With US oil hovering around $55 a barrel, producers are finally starting to profit from their hedging contracts after several quarters of earnings hits due to bad hedges. Diamondback Energy has locked in a weighted average price of $58.41 a barrel for 49% of its 2018 output, while Concho Resources has 77% of its 2018 output hedged at an average of $55.32.
A study led by a researcher from Nanyang Technological University in Singapore says southern Italy's Campi Flegrei volcano is starting a new cycle that could end in a major eruption. Scientists, who examined the volcano's 60,000-year history and geological samples from 23 of its eruptions, say the volcano passes through stages that begin with a big eruption, followed by small outbursts and a pre-caldera phase in which magma builds up underground, bubbles toward the surface and potentially results in another massive blast.
The Permian Basin's pipeline constraints are expected to be relieved next year, but one major challenge for producers will be finding enough workers to help them turn the taps on the several thousand drilled-but-uncompleted wells. Sanford C. Bernstein analyst Colin Davies says that up to 100 fracking crews may be required once the new pipelines come online, but despite the promise of hefty paydays, people are shunning the oil industry due to the lack of job security.
The Energy Information Administration expects US shale oil output to grow in December by 113,000 barrels per day to a record 7.94 million bpd for the month, driven by a 63,000 bpd increase in Permian Basin production. US natural gas production is forecast to hit its own high, climbing over 1 billion cubic feet per day to 75.1 bcf/d next month.
The pipeline industry has escaped from its image as a boring facet of the energy sector and is now at the center of billions of dollars of deals, dozens of new company launches and a flurry of mergers and acquisitions, with firms planning to spend over $40 billion in Texas on nearly 10,000 miles of pipelines alone. The sector is attracting growing interest from private equity-backed players, which are behind several multibillion-dollar deals including Occidental Petroleum's recent sale of $2.6 billion worth of midstream assets to two private equity startups.
Shale producer Pioneer Natural Resources has struck a $400 million cash-and-stock deal to sell its pressure pumping business to ProPetro Holding Corp. The deal comes as Pioneer is looking to streamline its operations and divest its Eagle Ford Shale assets to zero in on the Permian Basin.
San Antonio-based All American Oil & Gas has filed for Chapter 11 bankruptcy protection to prevent lender Kern Cal Oil 7 from taking over the company in a "predatory loan-to-own strategy," AAOG President Patrick Morris said. The company, which operates wells in California's San Joaquin Valley, has an enterprise value between $175 million and $195 million and approximately $142 million in debt.
As efforts to rein in spending continue and the focus shifts to developing known reserves more economically, big oil companies are having a hard time fully replacing the oil they pump, putting output growth at risk. Average reserve replacement ratios for the five biggest oil companies in the West -- BP, Chevron, ExxonMobil, Royal Dutch Shell and Total -- have been declining for years, while conventional hydrocarbons production has outpaced new discoveries in each of the past five years.
The Environmental Protection Agency will convene a hearing today in Denver to take public comments on a proposal to repeal methane emissions limits from oil and natural gas drilling and ease methane leak inspection requirements. The rollback, supported by the American Petroleum Institute, could result in $75 million in annual savings for the oil and gas industry.
Artificial intelligence will increase the oil and natural gas industry's production and profits, and companies should take steps to adopt new AI technologies, says Omar bin Sultan al-Olama, UAE state minister for artificial intelligence. "The opportunities are endless -- some estimates say AI can have a $2.85 billion contribution in the energy industry by 2022," al-Olama said Tuesday.