Brazil's state-run oil company Petrobras is offering up to a quarter of its 40 percent stake in the huge Libra offshore oil prospect as its seeks to reduce the largest debt in the global oil industry, two industry sources said on Tuesday.

The stake could fetch up to $1.5 billion, according to analysts at Macquarie, and is likely to attract international oil companies keen to expand in one of the world's fastest-developing oil basins.

Petroleo Brasileiro SA, as Petrobras is formally known, is targeting $15.1 billion in disposals by the end of next year but has struggled to sell assets in less attractive prospects off Brazil and in the Gulf of Mexico.

Chief Executive Aldemir Bendine has told Brazil's congress that the company will not be able to meet repayment obligations on its debt of more than $130 billion and maintain a $19 billion investment plan next year unless it hits the disposal target.

The company is now offering sought-after oil prospects in the so-called sub-salt areas in the Santos basin south of Rio de Janeiro, several industry sources said. These areas contain vast reserves trapped deep beneath the sea bed by a layer of mineral salts.

"Petrobras finally realised the assets they were offering were not as attractive as they thought and has decided to offer opportunities that are more likely to fetch a higher price," an industry source said.

In 2013 Petrobras made an upfront payment of nearly $7 billion for its 40 percent stake in the Libra development, which was Brazil's first offshore oil lease sold under production-sharing agreements under which the company is required to be the operator and hold a minimum 30 percent stake.

Royal Dutch Shell, which would become the biggest foreign investor in Brazil after the completion of its proposed $70 billion merger with BG Group, and France's Total each hold a 20 percent stake in Libra. China National Petroleum Corp and China's CNOOC each hold 10 percent.

First oil from the Libra field is expected to flow in the first quarter of 2017. The government estimates that Libra has between 8 billion and 12 billion recoverable barrels of oil and gas equivalent.

Analysts at Macquarie, who have an underperform valuation on Petrobras, cautioned over its ability to keep to its asset sales plans.

"We maintain our concerns regarding the Petrobras' ability to deliver its short-term


Read more at Reutershttp://www.reuters.com/article/petrobras-sale-idUSL8N13X2IU20151208#uMZZ7RmXoDJvYwJx.99

---

Attached Files

Chevron will slash spending by 24 percent next year as it works to complete projects already under construction while delaying others that have not received a final financial commitment from the company.

The multinational oil giant headquartered in San Ramon, California unveiled its 2016 capital and exploratory budget late Wednesday, providing an initial glimpse of how the world’s largest oil companies plan to curtail spending amid the worst downturn in years.

While many oil companies have remained tight-lipped about their capital budgets for next year, speculation has been growing that upstream investment will fall for the second year in a row, marking the first time that’s happened since the 1980s bust.

Chevron said Wednesday it will spend $26.6 billion next year, or nearly one-fourth less than it expects to invest this year, reaffirming the estimates laid out by the company in its third quarter conference call with investors.

About $11 billion of its 2016 budget has been earmarked for major capital projects that are already being built and another $9 billion has been targeted for existing base producing assets, including shale and tight resources, the company said.

Another $3 billion will go toward projects that have not been sanctioned.

“Our capital budget will enable us to complete and ramp up projects under construction, fund high return, short cycle investments, preserve options for viable long-cycle projects and ensure safe, reliable operations,” Chairman and CEO John Watson said in a statement.

In addition to funding its own projects, Chevron’s budget includes $4.5 billion of planned expenditures by affiliates, primarily linked to investments by Tengizchevroil LLP Kazakhstan and Chevron Phillips Chemical Company in the United States, which is building a $6 billion expansion along the Gulf Coast, including an ethane cracker at the company’s Cedar Bayou plant in Baytown, and two polyethylene units in Old Ocean near the Sweeny complex.

The company warned on its third quarter earnings call earlier this year that it would pare back spending and place some projects on the back burner as it braced for an extended crude slump.

“We are completing the projects we’ve got and working to preserve the options we have on some of the nice opportunities,” Watson said on the call. “We do have to live within our means here.”

http://fuelfix.com/blog/2015/12/09/chevron-slashes-2016-spending-plans-by-24-percent/?utm_source=twitterfeed&utm_medium=twitter#36515101=0

---

Attached Files

China is on track to miss its shale gas production target for this year as its biggest producers throttle back output amid weakening demand growth and a collapse in energy prices.

PetroChina Co., the country’s largest oil and gas company, may produce about 1.6 billion cubic meters of the unconventional gas this year, lagging behind its stated target of 2.6 billion cubic meters, according to people with direct knowledge of the matter.

China Petroleum & Chemical Corp., the nation’s second-biggest oil and gas producer, may pump around 3.5 billion cubic meters of the fuel, according to the people, who asked not to be identified because the information isn’t public. The explorer plans to complete an expansion project this month that will boost capacity to 5 billion cubic meters a year.

China’s efforts to copy the success of the U.S. in shale production has foundered as an economy growing at the slowest pace in 25 years curbs demand. The combined production of the two companies of 5.1 billion cubic meters in 2015 accounts for almost all of China’s commercial shale gas output. The country in 2012 announced an annual production target of 6.5 billion cubic meters for this year.

“We’ve seen very limited growth in the domestic market and an oversupply in terms of imports, that’s led to lower-than-expected production this year,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said by phone. “Shale gas is going to get cut when we’ve got an oversupplied market and companies focus on the lower end of the cost curve.”

PetroChina is holding back shale gas expansion at Sichuan in southwest China partly because they’re already struggling to sell conventional gas, which is cheaper to produce, according to the people. Sinopec, as China Petroleum is known, will keep some of its newly added capacity at its Fuling field idle because of a lack of buyers, according to the people.

Sinopec announced on Oct. 15 that proved shale gas reserves at Fuling increased by 273.9 billion cubic meters to 380.6 billion cubic meters, making it the world’s second-largest shale gas field outside North America. The country’s total proven shale gas reserves are estimated at 500 billion cubic meters, according to the Chinese Academy of Engineering.

http://www.bloomberg.com/news/articles/2015-12-09/petrochina-sinopec-2015-shale-output-said-below-china-target-ihyg00i0

Ship fuel prices have plummeted to lows not seen in over a decade, pulled down by a rout in crude oil prices as a result of a global glut just as demand for marine fuel slows on the back of Asia's weakening economies.

The benchmark end-user price for marine fuels, also known as bunker, Singapore's 380-centistoke grade bunker fuel BK380-B-SIN, closed at $183.21 per metric tonne on Tuesday, almost $10 lower from the previous day and at levels last seen in January 2005.

Singapore is the world's main shipping fuel hub, trading over 40 percent of it globally.

The fall in bunker fuel follows the tumble in crude prices after the Organization of Petroleum Exporting Countries ended their meeting last week without even mentioning production targets, indicating that members will continue to pump near record levels. OPEC members now seem to be defending market share against one another internally and against competitors like Russia and North America.

The average daily fuel cost to operate a Very Large Crude Carrier (VLCC) has fallen from over $75,000 to under $18,000 currently, meaning a sharp reduction in operating costs for shippers

Despite this fall in costs, bunker traders said that demand from shippers remained weak as they struggle with a slowdown in global seaborne trade.

"Although (bunker) prices are low, demand has been weak compared with the same time last year because of mounting pressures on the shipping industry amid slowing global activity," one bunker fuel trader said.

China, the world's biggest exporter, reported a 6.8 percent drop in exports in November from a year earlier, while its imports slowed 8.7 percent, as the country's economy grows at its slowest pace in decades.

Another trader said that demand would only increase if the average distance of ships' voyages rose and if ship owners filled their tanks in anticipation of a price rise. Yet, with the oil supply glut expected to last well into next year and the economic outlook also not improving, this is seen as unlikely.


Read more at Reutershttp://www.reuters.com/article/marine-fuel-idUSL3N13Y2T220151209#Sbyi3fUhdcXliMWV.99

---

Attached Files

Technip has denied speculation it is in merger talks with FMC Technologies.

It comes after previous reports from sources said to be close to the matter claimed discussions were ongoing between the pair.

Technip and FMC Technologies have market capitalisations of $5.8billion and $6.8billion respectively.

A spokesman for the company said: “Following recent press articles with respect to possible strategic transactions involving Technip, we state that there are no ongoing discussions with respect to such transactions.”

Earlier this year, FMC Technologies and Technip formed a joint venture, Forsys Subsea, which was aimed at reducing the cost of subsea oilfield exploration.

Talks will CGG last year fell through after the latter company said no to a €1.47billion offer from Technip.

https://www.energyvoice.com/oilandgas/95414/technip-denies-fmc-takeover-speculation/

2015 U.S. crude oil refinery inputs averaged about 16.7 million barrels per day during the week ending December 4, 2015, 151,000 barrels per day less than the previous week’s average. Refineries operated at 93.1% of their operable capacity last week. Gasoline production increased last week, averaging about 9.9 million barrels per day. Distillate fuel production increased last week, averaging over 5.2 million barrels per day.

U.S. crude oil imports averaged over 8.0 million barrels per day last week, up by 274,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.5 million barrels per day, remaining unchanged from the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 648,000 barrels per day. Distillate fuel imports averaged 58,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.6 million barrels from the previous week. At 485.9 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 0.8 million barrels last week, and are in the upper half the upper half of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 5.0 million barrels last week and are in the upper half of the average range for this time of year. Propane/propylene inventories fell 3.4 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 3.6 million barrels last week.

Total products supplied over the last four-week period averaged about 19.8 million barrels per day, down by 0.6% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.2 million barrels per day, up by 0.7% from the same period last year. Distillate fuel product supplied averaged 3.7 million barrels per day over the last four weeks, down by 1.2% from the same period last year. Jet fuel product supplied is up 5.5% compared to the same four-week period last year.

http://ir.eia.gov/wpsr/wpsrsummary.pdf

---

Attached Files

                                              Last Week  Week Ago     Last Year

Domestic Production '000........ 9,164          9,202             9,118

http://ir.eia.gov/wpsr/overview.pdf

Freeport-McMoRan Oil & Gas has decided to further reduce costs for its oil and gas capital spending plans as a response to market conditions.

As previously reported on August 5, 2015, Freeport-McMoRan Oil & Gas (FM O&G) is deferring investments in several long-term projects in response to oil and gas market conditions.

Following an ongoing review, capital expenditures for 2016 and 2017 have been reduced further from $2.0 billion per year in 2016 and 2017 to $1.8 billion in 2016 and $1.2 billion in 2017, including idle rig costs, the company said on Wednesday.

The revised plans, together with initiatives to obtain third party financing or other strategic alternatives, will be pursued with the goal of achieving funding for oil and gas capital spending within its cash flows and resources, Freeport-McMoRan added.

The revised plans incorporate a reduction in rig utilization from three Deepwater Gulf of Mexico drillships to one drillship while increasing production from third quarter 2015 rates of 150 barrels of oil equivalents per day (MBOE/d) to an average of 159 MBOE/d in 2016 and 2017.

According to its Wednesday statement, FM O&G expects to bring eight wells online in late 2015 and 2016 from its tie back drilling operations at the Holstein Deep, Horn Mountain and King Projects in the Deepwater Gulf of Mexico. These projects, combined with other initiatives, are expected to add low cost oil production, enabling cash production costs to decline from $19 per barrel of oil equivalents (BOE) in 2015 to less than $16 per BOE in 2016 and 2017. Under the revised plans, FM O&G’s cash flows would substantially fund its capital expenditures at $45 per barrel of Brent crude oil in 2017, said the company.

The company also added it was engaged in ongoing discussions with its rig vendors and other service providers to obtain reductions in costs and to evaluate opportunities to market idled equipment to third parties.

http://www.offshoreenergytoday.com/freeport-mcmoran-to-slash-gulf-of-mexico-rigs/

---

Attached Files

North Dakota's oil regulator on Wednesday identified Lime Rock Resources as the buyer of Occidental Petroleum Corp's North Dakota oil operations, confirming what Oxy's executives had yet to disclose publicly.

The deal, worth about $600 million, is expected to close by the end of the month.

Reuters first reported in October that Oxy had agreed to sell all of its North Dakota shale oil acreage and assets to Lime Rock, a private equity fund, as it focuses capital elsewhere.

In an Oct. 28 earnings conference call with investors, Oxy Chief Executive Steve Chazen did not identify the private equity fund as the buyer, although he confirmed the price.

The state's Department of Mineral Resources said on Wednesday that Oxy had filed paperwork to transfer well bonds to Lime Rock as the buyer. The transfers involve two entities controlled by Oxy's parent company.

North Dakota requires bonding for oil wells.

The deal includes all of Oxy's roughly 300,000 acres in the state, including a 21,000 square-foot regional office built three years ago.


Read more at Reutershttp://www.reuters.com/article/us-limerock-occidental-bakken-idUSKBN0TT00B20151210#xDVIJs8lmzf486uG.99

---

Attached Files

In an instant, Chesapeake Energy Corp. will erase the equivalent of 1.1 billion barrels of oil from its books.

Across the American shale patch, companies are being forced to square their reported oil reserves with hard economic reality. After lobbying for rules that let them claim their vast underground potential at the start of the boom, they must now acknowledge what their investors already know: many prospective wells would lose money with oil hovering below $40 a barrel.

Companies such as Chesapeake, founded by fracking pioneer Aubrey McClendon, pushed the Securities and Exchange Commission for an accounting change in 2009 that made it easier to claim reserves from wells that wouldn’t be drilled for years. Inventories almost doubled and investors poured money into the shale boom, enticed by near-bottomless prospects.

But the rule has a catch. It requires that the undrilled wells be profitable at a price determined by an SEC formula, and they must be drilled within five years.

Time is up, prices are down, and the rule is about to wipe out billions of barrels of shale drillers’ reserves. The reckoning is coming in the next few months, when the companies report 2015 figures.

“There was too much optimism built into their forecasts,” said David Hughes, a fellow at the Post Carbon Institute and formerly a scientist with the Geological Survey of Canada. “It was a great game while it lasted.”

The rule change will cut Chesapeake’s inventory by 45 percent, regulatory filings show. Chesapeake’s additional discoveries and expansions will offset some of its revisions, the company said in a third-quarter regulatory filing. Gordon Pennoyer, a spokesman for Oklahoma City-based Chesapeake, declined to comment further.

Other examples include Denver-based Bill Barrett Corp., which will lose as much as 40 percent, and Oasis Petroleum Inc., based in Houston, which will erase 33 percent, according to filings. Larry Busnardo, a Bill Barrett spokesman, declined to comment. Richard Robuck of Oasis didn’t respond to questions.

The U.S. shale revolution, which brought the country closer to energy self-sufficiency than at any time since the 1980s, was built on money borrowed against the promises of future output. New wells that could be drilled when U.S. oil was selling for $95 a barrel -- last year’s price as calculated by the SEC’s formula -- simply don’t pay at today’s prices, and the revolution has stalled.

Undrilled Properties

When fracking advocates lobbied the SEC, they argued that hydraulic fracturing was a new technology that unlocked oil and gas in vast layers of underground rock, making drilling more predictable that it used to be.

Drillers met the rule’s profitability provision last year due to a quirk in the SEC’s pricing formula. The agency’s yardstick is an average of the prices on the first day of each month during the calendar year. The price came to $95 a barrel at the end of 2014, even though oil was trading below $50 by the time the companies reported reserves in February and March. The 2015 average, including the Dec. 1 price, comes out to $51 a barrel.

“They got such a break with the price for last year, but it sure as hell isn’t going to happen this year,” said Ed Hirs, a managing director at Houston-based Hillhouse Resources, an independent energy company.

Proven Reserves

The wells that exist only on paper are particularly vulnerable to revision. And thanks to the SEC rule change, companies have a lot more undeveloped reserves on their books than they used to.

Undeveloped reserves of oil and natural gas liquids have more than tripled to 6.1 billion barrels since 2008, the last year before the rule went into effect, according to data compiled by Bloomberg on 40 independent U.S. producers. Undrilled wells account for 45 percent of proven reserves, up from 30 percent in 2008.

Writedowns, which are reported on a quarterly basis, point to sizable revisions. The 61 companies in the Bloomberg North American Independent Explorers and Producers index have announced impairments of $143.8 billion in the past year.

Some of the wells may never be drilled, while others may return to inventories if prices rise. A company’s deletions may be offset by the addition of new prospects, purchased properties or an increase in the estimated amount of crude each well will produce.

“The question is, how are these reserves going to come back?” said Subash Chandra, an energy analyst with Guggenheim Securities in New York. “Because if you have to spend within cash flow, those reserves aren’t coming back. Not unless we get a spike in prices, or we return to levered growth.”

http://www.bloomberg.com/news/articles/2015-12-10/billions-of-barrels-of-oil-vanish-in-a-puff-of-accounting-smoke

---

Attached Files

Production from the Bakken tight oil play increased slightly between September and October as operators began to draw down their backlog of wells that had been previously drilled but not completed, according to state regulators.

http://www.upstreamonline.com/live/1418893/bakken-flows-tick-up-in-october?utm_source=twitterfeed&utm_medium=twitter