News From The Oil Patch, May 13
John P. Tretbar
The federal government's antitrust watchdog has barred Scott Sheffield from taking a seat on the board of directors when Exxon-Mobil buys Pioneer Energy, the giant oil producer Sheffield founded. The Federal Trade Commission declined to challenge the $60 BILLION deal on the condition Sheffield be excluded from the board. The proposed consent order also bars Sheffield from serving in any advisory capacity at Exxon and prohibits the oil giant from appointing any Pioneer employee or director to its board for five years.
The benchmark Nymex crude futures contract dropped a dollar Friday to $78.26 per barrel. By midday Monday, New York crude prices were up a few cents from Friday's close at $78.68 a barrel. London Brent was also slightly higher, trading over $83 by teatime. Kansas Common crude at CHS in McPherson starts the week at $68.50 per barrel after dropping a dollar on Friday.
The Kansas Rig Count from Independent Oil and Gas Service drops by one rig to 17 in Western Kansas, with drilling underway on a lease in Russell County Friday. The tally is unchanged at 13 active rigs east of Wichita.
The state approved 13 new drilling locations last week. That's 331 so far this year, compared to 331 last year at this time. There are eight new permits east of Wichita, and five in Western Kansas, including a new one in Barton County.
Independent Oil and Gas Service reports one completion in Barton County out of 14 west of Wichita. Operators completed 46 new wells statewide. The running total this year is 452 wells, compared to 638 a year ago.
The government reports commercial crude inventories dropped by 1.4 million barrels last week to 459.5 million as of May 3rd. Commercial stockpiles are about three percent below the five-year average.
Crude imports outpaced exports by two-and-a-half million barrels a day last week. The difference is down slightly from a week ago but up from the four-week average. U.S. crude oil imports averaged 7.0 million barrels per day. That's an increase of 198 thousand barrels per day from the previous week, and about 300-thousand barrels a day over the four-week average. EIA says crude exports averaged 4.4 million barrels a day, up half a million barrels week-over-week but slightly less than the four-week average.
The government reported another refill purchase for the Strategic Petroleum Reserve, the fourth in four weeks. The weekly inventory report from the Energy Information Administration shows an additional 900-thousand barrels added to the SPR since last week. That's nearly three million barrels of crude in the last month. The government received an average of $95 a barrel when strategic stockpiles were sold to manage crude prices after the Russian invasion of Ukraine. They've been buying it back at around $78, and in the process have realized savings of about $50 million so far.
Some of the biggest players in the patch are doubling down on Texas and New Mexico, and that could spur even more mergers and acquisitions elsewhere. ExxonMobil, Chevron, Occidental and Diamondback Energy all plan to divest assets outside the Permian Basin worth tens of billions of dollars. Chevron intends to divest approximately $10 billion to $15 billion of assets by 2028, while Oxy plans to divest between $4.5 billion and $6 billion. A report by Rystad Energy and World Oil suggests this could pave the way for a power-shift among a new batch of deal-hungry players. Global mergers and acquisitions this year have already topped $64 BILLION, an increase of 145% over last year at this time, and the biggest first-quarter total in five years.
Some of the biggest players in the patch are doubling down on Texas and New Mexico, and that could spur even more mergers and acquisitions elsewhere. ExxonMobil, Chevron, Occidental and Diamondback Energy all plan to divest assets outside the Permian Basin worth tens of billions of dollars. Chevron intends to divest approximately $10 billion to $15 billion of assets by 2028, while Oxy plans to divest between $4.5 billion and $6 billion. A report by Rystad Energy and World Oil suggests this could pave the way for a power-shift among a new batch of deal-hungry players. Global mergers and acquisitions this year have already topped $64 BILLION, an increase of 145% over last year at this time, and the biggest first-quarter total in five years.
A large energy investment firm plans to continue spending on the liquefied natural gas export industry in this country, despite the Biden Administration's pause in new permitting. Ben Dell of Kimmeridge Energy Management tells Bloomberg his company expects to make additional investments in a proposed LNG export facility offshore near Louisiana, but says they're open to other prospects.