top line, fell 4.2% to $3.29B. Overall drilling revenue was $4.1B, up 9% year over year. Shares +0.5% premarket.

Baker Hughes Inc. (BHI) announced today adjusted net income for the first quarter of 2013 of $290 million or $0.65 per diluted share. This compares to net income of $0.49 per diluted share for the fourth quarter of 2012, and $0.86 per diluted share for the first quarter of 2012. Adjusted net income for the first quarter of 2013 excludes a foreign exchange loss of $23 million before and after tax ($0.05 per diluted share) related to the devaluation of Venezuela's currency in February 2013.


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Schlumberger [ticker SLB] Announces Second Quarter 2012 Results

Schlumberger Limited (NYSE:SLB) today reported second quarter 2012 revenue of $10.45 billion versus $9.92 billion in the first quarter of 2012, and $8.99 billion in the second quarter of 2011.

Income from continuing operations attributable to Schlumberger, excluding charges and credits, was $1.4 billion. An increase of 8% sequentially and 20% year on year. Diluted earnings per share from continuing operations, excluding charges and credits, was $1.05 versus $0.96 in the previous quarter, and $0.86 in the second quarter of 2011.

Following Schlumberger’s previously announced sale of both the Wilson distribution business and its equity ownership interest in CE Franklin Ltd. (CE Franklin), the Distribution segment has been reclassified to discontinued operations. All prior periods have been restated accordingly.

Schlumberger recorded charges of $0.02 per share in the second quarter and $0.01 per share in the first quarter of 2012 and $0.05 per share in the second quarter of 2011.

Oilfield Services revenue of $10.45 billion was up 5% sequentially and increased 16% year on year. Pretax segment operating income of $2.1 billion was up 8% sequentially and increased 20% year on year.

Schlumberger CEO Paal Kibsgaard commented, “Solid activity growth and a consistent focus on execution led to results that continued to strengthen in the second quarter.

Read the entire quarterly report

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Schlumberger Declares Quarterly Dividend

The Board of Directors of Schlumberger Limited (NYSE:SLB) today declared a quarterly dividend of $0.275 per share of outstanding common stock. The dividend is payable on July 13, 2012 to stockholders of record at the close of business on June 1, 2012.

Webcast - Live Q1 2012 Schlumberger Earnings Conference Call 04/20/12 at 9:00 a.m. ET Click here for webcast

What Are Hedge Fund Managers Buying Amid Falling Prices.....Ensco and Schlumberger

Hedge funds bought $1.6 billion of shares in two oil-services companies in the second quarter as analysts said a drilling boom in the U.S. may spread overseas, helping reverse a slump in the companies’ stock prices.
Ensco Plc (ESV) and Schlumberger Ltd. (SLB) received the most new investment by hedge funds of all energy companies, beating producers such as Marathon Oil Corp. (MRO), according to calculations by Bloomberg from regulatory filings this week. MHR Fund Management LLC, Vinik Asset Management LP and SAC Capital Advisors LP topped the list of buyers.

Oil companies have to boost drilling in expanding areas of the world such as in Asia and off the coasts of Brazil and West Africa to meet growing energy demand. Drilling for crude and natural gas in North America increased at five times the pace of the rest of the world in the past year.

“International has yet to really inflect, but we’re beginning to see some progress on that front,” said Bill Herbert, an analyst at Simmons & Co. in Houston, who has an “overweight” rating on Schlumberger and Ensco. “You’re going to see meaningful growth on international, deepwater and exploration-related activity.”
New York based MHR acquired $325 million of Ensco stock based on June 30 prices, and Vinik of Boston added $137 million of Schlumberger shares, the filings at the Securities and Exchange Commission in Washington show.

MHR Managing Principal Hal Goldstein didn’t respond to a phone message seeking comment. An executive at Vinik who asked not to be named said the firm never comments to the media......Read the entire article.

OPEC to Increase Production, Oil Services Companies Show a Jump in Profits

It appears we will start the week with a pull back in crude oil prices as Saudi Arabian Oil Minister Ali al-Naimi released a statement that OPEC will increase supply to meet what seems to be inevitable increased demand coming out of China and India. Our "friends" at Goldman Sachs are saying this only indicates that OPEC is using it's spare production supply and should only further the bulls story.

We personally have learned to not let Goldman Sachs lead the way in our oil trading but you also can't ignore it. While retail investors have less effect on oil markets then some other sectors, Goldman Sachs can increase that interest with their apparent media attention grabbing abilities.

But it's North American demand that is making most hedge funds and commercial buyers take a bigger interest in the "crude oil bull story" this week as a report from Commodity Futures Trading Commission showed that these investors have ramped up their net long positions 0.4 percent in crude contracts in the week ended Jan. 18th.

The oil services sector is giving traders additional confidence as Schlumberger reported better than expected quarterly profit on Friday followed by Haliburton releasing fourth quarter reports showing their net profit rose to $605 million, or .66 cents per share, from $243 million, or 27 cents per share, a year earlier. Revenue jumped 40 percent to $5.16 billion in the quarter after analysts had expected revenues to be $4.88 billion.

So do we open Monday morning selling the news on these companies? It's the numbers we trust and here's what we are using for Mondays trading......

Crude oil was lower overnight as it extends last week's decline. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 88.45 would confirm that a short term top has been posted. If March renews this winter's rally, weekly resistance crossing at 93.87 is the next upside target. First resistance is this year's high crossing at 93.46. Second resistance is weekly resistance crossing at 93.87. First support is the reaction low crossing at 88.45. Second support is the reaction low crossing at 88.07. Crude oil pivot point for Monday morning is 89.40.

Natural gas as it extends the rally off October's low. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If March extends the rally off October's low, the 62% retracement level of the June-October decline crossing at 5.025 is the next upside target. Closes below the 20 day moving average crossing at 4.478 are needed to confirm that a short term top has been posted. First resistance is the overnight high crossing at 4.823. Second resistance is the 62% retracement level of the June-October decline crossing at 5.025. First support is the 10 day moving average crossing at 4.554. Second support is the 20 day moving average crossing at 4.478. Natural gas pivot point for Monday morning is 4.719.

Gold was higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible. If February extends this month's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 20 day moving average crossing at 1380.40 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1366.30. Second resistance is the 20 day moving average crossing at 1388.40. First support is last Friday's low crossing at 1337.00. Second support is the reaction low crossing at 1331.10. Gold pivot point for Monday morning is 1342.60.


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Schlumberger Finalizes $11 Billion Dollar Merger with Smith International

Schlumberger has closed its merger with Smith International. As previously announced, each Smith stockholder will receive 0.6966 shares of Schlumberger common stock in exchange for each Smith share, with cash paid in lieu of any fractional shares of Schlumberger common stock. Schlumberger has issued approximately 176 million shares pursuant to the merger, representing a transaction value of approximately $11 billion. As a result, former Smith stockholders own approximately 12.9% of Schlumberger's outstanding shares of common stock.

The merger widens Schlumberger's lead as the world's largest oilfield services company based on revenue and market capitalization. Smith's drilling technologies, other products and expertise complement a variety of Schlumberger technology offerings, while the geographical footprint of Schlumberger will enable the merged companies to extend joint offerings worldwide.

Andrew Gould, Chairman and Chief Executive Officer of Schlumberger, commented, "I am extremely pleased to welcome Smith employees, customers and shareholders to Schlumberger. We are ready to begin the process of realizing the synergies made possible by this merger and our focus in the near term is on the execution of plans that have been laid out these past few months while continuing to deliver safety and quality in our field operations. Beyond the near term, the merger will allow us to address new markets and develop new technologies, and employees from both companies will have key roles to play in unlocking the value brought by the combination."

John Yearwood, former Chief Executive Officer of Smith, said, "This is an exciting time for all the former Smith International employees as we aggressively expand our service offerings through the rapid implementation of the identified growth strategies while continuing to focus on our customers' everyday needs. The quality of the integration planning process has been outstanding and everyone is looking forward to exceeding expectations."


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Schlumberger To Buy Smith International In $11 Billion Dollar Deal

Schlumberger Ltd. (SLB) will acquire Smith International (SII) for about $11 billion in an all stock deal that is the year's largest acquisition and will make Schlumberger by far the world's biggest oilfield services company.

The deal, which the companies announced Sunday, will cement Schlumberger's position atop the oil services industry, which helps oil producers locate and drill for oil deposits. After the deal, Schlumberger, already the biggest company in the sector by revenue and market value, would have revenues double that of its nearest rival, Halliburton Co. (HAL), although most analysts expect Schlumberger to sell some assets for antitrust or other reasons.

Under the terms of the deal, Smith shareholders will receive 0.6966 Schlumberger share for each Smith share they own, a 37.5% premium over Smith's share price on Thursday, when news of the deal was first reported. The deal, which must still be approved by shareholders of both companies, is expected to close in the second half of this year. Smith shareholders would own about 12.8% of the combined company.

The $11 billion price tag, which values Smith at $44.51 per share based on Friday's close, was higher than most analysts expected. Dan Pickering, an analyst for energy focused investment bank Tudor Pickering Holt & Co., said some Schlumberger shareholders might also have preferred a cash and stock deal to an all stock deal. But he said the deal makes sense for Schlumberger, which will now be able to package Smith's products with its own services to win more business.


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Schlumberger Profit Falls as Clients Slash Budgets

Schlumberger Ltd., the world’s largest oilfield-services provider, said second-quarter profit fell 57 percent after a plunge in energy prices prompted petroleum producers to cut spending. Net income dropped to $613 million, or 51 cents a share, from $1.42 billion, or $1.16, a year earlier, Schlumberger, based in Houston and Paris, said today in a statement. Excluding costs for job cuts, profit was 68 cents a share, 4 cents higher than the average of 24 analyst estimates compiled by Bloomberg. Sales fell 18 percent to $5.53 billion.....Complete Story



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OPEC General Sec. See No Cuts But Schlumberger Does

"OPEC Secretary General Doesn't See New Oil Cuts in May"
OPEC Secretary General Abdalla Salem El-Badri said he doesn't expect the oil cartel to cut production when the group meets next month, despite signs of even weaker crude demand and swelling oil inventory in big energy consuming nations. The Organization of Petroleum Exporting Countries needs to fully implement an agreement announced back in December to remove 4.2 million barrels a day from world markets before embarking on more reductions, El-Badri said. "We need to take all that off the market before we can talk about new cuts....Complete Story

"Oil Falls on Speculation Slow Recovery Will Limit Energy Demand"
Crude oil fell for the first time in five days in New York on speculation a slow recovery from the global recession may limit demand. The economy in the U.S., the world’s largest oil consumer, will continue to contract “for some time,” Lawrence Summers, director of the White House National Economic Council, said yesterday. Increased output by non OPEC producers has left the market oversupplied by about 720,000 barrels a day, said Algerian Oil Minister Chakib Khelil. “It’s difficult to see a really sustained rally in oil,” said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. “There are so many downside risks to the global economy....Complete Story

"Schlumberger CFO: Another Headcount Reduction Likely"
Schlumberger's Chief Financial Officer, Simon Avat, said Friday the oilfield services major will likely reduce its employment levels in the coming months, Dow Jones reports. The world's largest oilfield services company, Schlumberger cut some 5,000, or 6%, of its 84,000 global employees in the first round of layoffs announced in January amid a worldwide downturn in oil and gas activity and weakened crude prices. In the last five years, Schlumberger, whose principal offices are in Houston, Paris and The Hague, recruited 11,613 engineers from 140 countries and 8,754 specialists....Complete Story


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Schlumberger First Quarter Net Down 30% On Reduced U.S. Drilling

Schlumberger Ltd.'s (SLB) first quarter earnings fell 30% amid plummeting drilling activity, exceeding analysts' pessimistic expectations of a bigger decline amid a sharp drop in drilling activity for oil and gas.

Chief Executive Andrew Gould, however, said Friday in a conference call that Schlumberger would have difficulty replicating its first quarter performance amid lower prices for services and uncertainty in U.S. natural gas drilling.

Gould said Schlumberger's customers are seeking and obtaining lower prices for services. He said the company's first quarter performance would be "extremely difficult" to repeat as those renegotiated prices take hold.

"A lot of price concessions that we have given will flow though in subsequent quarters," Gould said.

Producers have cut back on drilling as low oil and gas prices have left many projects unprofitable and left less cash for those that could make money. Earlier this month, the number of drilling rigs in the U.S. was off by more than half from September to 975, according to Baker Hughes Inc. (BHI), the first drop below 1,000 since 2003....Complete Story


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Suncor To Buy Petro-Canada, Crude Oil Up Sharply On Fed Plan and Stock Rally

"Suncor To Buy Petro-Canada For $15 Billion Of Stock"
Suncor Energy Inc. (SU) said Monday it will acquire Petro-Canada (PCZ) for about $15 billion in stock as the two oil-sands companies bulk up to cut costs in the face of lower oil prices and a slowing world economy....Complete Story

"Crude Up Sharply As Stock Markets Rally"
U.S. crude oil futures rose on Monday, jumping above $53 a barrel as Wall Street and global stock markets rallied on a U.S. plan to buy up so-called toxic assets to tidy up bank balance sheets....Complete Story

"Schlumberger Says Another Round of Layoffs Coming"
Schlumberger is preparing for its second round of layoffs this year amid a global downturn in oil and gas activity that also has also pushed rivals to cut jobs....Complete Story

"Russia Sees No Economic Reason to Join OPEC, Energy Minister Shmatko Says"
Russia Energy Minister Sergei Shmatko said his country has no economic reason to join OPEC at the moment as the national oil industry already responds to market signals....Complete Story

Crude Oil Industry Headlines News

"Petrobras' P-51 Kicks Off Production in the Campos Basin"
The P-51 semisubmersible platform went on stream Jan. 24, beginning production of well MLS-99 in the Campos Basin's Marlim Sul field....Complete Story

"Infrastructure Investment: Eni OKs 2 Greater Longhorn Developments"
For a combined investment of $341 million, Eni plans to add a subsea well to the Longhorn development and increase production capacity on the Appaloosa field's Corral platform....Complete Story

"Schlumberger Says Mideast Job Cuts Below 5% Global Average"
Schlumberger will cut jobs in the Middle East amid slowing oil field activities, but less than the global average of 5%....Complete Story

Crude Oil Industry Headline News

"Pemex Plans $20B E&P Investment to Boost Production"
Pemex plans to invest nearly $20 billion this year in exploration and production, with $2.2 billion slated for Cantarell and $2.3 billion for Chicontepec....Complete Story

"A Rebound in Oil Prices May Presage Pick Up in Demand"
Oil dropped and rebounded after the EIA reported a larger-than-expected build-up in crude oil and gasoline stocks, a move that suggests the market is seeing a change....Complete Story

"Schlumberger's Net Falls 17%; Gould Says Job Cuts Affect 5,000 Worldwide"
Schlumberger Ltd., the world’s largest oilfield-services provider, said fourth-quarter profit fell 17 percent as a collapse in petroleum prices slowed exploration spending by customers. The company said job cuts “concern” 5,000 people worldwide....Complete Story

Crude Oil Industry Headline News

"Oil Falls For A Fourth Day As U.S. Job Losses Add To Concern Over Demand"
Crude oil fell a fourth day after a report showing that the U.S. unemployment rate surged in December raised concern demand will drop faster than OPEC cuts output....Complete Story

"Petrobras Will Pay Most In Bond Market Since 2003 To Fund Tupi Investment"
Petroleo Brasileiro SA, owner of the Americas’ biggest oil discovery in three decades, will pay the most in the bond market in five years to finance a record investment plan after crude prices tumbled....Complete Story

"Exxon Mobil's Cash Hoard Offers Major Growth Options"
With nearly $40 billion in cash in its coffers, Exxon Mobil holds enough financial firepower to pull off an industry changing transaction....Complete Story

"Santos LNG JV Plans to Boost Employment in '09"
Santos said plans are in place to hire 120 employees in 2009 to work on the proposed Gladstone LNG project that it wants to build with Malaysia's Petronas....Complete Story

"Schlumberger Begins Laying Off Hundreds of US Workers"
Schlumberger has begun laying off hundreds of workers in the U.S. and around the world in the first of what experts say will likely be a wave of job cuts in the energy industry....Complete Story

Crude Oil Industry Headline News

"Oil Falls a Third Day on Concern the Recession Will Cut Demand"
Crude oil fell for a third day as the rising number of jobless workers in the U.S. intensified concern that the recession will cut fuel use in the world’s biggest energy-consuming country....Complete Story

"Schlumberger Eliminates 1,000 Jobs in North America"
Schlumberger Ltd., the world’s largest oilfield-services company, cut 1,000 jobs in North America yesterday to curb costs during a slump in oil and natural-gas exploration spending as economies slow....Complete Story

"Gazprom, Naftogaz Officials in Brussels"
The heads of Ukraine and Russia's energy companies arrived in Brussels to negotiate an end to a natural gas lock down that has left much of Europe cold....Complete Story

"Recovery of US Economy Crucial to Increase Crude Oil Demand"
The global financial crisis and slowing down of the US economy will have an impact on the Oil & Gas industry in Asia for the coming year. However, 2009 upstream investment and activity looks encouraging in both Malaysia and Singapore....Complete Story

"Chesapeake Energy Chief to Remain for 5 More Years"
Chesapeake's Chief Executive Aubrey McClendon agreed to remain at the helm of the natural gas producer for at least five years, under a new employment contract that provides him a $75 million bonus....Complete Story