Mark Latham Commodity Equity Intelligence Service

Friday 8th May 2015
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Oil and Gas


China's crude oil imports hit record, coal shipments slump

China's crude oil imports hit a record high in April as falling prices encouraged stockpiling, but coal imports plunged and shipments of other commodites generally eased on a year earlier amid a sluggish economy.

China's exports unexpectedly fell 6.4 percent for the month, while imports tumbled by a deeper-than-forecast 16.2 percent, fueling expectations that Beijing will quickly roll out more stimulus to avert a sharper economic slowdown.

China, the world's second-largest crude oil buyer, imported a higher-than-expected 7.4 million barrels per day in April, up 8.6 percent on a year ago, as oil firms built up stocks despite tepid underlying refined fuel demand, especially for diesel.

With oil prices down 40 percent from last June's highs, China has been adding to its strategic reserves, although some analysts say imports may now pull back as the country starts to run out of storage space.

Coal imports by the world's top coal burner fell 26 percent from a year ago, extending a sharp scaleback in the first quarter due to weak demand, ample domestic supplies and tighter environmental controls.

"Demand for thermal coal is terribly weak, while domestic supplies are plentiful," said a Beijing-based coal trader.

Thermal power generation, predominantly fired by coal, fell nearly 4 percent in the first quarter of the year, as the world's second-largest economy shifted away from energy-guzzling sectors and boosted cleaner fuels such as hydro, nuclear and wind.

Copper imports fell 4.4 percent in April from a year earlier. Imports in the in the first four months dropped 14 percent on year earlier to 1.53 million tonnes, customs data showed.

Iron ore imports inched down 0.4 percent to 80.21 million tonnes in April from March, and fell 3.8 percent from a year ago, as the faltering economy pressured demand for the steelmaking ingredient from the world's top consumer.

Steel mills, however, took advantage of lower production cost and healthy orders abroad and exported 10.9 percent more steel products last month versus March, despite the scrapping of an export rebate on boron-added steel products.

April imports of soybeans were down down 18.3 percent from a year ago after a truck strike in early March in Brazil, the world's top exporter, delayed shipments.
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Glencore blames rivals for creating metals glut

The head of global mining and trading company Glencore said rivals were to blame for an oversupply of metals which depressed its share price.

Despite a partial recovery in the last few months, Glencore's shares are down about 6 percent from a year ago, under pressure from a rout in prices for most of the commodities it produces and trades.

"Unfortunately our competitors in the world have produced more supply than demand and commodity prices are down for that reason," Glasenberg said at the company's annual meeting.

"I am doing my level best to convince my competitors we should understand the words demand and supply," he added in response to a question from an investor about the share price.

Glasenberg has criticised rivals such as Rio Tinto and BHP Billiton at various times, blaming them for oversupplying the market, particularly in iron ore, a commodity Glencore has little exposure to.

Glasenberg said he was optimistic about the outlook for its key products: copper, nickel and zinc.

Coal, another main commodity for Glencore, also "looks good going forward", Glasenberg said, as Indonesia exports taper off with the country consuming more coal domestically.

Coal prices have been battered by a large supply overhang in the last couple of years.

Glasenberg has said unlike his rivals he would not aim to "cannibalise" his own market by adding to the glut.

The world's largest exporter of thermal coal said in March that its 2015 coal output was expected to fall by around 6 percent on the year after production cuts at some of its coal operations.

But London-listed Glencore's coal output rose by 4 percent in the first quarter this year from the same period a year ago.

In January the company said it could shut down production destined for export from its Optimum Coal Mines in South Africa, which would put 1,070 jobs at risk.

In reply to a shareholder who asked the company to prevent such a blow to the country, South Africa-born Glasenberg said if the company goes ahead with the Optimum closure it would expand capacity at another lower cost South African mine.

"So the net net effect should be the same but (would) just provide more benefit for shareholders, more benefit for the country, larger taxes being paid," he said.
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Something Odd about Money: Gold

By Yi Wen, Assistant Vice President and Economist, and Maria A. Arias, Research Associate

Inflation is typically described as a persistent increase in the general price level, such as in the consumer price index. One of the most important theories to explain inflation is the monetarist view that, according to Milton Friedman, “Inflation is always and everywhere a monetary phenomenon.”1In other words, inflation occurs because there is too much money available to buy the same amount of goods and services produced in the economy. This view can also be represented by the so-called “quantity theory of money,” which relates the general price level, the total goods and services produced in a given period, the total money supply and the speed (velocity) at which money circulates in the economy in facilitating transactions in the following equation:


In this equation:

  • M stands for money.
  • V stands for the velocity of money (or the rate at which people spend money).
  • P stands for the general price level.
  • Q stands for the quantity of goods and services produced.

Based on this equation, holding the money velocity constant, if the money supply (M) increases at a faster rate than real economic output (Q), the price level (P) must increase to make up the difference. According to this view, inflation in the U.S. should have been about 31 percent per year between 2008 and 2013, when the money supply grew at an average pace of 33 percent per year and output grew at an average pace just below 2 percent. Why, then, has inflation remained persistently low (below 2 percent) during this period?

Declining Velocity

The issue has to do with the velocity of money, which has never been constant, as can be seen in the figure below . If for some reason the money velocity declines rapidly during an expansionary monetary policy period, it can offset the increase in money supply and even lead to deflation instead of inflation.

Image title
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BHP spin-off South32 sees M&A opportunities

Newly formed mining and metals group South32 is open to acquisitions once it breaks from BHP Billiton , its CEO-elect Graham Kerr said on Wednesday.

BHP shareholders are expected to approve the spin-off, which includes some of the global miner's smaller assets, at meetings in Perth and London on Wednesday, paving the way toward a listing on May 18.

Named after the 32nd parallel south line of latitude that links its business centres in Perth and Johannesburg, South32 will produce alumina, aluminium, coal, manganese, nickel, silver, lead and zinc from mines and smelters in Australia, Brazil, Colombia, South Africa and Mozambique.

Those assets, long overshadowed by BHP's much larger iron ore, petroleum, copper and coal businesses, generated underlying earnings of $446 million on revenue of $8.3 billion last year.

"If you compare them across to Anglo, Glencore, I think you'd find our assets absolutely stack up beautifully," Kerr said referring to bigger rivals Anglo American Plc and Glencore Plc.

The new company will have the added advantage of carrying just $674 million in net debt.

"We're not over-geared, we're not over-leveraged. We don't have that problem that a lot of our peers will in the industry," Kerr told reporters ahead of the vote.

He said the company would consider acquisitions of any commodity, other than gold, where South32 could add value.

"If we do go into the M&A space it will be opportunistic and it will be only where we see value, and we'd have to sell that story very strongly to our shareholders."

He played down the prospects of chasing any of the coal assets that companies such as Vale and Anglo American are trying to sell right now.

"From our perspective, it's not the most value-accretive way we can see ourselves using our people, time or resources at the moment."

Forecasts on how much South32 will be valued at have dropped to between $5 billion and $10 billion since the spin-off was announced last year, as prices for its main products, including aluminium and manganese, have slumped.

South32 will be the world's top manganese producer and Kerr said if the company thought it could boost prices by cutting output it would consider doing so - in contrast to BHP'spolicy of producing at full tilt as long as it is profitable.
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Houthi missiles hit Saudi border town; airforce to retaliate

Yemen's Houthi fighters fired mortar and rockets at a Saudi Arabian border town on Tuesday for the first time since a Saudi-led coalition began a military campaign against them in late March, the coalition's spokesman said.

The projectiles struck a girls' school and a hospital in Najran, which is only three km (two miles) from Yemen's border, Brigadier General Ahmed Asseri said, prompting authorities to close down all schools in the area. There were no immediate details of any casualties.

The attack followed Monday's statement by Riyadh that it was considering a ceasefire to allow humanitarian relief and a call by President Abd-Rabbu Mansour Hadi, in exile in Saudi Arabia, for talks among Yemen's political factions.

"They were mortars and Katyushas fired randomly at a residential district. Unfortunately they hit a girls' school, they hit a hospital and they hit some houses," Asseri said in a phone interview.

"We will not let this action pass without reaction. The air force and other components of the coalition are taking care of the source of the attack," he added. He said more details on the number and type of projectiles fired, and whether they caused any injuries, would be released later on Tuesday.
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S&P warns BHP rating vulnerable to weak iron ore, oil prices

Standard & Poor's warned on Monday it may cut BHP Billiton's credit rating in the next 12 months, reflecting the global miner's commitment never to cut its dividend, even in the face of weak prices for its two biggest earners. "The negative outlook reflects the increased likelihood that BHP Billiton's financial metrics will worsen in 2016 as a result of lower iron ore and oil prices," S&P said.

"BHP Billiton's commitment to a progressive dividend policy reduces the company's financial flexibility in times of deteriorating market conditions." However S&P affirmed BHP's long-term corporate credit rating at 'A+' and its short-term rating at 'A-1', the highest among the world's top miners, and said it expected the company to cut costs and capital spending further to shore up its cash flow. 

BHP's planned spin-off of its smaller assets into a separate company, South32, would not affect its rating, the agency said. 

S&P also affirmed world no.2 iron ore miner Rio Tinto's long-term rating at "A-" and short-term rating at "A-2". It said the company's relatively low capital spending and "excellent position" on the iron ore cost curve globally should help it to meet the cash flow requirements to retain its credit rating. Last week S&P downgraded top iron ore miner Vale's ratings to "BBB", just two notches above junk level, which Vale called premature at a time it was stepping up output and cutting costs.
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China's 10 nonferrous metal output up 7.7% in Q1 to 12.17 mln tons

The combined output of the ten nonferrous metals rose 7.7% year on year to 12.17 million tons in the first quarter of this year, according to the latest statistics released by the National Development and Reform Commission.

The output of aluminum electrolytic rose 7.4% year on year to 7.51 million tons in the three-month period. The output of copper and alumina oxide see a growth of 14.4% and 15.3% to 1.85 million tons and 13.97 million tons, respectively.

The output of lead dropped 6.7% year on year to 0.99 million tons in the period, and the output of zinc went up 14.4% from a year earlier to 1.46 million tons in the first three months.

In Mar 2015, the average prices of copper and lead futures on the Shanghai Futures Exchange stood at RMB 42,097 and RMB 12,334 per ton, up 2.8% and down 1.3% from Feb 2015, respectively.?

In the first quarter of this year, China's nonferrous industry realized RMB 35.4 billion in profit, 8.8% higher than in the same period of 2014.
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China April HSBC PMI shows biggest drop in factory activity in a year

China's factories suffered their fastest drop in activity in a year in April as new orders shrank, a private business survey showed on Monday, hardening the case for fresh stimulus measures to halt a slowdown in the world's second-largest economy.

The latest indication of deepening factory woes raises the risk that second-quarter economic growth may dip below 7 percent for the first time since the depths of the global crisis, adding to official fears of job losses and local-level debt defaults.

The HSBC/Markit Purchasing Managers' Index (PMI) fell to 48.9 in April - the lowest level since April 2014 - from 49.6 in March, as demand faltered and deflationary pressures persisted.

The number was weaker than a preliminary reading of 49.2, and below the 50-point level that separates growth from contraction compared with the previous month.

"China's manufacturing sector had a weak start to Q2, with total new business declining at the quickest rate in a year while production stagnated," said Annabel Fiddes, an economist at Markit.

"The PMI data indicate that more stimulus measures may be required to ensure the economy doesn't slow from the 7 percent annual growth rate seen in Q1.”

The overall new orders sub-index dipped to 48.7 in April, the sharpest contraction in a year. That suggested a marked deterioration in domestic demand, as new export orders showed tentative signs of improvement.

Both input and output prices declined for a ninth month, while manufacturers shed jobs for an 18th month, auguring poorly for an economy that grew at its weakest rate for six years in the first quarter.

An official survey released on Friday showed China's factories struggled to grow in April as domestic and export demand remained weak. The official number of 50.1 was the weakest reading for the month of April since the data started in 2005, HSBC noted.
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Rio Tinto ready to resume hunt for mining deals — report

Until recently, Rio Tinto's chief executive Sam Walsh insisted the company was neither interested in acquisitions nor mergers.

Rio Tinto (LON:RIO), the world’s second largest mining company, is ready to restart looking for deals, but only if it can secure the right asset at the correct valuation and win investor support, analysts and banking sources say.

According to Bloomberg, Morgan Stanley and other analysts met this week with Rio’s chief financial officer Chris Lynch. And got the impression that the miner could be soon looking for tier-one assets whose valuations are being pushed lower.

“If they can buy tier-one assets at valuations that are closer to the bottom of the cycle, then that’s not a stupid thing to do,” Jason Beddow, chief executive officer of Argo Investments, toldBloomberg. His company manages close to $4 billion in Australia and holds Rio shares.

If Rio buys any assets this year, it would be its first acquisition in about three years.

If Rio buys any assets this year, it would be its first acquisition in about three years. But chief executive, Sam Walsh, has repeatedly said his company is neither interested in acquisitions nor has any short term plans of merging with anyone (read Glencore).

At a February event in London, Walsh had not problems vocalizing his thoughts and expressed that a merger with Glencore was simple “not going to happen,” indicating he thought Ivan Glasenberg’s company couldn’t pay a high-enough price.
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Oil and Gas

Canadian Natural Resources Earnings Swing to Loss

Canadian Natural Resources Ltd., one of the country’s largest oil and natural gas producers, posted its first quarterly net loss in four years on Thursday as a drop in energy prices more than offset record production.

The Calgary-based company lost 252 million Canadian dollars ($209 million), or 23 Canadian cents a share, in the first quarter compared with earnings of C$622 million, or 57 Canadian cents, a year earlier. The latest result was its first dip into the red since the fourth quarter of 2010.

The company said quarterly output was a record 898,053 barrels of oil equivalent a day, up from 684,647 barrels a year earlier. However, cash flow fell 36% to C$1.37 billion because of lower commodity prices.

“Canadian Natural is not immune to the impact falling prices have had on our cash flow and earnings,” President Steve Laut told analysts on a conference call.

On an adjusted basis, Canadian Natural earned 2 Canadian cents a share, down sharply from 85 Canadian cents a year earlier, but better than the 5 Canadian-cent loss analysts expected, according to a Thomson Reuters poll.

Mr. Laut said political uncertainty was “at the top of mind for everyone” after aleft-leaning party won control of Alberta’s government in provincial elections on Tuesday. Noting the victorious Alberta New Democratic Party pledged to raise corporate taxes and institute a regular review of oil and gas royalties, he said: “Clearly, this is not good for the industry.”

But the executive said he was encouraged that incoming Alberta PremierRachel Notley said she wants to forge a constructive relationship with the energy industry. “As one of the leading oil and natural gas companies in Alberta, we are committed to working with the new government,” he said.

Operationally, Canadian Natural said crude-oil production rose 23% and natural-gas production increased 51% amid lower operating costs.

The company announced yet another reduction in its 2015 capital program, and now targets spending of about C$5.7 billion this year. It announced spending cuts in January and March.

Canadian Natural said it continues to review its royalty lands and royalty revenue portfolio with a view to maximizing shareholder value. Options for its royalty lands and royalty revenue portfolio include a sale or spinoff, it said.
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Oil: Rally what rally?

LONDON (Reuters) - While oil futures prices rebound with vigor as analysts cite strong demand, the physical crude market tells a much more cautionary tale.

Tens of millions of barrels are struggling to find buyers in Europe with traders of West African, Azeri and North Sea crude blaming poor demand.

The deep disconnect between the oil futures and physical markets looks similar to the events of June 2014 when the physical market weakness became a precursor for a futures price crash.

Image titleLPG Houston

Image titleLNG Tokyo
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Saudis Splurge in Asia to Win Loyal Oil Customers for Decades

Saudia Arabia is spending generously now on Asian refiners to lock in its position as the region’s biggest supplier of oil for decades to come.

The Saudi national oil company is part of a group that’s building a processing plant in China and it teamed with Asia’s biggest refiner on another in Fujian province. Oil Minister Ali al-Naimi traveled to Beijing last month, highlighting the importance of the world’s second-biggest crude consumer to his country’s future. He also visited a South Korean refinery in which his country has a majority interest.

Pressure is rising on Saudi Arabia to hold on to market share in Asia as competitors including Iraq, Mexico and Russia make inroads. The kingdom, the world’s largest crude exporter, has cut price differentials on its crude to Asia 10 times in the past 18 months, while rivals followed with their own reductions.

“Saudi Arabia has been on the lookout for a lot more joint venture projects,” Suresh Sivanandam, a refining and chemical analyst at Wood Mackenzie Ltd. in Singapore, said by phone. “They want to secure demand for their crude and that’s one way of increasing market share.”

Daily consumption of 31.2 million barrels in Asia this year will take the region’s demand above that in the Americas at 31.1 million barrels, according to the Paris-based International Energy Agency. Asia will account for two-thirds of the growth in global oil demand in 2015, the IEA says.

The flexibility of Saudi Arabian Oil Co., the state company known as Aramco, to raise or cut output on short notice along with stakes in refineries run by its customers gives it an advantage over rivals, according to Julian Lee, an oil strategist with Bloomberg. The company has capacity to produce 12 million barrels of oil daily.

A joint venture between PetroChina Co., Aramco and Yunnan Yuntianhua Co. is currently building a 260,000 barrel-a-day refinery in the southwest of the Asian nation. Aramco already manages a 280,000 barrel-a-day refinery and petrochemical complex in China’s Fujian province along with China Petroleum & Chemical Corp., known as Sinopec, and Exxon Mobil Corp.

Aramco is pursuing a “long-term growth strategy” and is seeking to invest more in China to help the Asian nation meet its energy needs, Khalid Al-Falih, then the company’s chief executive officer, said in a speech in Beijing in March. The country is the largest oil consumer after the U.S.
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US Energy Dept grants Cove Point plant permission to export LNG

The U.S. Energy Department said on Thursday it has issued final authorization for Dominion Resources to export liquefied natural gas (LNG) from its Cove Point, Maryland plant.

The plant hopes to ship LNG starting in late 2017 to countries with which the United States does not have free trade agreements.
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Argentina's YPF reports higher than expected net Q1 profit

Argentina's state energy company YPF posted better than expected first-quarter profit on Thursday but earnings were still down 24.3 percent on the year due to the global slide in oil prices.

YPF posted profit of 2.109 billion pesos ($239 million) in the January to March period, beating the consensus forecast in a Reuters poll of economists that was for profit of 1.5 billion pesos. However, this was significantly below the 2.787 billion pesos achieved in the same period last year.

"During this period, the price in international crude halved, a situation that directly impacted the results of the major companies in the sector," YPF said in a statement.

Oil output at YPF, which was nationalized in 2012, rose 2.3 percent in the quarter, while natural gas production climbed 18 percent, the company said in its earnings statement.

Shale oil and gas output from 332 wells in the vast but barely tapped Vaca Muerta formation was 41,700 barrels per day equivalent, YPF said.

Argentina nationalized YPF in 2012 after accusing its former parent, Spain's Repsol SA, of under-investing and thereby generating a costly energy deficit for Latin America's No. 3 economy.

The country hopes that by hiking investments in Vaca Muerta, viewed as one of the biggest shale reserves in the Western Hemisphere, it will be able to reduce energy imports that are draining its low foreign reserves.

YPF raised $1.5 billion in a bond sale last month.

"Investments in the first quarter of 2015 reached 12.351 billion pesos, a level that has enabled us to maintain activity and growth in production in a global context that is unfavorable for this industry," YPF said.
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Rice Energy more than doubles natural gas production

Rice Energy has more than doubled its natural gas production from the Marcellus and Utica shales during the first three months of the year compared with the same period last year, the Canonsburg company reported today.

Rice reported production of 39.6 million cubic feet equivalent during the first quarter. A year ago, the company reported 16.4 MMcfe, which includes natural gas, natural gas liquids and oil.

The company, which went public last year, posted a profit during the first quarter, but a lower one compared to the first quarter of 2014. Rice earned $152,000 in the first quarter, down from $129.4 million last year.

"We are off to a strong start in 2015, building off our successful year in 2014,” said CEO Daniel Rice IV. “We remain committed to diligently executing our plan and delivering top-tier results."

Rice is increasing its 2015 annual production guidance to a range of 470 MMcfe/d to 490 MMcfe/d, “due to accelerated well timing from increased operational efficiencies.” Meanwhile, it’s reaffirming a 2015 capital budget of $890 million, which includes both its drilling and midstream investments.
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Talisman Energy provides Q1 results and update on Repsol transaction

'Talisman delivered solid operational and financial results in the first quarter of 2015 against a backdrop of significantly lower commodity prices and our strategic decision to cut capital investment,' said Hal Kvisle, President and CEO. 'Production from ongoing operations averaged 360,000 boe/d in the quarter, up slightly from the first quarter of 2014, and cash flow(1) was $605 million for the quarter, supported in large part by hedging settlements.'

First Quarter Highlights:

Production from ongoing operations averaged 360,000 boe/d in the first quarter of 2015, down 1% from the previous quarter, but up 2% from the first quarter of 2014. Liquids production was 137,000 bbl/d, down 2% from the previous quarter.
Cash flow for the quarter was $605 million, up 19% from the previous quarter due in large part to hedging settlements in the first quarter, but down 2% from the first quarter of 2014 due to lower commodity prices year-over-year.
Capital spending for the quarter was $436 million, down 48% from last quarter and 43% from the first quarter of 2014 due to the company's strategic decision to reduce capital investment during this time of lower commodity prices.
Net G&A for the quarter was $86 million, down 18% from the first quarter of 2014. The full impact of recent headcount reductions will be seen from the second quarter onwards.
Operating cost was $439 million, down 17% from the previous quarter and 15% from the first quarter of 2014.

Update on Repsol Transaction

On December 15, 2014, Talisman announced that it had entered into an arrangement agreement with Repsol S.A. under which Repsol will acquire all of the outstanding common shares of Talisman for US $8.00 per share in cash. On February 18, 2015, holders of Talisman's common shares and preferred shares approved the proposed arrangement at the special meeting of shareholders. Of the votes cast, over 99% of the shares of each class of shares were voted in favour of the arrangement.

On April 30, 2015, Talisman announced that the completion of the acquisition of Talisman by Repsol S.A. is scheduled to occur on May 8, 2015.
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Repsol earnings disappoint

Low energy prices, stalling production in Libya, currency adjustments in Brazil and higher exploration costs more than offset the positive impact of rising refining margins in Spain and encouraged investors to take profits after months when Repsol has outperformed the sector.

Repsol is hoping to open a new chapter in 2015 after several years marked by boardroom battles and a corporate transformation which culminated in the purchase of Talisman Energy and the transfer last month of executive powers from Antonio Brufau to Josu Jon Imaz.

While the integration of Talisman was a long-term strategic move for Repsol to grow in exploration and production, it had a first immediate impact on results as the dollar-denominated cash earmarked for the deal appreciated on the quarter and boosted core profits by 462 million euros ($525 million).

With the currency effect stripped out, average recurring net profit, adjusted for inventory effects, came in at 466 million euros, below a market consensus of around 500 million euros and a 532 million euros reading last year.

Shares in Repsol were down 3.7 percent to 17.75 euros at 0905 GMT, underperforming both Spain's blue-chip index Ibex and the pan-European sector index.

"Our initial reaction is to look beyond the large corporate and other beat and focus more on the core Repsol operating units results, which we would consider a little weak in the context of high expectations," said Jefferies analysts in a note.

The main reason for the miss was the exploration and production arm's 190 million euros loss in the quarter compared with a 255 million profit in the first three months of 2014.

This was only partly offset by an 84 percent jump, to 534 million euros, of the domestic refining unit's profit as refining margins hit a record high of 8.7 dollars per barrel.

The contribution of the Gas Natural stake to the results was stable to 122 million euros.
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Apache Swings to Loss on Revenue Drop, Big Write-Down

Apache Corp. swung to a first-quarter loss on impacts from low crude prices that contributed to a sharp decline in revenue and a big write-down.

The company also has been divesting itself of international assets as part of its effort to refocus on U.S. shale drilling. Last month, Apache agreed to sell its Australian unit for $2.1 billion to a group of private-equity investors. The sale marked Apache's exit from its Australian exploration and production business.

The company also recently completed the sale of its stakes in two liquefied natural gas projects in Canada and Australia to Woodside Petroleum Ltd. for $2.75 billion.

Like many other U.S. energy companies, Apache has cut back on drilling rigs and has been delaying well completions.

Chief Executive John J. Christmann IV said in prepared remarks Thursday that Apache's drilling and completion costs across its key plays in North America onshore are down between 20% and 40% from November.

The company's North American onshore production exceeded Apache's guidance despite the decrease in well completions and adverse impacts of severe winter weather in the Permian and Anadarko basins, Mr. Christmann said. In its international operations, production in both Egypt and the North Sea is tracking ahead of initial expectations, he added.

Overall, Apache reported a loss of $4.65 billion, or $12.34 a share, compared with a year-earlier profit of $236 million, or 60 cents a share, a year earlier. The latest period included a ceiling-test write-down of $4.7 billion related to low commodities prices. Excluding such items, the per-share loss was 37 cents. Revenue slid 50% to $1.82 billion.

Analysts polled by Thomson Reuters expected per-share loss of 57 cents and revenue of $1.81 billion.

For the latest period, Apache noted average selling prices for oil skidded 53% globally.

Apache also affirmed its 2015 onshore North American production and capital-spending forecasts.

Read more:
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Sanchez Energy announces first quarter results

Sanchez Energy Corporation, today announced operating and financial results for the first quarter 2015. Highlights from the report include:

Current production of approximately 50,000 BOE/D driven by strong production from recent development and exploration wells brought online at Catarina.

The company recently drilled two extended lateral tests at Western Caterina of 8,250 feet, on average, which are yielding exceptional results that are tracking estimated ultimate recoveries of approximately 1.5 MMBOE per well.

Based on recent operating results, the Company is increasing its full year 2015 production guidance range to 42,000 to 46,000 BOE/D.

Record production of 4,070 MBOE during the first quarter 2015 for average production of 45,217 BOE/D, exceeding the high end of the Company's initial 2015 guidance of 40,000 to 44,000 BOE/D.

Revenues of $110.6 million ($139.9 million inclusive of hedge settlements) and Adjusted EBITDA (a non-GAAP financial measure) of $83.7 million, which represent decreases of 18% and 13%, respectively, over the same period a year ago due to recent declines in commodity prices.

Executed and closed the sale of escalating working interests in 59 producing wellbores in the non-operated Palmetto Field in the Eagle Ford for aggregate consideration of approximately $85 million, subject to normal and customary closing and post-closing adjustments.

The Company's revised guidance of 42,000 to 46,000 BOE/D includes an adjustment for the expected loss of 1,000 BOE/D of production in 2015 resulting from sale.
At Catarina, the Company has already exceeded its July 2014 to June 2015 drilling requirement by drilling 54 wells towards its 50 well annual commitment. As the company executes its 2015 capital plan, it will bank wells in excess of the 50 towards its next annual commitment.

Operational efficiencies continue to drive sustainable cost savings across Sanchez Energy's asset base, with average well costs in all areas approximately 30 to 40% less than fourth quarter 2014.

Liquidity of $645 million as of March 31, 2015, which consisted of $345 million in cash and cash equivalents and an undrawn bank credit facility, which has a $550 million borrowing base and an elected commitment of $300 million.
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Indonesia's energy minister seeks to rejoin OPEC

Indonesia's energy minister said on Thursday he would seek President Joko Widodo's approval for the country to rejoin OPEC, seven years after leaving the oil exporters' group.

If it returned, Indonesia would be the fourth-smallest producer in the Organization of the Petroleum Exporting Countries ahead of Libya, Ecuador and Qatar, and bring the number of participants to 13 countries.

Indonesia was the only Asian OPEC member for nearly 50 years before leaving the group in 2008 as oil prices hit a record high, and rising domestic demand and falling production turned it into a net oil importer.

"I will ask the president to consider rejoining as a member of OPEC, so we are close to the market," Energy Minister Sudirman Said told reporters. "We have been offered (an opportunity) to rejoin."

OPEC termed Indonesia's departure a "suspension" and Ecuador, which rejoined in 2007, set a precedent for a return from suspension. An OPEC source said the door was always open.

"If a country fulfils the criteria for membership, of course there is the possibility to join the organization," the source said.

OPEC's statute stipulates, however, that any "country with a substantial net export of crude petroleum, which has fundamentally similar interests to those of Member Countries, may become a Full Member of the Organization, if accepted by a majority of three-fourths of Full Members, including the concurring votes of all Founder Members."
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Gazprom considering concessions to settle EU antitrust case

Gazprom is considering offering Europe new concessions, including on pricing, to settle its antitrust case and avoid a long legal battle which could result in billions of dollars in fines for the Russian gas producer.

The European Commission has accused Gazprom, which meets a third of EU gas needs and generates more than half its revenues there, of using its dominant position in eastern Europe to overcharge by up to 40 percent.

State-run Gazprom, which contributes about 8 percent of Russian GDP, denies the charges and says it has already made significant concessions. But it would rather avoid a costly court case that could further complicate relations between Moscow and Brussels, already strained by the crisis in Ukraine.

If it can settle the case by offering concessions, it will not be fined or get a finding of wrongdoing from EU regulators.

The EU wants Gazprom to calculate more of its contracts using European spot gas prices, rather than a formula it has historically used for most of its contracts based on the price of oil. Only around 16 percent of its contracts were based on spot gas as of the end of 2014.

European spot gas prices are based on major trading hubs in western Europe so using those prices for all contracts, including for eastern Europe would align prices across the EU. Also, spot gas prices have often been lower than oil and while the gap has narrowed as the oil price has fallen, it could widen again.

A Gazprom official said the company was considering including spot gas prices in more contracts, in what would be a major concession on the main sticking point between the two sides.

"We are working on it," the official, who did not want to be named, told Reuters.

The Commission has given Gazprom 12 weeks to respond to the charges made last month by the EU's new antitrust chief, Margrethe Vestager. The official said it was pouring over hundreds of pages of documents from the EU.

"We will work with the documents and the Commission," Gazprom spokesman Sergei Kupriyanov said.

Another set of charges relates to pressure the EU says Gazprom put on Poland and Bulgaria, which is entirely dependent on Russian gas, to invest in pipelines according to priorities dictated by Gazprom.

Gazprom may ask for an extension before explaining why it does not consider itself to be guilty of the charges. The source said Gazprom will also argue that it does not deserve to be fined as it has already changed its behaviour by introducing more competitive pricing, selling assets to comply with EU regulations and allowing its gas to be resold by consumers.

"We deserve not to be penalised but to be commended because Gazprom, together with its partner BASF, created competition on the European market," Alexander Medvedev, Gazprom's deputy head told a conference call last week.

After Gazprom's response, there may then be some legal back and forth between the two sides before Gazprom is expected to outline the concessions it is prepared to offer.
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Aramco to supply shale gas to industrial projects

Saudi Aramco will soon start the production of shale gas to supply industrial projects in the Kingdom, accoridng to oil minister Ali al-Naimi.

Speaking during the 18th annual meeting of the Saudi Economic Association, al-Naimi said that Saudi Aramco will initially provide shale gas to the Mining City of the North project and will supply a power generation plant, which is currently under construction.

Initial production will be from 20 MMcf/D to 200 MMcf/D, with about 20 MMcf/D due to be supplied to the Saudi Arabia Mining Company (Ma’aden) and to the power generation plant, accoridng to the minister.

Al-Naimi added that the Kingdom has made promising shale gas discoveries and has the technologies to produce it at a reasonable price.

Saudi Aramco's unconventional gas programme became fully operational in 2013, just 2 years after launching its unconventional gas programme in the northern region.

The company said at the time that it was ready to commit shale gas for the development of a 1,000-MW power plant that will feed a phosphate mining and manufacturing sector.

Saudi Aramco is exploring unconventional gas in the North West of the Kingdom, in South Ghawar, and the Rub’a al-Khali known as the Empty Quarter.

The company has projected rapid growth for its unconventional gas value chain between now and 2020. This includes site development, rig preparation, drilling, fracturing, completion, well tie-in, production, and maintenance.
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Origin Energy pushes back Gladstone LNG timetable

Origin Energy has pushed back the timetable for sustained production at its $24.7 billion Australia Pacific LNG project at Gladstone until the final quarter of the year.

In a presentation in Sydney, Origin Energy (ORG) chief Grant King said sustained production (and therefore associated cashflow) from the APLNG plant it is building with US major ConocoPhillips would not occur until the final quarter of 2015.

The previous timetable had been for sustained LNG production from the first of two trains, or processing units, in the September quarter.

The new timetable appeared in slides from the presentation posted to the stock exchange. No reason was given for the delay and the project’s budget was not reaffirmed.

An Origin spokeswoman said first LNG (as opposed to sustained production) was still expected in the third quarter of the year.

“We have every confidence that start-up will occur in the first quarter of 2015-16 (September quarter),” she said.

The delay is in contrast to the rival Gladstone LNG plant run by Santos, which last month said it would be targeting a September start-up, but subsequently revealed to analysts it had targets of first exports by July.
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Oil Producers Cast Aside Gloom as Rally Spurs Drilling Plans

Oil producers battered by the steepest market collapse in a generation are signaling for the first time that they believe the worst is behind them.

Carrizo Oil & Gas Inc., Devon Energy Corp. and Chesapeake Energy Corp. all lifted their full-year production outlooks this week. Shale explorer EOG Resources Inc. said on Tuesday it plans to increase drilling as soon as crude stabilizes around $65 a barrel, while Pioneer Natural Resources Co. has said it is preparing to deploy more rigs as soon as July.

The actions come amid a seven-week rally that’s boosted oil prices by 41 percent. They follow 10 months of dramatic cost-cutting and revamped drilling strategies that have created a new reality for some within the industry. As prices rapidly fell, a $60 price for oil looked like a death sentence. Now, with the cutbacks, it appears positively rosy.

“We didn’t think we’d be quite this good,” Stephen Chazen, Occidental Petroleum Corp.’s chief executive officer, said in an analyst call on Wednesday. The company expects to boost production as much as 14 percent this year, he said, compared to a previous forecast for 6.8 percent to 10 percent growth.

The danger, of course, is that a production surge by newly optimistic U.S. oil explorers will flood the market with excess crude and force prices back down to the $43 level seen in March, or worse.

While some analysts have speculated that a recovery would have an L-shape, settling at one lower price point by the end of the year, oil historian and economist Daniel Yergin has said he believes it will take a W-shape, with continued peaks and valleys as drillers rush out product in times of higher prices, then pull back when they drop.

Volatility Ahead

“That means oil prices are going to be a lot more volatile,” Yergin, the vice chairman of IHS Inc., said last month in an interview. “The notion of a W captures the sense of it. There isn’t going to be a landing place for oil.”

One of the most prominent executives in the international petroleum industry -- Exxon Mobil Corp.’s Rex Tillerson -- has been warning of just such a double dip in oil prices.

Tillerson, who is chairman and CEO of the world’s biggest energy producer by market value, told analysts, investors and fellow executives last month at a Houston energy conference that low prices will persist for years precisely because drillers are so ingenious about finding ways to extract oil profitably.

Even so, companies are gearing up for growth again.

New Normal

“There’s been a lot of talk around the shale patch that $65 or $70 a barrel is the new $100,” said Jim Krane, an energy fellow at Rice University in Houston who has researched the productivity gains of crude producers. “These companies are leaner and meaner and can start to play ball again at a lower price.”

Occidental has shortened the time it takes to drill a well in a layer of Texas’ Permian Basin known as the Wolfcamp A by 17 days, and lowered per-well costs by 24 percent to $8.3 million, the company said in an investor presentation on Wednesday.

“Our objective is to continue to grow the volumes through the year, to the extent we can unless you get a collapse in product prices,” Chazen said.

For EOG, $65 oil generates better returns for them now than $95 did two years ago. That’s thanks in part to equipment and drilling fees that have fallen as much as 30 percent in some regions, according to DrillingInfo Inc., a shale data and analytics company.

EOG, the largest U.S. shale producer, said it may begin fracking a backlog of hundreds of half-finished wells in the third quarter. Pioneer plans to add two rigs per month starting in July and continue doing so through the end of the year, adding up to $90 million per rig to its annual spending plan.

“We’ve made a great deal of progress in cost reductions and efficiency gains,” Pioneer President Tim Dove said. “We’re getting more confident in our ability to add rigs beginning in the third quarter.”
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Marathon Oil posts Q1 loss, sticks to production outlook

Marathon Oil Corp, an independent exploration and production company, reported a first-quarter loss on Wednesday as tumbling oil prices sliced its revenue nearly in half.

The first quarter adjusted net loss was $253 million, or $0.37 a diluted share. That was narrower than the $0.45 net loss forecast in a Thomson Reuters I/B/E/S consensus view.

A year ago, before oil prices fell 50 percent and revenue slumped to $1.5 billion, the company posted a quarterly adjusted profit of $613 million.

Unlike integrated companies such as Exxon Mobil Corp , Marathon lacks a refining arm it can rely on to bolster profits when oil prices fall.

In terms of operations, Marathon said it had no liftings in Libya during the first quarter, and that "considerable uncertainty remains around future timing of production and sales levels" because of civil unrest that has impacted shipments.

Although some shale oil companies raised their 2015 production outlooks this week, Marathon said its projected growth rates "remain unchanged" at 5 percent to 7 percent for the total company, excluding Libya, and 20 percent for the U.S. fields.

At the same time, Marathon said it reduced North American production costs 17 percent from the fourth quarter of 2014 and 28 percent from a year ago as producers demand discounts from services companies.

It said select non-core asset sales could generate some $500 million in revenue as it tweaks its portfolio of oil and gas properties.
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Summary of Weekly Petroleum Data for the Week Ending May 1, 2015

U.S. crude oil refinery inputs averaged over 16.3 million barrels per day during the week ending May 1, 2015, 247,000 barrels per day more than the previous week’s average. Refineries operated at 93.0% of their operable capacity last week. Gasoline production decreased last week, averaging about 9.2 million barrels per day. Distillate fuel production increased last week, averaging 5.0 million barrels per day. U.S. crude oil imports averaged over 6.5 million barrels per day last week, down by 905,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.2 million barrels per day, 5.0% below the same four-week period last year.

Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 626,000 barrels per day. Distillate fuel imports averaged 112,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.9 million barrels from the previous week. At 487.0 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 0.4 million barrels last week, and are above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 1.5 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.8 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 6.6 million barrels last week.
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Permian production nearly up to 2 million barrels per day

Production in the Permian Basin shale play is closer to the 2 million-barrels-a-day mark, even while low prices and rig counts have the nation’s other major plays shedding tens of thousands of barrels of production, according to an April report by the U.S. Energy Information Administration.

The Permian added 11,000 barrels of oil production from March to April, putting overall output at 1.992 million barrels of oil a day. The daily production count is a 134 percent increase from a low of 850,000 barrels a day in 2007, according to data from the EIA.

The increase in production has come at a time when the Permian has lost 327, or 58 percent, of oil drilling rigs since a peak of 562 in November, according to oil service company Baker Hughes. The Eagle Ford shale in South Texas has lost 115 oil rigs since October’s peak of 206, while the Bakken play in North Dakota has been reduced from a peak of 198 oil rigs in September to 80 at the beginning of May.

“I think (the production growth) is just the lag effect of wells that were drilled in the first quarter and completions have been delayed,” said Steve Pruett, president and CEO of Elevation Resources.

The Eagle Ford shale play in south Texas lost 33,000 barrels of daily production and the Bakken lost 23,000 barrels between March and April. The Niobrara play, spread between Colorado and Wyoming, dropped by 14,000 barrels of production to just more than 400,000 barrels per day. Pruett said that he and his colleagues think that things eventually will turn around in the Permian.

Read more: Permian production nearly up to 2 million barrels per day - Oil & Gas
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Carrizo Raises 2015 Crude Oil Production Growth Target to 18%

Carrizo Oil & Gas, Inc. today announced the Company's financial results for the first quarter of 2015 and provided an operational update, which included the following highlights:

Oil Production of 21,373 Bbls/d, 42% above the first quarter of 2014
Total Production of 34,595 Boe/d, 30% above the first quarter of 2014
Loss From Continuing Operations of $21.5 million, or ($0.46) per diluted share, and Adjusted Net Income (as defined below) of $6.4 million, or $0.14 per diluted share
Adjusted EBITDA of $101.8 million
Raising 2015 crude oil production growth target to 18%

For the first quarter of 2015, adjusted earnings before interest, income taxes, depreciation, depletion, and amortization, as described in the statements of operations included below ("Adjusted EBITDA"), was $101.8 million, a decrease of 11% from the prior year quarter as the impact of lower commodity prices more than offset the impact of higher production volumes.

Production volumes during the first quarter of 2015 were 3,114 MBoe, or 34,595 Boe/d, an increase of 30% versus the first quarter of 2014. The year-over-year production growth was driven primarily by strong results from the Company's Eagle Ford Shale assets. Oil production during the first quarter of 2015 averaged 21,373 Bbls/d, an increase of 42% versus the first quarter of 2014; natural gas and NGL production averaged 79,333 Mcfe/d during the first quarter of 2015. First quarter of 2015 production exceeded the high end of Company guidance for both oil and natural gas and NGLs due primarily to strong performance from the Company's Eagle Ford Shale assets, a lower-than-expected amount of voluntary production curtailments from its Marcellus Shale assets, and larger-than-expected non-operated production during the quarter.

Drilling and completion capital expenditures for the first quarter of 2015 were $151.6 million. Approximately 68% of the first quarter drilling and completion spending was in the Eagle Ford Shale. During the quarter, the Company incurred the majority of its planned 2015 drilling and completion capital expenditures for both the Utica Shale and Niobrara Formation. Land and seismic expenditures during the quarter were $12.4 million. As a result of cost savings and efficiencies realized in the Company's drilling program, Carrizo is decreasing its drilling and completion capital expenditure plan to $440.0-$460.0 million from $450.0-$470.0 million.

Carrizo is raising its 2015 oil production guidance to 22,100-22,500 Bbls/d from 21,800-22,400 Bbls/d. Using the midpoint of this range, the Company's 2015 oil production growth guidance increases to 18% from 17% previously. For natural gas and NGLs, Carrizo is increasing its 2015 guidance to 70-76 MMcfe/d from 65-75 MMcfe/d. For the second quarter of 2015, Carrizo expects oil production to be 21,400-21,800 Bbls/d and natural gas and NGL production to be 68-74 MMcfe/d.
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Oil train derails in North Dakota, small town evacuated

A train carrying crude oil derailed and caught fire in Wells County, North Dakota on Wednesday, officials said, just days after the U.S. government announced sweeping reforms to improve safety of the volatile shipments.

The nearby town of Heimdal was evacuated after as many as many as 10 tank cars of a BNSF train came off the rails, local media and fire officials said. There were no injuries, officials said.

A photo posted on Facebook by a local radio station showed flames and heavy black smoke from several tank cars that had derailed in a field.

Heimdal is a tiny town in central North Dakota located along one of the main rail lines heading east out of the giant Bakken oil patch. About two-thirds of all North Dakota oil production is shipped by rail, three-quarters of that to refiners on the U.S. East Coast.

"We are aware of crude derailment and resulting fire near Heimdal, ND. We have investigators on their way. Will update when we know more," Sarah Feinberg, acting administrator at the Federal Railroad Administration, said in a message on Twitter.

The derailment came just days after the U.S. Department of Transportation and Canada's Transport Ministry announced new rules last Friday for oil trains, including phasing out older tank cars, adding electronic braking systems and imposing speed limits. The measures were all meant to reduce the frequency and severity of oil train crashes.

The volume of crude oil by rail has rocketed in recent years as production increases from areas like North Dakota outpaced new pipeline development.

A spate of explosive accidents have accompanied that growth, the worst of which occurred in July 2013 when a train derailed in the town of Lac Megantic in Canada, killing 47 people.

Already this year, five trains have derailed and caught fire in the United States and Canada, all in rural areas. No deaths have occurred but the accidents have stoked fears about the safety of crude oil by rail.
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Nigeria slashes 2015 fuel subsidy by 90 pct following oil price slide

Nigeria will slash petrol subsidies by 90 percent this year because government revenues have been hit by the slump in oil prices.

The government had said it would gradually phase out fuel subsidies which are a significant burden on public finances, but cutting subsidies risks aggravating a fuel crisis in the country.

Major cities are experiencing a crippling gasoline shortage as oil importers feel the pinch from unpaid government subsidies, a plummeting local currency and tighter credit lines triggered by lower crude prices, oil traders and local industry sources say.

While Nigeria is Africa's biggest oil producer, a neglected refining system means it is almost wholly reliant on imports for the 40 million litres per day of gasoline it consumes.

Parliament approved the reduction in subsidies to 100 billion naira ($505 million) for 2015, Finance Minister Ngozi Okonjo-Iweala said late on Tuesday. The cuts were accounted for in last week's 4.49 trillion naira budget for 2015, but the breakdown was not announced until Tuesday.

Lawmakers also approved 45.5 billion naira for a separate kerosene subsidy.

In November, the government said it hoped to gradually phase out the subsidies, reducing them to 408.68 billion naira next year and 371.18 billion naira for 2017.

Okonjo-Iweala said in her budget speech that the government had already spent half of the amount it had planned to borrow and that it had not released any funds for capital expenditure this year on account of lower oil revenue.

This year's budget took longer than usual getting through parliament, worsening a cash squeeze in government, because of the closely fought general elections in March that saw incumbent President Goodluck Jonathan defeated by opposition leader Muhammadu Buhari. He will take office later this month.
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Occidental Petroleum Announces 1Q Results, production grows

Q1 2015 total company year-over-year quarterly production grew 72,000 barrels of oil equivalent per day or 13 percent to 645,000 barrels of oil equivalent per day
Q1 2015 Permian Resources year-over-year quarterly oil production growth of 68 percent and total barrels of oil equivalent growth of 46 percent
Dividend increased for the thirteenth consecutive year from $2.88 to $3.00 annualized

May 06, 2015 07:00 AM Eastern Daylight Time

HOUSTON--(BUSINESS WIRE)--Occidental Petroleum Corporation (NYSE:OXY) announced core income for the first quarter of 2015 of $31 million ($0.04 per diluted share), compared with $560 million ($0.72 per diluted share) for the fourth quarter of 2014 and $1.1 billion ($1.38 per diluted share) for the first quarter of 2014. The first quarter of 2015 had a reported loss of $218 million ($0.28 per diluted share), compared with a loss of $3.4 billion ($4.41 per diluted share) for the fourth quarter of 2014 and reported income of $1.4 billion ($1.75 per diluted share) for the first quarter of 2014. The first quarter of 2015 included non-core charges of $249 million, comprised mainly of asset impairment charges for certain domestic and international assets.

Cash flow from continuing operations before working capital changes was about $1.1 billion for the first quarter of 2015. Working capital changes of $0.6 billion were a result of lower realized prices, which impacted receivable collections and payments related to higher capital and operating spending accrued in the fourth quarter of 2014, but not paid until the first quarter of 2015. Total company capital expenditures for the first quarter of 2015 were $1.7 billion. The Oil and Gas segment spent $1.5 billion, with Permian Resources expenditures representing nearly 50 percent of the total expenditures, and the remaining $200 million was split between the Chemical and Midstream segments.
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Chesapeake Energy reports 2015 Q1 financial and operational results

Chesapeake Energy Corporation today reported financial and operational results for the 2015 first quarter. Highlights include:

Average production of approximately 686,000 boe per day, an increase of 14% year over year, adjusted for asset sales
Adjusted net income of $0.11 per fully diluted share and adjusted ebitda of $928 million
2015 total production guidance increased to 640 - 650 mboe per day
2015 capital guidance of approximately $3.5 - $4.0 billion reiterated
Additional 600 - 700 new Eagle Ford locations added following successful down spacing test results

Doug Lawler, Chesapeake's Chief Executive Officer, commented, 'Chesapeake is meeting the challenge of low commodity prices head-on and delivered a very strong first quarter. Adjusted for asset sales, our production in the 2015 first quarter grew by 14% compared to the 2014 first quarter. Our cash costs remain at industry-low levels and we expect our assets to continue delivering greater efficiencies even as we reduce our activity levels throughout 2015. We remain on target to balance our capital spending and our cash flow by year-end, and the capital efficiencies that we are seeing in each of our operating areas are helping to strengthen that cash flow. During this challenging commodity price environment, our talented employees and high-quality assets are delivering competitive, differential performance.'

2015 First Quarter Financial Results

For the 2015 first quarter, Chesapeake reported a net loss available to common stockholders of $3.782 billion, or ($5.72) per fully diluted share, which compares to net income available to common stockholders of $374 million, or $0.54 per fully diluted share in the 2014 first quarter. Items typically excluded by securities analysts in their earnings estimates reduced 2015 first quarter net income by approximately $3.824 billion on an after-tax basis and are presented on Page 11 of this release.

The primary source of this reduction was an impairment in the carrying value of Chesapeake's oil and natural gas properties largely resulting from significant decreases in the trailing 12-month average first-day-of-the-month oil and natural gas prices as of March 31, 2015, compared to December 31, 2014. Adjusting for this and other items, 2015 first quarter net income available to common stockholders was $42 million, or $0.11 per fully diluted share, which compares to adjusted net income available to common stockholders of $405 million, or $0.59 per fully diluted share, in the 2014 first quarter.

Adjusted ebitda was $928 million in the 2015 first quarter, compared to $1.515 billion in the 2014 first quarter. Operating cash flow was $910 million in the 2015 first quarter, compared to $1.614 billion in the 2014 first quarter. The year-over-year decreases in adjusted ebitda and operating cash flow were primarily the result of lower realized oil, natural gas and natural gas liquid (NGL) prices.
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Goodrich Petroleum Announces Q1 with deferred completions

Goodrich Petroleum Corporation today announced financial results and an operational update for the first quarter ended March 31, 2015.

Adjusted Revenues were $37.1 million for the quarter versus $49.1 million in the prior year period;
Earnings before interest, taxes, non-cash General & Administrative ("G&A") expenses and exploration ("Adjusted EBITDAX") was $24.5 million in the quarter, compared to $29.1 million in the prior year period;
Capital expenditures for the quarter totaled $48.4 million, which will be reduced to an estimated $10 – 15 million in the second quarter;
Production for the quarter totaled 780,000 barrels of oil equivalent ("Boe") (56% oil), which was affected by deferred completions. Oil volume growth expected to resume in the third quarter as previously drilled wells are completed beginning in June and additional drilling operations commence;
Cost cutting initiatives in place, including a projected 20 – 25% reduction in cash G&A for 2015;
Operating expenses for the quarter were lower by $16.4 million or 30% from the prior year period due to cost reduction efforts and the sale of a non-core property in December 2014;
Additional liquidity provided from $148 million of capital raised in the first quarter.


Industry-wide well results continuing to improve, with a recent well producing at a peak rate in excess of 1,900 Boe (92% oil) per day and the top ten well results averaging peak rates of approximately 1,500 Boe (93% oil) per day; and
Current well costs lower by approximately $3 million due to reduced drilling days and lower service costs, resulting in competitive rates of return at current strip prices.
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Rowan's revenue jumps 45 pct as new rigs contribute

Rowan Companies Plc's quarterly profit more-than doubled, helped by revenue from three new ultra-deepwater rigs.

The company's revenue rose 45 percent to $547 million for the quarter ended March 31.

Net income rose to $123.7 million, or 99 cents per share, from $59.6 million, or 48 cents per share, a year earlier.
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HollyFrontier profit beats, says to buy back $1 bln in stock

U.S. refiner HollyFrontier Corp's quarterly profit comfortably beat Wall Street estimates as lower crude costs boosted margins, and the company said it would buy back $1 billion in stock.

The company, formed through a merger of Holly Corp and Frontier Oil Corp in 2011, has returned $2.9 billion in cash to shareholders since the deal.

The buyback announced on Wednesday will replace the company's existing stock repurchase program, which had $462 million remaining.

"The second quarter is off to a very good start with new record crude rates being reached at several of our plants," Chief Executive Mike Jennings said.

He added that the company expects high refinery utilization rates for the rest of the year.

Refiners are benefiting as raw material costs drop, thanks to a steep decline in global oil prices. U.S. crude prices dropped 10 percent in the first quarter ended Mar. 31.

Dallas-based HollyFrontier's gross margins rose 13 percent to $16.69 per produced barrel in the March quarter, while operating costs fell 42 percent to $2.62 billion.

Net income attributable to shareholders doubled to $226.9 million, or $1.16 per share. According to Thomson Reuters I/B/E/S calculations, adjusted profit of $1.14 per share beat analysts' average estimate of 78 cents.

Sales and other revenue fell 37 percent to $3.01 billion, but beat the average estimate of $2.50 billion.
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Enbridge adjusted profit misses due to weak oil prices

Enbridge Inc , Canada's largest pipeline company, reported a lower-than-expected adjusted quarterly profit, hurt by hedging losses due to a steep drop in oil and gas prices.

Enbridge, which has struggled with soft demand due to a 40 percent drop in global crude oil prices since June, is restructuring its operations after announcing late last year that it would pay out more of its profits in dividends.

It is also pushing billions of dollars worth of pipeline and other assets into affiliated funds and partnerships to improve the cost of funding new projects.

Excluding one-time items, Enbridge's profit fell to C$468 million ($390 million), or 56 Canadian cents per share, in the first quarter ended March 31 from C$492 million, or 60 Canadian cents per share, a year earlier.

The result fell short of analysts' average estimate of 60 Canadian cents, according to Thomson Reuters I/B/E/S.

Net loss attributable to shareholders was C$383 million, or 46 Canadian cents per share, compared with a profit of C$390 million, or 47 Canadian cents per share, a year earlier.

The Calgary-based company said it moved crude volumes of 2.2 million barrels per day on its mainline system across Canada and the United States during the quarter.
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Saudi holds pricing-- at a discount

Saudi Arabia to cut June Arab Light crude
price to Asia to 75c-$1/bbl below Oman/Dubai avg to try to
regain mkt share, particularly in China, Bloomberg oil
strategist Bernard Leung writes.
  * Saudis losing mkt share to Iraq as Basrah Light of better
    quality, cheaper than Saudi Medium
    * Basrah Light offered at $2.80/bbl discount to Oman/Dubai
      in May vs $2 discount for Saudi Medium
    * Saudi shr of crude to China from top 15 suppliers slid
      to 16.24% in March from 18.64% in Feb. after Aramco
      raised prices for 2 mos.; Iraq 10.88% vs 8.68%

~Bloomberg 2 days ago.

Saudi Aramco, the state-owned oil producer, kept prices for Asian refiners steady for its benchmark Arab Light crude for June-loading cargoes, while raising them for European buyers.

This was seen as a sign that Saudi Aramco wants to keep its oil competitive in Asia, while the increase for Europe reflected rising prices for rival grades in recent weeks.

It's also important to note that the official selling price (OSP) for Arab Light is still at a discount to the regional benchmark Oman/Dubai crude.

The discount for June cargoes was set at 60 cents a barrel, the same as for May.

While the discount has narrowed from $2.30 a barrel for March cargoes, it has been in negative territory for nine straight months.

OSP discounts to the benchmark are still fairly rare, with the last occurrence more than four years ago, so an extended run of discounts show that Saudi Aramco is serious about maintaining its competitive edge, especially in Asia, which accounts for roughly two-thirds of its exports.


Normally the OSP tracks movements in the Brent-Dubai exchange for swaps, which measures the price differential between the main European crude benchmark and its Middle East counterpart.

The one-month exchange for swaps <DUB-EFS-1M> has been holding in a fairly narrow range anchored around $1.60 a barrel since September last year, when I first said that Saudi Arabia was more interested in protecting market share than cutting output to hold up prices.

But while the Brent-Dubai spread has been largely steady, the Saudi OSP has been lowered, breaking the usual correlation between the two, a further sign of Saudi determination to keep their prices competitive.

So, has the tactic worked, and if so, how well?

China is the main buyer of Saudi crude and here the picture is mixed.

In the first three months of the year China imported 12.75 million tonnes of crude from Saudi Arabia, or about 16 percent of its total, according to customs data.

Saudi Arabia increased its volumes by 0.5 percent in the first quarter to about 1.034 million barrels per day (bpd), but this meant it was still surrendering market share as China's overall imports grew by 7.5 percent.

Big gainers in the first quarter were number three supplier Oman, with a 30.8 percent rise in its shipments to China over the same period in 2014, Russia with a 14.3 percent increase and Kuwait with a 47 percent jump.

Iran, China's fifth-biggest supplier in the first quarter, saw its volumes drop 1.9 percent, while second-ranked Angola experienced a 7.5 percent decline.

But Saudi Arabia's modest gain in China imports in the first quarter should be seen against the light of a 7.9 percent decline in 2014 from the previous year.

It could be viewed as a positive that Saudi Arabia has managed to increase volumes to China in the first quarter, thus reversing partially last year's drop.

~Reuters, yesterday.

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Halcon Resources reports first-quarter loss, misses expectations

Halcon Resources Corp. on Tuesday reported a loss of $587.6 million in its first quarter.

The Houston-based company said it had a loss of $1.43 per share. Losses, adjusted for non-recurring costs, came to 4 cents per share.

The results did not meet Wall Street expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was for a loss of 1 cent per share.

The independent energy company posted revenue of $136.2 million in the period, also falling short of Street forecasts. Seven analysts surveyed by Zacks expected $174.1 million.
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Pioneer Natural Resources Swings to Loss

Pioneer Natural Resources Co. swung to a loss, as lower oil prices have reduced the company’s drilling activity.

The results come a day after Greenlight Capital’s David Einhorn criticizedPioneer and others in the fracking sector, citing low oil prices, environmental concerns and the industry’s high capital expenditures.

Pioneer Natural said Tuesday that it continues to forecast 10% production growth this year, but its second-quarter production outlook fell short of analyst expectations, according to SunTrust Robinson Humphrey analyst Neal Dingmann.

Sales volumes averaged 194,000 barrels oil equivalent per day (boed), up 17 percent from the 2014 first quarter.

The stock, down about 5% over the past two trading days, slid 0.5% in after-hours trading.

For the quarter ended March 31, the company reported a loss of $78 million, or 52 cents a share, compared with a profit of $123 million, or 85 cents a share, a year earlier. Excluding derivatives and other items, Pioneer posted a loss of three cents a share.

Revenue fell to $868 million from $944 million.

Analysts polled by Thomson Reuters projected earnings of eight cents a share on revenue of $751 million.

In addition to the sharp price declines throughout the energy sector, the oil and gas company also dealt with down time at its Spraberry/Wolfcamp operations in early January because of severe winter weather.

Still, Pioneer said it continues to deliver strong well results and said cost-cutting has contributed to improved margins.

The company said last year that it planned to sell its Eagle Ford Shale midstream business. Pioneer said it expects a sale to take place in May, which will strengthen the company’s balance sheet.

Citing lower prices, the company said in February that it would reduce some of its horizontal drilling activity and said it would shut down vertical drilling in the Spraberry/Wolfcamp area by the end of the month.

Pioneer’s 2015 capital budget of $1.85 billion is a 45% reduction from last year’s capital spending for continuing operations.
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Anadarko not in talks to sell Mozambique assets -CEO

Anadarko Petroleum Corp is not in talks to sell its multibillion-dollar stake in Mozambique's gas reserves and instead is working toward a final investment decision on the planned liquefied natural gas (LNG) project there, the company said on Tuesday.

"As it relates to Mozambique, we're not in discussions with anybody," Al Walker, Anadarko's chief executive officer, said in response to a question on the company's earnings call. "We've never hired a banker to run a process."

Anadarko, which has a 26.5 percent stake in the Area 1 license in the Rovuma Basin offshore Mozambique, is gathering the needed agreements and approvals, and a final funding decision is expected later this year or into next year, the company said.
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Canadian crude exports see first drop in four months in February: NEB

Exports of Canadian crude oil declined by a modest 57,000 b/d in February to average 3.046 million b/d, data released late Monday by the National Energy Board showed.

The drop stemmed entirely from a sharp decline in light crude exports, down 89,000 b/d from January's record-setting levels to 938,000 b/d.

Light Canadian crude oil exports have proven somewhat more variable than heavier grades, falling six times in the past 12 months.

In contrast, heavy crude exports resumed their steady rise, increasing by 32,000 b/d to a new record-high of 2.107 million b/d, surpassing last September's average of 2.095 million b/d.

February's dip nonetheless left total exports above 3 million b/d for just the third time in history, and marked a 325,000 b/d increase from the same time last year. Heavy crudes accounted for 275,000 b/d of that growth, but light crudes also increased 49,000 b/d from last February.
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Brazil regulator says former Petrobras board misled investors

Brazil's securities industry regulator accused the former board of state-run oil producer Petrobras of setting a fuel pricing policy that misguided investors and hurt the company.

The former board, chaired for years by then-Finance Minister Guido Mantega, approved a $221 billion, 2014-2018 investment program with specific debt targets but "chose to run a pricing policy that made it unlikely for those goals to be met," the watchdog, known as CVM, said in a report posted on Tuesday on its website.

Citations by the CVM can result in fines and restrictions on participating in financial market activities or serving as an officer of a public company.

The decision comes as Petrobras faces a number of class action lawsuits in U.S. courts by investors who accuse the company of misleading statements and failing to disclose corruption practices. Petrobras, worth nearly $300 billion in 2008, is now worth $63 billion despite finding large offshore oil resources.

As part of a government strategy to curb inflation, Petrobras for years kept domestic fuel prices below international levels. The subsidies caused about 60 billion reais ($19 billion) in refining losses for Petrobras, which was forced to buy oil at market prices but sell fuels at a loss.

That helped inflate the company's debt to $106 billion, making Petrobras the world's most-indebted and least-profitable major oil company.

According to Paulo Roberto Costa, whose testimony helped uncover the contract fixing, bribery and political kick-back scandal at Petrobras, the refining losses have hurt the company's finances more than the corruption.
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Alfa, Harbour Energy offer to buy Pacific Rubiales for C$6.50/shr

Pacific Rubiales Energy Corp said Mexican conglomerate Alfa Sab de CV and Harbour Energy Ltd have offered C$6.50 per share, valuing the oil and gas company at about C$2.05 billon ($2.08 billion).

The offer represents a premium of 35 percent to Pacific Rubiales' closing price on the Toronto Stock Exchange on Tuesday.

Reuters reported on Tuesday that Alfa and Harbour Energy have agreed to acquire Pacific Rubiales for C$6 billion ($4.97 billion), including debt.

Toronto-based Pacific Rubiales is the largest independent oil and gas producer in Latin America and its shares are also listed in Colombia.

Pacific Rubiales constituted a special committee, which has engaged an independent financial adviser to deliver a formal valuation, it said.

Alfa, which already owns an 18.95 percent stake in Pacific Rubiales, has businesses in oil and gas, branded foods, aluminum auto components, petrochemicals, information technology and telecommunications services.

Harbour Energy is a joint venture between Asian commodity trader Noble Group Ltd and U.S. private-equity firm EIG Global Energy Partners.
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New left-wing premier of Canada's Alberta says will partner with oil industry

The new premier-elect of Alberta said on Wednesday that her left-leaning party will be a "good partner" to the energy sector, moving to assuage the fears of the Canadian province's powerful oil industry who fear higher costs and opposition to pipelines.

Rachel Notley, who promised to review oversight of the oil and gas sector during the campaign, also said Canada needed a national approach to address environmental issues.

After four decades in power, Alberta’s Progressive Conservative dynasty was brought down Tuesday night by its most unlikely conqueror.

NDP Leader Rachel Notley — whose party held only four seats in the legislature before the election call — will become Alberta’s 17th premier as her party swept to power in the heartland of Canadian conservatism.

The NDP were on track to win 53 seats to defeat the PCs, the party of Alberta icons Peter Lougheed and Ralph Klein that was first elected in 1971 and which had, before Tuesday, won 12 straight elections with a majority.

“Well my friends, I don’t know, I think we might have made a little bit of history tonight,” Notley told a cheering crowd in Edmonton.

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U.S. Oil Market Update- Blame Canada!

Oil inventories continue to surge, but U.S. production has flatlined for weeks—even months.

I mean really—look at these simple facts that have been staring the Market in the face for months:

Year-to-date (YTD) production in 2015 in the U.S. is only 160,000 bopd (barrels of oil per day) above December levels—multiply that by 7 days a week to get 1.12 million barrels a week.
Demand in the U.S. is up by A LOT more—depending on which analysts/firm you want to believe—jU.S.t under 800,000 bopd. Refineries are running at record high throughputs jU.S.t to keep up (92.3% now vs. 5-yr average of 87.8%)!

Yet U.S. oil inventories continue to climb—by a stunning 6.54 million barrels a week so far this year—almost 300% over the typical December-May 1.71 million barrels per week. So U.S. production YTD only accounts for 17% of this. What gives?

This huge growth in inventories has caused some high profile analysts to call for $20 oil. The idea of oil storage becoming full in the U.S. caused a second big downleg in March in WTI prices—set in Cushing OK—to a low of $42/barrel.

The reason behind this seeming paradox? When you look at the data, the creators of South Park got it right - we should really 'Blame Canada!'

Two new pipelines recently debottleneck crude flows from Canada to the Gulf of Mexico, resulting in a 13.99% increase (408,000 bopd) in U.S. crude oil imports from Canada in December (2.86 million additional barrels per week) that has largely been maintained. When you contrast that fact to the US oil inventory build in the first chart below—well, that's almost all you need to know.

The vast majority of Canadian oil exports is heavy oil from the oilsands. While shale production—light oil—begins to stall and fade, oilsands production will increase every year for at least the next five years. Growing production and heavy discounts (pun intended) will keep U.S. refiners processing all the Canadian heavy oil—called Western Canada Select, or WCS—they can.

Even worse, crude oil imports are increasing as East and West coast refiners increase utilization, requiring them to consume additional seaborne crude (from Saudi Arabia and other places) in order to maintain their crude input blend slate: As U.S. refinery utilization increased from 89% to 92% over the past four weeks, total U.S. crude oil imports have averaged 7.56 million bopd, well above the YTD average of 7.26 million bopd and the March average of 7.25 million bopd.

Unless U.S. shale production falls dramatically (and soon), the U.S. crude inventory situation could get very ugly this summer as 1-3 million weekly builds continue - just as investors have written off full inventories as a risk factor!
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'No one can set the price of oil — it's up to Allah'

Oil cartel OPEC has lost control over the price of oil?

Saudi Arabian oil minister Ali Al-Naimi, however, does not think that Saudi Arabia or OPEC can really control oil prices.

"No one can set the price of oil — it's up to Allah," he said Tuesday in an interview with CNBC.

Saudi Arabia and OPEC, the 12-member oil cartel of which Saudi Arabia is the most influential member, has insisted on maintaining its oil production targets despite the recent decline in prices.

Read more:
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Halt to Libya's Zueitina oil port, linked fields cuts output more

All crude flows to Libya's Zueitina port have stopped after protesters demanding jobs blocked a pipeline, forcing the closure of several eastern oilfields, oil officials said on Tuesday.

The closure should lower oil output to as low as 400,000 barrels a day, according to estimates based on previous production figures.

"The protesters closed the pipeline to the port," Mohamed El Harari, spokesman for state oil firm NOC, said. He said that several oilfields in eastern Libya would have to close.

"This will have a big impact on oil production," he said, without giving a figure.

A port official said the security situation at the terminal was normal, adding that the port would technically stay open.

Libyan oil ports and oilfields regularly have to shut down due to protesters seizing them or armed groups fighting for control of the facilities.

The protesters were complaining they had not been hired by the state as promised by a previous oil minister, an engineer told Reuters.

Zueitina was one of the few Libyan ports still exporting oil as the largest have closed due to fighting or blocked oilfields connected to them, part of turmoil gripping the North African country four years after the ousting of Muammar Gaddafi.

Near the main eastern city of Benghazi, it has closed several times since 2011 due to protesters demanding jobs or management changes at state oil firms.
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Noble Energy boosts 2015 production forecast

Oil and natural gas producer Noble Energy Inc boosted its 2015 production forecast on Tuesday, citing cost cuts and technical improvements after reporting a better-than-expected adjusted profit.

It was the latest sign from the energy industry that deep budget cuts announced in the first quarter combined with new well techniques and other technology were beginning to yield results.

Noble boosted the bottom end of its production forecast for the year, and now expects to produce 300,000 to 315,000 barrels of oil equivalent per day (boe/d). Noble had forecast 295,000 to 315,000 boe/d for the year.

Noble reported a net loss of $22 million, or 6 cents per share, in the first quarter, compared with a profit of $200 million, or 55 cents per share, a year earlier.

Factoring in hedging losses and one-time items, the company earned 3 cents per share. By that measure, analysts expected earnings of 2 cents per share, according to Thomson Reuters I/B/E/S.

Production volumes rose 11 percent to 318,000 boe/d.
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US Mexico oil swap to Change North American Energy Dynamics

The United States is edging towards an historic agreement to swap crude oil with Mexico. The deal is important as it brings some relief to US producers struggling with a light oil glut at home and for Mexican national oil company, Pemex, which is hoping to mix the lighter crude coming out of US shale fields with its heavier blend.

However, the arrangement is not just about the relationship between the US and Mexico. It’s also about broader North American energy integration. And critically, many experts see the deal as another crack in the US crude oil export ban.

The swap between the US and Mexico – if approved – will allow the US to export 100,000 barrels of oil per day to Mexico. It will not affect US imports of Mexican crude. In February this year, the United States imported 784,000 barrels of crude and petroleum products per day from Mexico.

The oil swap with Mexico not only makes economic sense but also political sense as the North American region becomes increasingly integrated. The North American Free Trade Agreement (NAFTA) celebrated its 20th anniversary last year with some fanfare but there is still more to be done to bring the US, Canada, and Mexico closer together. The Whitehouse’s Quadrennial Energy Review, released on April 21, recommends greater integration of North American energy markets. The free trade in crude oil between the three nations would be a positive step.

Finally, the swap represents a small step towards loosening the crude export ban. The ban, implemented in response to the Arab oil embargo in the 1970s, is widely considered an anachronism by energy experts. Lifting it would likely bring economic benefits to the US. shale producers dealing with a glut of light shale oil that can’t be easily refined on the Gulf Coast but could be sold abroad.
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New leaders take reins at China's oil giants

New chairmen have been named for the country's top three State-owned oil companies as the sector faces a range of challenges including low global crude prices, industrial reform, a need for improved growth and the fallout from President Xi Jinping's anti-corruption campaign.

Wang Yupu, 59, deputy head of the Chinese Academy of Engineering, is replacing Fu Chengyu as chairman of Sinopec Group, Asia's largest refiner, the Organization Department of the Central Committee of the Communist Party of China announced on Monday.

However, the strategic path followed by the huge enterprise is likely to remain unchanged as the country deals with rising dependence on foreign supplies of crude, said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

Li Li, research director at ICIS Energy, a Shanghai-based consultancy, said observers are eager to see whether Wang continues the openness and innovation that characterized the reform process under Fu.

Fu, 64, will retire after serving an extra year as chairman. Most heads of State-owned enterprises step down at 63, but Fu, who has led Sinopec since 2011, was allowed to remain beyond the designated age.

On April 27, China's anti-graft watchdog announced that Wang Tianpu, Sinopec's president, was under investigation for suspected "serious disciplinary violations", a euphemism for corruption.

Before that, Sinopec had largely escaped the attention of anti-graft investigators. In contrast, China National Petroleum Corp, the country's largest oil producer, had seen several senior officials face corruption probes.

The central government also announced that Wang Yilin, a former CNPC executive and current chairman of China National Offshore Oil Corp, the country's largest offshore energy producer, will become the chairman of CNPC.

Wang replaces Zhou Jiping, 63, who is retiring and has been CNPC chairman since 2013.

"CNPC is now facing multiple problems including sharply declining profits, the anti-graft campaign and the unclear direction of mixed-ownership reform," Li said. "Wang will have a lot on his plate."

Wang, born in 1956, became deputy general manager of CNPC after serving as head of the company's subsidiary in the Xinjiang Uygur autonomous region. He was appointed chairman of CNOOC during the last leadership reshuffle at the three oil giants four years ago.

His role at CNOOC will be taken by Yang Hua, the corporation's current president, the Organization Department said.

Yang, born in 1961, joined CNOOC in 1982, starting as an upstream oil exploration geologist. As chief financial officer, Yang played a crucial role during CNOOC's largest overseas takeover, the acquisition of Nexen Inc in 2013.
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Shale Oil Drillers Plunge After Einhorn Slams Fracking Costs

Money manager David Einhorn slammed the shale drilling industry that ushered in a new era of U.S. oil production as wasteful, expensive and a terrible investment.

Shale explorers including Pioneer Natural Resources Co. and EOG Resources Inc. plunged as investors heeded Einhorn’s remarks at the Sohn Investment Conference in New York on Monday.

Einhorn, who manages $12 billion as president of Greenlight Capital, said investors who are bullish on oil prices should avoid buying stock in producers and instead invest in the commodity itself. He singled out Irving, Texas-based Pioneer for special attention.

“Pioneer burns cash and isn’t growing,” said the 46-year-old Einhorn. “Why is the market paying $27 billion for this company?”

Pioneer fell as much as 5.3 percent for the biggest intraday decline since Feb. 11. EOG had been up as much as 2.5 percent before Einhorn’s comments triggered a sell-off that wiped out most of Monday’s gains. Both companies recovered some of those declines later: Pioneer closed 1.9 percent lower at $168.33, and EOG was up 0.5 percent.

Tadd Owens, a spokesman for Pioneer, didn’t immediately respond to a voicemail seeking comment. EOG spokeswoman K. Leonard also didn’t immediately respond.

On Monday, Einhorn also singled out Concho Resources Inc., Whiting Petroleum Corp. and Continental Resources Inc. as examples of shale explorers that spend too much and generate too little cash. A Concho spokeswoman said she wasn’t immediately able to comment; spokespersons for Whiting and Continental didn’t immediately respond to requests for comment.

Shale explorers revolutionized North American oil and natural gas production with sideways drilling and hydraulic fracturing techniques honed in Texas, Oklahoma and North Dakota. As a result, U.S. crude output almost doubled in the past eight years to more than 9.3 million barrels a day, more than every member of OPEC except Saudi Arabia.

Einhorn has a long history of betting against companies within his New York-based hedge fund firm. He’s also a frequent speaker at the annual Sohn conference where he explains his rationale. The strategy has had mixed success.
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Anadarko reports wider quarterly loss, output a record

Anadarko reports wider quarterly loss, output a record

Anadarko Petroleum Co on Monday reported a wider-than-expected quarterly loss as a crude price collapse hurt the U.S. independent oil and natural gas company's results.

Even as oil prices have tumbled about 40 percent from a peak over $100 a barrel in June, Anadarko said its oil and gas sales rose to a record in the first quarter.

"The significant cost savings, outstanding well performance and ongoing efficiency gains we achieved during the first quarter enabled Anadarko to deliver higher sales volumes for lower costs," Al Walker, Anadarko's chairman and chief executive, said in a statement.

Anadarko's operating expense per barrel oil equivalent (boe) fell 17 percent in the quarter.

Anadarko had a first-quarter loss of $3.3 billion, or $6.45 per share, compared with $2.7 billion, or $5.30 per share in the same period a year earlier when results included a $5 billion settlement related to litigation.

Excluding one-time items, the largest being a $2.4 billion write down of the value of some of the Houston company's assets, Anadarko had a loss of 72 cents per share.

Analysts on average had expected Anadarko to report a loss of 64 cents per share, according to Thomson Reuters I/B/E/S.

Oil and gas output, adjusting for divestitures, averaged 920,000 barrels of oil equivalent per day (boed). That compares with 789,000 boed in the year-ago period.

Shale wells in Anadarko's Wattenberg field in Colorado and the Eagle Ford in Texas drove most of the output gains, the company said, even as drilling and completion costs fell.

For example in the Eagle Ford, Anadarko's average drilling cost fell 14 percent, it said.
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Russian oil production remains at post-Soviet high in April

Russian oil and gas condensate production, among the world's largest, remained at a post-Soviet record level of 10.71 million barrels per day in April, underpinned by a recent recovery in oil prices, Energy Ministry data showed on Saturday.

Global oil prices jumped 21 percent in April to over $66 a barrel due to slowing drilling activity and increasing political tensions in the Middle East, having collapsed from a peak of $115 per barrel in June last year.

The price slump has significantly hurt the Russian economy, which relies on oil and natural gas for around half the federal budget revenues. Russia's GDP contracted by 3.4 percent in March year on year.

Russian production of oil and gas condensate, a type of ultra-light oil, stood at 43.830 million tonnes in April, the data showed.

A Russian Energy Ministry delegation will fly to Vienna next month to meet officials from the Organization of the Petroleum Exporting Countries.

So far Russia, which is not an OPEC member, has failed to persuade OPEC to cut oil output in order to prop up prices.

Last month, OPEC oil supply jumped to its highest in more than two years, boosted by record or near-record supplies from Iraq and Saudi Arabia.

Rosneft, Russia's leading oil producer, cut its oil production by 0.1 percent in April to 3.81 million barrels per day.

Total Russian oil exports via pipeline monopoly Transneft edged up by 0.7 percent to 4.4 million barrels per day, or 18.021 million tonnes in April.

Russia is aiming to increase its crude oil exports in the coming years and the Energy Ministry expects exports to be 3 million tonnes higher this year.
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Shell, Total align trading and refining units to drive profit growth

Top oil firms Royal Dutch Shell and Total are bringing their refining and trading operations closer together, seeking alternative ways to drive profits as oil prices fall and independent trading houses expand into their territory.

The restructuring will enable the Anglo-Dutch and French companies' in-house traders to capture profits faster from the fluctuating prices of the different crude oil sources and products coming through their refineries.

Snapping at their heels are energy brokerages Vitol and Gunvor, which have bought refining plants in Europe in the last two years in order to do the same.

"As traders grew assets in downstream, majors realised there was a lot of money to be made on optimisation. So to a certain extent, trading houses encouraged us to change," said a high level source from one of the oil firms, speaking on condition of anonymity because he was not authorised to speak publicly on the matter.

Shell and Total have already started work on aligning their refining and trading operations and as a result both reported much better than expected first quarter profits

Now both are stepping up the restructuring.

Shell plans to move dozens of traders from London, Dubai and Singapore to Rotterdam, where it is beefing up a trading hub just miles from its flagship Pernis refinery, Europe's largest, according to company and trading sources. It also plans to lay off dozens more traders as part of the move to a cheaper cost-base.

"We are completing staff consultation and finalising the design of the proposed change," a Shell spokesman said.

Meanwhile Total is beefing up its Geneva trading hub so that a bigger team of dealers can optimise profits from the volatility of crude prices, company sources told Reuters.

It is simultaneously restructuring its refining businesses to expand its product line, by converting its unprofitable La Mede plant in southern France to a biodiesel plant and upgrading its Donges refinery on the Atlantic coast to capture growing demand for low-sulphur marine gasoil following changes in EU rules. [ID: nL5N0XD14O]

Total is being more tight lipped about the reforms and only said this week that "downstream again generated excellent results due to its ongoing restructuring efforts".

A refinery closely linked to trading operations can modify its output to respond to swift changes in global demand for products - such as a boost for diesel or gasoline after unplanned outages or bad weather - and lock in high profits.

Refineries that process several kinds of crude oil can leverage profits from the different prices of, say, Russian Urals or Nigerian Bonny Light, by linking trading teams into their operations.

Shell's chief financial officer Simon Henry said Shell made an extra $1 billion last year thanks to its restructuring, and added that profits would likely increase this year.

The action took return on capital in downstream at Shell to 13.4 percent last year, 5 percentage points higher than for the overall group and up from below 10 percent several years ago.

"It is not often in this industry that the downstream has had a higher return on capital than the upstream," said Henry.

Oil companies' refining operations have become increasingly unprofitable in recent years as the Middle East and Asia have built their own refineries to meet their own demand.
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U.S., Canada release tougher oil-train safety standards

Long-awaited new safety rules for trains carrying oil in the United States and Canada were announced on Friday as regulators seek to reduce risks after a series of explosive accidents accompanied a surge in crude-by-rail shipments in recent years.

Canada's Minister of Transport, Lisa Raitt and U.S. Transportation Secretary Anthony Foxx jointly announced the rules that within three years would phase out older tank cars that are widely considered to be unsafe during derailments.

The rules, which have already created a fierce debate between tank-car owners, railroads and federal regulators, call for thicker tank-car hulls, head shields, electronic pneumatic brakes and pressure-relief valves for oil train cars, all of which have been deemed by regulators to be crucial in improving the safety of transporting oil by rail.

In perhaps the most contentious part of the rules, the entire fleet of DOT-111 cars built before October 2011, and considered prone to puncture during accidents, must be phased out within three years. Cars built after that, known as CPC-1232s, will be phased out within five years.
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Chevron reports first quarter net income of $2.6 billion

Chevron Corporation today reported earnings of $2.6 billion ($1.37 per share - diluted) for first quarter 2015, compared with $4.5 billion ($2.36 per share - diluted) in the 2014 first quarter. Foreign currency effects increased earnings in the 2015 quarter by $580 million, compared with a decrease of $79 million a year earlier.

Sales and other operating revenues in first quarter 2015 were $32 billion, compared to $51 billion in the year-ago period.

'First quarter earnings declined from a year ago due to sharply lower oil prices, which reduced revenue and earnings in our upstream business,' said Chairman and CEO John Watson. 'Downstream operations were strong, benefitting from lower feedstock costs and improved refinery reliability.'

'We're responding to the current price environment by capturing cost reductions, pacing new project approvals and further streamlining our portfolio as planned. We're taking a number of deliberate actions to lower our cost structure, and I expect these efforts to increasingly show through in our financial results as the year progresses.'

'Production increased over 3 percent in the period, and we are hitting major milestones on our development projects under construction, like Gorgon and Wheatstone in Australia,' Watson added. 'We remain on track to deliver significant cash flow and production growth by 2017.'

Recent upstream milestones include:

Australia - Achieved introduction of fuel gas and start-up of the first gas turbine generator at the Gorgon LNG plant.
Australia - Completed installation of Wheatstone platform topsides.
Australia - Announced a natural gas discovery, Isosceles-1, in the Carnarvon Basin in 50 percent-owned Block WA-392-P.
Bangladesh - Achieved first liquids from the Bibiyana Expansion Liquid Recovery Unit.
United States - Announced a joint venture to explore and appraise 24 jointly held offshore
leases in the northwest portion of Keathley Canyon in the deepwater Gulf of Mexico.
United States - Ramped up oil-equivalent production at Jack/St. Malo in the deepwater Gulf of Mexico to more than 70,000 barrels per day.

'In the downstream, we continued to streamline our asset portfolio with the sale of our interest in Caltex Australia Limited,' Watson commented. 'This sale is aligned with our previously-announced asset sales commitment.' Cash proceeds of $3.6 billion were received upon settlement on April 2, and a gain on sale of $1.6 billion will be reflected in second quarter 2015 results.
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Marathon Petroleum reports first quarter results

Marathon Petroleum Corporation has reported 1Q15 earnings of US$891 million, or US$3.24 per diluted share, compared with US$199 million, or US$0.67 per diluted share, for 1Q14. 1Q15 earnings included pretax pension settlement expenses of US$1 million, compared with US$64 million for 1Q14.

"Our record first quarter earnings highlight Marathon Petroleum's ability to take full advantage of favourable market conditions," said Gary R. Heminger, President and CEO. "Our extensive logistics and retail networks give us tremendous flexibility in feedstock acquisition and the ability to optimise refining operations and product distribution throughout our marketing footprint."

Heminger noted that MPC's integrated refining system made a significant contribution to the quarter's earnings. "Our refineries operated very well during the first quarter, and we were able to capture the strong Gulf Coast and Midwest crack spreads," he said, noting that the facilities also benefited from lower maintenance activity relative to the prior year. "I am particularly proud of the dedicated employees at both our Catlettsburg and Galveston Bay refineries for operating our facilities safely, efficiently, and without production impact during the recent work stoppage."

Heminger said MPC had finalised labour agreements at its Catlettsburg, Ky., Texas City, Texas, and Canton, Ohio, refineries. "We are pleased that we were able to reach these agreements, and we look forward to an equally successful outcome at our Galveston Bay refinery complex in Texas," he added.

Speedway, MPC's retail segment, performed very well, achieving record first quarter earnings even before the contribution from its newly acquired locations. "Speedway continues to make excellent progress converting its new retail locations to the Speedway brand," Heminger said. "As of today, we have rebranded more than 400 stores, including 260 completed during the first quarter. The rapid pace of store conversions contributes to our confidence that we will achieve the synergies and marketing enhancements we expect as we integrate this business."
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Canadian Oil Sands first quarter results and progress on cost savings

Canadian Oil Sands first quarter results and progress on cost savings    
Canadian Oil Sands Limited reported strong operating performance at Syncrude for the first quarter of 2015, with cost reduction initiatives and stable production mitigating the impact of lower oil prices. COS' cash flow from operations of $76 million ($0.16 per Share) fully funded capital expenditures in the period. Realized Synthetic Crude Oil selling prices averaged $56 per barrel, representing a 47 percent drop compared with the first quarter of 2014. Syncrude produced an average 293,700 barrels per day during the first quarter of 2015 at an operating expense of $35.71 per barrel.

Highlights for the three months ended March 31, 2015:

Operating expenses are down 24 percent to $35.71 per barrel in the first quarter of 2015 compared with the comparative 2014 period.

Capital expenditures are down 66 percent to $73 million, reflecting the substantial completion of the major projects and progress on cost reductions. With the completion of these major projects, capital investment is set to be lower for the next several years.

Sales volumes for the quarter averaged about 107,300 barrels per day relative to the 105,300 barrels per day recorded in the first quarter of 2014.

Cash flow from operations was $76 million ($0.16 per Share) compared with $357 million ($0.74 per Share) in the same quarter of 2014. Despite the impact of significantly lower selling prices, COS was able to fund its capital expenditures from cash flow from operations in the first quarter of 2015.

A net loss of $186 million (($0.38) per Share) was recorded for the quarter compared with net income of $172 million ($0.35 per Share) in the 2014 comparative period, largely as a result of unrealized foreign exchange losses on COS' U.S. dollar denominated long-term debt.
COS declared a quarterly dividend of $0.05 per Share, payable on May 29, 2015 to shareholders of record on May 22, 2015.

COS remains in a strong financial position and has sufficient liquidity and balance sheet strength in the current environment, including $1.1 billion available under credit facilities that do not expire until 2018.

Syncrude Operations

During the first quarter of 2015, Syncrude produced 26.4 million barrels, or 293,700 barrels per day, compared with 26.3 million barrels, or 292,500 barrels per day, in the first quarter of 2014. A planned turnaround of Coker 8-3 and ancillary units commenced in late March 2015 and is expected to be completed in May.
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Concho Productivity

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Saudi cuts Arab Light price to Asia.

Saudi Arabia to cut June Arab Light crude
price to Asia to 75c-$1/bbl below Oman/Dubai avg to try to
regain mkt share, particularly in China, Bloomberg oil
strategist Bernard Leung writes.
  * Saudis losing mkt share to Iraq as Basrah Light of better
    quality, cheaper than Saudi Medium
    * Basrah Light offered at $2.80/bbl discount to Oman/Dubai
      in May vs $2 discount for Saudi Medium
    * Saudi shr of crude to China from top 15 suppliers slid
      to 16.24% in March from 18.64% in Feb. after Aramco
      raised prices for 2 mos.; Iraq 10.88% vs 8.68%
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EOG'S Slide: Will resume completions at $65

Oil and natural gas producer EOG Resources Inc plans to begin fracking hundreds of wells in North Dakota and Texas later this year if oil prices stabilize around $65 per barrel, executives said on Monday after reporting a better-than-expected adjusted profit.Image title
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Alternative Energy

Molycorp stocks slide following wider Q1 loss, further financing needs

US integrated rare earths producer Molycorp’s NYSE-listed stock on Thursday slid 12.5% after the company reported a wider-than-expected first-quarter loss and confirmed that it would require further financing this year to meet its business plan and obligations as they became due. 

Molycorp, which operates the Mountain Pass rare earths mine and processing facility, in California, explained that in light of the continued softness in the prices for its products, inconsistent or depressed demand for certain of its products and the delayed ramp-up of operations at the Mountain Pass facility, would force it to seek additional financing this year. 

The Greenwood, Colorado-based company's had last year September engaged Oaktree Capital Management to provide up to about $400-million in secured financing through credit facilities and the sale and leaseback of certain equipment at Mountain Pass for corporate, operating and capital expenditures. It had received initial gross proceeds of $250-million from Oaktree, with the remaining $149.8-million available to be drawn until April 30, 2016, $134.8-million of which was available only if the company achieved certain financial and operational performance targets.

In a Securities and Exchange Commission filing on Thursday the company reiterated that if it was unable to execute its business plan and restructure debt, it might not be able to continue as a going concern. Molycorp said its cash balances fell to $133.6-million as of March 31, down from $211.7-million in December, which represented its primary source of liquidity to fund capital expenditures, debt service and net operating cash requirements. 

Molycorp reported negative cash flows from operating activities of $73-million during the first quarter. The average selling prices fell 16% quarter-over-quarter to $30.97/kg. The company's loss attributable to shareholders widened to $102.3-million, or $0.42 a share, up from $86.1-million, or $0.40 a share, a year earlier. An adjusted loss  share of $0.28 in the quarter did not reflect inventory impairment charges at Mountain Pass, out-of-ordinary business expenses and certain other non-cash items. Revenue fell more than 10% to $106.4-million.
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SunEdison's emerging market unit files for IPO

TerraForm Global Inc, formed by solar company SunEdison Inc to own and operate some of its power plants in emerging markets, filed with U.S. regulators for an initial public offering of its class A common shares.

The Bethesda, Maryland-based company's IPO filing had a nominal fundraising target of $700 million.

The amount of money a company says its IPO will raise in its initial filings is used to calculate registration fees. The final size of the IPO could be different.
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LCOE US-Current Data

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MIT says solar power fields with trillions of watts of capacity are on the way

A massive study on solar power by researchers at the Massachusetts Institute of Technology (MIT) came to two main conclusions: Solar energy holds the best potential for meeting the planet's long-term energy needs while reducing greenhouse gasses and federal and state governments must do more to promote its development.

The main goal of U.S. solar policy should be to build the foundation for a massive scale-up of solar generation over the next few decades, the study said.

"What the study shows is that our focus needs to shift toward new technologies and policies that have the potential to make solar a compelling economic option," said Richard Schmalensee, a Professor Emeritus of Economics and Management at the MIT Sloan School of Management.

Federal and state subsidy programs designed to encourage investment in solar systems should be reviewed with an eye on increasing their cost-effectiveness and with a greater emphasis on rewarding production of solar energy, the study said.

For example, the federal government's solar investment tax credit (ITC), passed in 2008, is set to expire next year. It offered a 30% tax credit for residential and business installations for solar energy. When it expires in 2016, the tax credit will drop to a more permanent 10%.

The MIT Energy Initiative (MITEI) released results of the study in a 356-page report,  TheFuture of Solar Energy, on Monday. The study found that even with today's crystalline silicon photovoltaic (PV) technologies, the industry could achieve terawatt-scale deployment of solar power by 2050 without major technological advances.
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Tata target: 400 MW solar power in 3 years

By incentivizing rooftop solar generation, Tata Power Delhi aims to produce 400 MW of solar electricity in the next three years.

On Wednesday, the discom held a workshop which unveiled the results of a US study commissioned by the power utility. The results supported the company's plans for this foray into renewable energy generation.

Tata Power opened tenders to procure solar panels this week. Aimed primarily for commercial and industrial category consumers who have higher tariff, the discom plans to start installing solar panels for interested consumers within the next few weeks.

The results of the study by leading US energy consulting firm Energy and Environmental Economics (E3) were also shared with senior officials of Delhi government, DERC and experts from the power industry. It was commissioned by Tata Power Delhi in June 2014 in line with National Solar Mission.

"We have received approval from DERC and will begin advertising for the scheme within the next two months. The idea is to reduce cost of power, specifically for commercial and industrial consumers who pay higher tariff at peak hours. They will be able to break even within five years," said an official.

Consumers may either pay the full cost upfront, go for an installment scheme or procure the panels through a third party after which the discom will provide the net metering and grid connectivity. "The cost of the project would be recovered within five years. For the 20 years thereafter, consumers will be able to get free solar power," said an official. The lifespan of a solar panel is approximately 25 years.
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Tesla posts wider net loss, stands by full-year delivery target

Tesla Motors Inc Wednesday reported a wider first-quarter net loss, but outperformed expectations and stuck to key milestones for the year ahead despite pressure on margins.

The company reaffirmed plans to start delivering its Model X sport utility vehicle late in the third quarter. The Model X, its second high-volume model, is critical to Tesla's goal of delivering 55,000 vehicles this year.

The automaker said it still expects to achieve that full-year sales goal, but warned that a "less rich product mix" would push down average selling prices for the Model S sedan, which now starts at $76,200.

Tesla said last month it had delivered 10,030 Model S sedans in the first quarter, a 55 percent increase from the year before. The company on Wednesday forecast deliveries of 10,000 to 11,000 vehicles in the second quarter.

Automotive gross margins for the just-ended quarter were 26 percent on an adjusted basis. The company forecast narrower automotive gross margins of "just under" 25 percent for the second quarter.

Tesla said it raised prices for cars sold in Europe by 5 percent to offset the currency exchange hit.

Tesla reported an adjusted net loss of 36 cents a share in the latest quarter, excluding certain expenses, compared with a profit of 14 cents a share on the same basis a year ago. Analysts had been expecting a loss of 50 cents a share on that adjusted basis. Tesla's net loss in the just-ended quarter was $1.22 a share, compared with a 40 cents a share net loss a year ago.

Tesla's cash reserves fell to $1.5 billion as of March 31 from $1.9 billion at the end of 2014. Company executives said in February the pace of cash consumption would slow during this year and cash flow would turn positive in the "latter half of the year."

Chief Executive Officer Elon Musk wrote in a letter to shareholders on Wednesday that Tesla still plans $1.5 billion in capital spending this year to expand production capacity, buy production tooling for the Model X and complete its large battery "gigafactory" and other facilities.

He said the company will start producing energy storage systems, marketed by a new subsidiary called Tesla Energy, in the third quarter.

Home units will start at $3,000. Analysts say the market for stationary energy storage batteries could grow into the billions of dollars as more home-owners and businesses look to store energy produced by solar or wind power systems, and take advantage of subsidies for sources of power that do not emit greenhouse gases.

Musk said the stationary battery storage systems could be "materially profitable" sometime next year.
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Vestas surprises with strong quarter, higher forecasts

Denmark's Vestas posted strong first-quarter operating profits and raised 2015 forecasts by more than expected after record orders, sending shares in the world's largest wind turbine maker higher.

Vestas said it now expected a minimum 7.5 billion euros of revenues this year, up from a previous forecast of at least 6.5 billion euros, with an operating margin of a least 8.5 percent, up from a minimum of 7.0 percent previously.

While investors and analysts had expected higher forecasts after the company's unprecedented order intake they were still taken aback by the extent of the upgrades.

The company said two-thirds of the increase in its sales forecast was due to the unexpectedly high level of orders while a third was thanks to the U.S. dollar, which continues to be strong against European currencies.

Vestas' notoriously volatile shares jumped as much as 6.5 percent and were up nearly 4 percent at 327 crowns by 0930 GMT.

Orders in the first quarter amounted to 1,750 megawatts (MW) compared to 6,500 MW for the full year in 2014.

"It's very early in the year and I hadn't expected for them to hike guidance so much," said Alm Brand analyst Michael Friis Jorgensen.

"It's not a one off. We have already started strongly in the second quarter and there are a lot of deals in the pipeline with framework agreements," he said, referring to longer-term deals.

Vestas, which made a profit in 2014 after a protracted period of losses, profit downgrades, job losses and cost cuts, said it would now have free cash flow of at least 600 million euros, up from a previous forecast of 400 million euros.

It said operating profit before one-off items amounted to 79 million euros ($89 million) in the first quarter, up from 40 million euros a year ago. Analysts polled by Reuters had on average expected a 19 percent rise to 47.7 million euros.

Vestas Chief Executive Anders Runevad said the strong results stemmed from a 29 percent rise in deliveries of turbines, especially in the United States, from a year earlier and noted that orders during the quarter came from 20 countries.

Vestas last week received one of its single largest orders yet, from a division of Warren Buffet's Berkshire Hathaway for a 400 MW farm in Nebraska.
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SolarCity installations top view, sales costs soar

SolarCity Corp, said on Tuesday first-quarter solar installations were higher than expected, despite a particularly snowy winter in many of its key East Coast markets.

The company, which is backed by Tesla Motors Inc founder Elon Musk, reported first-quarter installations of 153 megawatts, above its forecast of 145 MW. In the same period last year, it installed 82 MW of projects. California was the company's largest market.

SolarCity, which loses money because it spends aggressively on expanding its fast-growing solar installation business, reported a quarterly loss attributable to common shareholders of $21.5 million, or 22 cents per share, compared with $24 million, or 26 cents per share, a year ago.

Revenue rose 6 percent to $67.5 million, but sales and marketing expenses soared to $86.7 million from $46.9 million.

SolarCity has grown rapidly thanks to a business model that allows homeowners to spread payments for solar panels over 20 years, avoiding a hefty one-time payment of $20,000 to $30,000. It and other installers have also benefited from an 80 percent drop in the price of solar panels since 2008 and generous state and federal incentives for renewable power.

SolarCity thinks the value of is energy contracts is a better way to assess its financial position than revenue or cash flows. The company said payments from energy contract customers over the remaining life of those contracts rose by $1.2 billion in the first quarter as it added 28,000 new customers.

In the second quarter, SolarCity expects to install 180 MW of solar systems. It forecasts it will install between 920 MW and 1,000 MW for the full year.
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Offshore Wind Power Seen Growing by Record 4.2 Gigawatts in 2015

Wind-power developers are expected to install a record 4.2 gigawatts of offshore turbines this year, according to a Bloomberg New Energy Finance report.

That’s double the 2.1 gigawatts added in 2013, with Germany expected to lead installations in coastal waters with more than 2.3 gigawatts this year, followed by 1 gigawatt in the U.K., the London-based research company said in a report Friday.

The jump comes after delays last year shifted some project completions into this year, and will continue to grow as the technology becomes more accepted, Tom Harries, a wind analyst for BNEF in London, said in an interview.

“Offshore wind installation is increasing year-on-year until at least 2020,” Harries said. “There’s increased confidence that the technology is working and the cost of the technology is coming down.”

The total amount of offshore wind power in operation will reach 48 gigawatts by 2020, growing at a compound annual rate of 53 percent, according to the report.

Installing turbines in the harsh marine environment is more challenging than on land, making the electricity more expensive. The levelized cost of energy for offshore wind farms is now about $179 a megawatt-hour, down from $202 in the second half of last year, in part because of currency fluctuations, according to the report. Onshore wind power costs about $85 a megawatt-hour.

“A few years ago, people thought about offshore wind as an extension of onshore wind,” Harries said. “Then they realized that this is a different kind of beast.”
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Areva says to cut 5,000-6,000 jobs globally

Loss-making French state-controlled nuclear group Areva plans to axe as many as 6,000 jobs, about 14 percent of its headcount, as it seeks to reduce labour costs by about 15 percent in France and 18 percent in total internationally.

"We expect 3,000 to 4,000 job cuts in France and 5,000 to 6,000 globally, but more towards 6,000," Francois Nogue, human resources director for the group, said on Thursday.

The job cuts in France will be part of the global headcount reduction, which the company hopes to complete by the end of 2017.

Areva, whose equity capital has been virtually wiped out by four years of losses, employs 42,000 people worldwide, including 28,000 in France.

Nogue said staff costs - at about 3.4 billion euros ($3.87 billion), including about 2.4 billion in France - were a major part of Areva's cost base.

Areva said it would also cut bonuses and other variable pay items, and negotiate with unions about working hours. Nogue said he expected talks with unions to last a few months.

Staff cuts and wage reduction will account for about two thirds of a 1 billion euro cost reduction plan, Nogue said.

In 2014, Areva booked a loss of 4.8 billion euros on revenue of 8.3 billion. The company aims to present a restructuring plan by the time it publishes first-half results in July.
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Highfield halts shares as it hopes for cash

ASX-listed potash hopeful Highfield Resources went into a trading halt on Thursday, with the company saying it was on the brink of a ‘significant’ capital raising. 

A definitive feasibility study into Highfield’s Muga project, in Spain, recently estimated that a capital investment of $256-million would be required to deliver 1.123-million tonnes a year of granular potash, over a mine-life of 24 years.

Initial production from Muga was planned for the second quarter of 2017, with full production targeted for January 2019. Highfield was expected to resume trading on May 11.

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CF Industries posts smaller profit after year-ago sale

CF Industries posts smaller profit after year-ago sale

U.S. fertilizer producer CF Industries reported lower first-quarter profit on Wednesday, with the drop reflecting a one-time gain a year ago from the sale of its phosphate business.

The world's second-largest maker of nitrogen fertilizer said it was on track to starting up a new urea plant at Donaldsonville, Louisiana in the third quarter. Other parts of its $4.2 billion capacity expansion in that state and at Port Neal, Iowa are scheduled to come online in the fourth quarter and next year.

Net earnings fell to $231 million or $4.79 per share from $708.5 million or $12.90 per share a year earlier. Net sales dipped 16 percent to $954 million, reflecting the sale of its phosphate business to Mosaic Co. Nitrogen sales eased 3 percent.

Analysts had on average expected CF to earn $4.61 a share on sales of $978 million, according to Thomson Reuters I/B/E/S.

Cold, wet weather delayed demand for nitrogen fertilizer during the period, Chief Executive Tony Will said in a statement.

Rival nitrogen producer Agrium Inc reported a smaller than expected profit on Tuesday, due in part to a late start to the U.S. spring farming season.

U.S. plantings of corn, a crop that uses much fertilizer, are expected to reach 89 million acres, according to CF, down slightly from last year's 90.6 million.
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Precious Metals

Online platform BitGold to go public in Toronto, seek Asia listing

Canada's BitGold, a startup that runs an online payments and savings platform based on the precious metal, plans to go public in Toronto next week and will seek a listing in Asia in six to 12 months, the company's chief executive said.

"We felt there was this compelling opportunity to build a financial service that had virtually no counterparty risk because it only held gold," Chief Executive Roy Sebag said in an interview on Wednesday.

"It quickly became clear that what we wanted to build was a global internet platform," Sebag said. "We thought the real opportunity was broadening access to gold."

Users registered on Toronto-based BitGold's platform can deposit gold into vaults using a range of payment methods such as a credit cards and bitcoin.

The service acts as a savings account with gold as the currency. BitGold's clients can also spend their gold or earn gold by sending an invoice to someone for services.

The company has arrangements with Brinks Company to have access to vaults in Toronto, London, Zürich, Dubai, Singapore and Hong Kong. Users are also able to redeem gold and have it shipped home.

BitGold expects to list on the Toronto Venture Exchange on May 13, under the ticker symbol "XAU", Sebag said. It would seek to list later in Hong Kong or Singapore.

Sebag, a hedge fund manager who founded the company with former Goldman Sachs metals strategist Josh Crumb, said they hit upon the idea as the financial crisis unfolded and resulted in loose monetary policy.

Before the website went live this week, about 30,000 users had pre-registered and it has users in about 50 countries, he said.

Investors include Soros Brothers Investments, Sprott Inc , PowerOne Capital Markets and Sandstorm Gold. Soros Brothers owns 6 percent of the company, Sebag said.

BitGold's investment banks are Dundee Capital Markets, GMP Securities, Canaccord Genuity and Clarus Securities.

Earlier this year, BitGold raised C$7.5 million in cash, with an additional C$5 million in warrants that could be further exercised, giving the company a valuation of C$50 million, Sebag said.
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Randgold ready to end drought in gold discoveries

Randgold Resources Ltd. is getting ready for the end to a drought in gold discoveries that has dragged on for five years and raised doubts over the miner’s ability to grow.

Randgold will know by the end of this quarter if it has a major find at the Fonondara project in Ivory Coast after starting up its drill rigs, Chief Executive Officer Mark Bristow said in an interview.

“This is the first real exploration target we’ve talked about for five years,” he said in London. “It compares very favorably to other targets that ended up in discoveries.”

Randgold, which built its business making its own finds in Mali, Senegal and Ivory Coast, is currently developing no new mines. Its last major discovery was Gounkoto in Mali in 2009.

Bristow has vowed to shake up exploration and actively look for deals to add projects. Randgold has a $500 million to $700 million war chest to buy assets from struggling rivals, he said in November. An offer to buy Kinross Gold Corp.’s Mauritanian mine was rebuffed, a person familiar with the matter said in March. Randgold, one of the best-performing gold stocks in the past decade, is debt-free and profitable at current prices.

“We’re not short of opportunities to evaluate, but nothing fits our criteria,” Bristow said in the interview Thursday.

Randgold reported first-quarter net income of $48.2 million after $74.3 million a year earlier. The company had sales of $344.6 million and produced 279,531 ounces of gold.
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Eastern Plats: 50% upside to cash deal??

Why is Eastern Platinum’s Share Price On the Rise?

blue graphInvestors keeping an eye on companies in the platinum space will no doubt have noticed that Eastern Platinum’s (TSX:ELR) share price is on the rise. 

Shares of the company were up 12 percent to $1.96 on Tuesday, and have risen nearly 40 percent so far this year. Since it was announced last November that Eastern Platinum would sell substantially all of its South African assets to China’s Hebei Zhongbo Platinum, the Eastern’s share price has gone up by about 130 percent.

At the time of the announcement, Eastern Platinum CEO Ian Rozier stated that the company would be “extremely well capitalized” following the transaction, while market commentators such as James Fraser of pointed out that the deal could mean as much as $3.25 cash per share for shareholders.

Since then, the company has reached an agreement to buy out its minority interest partners in light of the deal and has seen approval from shareholders and from the Chinese government for the transaction. On April 9th, break fees of US$11.25 million were placed into escrow by each party, as per the terms of the agreement.

On rising prices and insider buying

According to Rozier, it’s that progress towards closing the transaction that’s stoking interest in Eastern Platinum stock.

“Over the last 3 months investors have continually been quantifying the risk of the deal possibly not completing,” he said via email. “However, with shareholder approval, Chinese government approval to do the transaction, and the recently reported payment of the ‘break-fee’ by Hebei Zongbo, I think investors are feeling more confident that the transaction will complete. On the basis that upon completion the stock would  have a cash value of over $3.00 per share, the stock is becoming more attractive with time as the risks are reduced.”

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Base Metals

Second protester killed in clashes over Southern Copper Peru copper project

A man protesting Southern Copper Corp's $1.4 billion Tia Maria project in Peru was killed in clashes with police on Tuesday, the second death in two weeks as government talks with opponents remain thwarted.

Interior Minister Jose Luis Perez said authorities were investigating how the protester was killed and two others wounded in Peru's southern region of Arequipa.

Tia Maria has the potential to add 120,000 tonnes of copper to Nasdaq-listed Southern Copper's annual supply, but the project has been stalled since three people died in similar rallies in 2011. Opponents say they fear the project will pollute surrounding agricultural valleys.

Helar Valencia, one of four local mayors calling for Tia Maria's cancellation, said the death of another protester further eroded trust in national authorities.

"This is going to anger people even more," Valencia said. "If before only some were against Tia Maria, now I think it's the whole valley."

Perez, who said he had ordered police not to use lethal weapons, replaced local law enforcement chiefs after another protester died from a bullet wound April 22.

Southern Copper said last week that the protests might delay the project's 2017 start date and that progress hinged on talks between opponents and the government of President Ollanta Humala, who supports Tia Maria.

Valencia said talks broke down more than two weeks ago and had not resumed since.

Construction on Tia Maria was poised to start when the protests broke out more than 40 days ago.

Southern Copper, controlled by Grupo Mexico, received an environmental permit for Tia Maria last year after it agreed to build a desalinization plant to ease pressure on local water supplies.
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Glencore first-quarter copper output falls 9 percent

Miner and commodity trader Glencore on Tuesday reported a 9 percent fall in first-quarter copper production mostly due to lower copper grades at its Alumbrera and Antamina mines in South America and maintenance at the Collahuasi mine.

Glencore, unlike its main rivals in the mining industry, has a bigger exposure to base metals rather than iron ore. The company also has a large commodity trading division, in addition to its mining and oil assets.

Output of copper, the largest earner for the Swiss-based company, was 350,700 tonnes in the first quarter, below most analysts forecasts.

In nickel, the company reported a 7 percent increase to 23,800 tonnes, thanks to a higher contribution from Koniambo, a nickel project the company inherited from its takeover of Xstrata in 2013, which has been affected by various operational issues.

Coal production rose 4 percent in the first quarter to 35.6 million tonnes, mainly thanks to the commissioning of two new thermal coal projects in South Africa. An announced potential output cut at Glencore's Optimum coal operation in South Africa is expected to have an impact later in 2015, the company said.
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Grupo Mexico approves stock buybacks of up to $243.3m in 2015

Mexican railroad and mining company Grupo Mexico said on Monday the company's shareholders had approved potential share buy-backs worth up to $243.3-million during 2015.

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Steel, Iron Ore and Coal

Andrew Forrest says Fortescue job losses 'nonsensical injury' from iron ore war

Fortescue's Andrew Forrest: "The two multinationals, now one, are continuing a strategy and we, all Australians, are paying the price for." Photo: Erin Jonasson

Fortescue Metals Group chairman Andrew Forrest says a decision to abandon the miner's family friendly fly-in, fly-out roster was "personally devastating", laying the blame on his larger competitors.

Fortescue has begun sacking hundreds of workers as it ditches its boom-time eight days on, six days off roster for 14 days on, one week off to cut costs. It is expected 700 Fortescue workers will lose their jobs by June 30.

It is expected 700 Fortescue workers will lose their jobs by June 30.

Fortescue pioneered the family friendly roster a decade ago as it fought against soaring wage costs across the Pilbara when the mining investment boom exposed severe skill shortages. It was able to lure workers and forced other miners to respond and offer similar rosters at many sites across the Pilbara.

But by July, Fortescue's Pilbara workforce will be on a 14 days on, one week off roster.
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Rio Tinto stands by forecast for China steel demand growth

Rio Tinto said on Thursday it still sees Chinese steel demand growing and peaking at close to 1 billion tonnes over the long term, in contrast to some forecasters who have said steel demand has already peaked in China.

“We continue to believe that the long run peak steel demand of China has a long way to go to approximately the billion number that you indicate,” Chairman Jan du Plessis said in response to a question at the group’s Australian annual meeting.

“It’s a serious conclusion we came to after long debate.”

A recent media report quoted economists and others saying that Rio Tinto’s and BHP Billiton’s long-held forecast that Chinese steel demand would peak at 1 billion tonnes around 2025 was outdated and they had stood by it so as not to lose face.
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ArcelorMittal cuts 2015 view on U.S. steel, weak mining

ArcelorMittal, the world's largest producer of steel, on Thursday cut its profit forecast for 2015 due to a more bearish view of the U.S. steel market and the impact of falling iron ore prices on its mining business.

The company said it expected its 2015 core profit to come in between $6 billion and $7 billion. It had previously set a range of $6.5 billion to $7 billion.

In the first quarter, core profit (EBITDA) fell 21 percent to $1.38 million, below the $1.43 million expected in a Reuters poll of nine analysts.

Its steel operations were hit by the U.S. market, where imports increased and demand fell, largely due to destocking of inventories.

"When you look at exports to the United States at the beginning of the year, clearly there was a surge. The main driver was the price differential, there was an enormous incentive to attract imports," Chief Financial Officer Aditya Mittal told a conference call.

"Since then price levels have corrected and the incentives for imports have also declined," Aditya added. "Therefore I would expects imports to come down from the peaks of the first quarter in the coming months."

Core profit margins in the company's North American business fell to 1.1 percent in the first quarter of 2015 from 5.2 percent in the same period last year.

The group's shares fell as much as 3.3 percent in early trading on Thursday.

The profit decline was caused by a 74 percent drop in profits at the group's iron ore mining operations, which suffered from much lower market prices.
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Xinjiang Q1 outbound electricity transmission firstly exceeds 7,000 GWh

Xinjiang saw outbound electricity transmission surge 120% year on year to reach 7,058.34 GWh in the first quarter this year, exceeding 7,000 GWh for the first time and equating to about 2.338 million tonnes of standard coal, said the Xinjiang Development and Reform Commission recently.

The electricity transmitted via the Hazheng ±800 KV DC transmission line, which extends from south Hami of Xinjiang to Zhengzhou in Henan province, stood at 5,489.06 GWh, while the rest 1,569.28 GWh was transmitted by a quadruple-circuit 750 KV AC transmission line to northwest China.

Over the past years, Xinjiang has been pushing ahead the construction of supporting facilities under the strategy of “transmitting Xinjiang’s electricity to other parts of China”.

The 750 KV AC line was put into operation on November 3, 2011, drawing an end to Xinjiang’s isolated power grid operation.

To date, an electricity outbound transmission network constituted by Hazheng line and 750 KV AC line has initially taken shape in Xinjiang, contributing combined transmission capacity of 13 GW.

Xinjiang has cumulatively transmitted over 30 TWh of electricity to other provinces since 2011, equating to about 9.937 million tonnes of standard coal, achieving industrial added value of about 3.87 billion yuan and increasing fiscal revenue of about 2 billion yuan.

Besides, a mine-mouth thermal power plant in Hami with four 0.66 GW generating units, constructed by Shenhua Guoneng Energy Group, was commissioned recently, marking that Xinjiang has gained another 2.64 GW outbound transmission capacity.

In light of the national plan for Xinjiang’s power grid construction, an outbound transmission network, comprising the Zhundong-Chengdu line (east Zhungeer of Xinjiang to Chengdu of Sichuan), Zhundong-East China double-circuit ±1,100 KV line, and north Hami-Chongqing ±800 KV UHV DC line, will come into being by 2020. By then, Xinjiang will own five DC and three AC outbound transmission lines, capable of supplying 30 TWh of electricity to major consumption areas each year.
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China releases clean coal action plan 2015-2020

China’s National Energy Administration (NEA) released on May 5 an action plan on clean and highly efficient use of coal over the period from 2015 to 2020, detailing plans on the coal quality upgrading, retrofitting of coal-fired thermal plants, industrial boilers and coal chemical operations, as well as the controlling of scattered use of coal for residential purposes.

China will further develop coal washing and processing to improve coal quality in a more sophisticated manner, the NEA said. Large-scale coal preparation facilities – with annual capacity above 6 Mtpa for thermal coal and over 10 Mtpa for coking coal -- that are highly intelligent and highly reliable will be developed.

More than 70% of the raw coal should be washed in China by 2017, and over 80% by 2020, the NEA said.

High-quality coal distribution centers should be built at mining areas, ports and main end-user areas. By 2020, China will have 11 large coal storage and blending bases and 30 coal logistics parks each with annual circulation at 20 million tonnes or above.

Breakthrough should be achieved in low-rank coal upgrading technology by 2017 and a group of 1 Mtpa demonstration projects will be built by 2020, the NEA said.

China will continue to retrofit coal-fired thermal power plants and industrial boilers to save energy and reduce emissions. In accordance with local water resources, environment and biological situations, nine large coal and power bases will be built in coal-rich provinces, including Xinjiang, Inner Mongolia, Shaanxi, Shanxi and Ningxia, to supply electricity to consumer areas.

Coal consumption of newly-built coal-fired generating units should be above 0.3 kg standard coal per kWh of electricity output, while existing coal-fired units below 0.31 kg standard coal.

Coal used for power generation should account for over 60% of the country’s total coal consumption, the NEA said.

For industrial boilers, by 2020, China will phase out all the coal-fired boilers with capacity of 600,000 T/h. Existing boilers with low efficiency or failing to meet emission standards would be eliminated or upgraded; over half of the boilers should be high-efficient boilers, the NEA said, without elaborations.
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Bank of America's new policy to limit credit exposure to coal

Bank of America announced Wednesday it will reduce its financial exposure to coal companies, acknowledging the risk that future regulation and competition from natural gas pose on the industry.

The bank announced its new coal policy at its annual meeting, saying it would cut back its lending to coal extraction companies and coal divisions of broader mining companies.

"Our new policy reflects our decision to continue to reduce our credit exposure over time to the coal mining sector globally," said Andrew Plepler, head of corporate social responsibility at Bank of America.

The announcement comes amid a growing fossil fuel divestment movement, in which universities, churches and large asset owners are being pressured to abandon or curb their investments in high-carbon energy.

Global bank HSBC said in a client research note in April that the recent drop in energy prices has put a spotlight on "stranded" fossil fuel assets, making them a risk to investors.

"As rigs are dismantled, capex (capital expenditures) is cut and operating assets quickly become unprofitable, stranding risks have become much more urgent for investors to address, including shorter term investors," the research note said.

Bank of America's new policy arose from pressure from universities and environmental groups, the bank said.

"From these engagements, we have developed a coal policy that will ensure that Bank of America plays a continued role in promoting the responsible use of coal and other energy sources, while balancing the risks and opportunities to our shareholders and the communities we serve," it said.

The Rainforest Action Network Climate, one of the groups that pressured Bank of America on this issue, said the announcement represented a "sea change"

"It acknowledges the responsibility that the financial sector bears for supporting and profiting from the fossil fuel industry and the climate chaos it has caused," said Amanda Starbuck, RAN's energy program director.

The RAN said Bank of America has made strides since 2011, when it was one of the biggest bankrollers of coal. On Monday, it got the highest rating of any bank in the RAN's 2015 Coal Finance Report Card.
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Rio Tinto unshakeable on iron ore expansion plans

Rio Tinto unshakeable on iron ore expansion plans

Rio Tinto vowed to continue producing iron ore at full tilt, despite a 55 percent plunge in prices since the start of last year, underpinned by its forecast that China's steel demand will grow towards 1 billion tonnes.

While rivals BHP Billiton and Brazil's Vale have lightly tapped the brakes on their medium term output plans, Rio said on Thursday it will focus on cutting costs so it remains the world's most profitable producer.

"With iron ore now trading around $60 a tonne delivered into China, we have more to do to ensure that we maintain the margin between ourselves and other producers," Chief Executive Sam Walsh said at the global miner's Australian annual meeting.

Rio Tinto and rivals Vale and BHP have ramped up output over the past few years just as demand growth slowed in China, the biggest user of iron ore, which has driven down prices and threatened the survival of smaller producers.

The world no.2 iron ore producer expects to ship 350 million tonnes of the steel-making ingredient this year, up from 300 in 2014.

Rio's relentless expansion has been based on its long-held forecast that demand for steel in China would grow to 1 billion tonnes around 2025, matching an estimate from BHP Billiton.

The forecasts recently came under fire from economists and former BHP executives and contradicts the view of China's steel industry association which says demand has already peaked at around 820 million tonnes.

Rio Chairman Jan du Plessis said the board and management stood by the forecast.

"We continue to believe that the long run peak steel demand of China has a long way to go to approximately the billion number," he told shareholders. "It's a serious conclusion we came to after long debate."

Walsh said the market was in transition, "with high-cost and in some cases late-entrant supply" having to cut output as more low-cost supply comes on stream, and reiterated that the shift would be bumpy.

The company shrugged off attacks from smaller rival Fortescue Metals Group which has criticised Rio Tinto and BHP for flooding the market, driving down prices, and in turn hurting smaller miners and the Australian economy.

Rio had no desire to "push competitors out of the business," du Plessis said.

He defended the company's strategy of investing $28 billion in its West Australian iron ore operations over the past eight years, saying its global market share has remained at 20 percent over the past decade.
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China April steel sector PMI rebounds on month

The Purchasing Managers Index (PMI) for the Chinese steel sector rose to an eight-month high of 48.2 in April, up from 43 in March, showed data from the China Federation of Logistics and Purchasing (CFLP) on May 4.

However, it was the 12th consecutive month below the 50-point threshold separating growth from contraction, indicating persisting sluggishness in the sector.

The new order sub-index rose to 49.4 in April from March’s 45.5, the third consecutive monthly increase and the highest since August 2014, mainly due to improving demand as industrial activities recovered.

Meanwhile, the sub-index for steel products stocks edged up to 50.8 in April from 50.7 in March, the 16th consecutive month above the 50-point threshold, said the CFLP.

As of April 20, steel products stocks of key steel producers stood at 16.68 million tonnes, up 1.26% from ten days ago and up 5.44% from the previous year, the China Iron and Steel Association (CISA) said.

Industry insiders said the steel sector may recover a bit amid the government’s stimulus policies, and steel prices may rebound should demand improve further in May.
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China to expand coal ban to suburbs

China will expand its bans on coal burning to include suburban areas as well as city centers in efforts to tackle air pollution, the top energy agency said on Tuesday.

Detailing its clean coal action plan 2015-2020, the National Energy Administration (NEA) said it would promote centralized heating and power supply by natural gas and renewables, replacing scattered heat and power engines fueled by low quality coal.

The world's biggest coal consumer will ban sale and burning of high-ash and high-sulphur coal in the worst affected regions including city clusters surrounding Beijing.

Beijing ordered a ban last year against coal burning in its six central districts from 2020.

Under the action plan, coal-fired industrial boilers will all shift to burn natural gas or clean coal by 2020 in the Beijing-Tianjin-Hebei city clusters, Pearl River delta and Yangtze River delta area, NEA said.

China has around 600,000 industrial boilers fueled by coal, most of them are in residential areas in northern China.

The government will offer subsidies for clean fuels, it said, without giving details.

In an earlier action plan released by the Ministry of Industry and Information Technology, China aimed to cut coal consumption by over 80 million tonnes by 2017 and more than 160 million tonnes by 2020.
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ArcelorMittal S.Africa to cut Q2 output on slack demand

ArcelorMittal's South African unit will cut second-quarter production by 6 percent at its Newcastle plant due to slack demand from its domestic market, it said on Tuesday.

"Production to be reduced by a further 6 percent (year on year) to 4,300 tons per day to reduce the steel stock on hand," the firm said in a presentation delivered at the plant in South Africa's eastern KwaZulu-Natal province.

The plant is ArcelorMittal's third-largest in South Africa by output.

The unit of the world's top steelmaker said earlier this year that while it saw international prices staying depressed, it planned to produce at full capacity and reduce costs.

CEO Paul O'Flaherty said on Tuesday South Africa was "under heavy attack" from cheap imports and the slow domestic market could only recover if the government implemented its infrastructure plans.

President Jacob Zuma's government announced plans three years ago to invest $95 billion in roads, ports and railways before 2015, but many initiatives have stalled.
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Coal Markets May Just Have Been Thrown A Lifeline

There have been rumours the last few months. And last week we got confirmation of a major shift underway in one of the world's biggest bulk commodities.

That's thermal coal. Where it looks as if the world's largest supplier -- Indonesia -- is on the verge of a collapse in output.

Reuters quoted Pandu Sjahrir, the chairman of the Indonesian Coal Mining Association, as confirming that the country's coal producers are now cutting back output in a major way. With Sjahrir saying that overall Indonesian production could drop to between 350 million and 400 million tons for 2015.

That confirms previous announcements from Indonesia's government that a major production cut is in the works this year. And suggests that the scale of the drop could be one of the largest the coal market has ever seen from this critical exporting nation.

Last year, total Indonesian coal production came in at 458 million tons. Meaning that a fall to the lower end of the range quoted by the Coal Mining Association would imply a 24% reduction in output.

Such a drop looks all but assured, according to chairman Sjahrar, who noted that companies have stopped trying to expand production in order to keep cash flow high -- with producers now almost completely focused on making sure they have "enough cash on hand".
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Goldmans leaves coal

Goldman Sachs Group Inc. got a disconcerting update a year after buying its second coal mine in Colombia: “Certain operational issues have arisen,” commodities executives reported.

That was putting it mildly. Local women and children had formed a human blockade to protest labor issues, shutting down production. Coal prices had dropped 20% in three years, and another 6% decline could permanently impair the value of Goldman’s investment, the executives told directors in late 2013.

After that, the bad news kept coming. Coal prices tumbled by more than 40%. An environmental law shut down production for most of last year.

It now appears that Goldman has had enough. The firm is in talks to sell the coal mines at a loss, according to people familiar with the negotiations. Any deal, coming after Goldman’s prior sales of power plants and an aluminum-storage business, would mark the end of the firm’s rocky sideline as a producer of raw materials.

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Steel mills shift to exports as market sags

First-quarter steel exports surged 40.7 percent to 25.78 million metric tons as mills responded to weak domestic demand and falling prices, the China Iron and Steel Association said.

"Although domestic steel companies face increasing trade disputes in foreign markets, exports will continue to increase, driven by global demand and the companies' price competitiveness," said CISA Vice-President Zhu Jimin.

The jump in exports also reflected a low base of comparison, he said.

Zhu said that overseas sales will grow more slowly this year because the government has ended export rebates for certain steel products.

After rebates were eliminated, steel exports weakened from 10.3 million tons in January to 7.8 million tons in February and again to 7.7 million tons in March, according to CISA data.

Even though demand and prices fell, while environmental protection costs rose, the industry's first-quarter aggregate loss narrowed. Medium-sized and large mills lost a total 987 million yuan ($159.6 million), compared with 8 billion yuan a year earlier, the association said.

The booming stock market offset deficits in steel mills' core business.

"Many steel companies invested in the stock market in recent months, which helped their financial performance," said Chen Yuqian, deputy director of the finance and assets department of the CISA.

He said the companies' steel operations recorded a total loss of 11.05 billion yuan in the first quarter, 3.43 billion yuan more than a year earlier.

Some giant steel companies that own iron ore mines experienced even bigger problems as the prices of the raw materials slumped from $133 a ton at the beginning of 2014 to about $51 a ton late last month.

"Falling iron ore prices have helped Chinese steel mills cut costs for raw materials, but declining prices made some steel giants including Shougang Group and Hebei Iron and Steel Group post huge losses in their mining segment," Zhu said.

In the past, owning mines was a good way to control raw material cost for Chinese steel mills, but now it is a burden because of sharply falling global iron ore prices, he said.
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China's crude steel output down 1.7% in Q1 to 200.1 mln tons

China, the world's largest steel producer, saw its crude steel output fall 1.7% year on year to 200.1 million tons in the first quarter of this year, according to the latest statistics released by the National Development and Reform Commission.

The commission says that the country's output of steel products up 2.5% year on year to 266.4 million tons in the period.

China exported 25.78 million tons of steel products from Jan to Mar, up 40.7% year on year, while its import of steel products reached 3.23 million tons, down 10% from a year earlier.

China's steel prices continue to decrease in Mar 2015, with the domestic composite steel price index plunging 1.4 points to 74.67 compared with that in Feb this year.

The steel industry realized RMB 18.13 billion in profit in the first three months, 36.0% less than in the same period of last year.
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Shaanxi Coal 2014 profit down nearly 73%

Shaanxi Coal Industry Co., Ltd, the third-largest listed coal miner by volume in China, posted a year-on-year drop of 72.71% in its net profit to 951 million yuan ($137.3 million) in 2014, the company said in its annual report on April 25.

This was the second consecutive year-on-year drop since its listing at Shanghai Stock Exchange, which was mainly attributed to continuously falling coal prices and sluggish demand.

In 2014, the company’s operation revenue reached 41.15 billion yuan, down 4.79% on year, with total profit falling 52.9% to 3.52 billion yuan, according to the report.

Shaanxi Coal produced a total 115 million tonnes of coal last year, down 1.07% on year; while total sales during the same year increased 2.26% from the previous year to 135 million tonnes.

The average sales price of raw coal of the company stood at 257.97 yuan/t in 2014, down 13.67% on year; while that of washed coal plunged 26.32% on year to 290.17 yuan/t.

The cost of self-produced coal was 181.48 yuan/t, down 6.79% on year; while the cost of washed coal was 290.15 yuan/t, falling 17.48% from the year before.

The company targeted an annual output of 106 million tonnes in 2015, down 7.8% from the actual output last year, and planned to increase sales revenue by 2.92% on year to 42.35 billion yuan.

Oversupply is expected to ease in China’s domestic market to some extent, but a fundamental change seems unlikely and the whole sector would have to face grave challenges, the company said.
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