Mark Latham Commodity Equity Intelligence Service

Friday 31st July 2015
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    Oil and Gas


    Surrender Monkeys?


    The economic expansion—already the worst on record since World War II—is weaker than previously thought, according to newly revised data.

    From 2012 through 2014, the economy grew at an all-too-familiar rate of 2% annually, according to three years of revised figures the Commerce Department released Thursday. That’s a 0.3 percentage point downgrade from prior estimates. (USA)


    The Conference Board of Canada has downgraded its forecast for the Canadian economy.

    On Wednesday, the board predicted the economy will grow by 1.6 per cent this year, Canada’s worst showing since 2009. In May, it forecast growth of 1.9 per cent. The Canadian economy grew by 2.4 per cent last year.

    The board said the contraction of the Canadian economy in the first quarter of the year, lower oil prices, a near-record trade deficit and uncertainty in global markets have dimmed the growth outlook for Canada.

    “There has been much speculation on whether the Canadian economy has dipped into recession,” Matthew Stewart, associate director, national forecast, said in a release. “We expect the numbers to show economic growth tracking close to zero in the second quarter.

    “But even if Canada  slips into mild recession, we expect it to be small and short-lived, with the economy picking up through the rest of the year.”

    Todd Hirsch, chief economist with ATB Financial, said the economic picture has gotten progressively worse over the year both for Canada and Alberta.

    “Part of it is energy prices. That’s the Alberta story. These energy prices are in our sort of lower case scenario that we thought we would see by the middle of the year,” he said. “Those haven’t recovered yet. For Canada, it’s really an export story which is a big puzzle.


    NEW YORK (Standard & Poor’s) July 27, 2015–Standard & Poor’s Ratings Services  downgraded 244 issuers worth $1.2 trillion in rated debt and upgraded 125  issuers with $621 billion in rated debt in the second quarter of 2015.

    Downgrades eclipsed upgrades around the world as geopolitical and economic  risks rose, including Greece’s potential exit from the eurozone (the  “Grexit”), a slowdown in economic growth in China, and the credit effect from  interest rate normalization on part of the Federal Reserve System in the U.S., according to Standard & Poor’s “Global Corporate And Sovereign Rating Actions And Outlook–Downgrades Surpass Upgrades Around The World As Geopolitical And Economic Risks Increase,” published today on RatingsDirect.

    “Downgrades surpassed upgrades across the globe in the second quarter of 2015,  with most regions seeing two downgrades for every one upgrade—slightly above historical averages,” said Diane Vazza, head of Standard & Poor’s Global Fixed Income Research Group.


    Taiwan Q2 GDP growth unexpectedly slumps to 3-yr low as demand from China cools

    * Q2 GDP growth below forecast, lowest since early 2012

    * Collapse in exports hits economy

    * Government to downgrade full year GDP forecast

    * Central bank can't do much -analyst (Adds further analyst comments, context on monetary policy)

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    Chinese provinces power load hit new high

    China has witnessed a surge in power load in many provinces since entering the dog days in mid-July, driven by increased residential and irrigation demand amid high temperature, sources reported.

    On July 27, power grid in eastern Shandong province posted a record high load of 62.55 GW, up 1.4% from the peak level last year, said the Shandong branch of the State Grid Corp.

    The company predicted a power load peak of 69.5 GW in early or mid-August in Shandong, and the province may experience a maximum shortfall of 7 GW.

    Northwestern China’s Shaanxi province saw its power load hit record high at 17.7 GW on July 27, and is predicted to see its power load peak at 18.92 GW in 2015, with daily power consumption at 400 GWh the most.

    Luckily, the province would have 1.11 GW of surplus power even its power load peaks at 19.5 GW during extreme weather this year, said the Shaanxi branch of the State Grid Corp.

    Meanwhile, power load on the grid of southeastern Jiangsu also hit the highest of the year at 80.26 GW on July 29. Shanghai and Tianjin saw their power load reach the highest level of the year at 28.26 GW and 12.7 GW.

    Northwestern Xinjiang reported a record high of 25.73 GW in power load on July 23, up 11.7% from the year prior.
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    Sumitomo Jumps Most in Two Years After Quarterly Profit Surges

    Sumitomo Corp., the Japanese trading house that posted its first annual loss in 18 years on asset writedowns, said profit grew 57 percent in the quarter ended June. The shares jumped.

    Net income rose to 82 billion yen ($661 million), Sumitomo said in a statement to the Tokyo Stock Exchange. That beat the 53 billion-yen average forecast from three analysts surveyed by Bloomberg. Sumitomo’s free cash flow jumped to $106.9 million from a negative $107 million a year earlier.

    “Our ‘earnings pillars’ including media business and leasing business showed robust performance, despite a decrease in earnings of tubular products business in North America due to a drop in oil prices,” Sumitomo said. The trader expects the global economy to “continue its slow but steady growth.”

    A bet on U.S. shale gas led Sumitomo’s writedowns last year, which included impairments on Australian coal and Brazilian iron ore. The trader, whose assets include Japan’s biggest shopping channel and a zinc mine in Bolivia, said it expects a rebound this fiscal year, forecasting net income of 230 billion yen.

    Total resource-asset writedowns by Japan’s five major traders, which include Mitsui & Co. and Itochu Corp., exceeded $5.8 billion last year, a figure equal to two-thirds of the companies’ annual profits. Investments in oil, gas and mining have turned problematic as China’s economy slowed, softening raw material prices over the past two years.

    Sumitomo’s recovery this year is being led by businesses outside raw materials, where demand is weaker than initially anticipated, the company said. Transport infrastructure, media and lifestyle goods and services, as well as reneweable energy projects will support this year’s profit, it said.

    Sumitomo shares jumped as much as 7.6 percent to 1,432.50 yen, the most since May 21, 2013, and ended at 1,418 yen. Revenue declined 3.2 percent to 2 trillion yen in the first quarter, Sumitomo said.

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    Scorpio Bulkers takes major financial hit - Report

    Maritime 360 reported that NYSE-listed Scorpio Bulkers has booked a major write-down on divested newbuilding contracts and remaining orders held for sale.

    The Emanuele Lauro-led company posted a net loss of USD 138.6 million for Q2 15 versus a loss of USD 15 million in Q2 14. Excluding one-time items, the adjusted net loss was USD 16.6 million.

    Losses related to the sale of newbuilding contracts for eight Capesizes, one Ultramax and two LR product tankers, plus write-downs on assets held for sale, totalled USD 119.6 million in the latest quarter.

    Scorpio Bulkers has a remaining orders for 48 bulkers, with USD 994.3 million in yard instalments due in Q3 2015 to Q3 2016. The company has credit agreements to finance all but four of these newbuildings.

    In addition to the 16 vessel contracts it has already sold, Scorpio has four additional newbuilding contracts (for three Capesizes and one Kamsarmax) that are held for sale. These vessels have remaining yard payments due of USD 148.5 million.

    Twelve of the company's newbuildings have already been delivered and 11 additional vessels are chartered-in. Average time charter equivalent rates averaged USD 6,737/day in Q2 2015, down 32% from USD 8,867/day in Q2 2014.
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    Vedanta reports $136 mln Q1 profit, looks to restart Goa mines

    India's Vedanta Ltd said on Wednesday its quarterly profit more than doubled from a year-ago comparison weighed down by a one-time charge, and that it was on track to restart mining in key producing state Goa after monsoons.

    The mining and energy group, which has been hit by a slump in crude prices and mining bans in key producing states, posted a consolidated net profit of 8.66 billion rupees ($135.61 million) for its fiscal first quarter to June 30.

    That compared with a profit of 3.76 billion rupees in the same period last year, which was hurt by a one-time charge of 21.28 billion rupees.

    Excluding the impact of one-off charge, the company's first- quarter profit was 35.4 percent lower than a year earlier.

    Consolidated net sales fell marginally to 169.52 billion rupees from 170.56 billion at Vedanta, which has interests in oil and gas, iron ore, zinc, copper, power and aluminium.

    Chief Executive Tom Albanese said the company saw continued volatility in commodity prices in the first quarter.

    "We continue to focus on improving efficiency, costs, and enhancing production across our well-invested asset base," he said, adding Vedanta was on track to restart iron ore production at Goa following the monsoons.

    He did not give a specific time frame, but the monsoons in India typically last until September.

    The Indian government cut export tax on low-grade iron ore by a third from June, in a big boost for companies in top exporting state Goa, which is close to restarting its mining industry.

    Vedanta, part of London-listed miner Vedanta Resources Plc , in June made a $2.3 billion offer to buy out minorities in its cash rich oil and gas unit, Cairn India Ltd.

    Albanese told Reuters last week that Vedanta's offer was fair, dismissing reports that opposition from minority shareholders in Cairn India, including ex-parent Cairn Energy , could scupper the deal.

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    LyondellBasell sees 13 percent increase in profits

    LyondellBasell’s profits climbed 13 percent as the chemical giant soaked up vast supplies of cheap natural gas and natural gas liquids and continued operating when competing plants shut down.

    “Planned and unplanned industry downtime created favorable global conditions, demonstrating that the industry is operating with a fundamentally tight supply and demand balance,” CEO Bob Patel said in a statement.

    The company on Tuesday reported earnings of $1.33 billion, or $2.82 per share, during the three-month period ending June 30. During the same period last year, the company posted earnings of $1.18 billion, or $2.23 per share.

    And Lyondell is expecting to continue growing its earnings in the third quarter amid continued access to swells of cheap natural gas and natural gas liquids, which the company uses as feedstock to manufacture its chemicals.

    Unexpected plant shutdowns across the world caused global supply shortages of olefins and polyolefins — raw materials used to make food packaging, automative parts, bottles, paints and coatings — giving a boost to Lyondell, which ran its plants hard to take advantage of the tight market. But that imbalance has started to resolve as supply returns to market, the company said.

    Lyondell in the coming weeks is planning to shut down two plants that make propylene oxide and its derivatives — used to make insulation, home furnishings, cosmetics and foam cups — as well as one European olefins plant.

    The company’s refining segment also reported a stronger second quarter even though it processed about 2,000 fewer barrels per day of crude oil. Falling oil prices helped give Lyondell better margins for its refined products, the company said.
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    Commodity Super Bubble Bursts.

    WE’RE still in a super commodity cycle — except that Credit Suisse says it’s a “super down” cycle.

    And have we got further to fall? Perhaps, considering that oil ­prices are still 35 per cent above their 40-year inflation-adjusted norm, and minerals are 41 per cent above.

    Real commodity prices are not that low. Credit Suisse shows that, in real terms and over a trajectory of the past 50 years, present prices are still well above the norm. In fact, on only four occasions since 1964 have commodities in real terms been higher than now: during the two oil shocks of the 1970s, then in the 2007 culmination of the recent commodity boom and finally during the temporary recovery surge after the GFC. We’re still well ahead of what miners and oil drillers received right from the early 1980s through to about 2005.

    The one piece of good news in the Credit Suisse report is that iron ore prices might soon level off. In the previous iron ore bear market prices fell 54 per cent. This time they are down 55 per cent.

    What has got the analysts at Credit Suisse really worried, though, is the Chinese triple bubble: credit, real estate and investment. China’s private sector debt to GDP ratio is 30 per cent above trend; property prices are down six months in a row; China’s investment share of GDP is now 48 per cent, significantly higher than in Japan and South Korea at similar stages in their industrialisation.

    “We think there is a high probability of a hard landing for China at some point over the next three years,” the report concludes.

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    CRB breaks to new low.

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    A Summary of China H1 power projects under construction

    China had a total of 172.66 GW of power projects of various energy sources under construction by May 31, the China Electricity Council (CEC) said earlier this month.

    Coal-fired power projects continued to take the largest share, hitting 62.64% at 105.16 GW, according to the CEC data.

    The scale of construction for new coal-fired plants is expected to stay high in the future, as China further eliminates ageing coal-fired power generating units, said the CEC.

    Nuclear plants under construction accounted for 20.99% or 36.24 GW, up from 18.99% a year earlier; followed were wind power projects at 11.03% or 19.05 GW, up from 6.03% from the same period last year.

    The strong momentum in nuclear and wind power projects suggests that the country is seeking new energy sources as it shifts away from highly-polluting coal plants in order to optimize energy structure and improve air quality.
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    Sabic Net Beats Estimates as It Battles Volatile Oil Prices

    Profit at Saudi Basic Industries Corp. declined less than analyst estimates as the Middle East’s biggest petrochemicals company seeks ways to weather swings in oil prices.

    Sabic’s second-quarter net income dropped 4.5 percent to 6.17 billion riyals ($1.65 billion) from 6.46 billion riyals a year earlier, the Riyadh-based company said in a statement to the Saudi bourse. The company’s profit is 25 percent higher than the 4.95 billion riyal mean estimate of nine analysts compiled by Bloomberg. It will pay a dividend of 2.5 riyals a share for the first half.

    “Given the volatility in oil prices, we are looking at ways to optimize our feedstock production,” acting Chief Executive Officer Yousef Al Benyan said in a news conference in Riyadh.

    Profit declined due to lower-than-average sales prices even after Sabic reduced its cost of production, the company said in the statement. Saudi Arabia is OPEC’s biggest oil producer, and the Arab nation is home to 16 percent of the world’s proven oil reserves. Brent crude, a pricing benchmark for about half the world’s oil, declined 49 percent in the last 12 months. The company’s second-quarter sales fell 13 percent to 42 billion riyals.

    Sabic, which won’t be directly involved in Saudi Arabia’s shale production and has no plans to invest in Iran, is considering opportunities in U.S. shale gas production, Al Benyan said. It signed a shale gas production deal to export the product from the U.S. to the U.K. and other countries, he said.

    Sabic’s outlook on China’s economy is positive, he said. China was Saudi Arabia’s biggest trading partner last year, according to data compiled by Bloomberg. The company’s shares rose 2 percent to 100.25 riyals as of 11:42 a.m. in Riyadh, bringing its increase this year to 20 percent. That compares with a 12 percent gain in the same period for the 170-member Tadawul All Share Index.
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    Oil and Gas

    1.8 Bcf/d of Marcellus/Utica Gas Heads West on REX Starting Aug 1

    Something really big is about to happen in the Marcellus/Utica region. Starting August 1, the Rockies Express Pipeline (REX), originally built from Colorado and Wyoming to Monroe County, OH to bring natural gas from west to east, will reverse the flow for a large and important section of the pipeline.

    On August 1, the section of REX from Monroe County, OH to Mexico, MO will reverse the flow and carry 1.8 billion cubic feet per day (Bcf/d) of Utica and Marcellus Shale gas to the Midwest, including to the greater Chicago area.

    This flow reversal has the power to a) increase prices northeast drillers receive for their natural gas, and b) lower the cost of natural gas for consumers (and industrial companies, and electric generating plants, etc.) in places like Chicago. It is a win/win scenario. It is important, and will have such a profound affect on natgas prices in the Midwest.
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    Valero Energy's quarterly profit doubles

    U.S. refiner Valero Energy Corp reported a better-than-expected quarterly profit as its refining margins rose due to a steep fall in crude oil prices.

    Gasoline crack spreads - the difference between crude oil and gasoline prices - have risen due to a 50 percent slump in crude prices since June 2014.

    Valero's refining margin rose to $13.71 per barrel in the second quarter from $9.84 per barrel a year earlier.

    The company's refining volumes rose 3 percent to an average of 2.8 million barrels per day (bpd), mainly due to lower maintenance activity.

    Valero said on Thursday that it was on track to start operations at two light crude processing units at the Corpus Christi and Houston refineries in the first quarter of 2016.

    Net income from continuing operations attributable to Valero's stockholders more than doubled to $1.35 billion, or $2.66 per share, in the quarter ended June 30 from $651 million, or $1.22 per share, a year earlier.

    Analysts on average had expected earnings of $2.42 per share, according to Thomson Reuters I/B/E/S.

    Operating revenue fell 28 percent to $25.12 billion.

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    Marathon Petroleum plans additional $2 bln share buyback

    Marathon Petroleum Corp reported a weaker-than-expected quarterly profit, hurt by a decline in refining margins as the company's crude costs remained high.

    Marathon Petroleum, unlike other refiners, failed to benefit from a 50 percent drop in global crude prices in the past year.

    Shares of the company, which was spun off from Marathon Oil Corp, fell about 5 percent in premarket trading on Thursday.

    The company's gross refining margin fell to $14.84 per barrel in the second quarter from $16.02 a year earlier.

    In contrast, Valero Energy Corp reported a better-than-expected quarterly profit on Thursday as its refining margin rose to $13.71 per barrel from $9.84.

    Marathon Petroleum said it was hurt by "less favorable product price realizations compared to the spot market reference prices and less favorable crude oil acquisition costs."

    The company also announced another $2 billion share buyback program. Marathon Petroleum said it had bought back $408 million of shares in the second quarter under the $2 billion buyback plan it had announced in July last year.

    The company said this month it would acquire MarkWest Energy Partners LP for $15.6 billion to enter the natural gas processing business.

    Net income attributable to Marathon Petroleum fell to $826 million, or $1.51 per share, in the quarter ended June 30 from $855 million, or $1.48 per share, a year earlier.

    Analysts on average had expected a profit of $1.76 per share, according to Thomson Reuters I/B/E/S.

    Marathon Petroleum's total revenue and other income fell 23.6 percent to $20.58 billion.
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    Saudi Arabia Reportedly To Cut Crude Production

    Saudi Arabia reportedly will cut crude production at the end of the summer after keeping up record production for most of the year.The world's top crude exporter could start the cuts as early as September, sources told the Wall Street Journal. The reductions could amount to 200,000 to 300,000 barrels a day.

    Saudi Arabia produced 10.56 million barrels a day in June.

    The cuts will likely come from domestic supply and won't affect exports. Saudi Arabia burns crude to create electricity, with demand especially high during the hot summer months.

     Saudi Arabia has led an effort to keep OPEC production up and crude prices low as it seeks to protect market share from U.S. shale producers.

    Read More At Investor's Business Daily:

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    LINN Energy: Q2 Results; To Recommend Suspension of Distribution

    LINN Energy, LLC and LinnCo, LLC announced today financial and operating results for the three months ended June 30, 2015, the intent to recommend suspension of LINN's distribution and LinnCo's dividend and the repurchase of approximately $599 million of senior notes at a 35 percent discount.

    "After careful consideration, management has decided to recommend to the Board of Directors that it suspend payment of LINN's distribution and LinnCo's dividend at the end of the third quarter 2015 and reserve approximately $450 million in cash from annualized distributions. The Board and management believe this suspension to be in the best long-term interest of all Company stakeholders," said Mark E. Ellis, Chairman, President and Chief Executive Officer.

    LINN reported the following second quarter 2015 results:

    Grew average daily production by 1.5 percent to approximately 1,219 MMcfe/d for the second quarter 2015, compared to 1,201 MMcfe/d for the first quarter 2015;
    Increased full-year 2015 production guidance by approximately four percent and decreased lease operating expenses guidance by six percent;
    Total revenues of approximately $322 million for the second quarter 2015, which includes losses on oil and natural gas derivatives of approximately $191 million;
    Improved lease operating expenses by 18 percent to approximately $141 million for the second quarter 2015, compared to $173 million for the first quarter 2015;
    Net loss of approximately $379 million, or $1.12 per unit, for the second quarter 2015, which includes non-cash losses related to changes in fair value of unsettled commodity derivatives of approximately $455 million, or $1.33 per unit;
    Excess of net cash provided by operating activities after distributions to unitholders and discretionary adjustments considered by the Board of Directors ("Board"), including total development of oil and natural gas properties (see Schedule 1) of approximately $71 million for the second quarter 2015; and
    Estimated net positive mark-to-market hedge book value of approximately $1.6 billion as of June 30, 2015, and $1.8 billion as of July 28, 2015.
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    Conoco has quarterly loss, lowers capex

    ConocoPhillips, a Houston-based, independent oil and gas company, Thursday reported a second-quarter 2015 net loss of $179 million, compared with second-quarter 2014 earnings of $2.1 billion.

    Excluding special items, second-quarter 2015 adjusted earnings were $81 million, or $0.07 per share, compared with second-quarter 2014 adjusted earnings of $2.0 billion, or $1.61 per share. Special items for the current quarter primarily related to a deferred tax charge from a change in Canada’s tax law and non-cash impairments.

    Production from continuing operations, excluding Libya, for the second quarter of 2015 was 1,595 MBOED, an increase of 39 MBOED compared with the same period a year ago. The net increase reflects 69 MBOED, or 4 percent growth, after adjusting for 30 MBOED from dispositions and downtime. Growth was primarily due to new production from major projects and development programs, partially offset by normal field decline and downtime.

    Adjusted earnings were lower compared with second-quarter 2014 primarily due to lower realized prices, partially offset by higher licensing revenues. The company’s total realized price was $39.09 per barrel of oil equivalent (BOE), compared with $70.17 per BOE in the second quarter of 2014, reflecting lower average realized prices across all commodities.

    Operating costs for the quarter were $2.16 billion compared with $2.43 billion in the second quarter of 2014. Adjusted for pension settlement and restructuring costs of $69 million pre-tax, operating costs were improved 14 percent year over year.

    “We are lowering our operating cost and capital expenditures guidance, while maintaining our operational targets.”

    For the quarter, cash provided by continuing operating activities was $2.0 billion. Excluding a $0.3 billion change in operating working capital, ConocoPhillips generated $2.3 billion in cash from operations. In addition, the company funded $2.4 billion in capital expenditures and investments, paid dividends of $0.9 billion, and increased debt by $2.5 billion.

    Ryan Lance, ConocoPhillips chairman and chief executive officer, said: “We continue to deliver on our operational milestones while positioning the company for a period of lower, more volatile prices.”

    “We exceeded our production target, made progress on our major project startups and safely executed our planned turnarounds in the quarter. We are lowering our operating cost and capital expenditures guidance, while maintaining our operational targets. To further increase our capital flexibility, we are continuing to shift the portfolio to investments with shorter cycle times, including reductions to deepwater spending.

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    Occidental:boring quarter, but the story is well worth a read.

    Occidental Petroleum Corp.’s profits fell 85 percent in the second quarter as lower oil prices offset its surge in crude production from the Permian Basin in West Texas and elsewhere.

    Houston-based Occidental, the biggest oil producer in the Permian, collected $165 million, or 21 cents a share, in the second quarter, down from $1.1 billion, or $1.38 a share, in the April-June period last year. Revenues fell to $2.3 billion from $3.7 billion.

    Occidental’s crude production in the Permian continue to rise as oil prices fell and drilling activity declined across the U.S. shale plays in Texas and elsewhere. It put out 51 percent more oil and gas in the Permian compared to the same period last year, bringing output there to 109,000 barrels of oil equivalent a day.

    Overall, Occidental’s energy production increased 13 percent to 658,000 barrels a day.

    “We continue to focus on managing our business to be profitable in this current environment by improving margins and increasing production through improved well performance,” Occidental CEO Stephen Chazen said in a written statement.

    He said its operating costs are down, making it cheaper to pull a barrel out of the ground – $1.50 cheaper at $13 a barrel in operating costs.

    The company spent 25 percent less in the quarter than last year, but its higher production volumes and improved well performance in the Permian brought in about $400 million in additional operating income compared to the first quarter.

    It said the rise in Permian output was offset by declines in the Midcontinent region and elsewhere.

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    Gas awakening from US shale slumber as LNG shipments near

    Bloomberg reported that after years of languishing in a shale-induced coma, the US natural gas market is waking up.

    Seasonal price swings will intensify as the country begins shipping liquefied natural gas cargoes to Asia and Europe later this year, said Bank of America Corp, RBC Capital Markets LLC and Wood Mackenzie Ltd. While that’s good news for traders yearning for volatility, it could be bad news for consumers.

    Exports will help prices rebound from the slump caused by the US pumping record amounts from shale formations. Growing domestic winter demand is already causing spikes and trading volumes in futures markets have rebounded to the highest level in 3 years. Average retail gas prices also will rise with LNG exports, according to Bloomberg New Energy Finance.

    Mr Francisco Blanch, head of commodities research at Bank of America Corp in New York, said that “Connecting U.S. natural gas prices into the global market could result in wider spreads at home. Global LNG spot prices are notoriously seasonal.”

    The International Energy Agency said that Cheniere Energy Inc will start operating a liquefied natural gas terminal this year in Louisiana, the first new export site in 46 years. The US will be the 3rd largest supplier by 2020.

    Mr Blanch said that In a sign of what may be coming, futures for January 2017 are already trading at a 35.7 cent premium to October 2016 contracts, the biggest premium for this time of the year since 2012. That seasonal spread may widen to as much as a dollar as LNG exports expand.
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    Cimarex and Concho

    Image titleBig important slide.
    Image title32% IRR at $50 Oil. Very Impressive.
    Image titleConcho says 70% IRR: same area, $60 assumption here. Note that Concho is shortening its laterals.

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    Shell-BG: hmm, its not about price, its about synergies...


    Progressing with the recommended combination with BG: ‘grow to simplify’

    In April 2015, Shell announced its recommended combination with BG.

    - Enhanced free cash flow - this enhances Shell’s dividend potential in any expected oil price environment.

    - An IOC LNG and deep water innovation leader – accelerating and de-risking our current strategy.

    - Springboard to change Shell – asset sales and refocused spending would result in a simpler, more focused company, concentrated around three pillars – upstream and downstream engines, deep water and LNG.

    • We remain on track for completion in early 2016, as planned. We are making good progress with the regulatory approvals process, including approvals received from Brazil CADE, South Korea FTC and US FTC. Pre-conditional filings have been submitted, covering Australia, China and the EU, and we are progressing well in other jurisdictions.
    • A joint team has been established with BG to plan for a world class integration of the two companies once the transaction has closed, and to retain the top talent from both companies.
    • Synergies from the transaction should be at least $2.5 billion per year from 2018, subject to the bases of belief, principal assumptions and sources of information set out in Appendix 5 to the announcement of the recommended combination.
    • By combining Shell’s current complementary positions with BG’s LNG and deep water assets, Shell can add significant value – beyond the announced synergies - by applying its technology and know-how at greater scale, at a lower cost, concentrating on areas of existing competitive advantage, and through better optimization of the combined portfolio.
    • Pro-forma combined capital investment for Shell and BG in 2016 is expected to be around $35 billion in the current environment.
    • Shell expects $30 billion of asset sales between 2016 and 2018, as the combined portfolios are restructured.
    • The free cash flow expansion expected from BG’s Australia and Brazil growth is a natural fit with Shell’s 2017+ free cash flow growth potential.
    • This in turn enhances Shell’s continued intention to pay a dividend of $1.88/share for 2015 and at least $1.88/share for 2016, and reflects confidence in future financial capacity.
    • Share buy-back of at least $25 billion expected for 2017-2020, subject to the assumptions set out in the announcement of the recommended combination, supported by the re-shaping of the portfolio we are planning, and enhanced free cash flow from the combination with BG.
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    Eni swings to loss as low crude prices and Saipem weigh

    Eni SpA swung to a loss in the second-quarter as low crude oil prices and the poor performance of a unit continued to hammer the Italian oil and gas company's financial results.

    Eni had a net loss of 113 million euros ($125 million) in the second quarter, compared with a EUR658 million profit in the corresponding period last year. Revenue fell 19% in the quarter to EUR22.19 billion

    Adjusted net profit, which strips out special items and the change in the value of oil inventories, was EUR139 million, a drop of 84%. Excluding the results of Saipem SpA, Eni's troubled oil and gas services unit, the adjusted net profit was EUR448 million.

    Eni, which is 30%-owned by the Italian government, set its interim dividend on this year's results at 40 European cents. Eni has said its total dividend for this year will amount to 80 cents.

    Production in the second quarter rose 11 % to 1.75 million barrels of oil and equivalent natural gas volume a day. Eni raised its forecast for production growth this year to more than 7% from 5%.

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    3 Surprises From Whiting Petroleum Corporation's Earnings Report

    Whiting Petroleum Corporation's unleashed its second-quarter earnings report after the market closed on Wednesday. In that report, the shale-focused driller unveiled a number of surprises for investors. Here are the top three that investors need to know.

    1. Surprise: We made money!
    Before the report, the consensus among Wall Street analysts was that Whiting Petroleum would basically break even during the quarter on an adjusted earnings-per-share basis. However, Whiting earned $9.2 million, or $0.04 per share, which was quite a surprise. Still, earnings per share were down 97% from the year-ago quarter, so there's not a whole lot to celebrate.

    Among the drivers of the surprising profit was better-than-expected production and lower expenses. Overall, Whiting did a solid job cutting costs, with its lease operating expenses falling from $11.85 per barrel of oil equivalent, or BOE, last year to $9.25 per BOE this quarter. Meanwhile, general and administrative expenses fell from $3.13 per BOE to $2.46 per BOE over the past year.

    2. Surprise: We outproduced our guidance!
    As I already mentioned, Whiting Petroleum delivered surprisingly stronger production during the quarter. In fact, its production set a new record at 170,245 BOE per day, which was 2% higher than last quarter and exceeded the high end of the company's guidance. That performance comes even as it sold 8,300 BOE/d worth of oil and gas properties during the quarter. It's the second time this year the company's production exceeded the high end of its guidance.

    Two factors are fueling this stronger-than-expected production. First, the company's Williston Basin operations have been testing larger sand volumes for completions, which is resulting in a 40% to 50% surge in initial production against the previous completion method. The other big driver is the company's DJ Basin field, which delivered a 31% production increase from just last quarter.

    3. Surprise: We're cutting our just-increased capex budget!
    The final surprise might have investors scratching their heads at first glance. That's because just two weeks ago, the company increased its capital budget from $2 billion to $2.3 billion as a result of selling $300 million in assets so far this year. However, it has decided to pull back the reins on its capex budget a bit, as it now plans to spend only $2.15 billion.

    As a result of the reduction, the company expects to run eight drilling rigs during the second half of the year, down from the 11 in the original plan. Further, full-year production growth is expected to be 6.5%, as opposed to the previous plan for 7% production growth. The company doesn't specify a reason for the reduction, but it probably isn't due to financial constraints, as the company boosts of strong liquidity consisting of undrawn borrowing capacity of $4.5 billion on its credit facility, as well as future plans for additional non-cash asset sales. Instead, the cut probably has to do with the slide in the price of oil over the past few weeks, as crude has now fallen more than 20% off its recent peak.
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    Tepco's Q1 LNG use down 5% to 5.13 million mt on weak demand

    Japan Tokyo Electric's LNG consumption fell 5% year-on-year to 5.128 million mt in the first quarter to June as its power sales slipped 1.9% on the year to 58.6 billion kWh, the power utility said Wednesday.

    Slow pick-up in demand from industrial users and growing competition have contributed to the decline in electricity sales for Tepco, the utility said.

    Its use of coal was up 4.9% from a year ago to 1.752 million mt for the three months to June.

    During this quarter, Tepco used 350,000 kl or 24,192 b/d of fuel oil, down 38.5% from a year earlier, while its consumption of crude oil rose 24.5% year-on-year to 146,000 kl or 10,091 b/d.

    Recent drops in oil and LNG prices have helped Tepco to lower Q1 fuel costs to 401.8 billion yen ($3.2 billion), the lowest since the first quarter of fiscal year 2010-2011, Tepco said.

    For the first quarter, Tepco bought 2.1 billion kWh of electricity generated by solar, compared with 1.2 billion kWh for the same period last year.

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    PIRA: LNG balances continue to tilt toward supply overhang

    PIRA: LNG balances continue to tilt toward supply overhang

    NYC-based PIRA Energy Group said it believes that liquefied natural gas supply/demand balances continue to tilt toward a major supply overhang.

    While the length in the market has not led to lower spot prices in the past 30 days, the methods required to dispose of incremental LNG supply are becoming more creative, according to PIRA.

    European Gas Price Scorecard

    PIRA said it has argued for some time that this year’s leisurely attitude toward storage accumulation is based on three principles and it believes these principles are still holding in place.

    One is that at least 15 years of gas demand has been lost to a combination of power sector deterioration (renewables), industrial migration to North America (lower gas prices), and efficiency gains (E.U. policy mandates) in the R/C sector.

    These losses have made higher storage injections somewhat superfluous for a market that is not growing and has shown over consecutive winters that the amount of incremental gas demand per heating degree day is dropping.

    Central Asian Gas Major Looks to Ramp Up Gas Usage

    Turkmenistan is currently implementing several major projects aimed at increasing the production and export of natural gas, as well as the projects for deep processing of gas, the country’s Ministry of Oil and Gas Industry and Mineral Resources said July 23.

    The total cost of these projects is $20 billion. Moreover, these projects include the second stage of Galkynysh field’s development, construction of Turkmen sector of the fourth branch of Turkmenistan-China gas pipeline with the total capacity of 30-bcm of natural gas, a plant for polyethylene and polypropylene production in Balkan province, as well as a plant for producing synthetic gasoline from natural gas in Ahal province.
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    Suncor Deepens Spending Cuts for 2015 as Oil Price Languishes

    Suncor Energy Inc., Canada’s largest oil producer, cut its spending plan for 2015 for a second time and eliminated some non-essential projects as part of cost-reduction efforts.

    The company now plans to spend between C$5.8 billion ($4.5 billion) and C$6.4 billion from an earlier range of C$6.2 billion and C$6.8 billion, Calgary-based Suncor said Wednesday Canadian time in a statement on Marketwired.

    Suncor has already cut about 1,000 jobs and previously lowered its 2015 capital budget by C$1 billion while delaying projects to weather collapsing prices. Still, it’s pressing ahead with the C$13 billion Fort Hills oil-sands mine.

    The move to cut spending comes after the price of West Texas Intermediate moved back into a bear market, dropping below $50 a barrel earlier this month for the first time in about a quarter. The U.S. benchmark, averaged about $58 in the second quarter compared with about $103 in the year-earlier period.

    WTI for September delivery was at $48.90 a barrel in electronic trading on the New York Mercantile Exchange, up 11 cents, at 11:32 a.m. Thursday in Sydney.

    Even with the spending reductions, Suncor’s oil sands production in the quarter rose to 423,800 barrel a day from 378,800 barrels in the year-earlier period. The improvement was helped by better operational reliability, the company said.

    Second-quarter net income more than tripled in the quarter to C$729 million as it booked gains from reassessed debt and asset disposals.
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    Idemitsu to buy Royal Dutch Shell's 1/3 stake in Showa Shell -Nikkei

    Idemitsu Kosan Co Ltd, Japan's second-biggest refiner, has agreed to buy about a 33 percent stake held by Royal Dutch Shell in fifth-ranked Showa Shell Sekiyu for about 160 billion yen ($1.3 billion), the Nikkei business daily reported.

    The deal will be announced later on Thursday, the Nikkei said.

    Showa Shell shares soared as much as 13 percent on the report, while Idemitsu fell 3 percent.
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    Saipem Shares Drop After Unexpected Loss, Profit Target Cut

    Saipem SpA, Italy’s biggest oil and gas contractor, plunged in Milan trading after saying it will cut jobs and exit businesses as writedowns led to an unexpected loss and an earnings-target reduction.

    The company, controlled by Italian oil producer Eni SpA, on Tuesday reported a second-quarter net loss of 997 million euros ($1.1 billion), after total writedowns of assets for 929 million euros. Analysts were expecting a 39.1 million-euro profit.

    “The further steep fall in the oil price has resulted in a major disruption, which is not likely to be reversed in the short-to-medium term,” Chief Executive Officer Stefano Cao, who replaced Umberto Vergine in April, said in a statement. This “has resulted in clients taking an increasingly rigid approach in the operational and commercial management of contracts.”

    The Milan-based company fell as much as 9.9 percent to 7.34 euros, heading for the lowest closing price since January.

    Saipem expects a loss before interest and taxes of 450 million euros in 2015, compared with a previous forecast of as much as 700 million euros in profit. That marks at least the third time the company lowered its guidance since 2013 and comes after PJSC Gazprom canceled a $2.2 billion Black Sea project earlier this month.

    Saipem plans 1.3 billion euros of savings through 2017, including a workforce reduction of 8,800 people. The company will exit businesses, downsize its presence in Brazil and Canada, where lower-margin contracts led to previous target cuts, and scrap five vessels. It forecasts a net loss this year of 800 million euros.

    Net debt rose to 5.53 billion euros at the end of June. Chief Financial Officer Alberto Chiarini said the sale of bonds or shares are options to cut debt, during a conference call with analysts.

    Brazilian prosecutors allege bribes of artworks and cash were paid on behalf of Saipem, the Italian oil services company, to secure contracts with the Latin American country’s state-owned oil company, Petrobras.

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    EIA reports sharp drop in US domestic production

                                           Latest week  Last week   Year ago

    Domestic Production ......9,413           9,558        9,443
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    Summary of Weekly Petroleum Data for the Week Ending July 24, 2015

     U.S. crude oil refinery inputs averaged about 16.8 million barrels per day during the week ending July 24, 2015, 108,000 barrels per day less than the previous week’s average. Refineries operated at 95.1% of their operable capacity last week. Gasoline production decreased last week, averaging 9.7 million barrels per day. Distillate fuel production increased last week, averaging 5.1 million barrels per day.

    U.S. crude oil imports averaged over 7.5 million barrels per day last week, down by 396,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.5 million barrels per day, 1.0% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 613,000 barrels per day. Distillate fuel imports averaged 130,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.2 million barrels from the previous week. At 459.7 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 decreased by 0.4 million barrels last week, but are in the middle of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 2.6 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 0.1 million barrels last week.

    Total products supplied over the last four-week period averaged 20.1 million barrels per day, up by 3.8% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.5 million barrels per day, up by 6.2% from the same period last year. Distillate fuel product supplied averaged over 3.7 million barrels per day over the last four weeks, down by 3.6% from the same period last year. Jet fuel product supplied is down 3.1% compared to the same four-week period last year.

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    Range Resources Corporation announces second quarter 2015 results


    • Production volumes reached a record high, averaging 1,373 Mmcfe per day, a 24% increase over the prior-year quarter.
    • Unit costs declined $0.36 per mcfe, or 11% compared to the prior-year quarter.
    • Two Marcellus dry gas wells in southwest Pennsylvania were turned in line, each at 34.2 Mmcf per day, 1.8 Bcf per well of cumulative production in 90 days.
    • Full-year 2015 capital budget of $870 million is on track to deliver 20% annual growth.
    • Spectra's Uniontown to Gas City project is anticipated to open ahead of schedule allowing Range as anchor shipper to move approximately 170 Mmcf per day of net natural gas production, or approximately 28% of its average net second quarter production in the southwest Marcellus, to Midwest markets with improved realized prices.
    • Mariner East I expected to start the commissioning process in late third quarter expanding Range's access to NGL markets outside the Appalachian basin with Range being the only producer directly holding capacity on the project.

    Commenting, Jeff Ventura, Range's Chairman, President and CEO, said:

    'Operational results in the second quarter continued to be excellent, as we lowered costs, improved capital efficiencies, exceeded production guidance and achieved great drilling results, especially in the dry gas area. Conversely, the oversupply of natural gas and NGLs in Appalachia challenged commodity prices during the quarter. Importantly, Range expects relief later this year as two key marketing events are projected to commence -- Mariner East I which is expected to improve our NGL pricing in the fourth quarter and Spectra's Uniontown to Gas City project which is expected to improve our natural gas pricing is anticipated to commence ahead of schedule on August 1st. The Spectra project is expected to be impactful since that capacity would equate to about 28% of our second quarter average net production in our Southern Marcellus Division when it comes on line, while Mariner East I is expected to cover almost all of our propane production and add a major ethane market to our already industry-leading ethane sales portfolio. Both projects are expected to provide substantial pricing improvements for Range.

    'Range is on track to spend $870 million in 2015, approximately $700 million less than 2014, while still generating 20% year-over-year production growth. We believe this makes Range one of the most capital efficient producers in the industry. This capital efficient growth combined with our dry, wet and super-rich drilling inventory across the Marcellus, Utica and Upper Devonian give us great optionality to maximize returns throughout any commodity cycle. We believe this inventory, coupled with our capital discipline and diversified portfolio of marketing arrangements, allows Range to create value as we move forward into an expected better market that balances supply, demand and infrastructure.'
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    Calfrac sees lower activity and pricing in Q2

    Revenue in the second quarter of 2015 was $319.6 million, a decrease of 36 percent from the same period in 2014. The Company's fracturing job count decreased by 30 percent due to lower activity in Canada and the United Stateswhile consolidated revenue per fracturing job decreased by 12 percent primarily due to significantly lower pricing inCanada and the United States, partially offset by an increase in job size and the appreciation of the U.S. dollar.

    Pricing in Canada declined by an average of approximately 20 percent in the second quarter of 2015 from the second quarter of 2014. In the United States, pricing was lower by an average of 30 percent compared to the second quarter of 2014. In Argentina, pricing was down by less than 10 percent as the Company agreed to a pricing reduction during the first quarter of 2015 in light of lower crude oil prices in that market. In Russia, pricing is determined by contract awards which resulted in the Company achieving a nominal pricing increase during the most recent contract renewal process.

    Operating loss for the second quarter of 2015 was $7.0 million, a decline of 116 percent from the comparable period in 2014. Operating income as a percentage of revenue was lower by 1,110 basis points compared to the same period last year due to significantly lower pricing in the United States and Canada, and to a lesser extent, Argentina, combined with lower utilization in the United States.

    Net loss attributable to shareholders of Calfrac was $43.3 million or $0.45 per share diluted, compared to $12.9 millionor $0.14 per share diluted in the same period last year, primarily due to lower pricing for the Company's fracturing services.

    In the second quarter of 2015, Calfrac declared a quarterly dividend of $0.0625 per share.
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    Hess Sees Second-Quarter Loss as Bakken Helps Lift Oil Output

    Hess Corp., which sold off fueling stations and refineries to focus on production, reported its second consecutive quarterly loss as higher oil output failed to compensate for lower prices.

    The second-quarter loss was $567 million, or $1.99 a share, compared with net income of $931 million, or $2.96, a year earlier, New York-based Hess said in a statement Wednesday. Excluding one-time items, the loss was 52 cents a share, less than the 71 cent average of 21 analysts’ estimates compiled by Bloomberg.

    The loss came as the company pumped more oil to make up for crude prices that fell 44 percent from a year earlier. Output rose 23 percent, led by North Dakota’s Bakken Shale where production was up a 49 percent to the equivalent of 119,000 barrels of oil a day.

    Total production rose to 391,000 barrels a day, beating the highest analyst estimate of 361,600 barrels a day.

    Hess also sold a half interest in operations that include a gas-processing plant, a crude rail terminal and rail cars to Global Infrastructure Partners for $3 billion in a deal that closed July 1.

    One-time items for the quarter included a $385 million writedown on the value of onshore U.S. assets. Capital and exploratory spending fell 15 percent from a year earlier to $1.07 billion as the company reduced drilling.

    “We achieved strong operating performance in the quarter and delivered significant and immediate value to our shareholders with the sale of a 50 percent interest in our Bakken midstream assets,” Chief Executive Officer John Hess said in the statement.
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    Russia's Novatek Q2 net profit up 31 pct to 42 bln rbls

    Novatek, Russia's No. 2 gas producer, made second-quarter net profit of 41.9 billion roubles ($703 million), up 31 percent year-on-year on stronger sales, it said on Wednesday.

    Analysts had expected the firm to post 38 billion roubles in quarterly net profit.

    The company said its revenues were at 112.2 billion roubles, up from 88.4 billion roubles in the same period last year.

    "The growth was mainly due to an increase in liquids sales volumes and net prices in Russian rouble terms," Novatek said. Russian exporters are benefiting from the weak rouble as their sales are mainly denominated in U.S.-dollars.

    In the second quarter of 2015, liquid hydrocarbon sales were up almost 73 percent to 2.9 million tonnes, the firm said.

    Novatek, Russia's largest independent gas producer, said its earnings before interest, taxes, depreciation and amortization (EBITDA) reached 50.2 billion roubles versus 40.3 billion a year earlier.

    Novatek's largest shareholders are its Chief Executive Leonid Mikhelson, businessman Gennady Timchenko and France's Total.
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    Ecopetrol discovers hydrocarbon in Colombian Caribbean ultra-deepwater

    Ecopetrol has informed that at a depth of 3720 m, the Kronos-1 well verified the presence of hydrocarbons in ultra-deepwater of Colombian south Caribbean area.

    This discovery proves the geological model proposed for an unexplored area with high hydrocarbon potential.

    Kronos-1 is located in block Fuerte Sur, 53 km offshore, where partners Anadarko, operator, and Ecopetrol, each hold 50% interest.

    According to operator's quarterly operations report, after drilling at a water depth of 1584 m, the well reached total depth of 3720 m and encountered a net pay thickness between 40 m to 70 m of gas bearing sandstones. Ecopetrol and Anadarko's integrated technical teams are continuing to evaluate the Kronos discovery results. Nowadays the drilling operation continues, aiming to reach a deeper target to determine possible additional results.

    Juan Carlos Echeverry, Ecopetrol's President, said, "This discovery adds to the one accomplished in December at the Orca-1 well, located in the deep water of Tayrona block offshore Guajira, where we are partners with Petrobras, Repsol and Statoil. These results are very important and confirm the potential of the Colombian Caribbean petroleum system in a vast area and are aligned with Ecopetrol´s new strategy, in which one of the key areas is the exploration on high potential marine basins."
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    Total Profit Beats Estimates as Production, Refining Advance

    Total SA posted a better-than-expected profit in the second quarter after production and refining surged, almost making up for a crude price slump. 

    Net income, excluding some non-recurrent items, slid 2.1 percent to $3.09 billion from a year earlier, beating the $2.67 billion average of 15 estimates compiled by Bloomberg. The Courbevoie, France-based producer said Wednesday in a statement its dividend would remain at 61 euro cents ($0.67) a share.

    Total confirmed a target to cut costs by $1.2 billion while increasing output by 12 percent to the equivalent of 2.3 million barrels of oil a day as new projects started in Angola, the North Sea and Russia. The production gain and the highest refining margins in at least 12 years are helping Europe’s second-biggest oil company weather a crude-price crash.

    Total reported “very strong refining and chemicals on the back of stellar refining margins and a resilient upstream,” Raymond James analyst Bertrand Hodee said in a note. Cost-savings are “likely to exceed market expectations,” he said.

    Total is focused on lowering costs to “sustainably reduce its breakeven and maximize cash flow,” Chief Executive Officer Patrick Pouyanne said in a statement.

    Total confirmed a target to raise output by more than 8 percent in 2015 and said the start of projects before year-end include the Gladstone liquefied natural gas development in Australia, Laggan-Tormore and the Surmont 2 oil-sands unit in Canada. Increasing output from new prospects and a concession in Abu Dhabi in the quarter helped the company offset a halt at its LNG unit in Yemen.

    Net income dropped 4 percent to $2.97 billion. Adjusted net operating income from refining and chemicals, which benefit from lower oil prices, rose threefold to $1.35 billion.

    In the refining business, European margins rose to $54.10 a metric ton from $47.10 in the first quarter and $10.90 a year earlier. It was the highest level since at least 2003.

    Total plans to cap spending at $23 billion to $24 billion in 2015, down from $26 billion last year. The company also announced the sale of a 20 percent stake in the Laggan-Tormore project west of the Shetlands Islands in Scotland to SSE Plc for 565 million pounds ($882 million).

    The producer has plans for $10 billion of asset sales through 2017, including $5 billion this year. Total said second-quarter asset sales amounted to $733 million, bringing those for the first half to $3.5 billion.
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    Anadarko Petroleum posts 73 percent decline in net income, production boost

    Anadarko Petroleum Corp. posted a 73 percent decline in second-quarter net income Tuesday as it got lower prices for the extra oil and gas it was pumping from wells in Colorado and Texas.

    The Woodlands-based oil explorer’s profits fell to $61 million, or 12 cents a share, in the second quarter, down from $227 million, or 45 cents a share, in the April-June period last year. Revenues fell from $4.4 billion to $2.6 billion.

    The company boosted its oil sales by 42,000 barrels a day, overshooting its production guidance by 18,000 barrels a day because of “continued improvements in productivity and ongoing operating efficiencies,” Anadarko CEO Al Walker said in a written statement.

    Shaving off time and money from processes that lift oil out of the ground has allowed the company to increase its production by 13 percent, or 35,000 barrels of oil a day this year. That’s “enhancing our relative cash margins and enabling us to drill more than 100 additional wells this year – all while staying within our capital guidance,” Walker said.

    Anadarko has sold off more than $1.1 billion in assets this year. It had about $2.2 billion in cash on hand at the end of the second quarter.

    The company sold 77 million barrels of oil and gas in the second quarter, an average of 846,000 barrels of oil equivalent a day. It expects to produce 298 million to 302 million barrels of oil equivalent throughout all of 2015. That’s up by 2 million to 6 million barrels compared to last year, adjusted for asset sales.

    Its U.S. output was driven by its Wattenberg field in Colorado, as well as its stake in the Eagle Ford Shale and the Delaware Basin in Texas.

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    India defers taking delivery of 20 LNG cargoes from Qatar

    As global gas prices slumped, India has deferred taking deliveries of at least 20 shiploads of expensive liquefied natural gas (LNG) from its main supplier Qatar and wants a rate cut matching the 60 per cent fall in international rates.

    India buys 7.5 million tonnes a year of LNG on a long-term from RasGas of Qatar on a 25 year contract, indexed to a moving average of crude oil price.

    The price of LNG from Qatar comes close to USD 13 per million British thermal unit as compare to the USD 6-7 rate at which it is available in the spot or current market.

    With few takers for high priced LNG, India has "deferred taking deliveries of 20/21 cargoes so far in 2015 calendar year", a top source said.

    In a full year, 7.5 million tonne of LNG translates into 120 cargoes or shiploads.

    "Price is an issue," the source said, adding that high price of LNG under the long-term contract has led to users in fertiliser and power industry finding it cheaper to use alternate fuels like naphtha and fuel oil.

    Petronet LNG which buys LNG from Qatar on a long-term contract since 2004, has asked RasGas for a cut in import volumes this year, he said.

    "The contract is a take or pay wherein the buyer has to take the contracted volume every calendar year or pay for it. But the contract also provides for a flexibility that gives the buyer (the option) to defer taking 30 per cent of the supplies in a year. These volumes can be taken at anytime during the duration of the contract," the source said.

    Similarly, the contract also provides for the buyer to seek 10 per cent more quantity over the contracted volume in any year, with the excess volume being adjusted during the remaining duration of the contract.

    Read more at:

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    CONSOL Energy Reports Second Quarter Results

    CONSOL Energy Inc. reported a net loss of $603 million for the quarter, or ($2.64) per diluted share. This compares to a net loss of $25 million, or ($0.11) per diluted share from the year-earlier quarter. The net loss for the quarter includes a significant unusual item: an $829 million pre-tax impairment in the carrying value of CONSOL's shallow oil and natural gas assets largely due to the continuation of depressed NYMEX forward prices.

    After adjusting for certain unusual items, which are listed in the EBITDA reconciliation table, the company had an adjusted net loss1 in the 2015 second quarter of $84 million, or ($0.37) per share. Adjusted EBITDA1 was $138 million for the 2015 second quarter, compared to $246 million in the year-earlier quarter. Cash flow from operations in the just-ended quarter was $62 million, compared to $221 million in the year-earlier quarter.

    "CONSOL is focused on managing through what continues to be a very challenging commodity price environment," commented Nicholas J. DeIuliis, president and CEO. "Given this environment, we will manage the company to be free cash positive over the next 18 months, beginning in the second half of 2015. We are moving forward by resetting the company using zero-based budgeting, lean manufacturing and continuous improvement to hold our E&P production growth targets, while achieving our free cash flow targets."

    CONSOL's E&P Division achieved record production of 75.5 Bcfe, or an increase of 45% from the 51.9 Bcfe produced in the year-earlier quarter. CONSOL Energy's annual gas production guidance remains at 30% growth for 2015 and 20% for 2016. CONSOL lowered its 2015 E&P capital expenditures (CAPEX) forecast to $800 million, which is $120 million lower than the previous guidance due to a combination of improved well profiles, decreased cycle times, and the de-bottlenecking of midstream infrastructure. Also, due to lean manufacturing and continuous improvement, the company intends to significantly reduce E&P capital in 2016 to approximately $400 - $500 million depending on natural gas prices.
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    Billionaire Ambani Said to Weigh Sale of U.S. Shale Gas Holdings

    Indian billionaire Mukesh Ambani’s Reliance Industries Ltd. is weighing a sale of its U.S. shale gas investments, people with knowledge of the matter said.

    The Mumbai-based company may sell the holdings as part of a strategic review of its assets, as it believes their worth isn’t fully reflected in its market value, one of the people said, asking not to be named as the details are private. It has invested more than $8 billion in its unconventional gas joint ventures through the end of March, according to its annual earnings report.

    Reliance, the operator of the world’s biggest oil-refinery complex, said July 24 that earnings from its shale assets fell in the latest quarter as natural gas prices slumped. Hydraulic fracturing has opened up reserves from Texas to North Dakota, causing prices to fall 54 percent from the five-year high reached in 2014.

    Selling the shale assets would allow Reliance to put its capital to more productive uses, given the gas market may not improve for some years, according to one of the people. It hasn’t made a final decision to sell, and Reliance isn’t willing to part with the assets at a depressed price, another person said.

    BHP Billiton Ltd. wrote down an additional $2.8 billion on its shale assets this month, joining impairments by explorers Royal Dutch Shell Plc, Statoil ASA and Total SA. Tushar Pania, a spokesman for Reliance, didn’t reply to an e-mail seeking comment.

    Reliance, which has a market value of $51 billion, owns 45 percent of a project controlled by Pioneer Natural Resources Co. in south Texas’s Eagle Ford formation. It also has a 40 percent interest in a Chevron Corp. venture in the Marcellus shale deposit in Pennsylvania, as well as 60 percent of a project in the same area jointly owned with Carrizo Oil & Gas Inc.

    The Indian company and partner Pioneer Natural Resources this month sold a Texas pipeline and processing company to Enterprise Products Partners LP for $2.15 billion.
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    National Oilwell profit beats estimates due to cost cuts

    National Oilwell Varco Inc, the largest U.S. oilfield equipment provider, reported a higher-than-expected quarterly profit as cost cuts helped offset the impact of a fall in global drilling activity.

    The U.S. rig count has slumped to a five-year low as oil producers idle rigs due to a 50 percent drop in global oil prices since June last year.

    To cope with falling demand for oilfield services and equipment, National Oilwell, like its rivals, is cutting jobs and costs. The company said last month that it would cut its Norwegian workforce by 1,500 by the end of this year.

    Expenses fell more than 18 percent to $417 million in the second quarter ended June 30 from a year earlier, the company said.

    "The operating margins delivered by our segments this quarter reflect our focus on reducing costs to become more efficient," Chief Executive Clay Williams said in a statement.

    Operating margins at the company's rig systems business, which accounted for nearly half of total revenue, rose to 20.5 percent from 19.3 percent in the first quarter.

    However, total order backlog fell to $10.22 billion in the second quarter from $11.89 billion in the first quarter.

    Net income attributable to the company fell to $289 million, or 74 cents per share, in the second quarter, from $619 million, or $1.44 per share, a year earlier.

    Excluding one-time items, National Oilwell earned 77 cents per share, above the average analyst estimate of 64 cents, according to Thomson Reuters I/B/E/S.

    The Houston-based company's revenue fell 25.6 percent to $3.91 billion, slightly above analysts' average estimate of $3.86 billion.

    The company had said in April that it expected revenue to fall for the next few quarters.

    Up to Monday's close, National Oilwell's stock had fallen about 51 percent in the last year. The Dow Jones Oil and Gas Titans 30 Index had declined 31.5 percent in the same period.

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    BP less likely to be acquired after $18.7 bln settlement - CEO

    BP is less likely to be acquired following its $18.7 billion settlement over the 2010 Macondo oil spill, Chief Executive Officer Bob Dudley said on Tuesday.

    The has been much speculation in recent months that the British oil and gas giant could become an acquisition target for a larger rival, leading the British government to warn it would oppose any takeover bid.

    While some analysts expected BP to be even more attractive following its settlement with the U.S. authorities this month to resolve most claims from the Gulf of Mexico oil spill, Dudley sought to quell any speculation.

    "As a result of the settlement in the U.S. it is actually less likely that someone would want to acquire BP and it is certainly not our intention to put the company up for sale," Dudley told reporters.

    Merger and acquisition activity in the energy sector has been rekindled as company valuations slumped along with oil prices, highlighted by Royal Dutch Shell's $70 billion bid to acquire BG Group earlier this year.

    BP shares are still some 35 percent below their value before the 2010 Macondo rig explosion and spill that killed 11 workers. The company's second-quarter profit slumped by nearly two thirds from a year ago as it took a huge $10.8 billion charge related to the settlement.
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    Russia's Gazprom gas output seen at all-time low in 2015

    Russia's Economy Ministry said on Tuesday it expected gas production at Gazprom to decline to 414 billion cubic metres (bcm) this year, an all-time low, due to sluggish demand and a decline in upstream investments.

    Gazprom, Russia's and the world's biggest natural gas producer, said in its latest forecast in May that it expected its natural gas production to recover this year to 450 bcm after it declined last year to just above 444 bcm.

    The economy ministry figures were published after it announced Russia's gross domestic product (GDP) shrank by 4.2 percent in June from a year earlier, when the country's growth prospects deteriorated sharply due to Western sanctions over the Ukraine conflict and a drop in the price of oil.

    Gazprom, which normally accounts for around 8 percent of Russian GDP, earlier this year stopped publishing its gas output on a monthly basis via monitoring agency CDU TEK at the energy ministry.

    The economy ministry said Gazprom's gas exports to the EU and Turkey declined by 6.2 percent to 66.8 bcm in the first half of the year due to lower gas consumption in Europe and increasing gas usage from storage facilities in winter.

    The ministry sees total Russian gas exports at 164.6 bcm in 2015, down 5.5 percent from the last year. It also said Russia's average export price for gas stood at $249.7 per 1,000 cubic metres in January-May, down from $335.7 in the year-earlier period.

    The ministry, citing Gazprom data, said investments into gas production in January-April fell by more than 60 percent at current prices.

    Gazprom has been hit by a pricing dispute with Ukraine, which is battling pro-Moscow insurgency in its eastern regions. Ukraine stopped buying Russian gas starting from July 1 after EU-brokered talks collapsed without a deal on how much Kiev should pay for its supplies.

    The Kremlin-controlled company also lost its position as western Europe's top gas supplier to Norway earlier this year.

    In another setback for Gazprom, it has failed so far to agree with Turkey on an underwater p[peline.
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    UAE shifts fuel prices as the Gulf watches

    The United Arab Emirates has become the first Gulf state to take a major step towards taming the gas-guzzling habits of its drivers, who see cheap fuel as part of their birthright.

    The UAE said it would raise domestic prices for gasoline and cut them for diesel in a politically sensitive reform designed to save it money and encourage fuel efficiency.

    State subsidies have long kept domestic fuel prices at some of the lowest in the world - part of the welfare packages which Gulf governments offer in their drive to maintain social stability.

    This has led to a preference for huge sports utility vehicles, and the subsidy costs have become harder to bear for governments since last year's global oil price plunge slashed energy export revenues.

    The International Monetary Fund projects the UAE will post its first fiscal deficit this year since 2009, and estimates the country spends $7 billion annually on petroleum subsidies.

    So this month, the UAE said it was shifting from a system of fixed, subsidised fuel prices to one of adjusting prices monthly in response to global trends. It did not reveal details of its new formula or say whether subsidies would be removed entirely, but announced that prices would be "based on the average global prices with the addition of operating costs".

    The price of a litre of octane 95 gasoline will climb 24 percent to 2.14 dirhams (58 U.S. cents) at the start of August, while diesel will fall 29 percent to 2.05 dirhams, state news agency WAM reported on Tuesday.

    The moderate size of the price changes suggests there will be little immediate impact on domestic consumption. Demand in the UAE has more than doubled since 2009 to reach almost 400,000 barrels per day last year, according to the Joint Oil Data Initiative which compiles figures from governments worldwide.

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    Conoco sells condensate to Trafigura

    ConocoPhillips Said to Sell Bayu-Undan Condensate to Trafigura
    2015-07-28 06:46:26.44 GMT

    By Serene Cheong
         (Bloomberg) -- U.S. co. sells 650kb of Bayu-Undan
    condensate for 1H Sept. loading at ~$1.50-$2/bbl discount to
    Dated Brent, say 3 people who trade the grade.

      * Trafigura has started mktg cargo, said to be the only spot
        shipment of Sept.-loading Bayu-Undan scheduled this mo.

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    Is US oil production surging again??

    Image title
    WTI makes new lows.

    Image title
    Brent is nowhere near new lows.

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    Mexico Gas imports surging

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    North Dakota crude breakeven prices as low as $24/b: state agency

    US crude prices would still need to drop significantly before falling below breakeven prices in North Dakota's four most prolific counties, according to data released by the state Department of Mineral Resources Monday.

    Breakeven prices for rigs in North Dakota's Dunn, McKenzie, Mountrail and Williams counties range from $24/b in Dunn to $41/b in Mountrail, according to the data.

    Those four counties accounted for 63 of the state's 68 oil rigs on Monday, according to the data.

    The breakeven prices ranged from $28/b to $42/b in the four counties when the DMR published its last such data in October 2014.

    At the same time, breakeven prices have fallen dramatically in counties with far less drilling activity, the data shows. The breakeven price is $62/b in Divide County, which has three working rigs. Previously, the breakeven price in Divide was seen to be $85/b, when the county had eight working rigs. McLean County saw its breakeven price fall to $25/b from $73/b, although there are no longer any working rigs there, according to the data.

    The drop in breakeven prices comes as North Dakota's crude production has grown as rig counts and prices have dropped. Earlier in July, the state's oil and gas regulator reported that crude production topped 1.2 million b/d in May, compared with April production of less than 1.17 million b/d and just shy of the all-time record of 1.23 million b/d, set in December 2014.

    This production boost, aided by improved drilling technology and increased efficiencies, came as the statewide rig count in May fell to 83. The all-time of 218 was posted in May 2012.
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    Southwestern Energy Announces Second Quarter 2015 Results

    Southwestern Energy Company today announced its financial and operating results for the quarter ended June 30, 2015. Second quarter highlights include:

    Record production of 245 Bcfe, including 2 Bcfe associated with the East Texas and Arkoma assets that were divested during the second quarter;
    Total Appalachia net production of 122 Bcfe, comprised of 87 Bcf from Northeast Appalachia (a 43% increase compared to year-ago levels) and 35 Bcfe from Southwest Appalachia;
    Increased 2015 production guidance to 973 Bcfe to 982 Bcfe, including 6 Bcfe associated with the asset divestiture noted above, while decreasing 2015 capital expenditures guidance to $1.875 billion;
    Expanded firm transportation and sales portfolio in Southwest Appalachia, bringing long-term takeaway capacity to approximately 800 million cubic feet per day and additional firm sales enabling robust growth in 2016 and 2017;
    Early well results in Southwest Appalachia significantly outperforming offset wells;
    Favorable results from test wells in unproven acreage of Northeast Appalachia;
    Adjusted net loss attributable to common stock (a non-GAAP measure reconciled below) of $9 million, or $0.02 per diluted share when excluding a non-cash ceiling test impairment of natural gas and oil properties and certain other items; and
    Net cash provided by operating activities before changes in operating assets and liabilities (a non-GAAP measure reconciled below) of approximately $339 million.

    "The second quarter presented challenges to the energy industry, but just as we have done historically, Southwestern Energy delivered another strong quarter," remarked Steve Mueller, Chairman and Chief Executive Officer of Southwestern Energy. "We have increased guidance on our already record production levels, reduced our 2015 capital investments, added new economic locations and after only seven months, are operationally performing alongside the best in our industry in our newest acquisition in southwest Appalachia.  Our low cost structure and our unique portfolio continues to demonstrate our ability to thrive in an environment where many in the industry are focusing on how to survive. The operational momentum that we have built in 2015 is setting up an enduring future of delivering significant returns for our shareholders."

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    Shale gas well discovered in Henan

    A shale gas well has been discovered for the first time at a farmland undergoing urban development in the city of Kaifeng, Henan Province, a breakthrough in shale gas detection.

    The Mouye No.1 well was discovered in a farmland in Xiangfu district in Kaifeng, with a reserve of 12.7 billion cubic meters, the provincial land resources department told the Xinhua News Agency on Sunday.

    Xinhua quoted experts as saying that detecting shale gas resources in city planning areas is of great importance for developing and exploiting future energy resources for cities.

    However, Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, told the Global Times that it will be more difficult to exploit shale gas wells near populated areas because of the pollution and noise caused by such explorations.
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    BP profits slide, below expectations

    BP's profits have fallen by 50 per cent year on year in the second quarter, undershooting analysts' expectations.

    The UK-based oil major said 'underlying replacement cost profits' - the earnings measure preferred in the industry which strips out one-time items- fell to £1.31bn in the three months to June, down from £2.6bn in the same period last year. Analysts had forecast underlying replacement cost profit of $1.6bn.

    BP cut capital expenditure to $4.7bn in the second quarter, down from $5.4bn in the same period last year.

    The oil major made a loss of $5.8bn during the period, down from a profit of £3.4bn in the second quarter of last year - however this includes the huge Gulf of Mexico payout costs.

    BP's update on the second-quarter showed the oil major had taken a $9.8bn charge following the $18.7bn settlement it reached earlier this month with the US government over the 2010 Gulf of Mexico oil spill.

    Like the rest of the energy industry, BP is grappling with a much weaker crude price than a year ago. Brent crude, the global oil benchmark, averaged just over $108 in the second quarter of last year. That average tumbled to $59 in the second quarter of this year.

    The price of Brent crude has fallen 20 per cent since early May.

    BP shares have fallen 5.7 per cent this year, underperforming the FTSE 100 but faring better than UK-listed rival Royal Dutch Shell. BP's shares have fallen 20 per cent since a mid-April peak.
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    Statoil Second-Quarter Profit Beats Estimates as Output Rises

    Statoil ASA, Norway’s biggest oil and gas producer, said adjusted earnings after tax fell 27 percent in the second quarter following a plunge in crude prices.

    Net income excluding financial and other items fell to 7.2 billion kroner ($882 million) from 9.9 billion kroner a year earlier, the Stavanger-based company said Tuesday. Profit beat the average 5.5 billion-krone estimate in a Bloomberg survey of 20 analysts.

    “Statoil delivered encouraging operational performance with good production growth and high regularity, whilst continuing to reduce cost,” Statoil’s Chief Executive Officer Eldar Saetre said in a statement. “Our financial results were characterized by gains from divestments and lower prices.”

    Statoil and competitors such as Royal Dutch Shell Plc and Total SA are cutting investments and operational costs after oil prices fell by about 50 percent over the last 12 months. Statoil, which operates more than 70 percent of Norway’s oil and gas production, said earlier this year it will reduce spending by 10 percent in 2015 and cut thousands of jobs in the three years through 2016.

    The company, of which the Norwegian state owns a 67 percent stake, will pay 1.8 kroner a share in dividends for the quarter, after saying in February it would maintain payouts at that level in the year’s first three quarters despite lower oil prices. The company has been raising debt and selling assets to afford dividends and investments over the past years.

    Output in the quarter rose 4 percent to 1.87 million barrels of oil equivalent a day from a year earlier, the company said.
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    Libya Crude Output Drops as Conflict Cuts Power at Oil Fields

    Libya’s crude production dropped below 400,000 barrels a day as the conflict in the divided North African country cut electricity supply at oil fields, according to the state-run National Oil Corp.

    Output in Libya, holder of Africa’s largest crude reserves, has been hampered by a lack of security and maintenance as well as power outages, Mohamed Elharari, an NOC spokesman, said Monday by phone from Tripoli. Crude production was about 411,000 barrels a day in June, according to the most recent OPEC monthly report.

    “The situation is not very good,” Elharari said. “There is poor maintenance, and there are electricity cuts at the oil fields.”

    Libya produced about 1.6 million barrels a day before the 2011 rebellion that ended Muammar Qaddafi’s 42-year rule. The country is today the smallest producer in the Organization of Petroleum Exporting Countries. It has failed to restore output as militias fight for the control of export terminals while tribes and workers block operations at fields and pipelines to seek jobs and better pay.

    The country has been divided since last year between an internationally recognized government that operates from the east and an administration that rules over the capital Tripoli and most of the western region. Es Sider and Ras Lanuf, the nation’s largest and third-largest oil ports, have been shut down since December following attacks by militias loyal to the Tripoli government.

    “There is no change to the situation at the ports,” Elharari said. “We are trying to re-open them, but so far there is no progress.”

    Libya’s challenges in boosting crude production coincide with a global excess in supply over demand for the past five quarters, the most enduring oil glut since the 1997 Asian economic crisis, according to the International Energy Agency.
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    EXCO Resources, Inc. Reports Second Quarter 2015 Results

    2015 Second Quarter Highlights

    -Drilled 9 gross (4.4 net) and turned-to-sales 22 gross (5.7 net) operated horizontal wells in the second quarter 2015, consistent with the capital budget.
    -Produced 361 Mmcfe per day, or 33 Bcfe, for the second quarter 2015, which exceeded the midpoint of guidance. Production increased 22 Mmcfe per day from the first quarter 2015.
    -Adjusted EBITDA, a non-GAAP measure, was $69 million for the second quarter 2015, 19% above adjusted EBITDA for the first quarter 2015, primarily due to higher production as well as lower operating and general and administrative costs.
    -Cost saving initiatives resulted in general and administrative costs and gathering and transportation costs that were 7% and 6%, respectively, below the low-end of guidance, as well as operating costs within guidance. Reduced drilling and completion costs through negotiations with key vendors.
    -Enhanced completion design in East Texas Shelby area yielded strong results as evidenced by a 15% increase in estimated ultimate recoveries ("EUR") for undeveloped Haynesville shale locations to 1.5 Bcf per 1,000 lateral feet. The Company believes further upside is achievable based on certain of its proved developed producing wells in this area with EURs of 1.75 Bcf per 1,000 lateral feet.
    -Adjusted net income (loss), a non-GAAP measure, was a net loss of $12 million, or $0.05 per diluted share, and GAAP net income (loss) was a net loss of $454 million, or $1.67 per diluted share, for the second quarter 2015. The GAAP net loss was primarily due to the $394 million impairment of the Company’s oil and natural gas properties pursuant to the ceiling test in accordance with full cost accounting.
    -Pro forma liquidity was $368 million as of the end of the second quarter 2015, after giving effect to the amendment to the Company's credit agreement that is anticipated to close this week. EXCO is evaluating transactions that would enhance its liquidity and provide additional financial flexibility.

    EXCO Resources reported second quarter 2015 loss per share of 5 cents, which compared favorably with the Zacks Consensus Estimate of a loss of 8 cents per share.

    Revenue: Revenues of $94 million came substantially below the year-ago quarter level of $183 million.
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    Zeebrugge terminal to re-export LNG cargo

    The 155,000 cbm Seishu Maru LNG carrier is scheduled to arrive at Belgium’s Zeebrugge terminal from Sagunto in Spain on August 1, port data reveals.

    The liquefied natural gas carrier will load a cargo of previously imported LNG and depart from Zeebrugge to the Jurong terminal in Singapore on August 2, according to the data.

    It is expected to arrive at Singapore’s first LNG terminal on August 28.
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    Gulfport Provides Second Quarter 2015 Operational Update

    Net production averaged 473.9 MMcfe per day for the quarter, exceeding the Company's previously estimated guidance of approximately 445 MMcfe per day to 455 MMcfe per day.
    Realized natural gas price before the impact of derivatives and including transportation costs averaged $2.23 per Mcf, a $0.41 per Mcf differential to NYMEX during the quarter.
    Realized oil price before the impact of derivatives and including transportation costs averaged $50.15 per barrel, a $7.81 per barrel differential to WTI oil price during the quarter.
    Realized natural gas liquids price, including transportation costs, averaged $12.71 per barrel, or $0.30 per gallon, approximately 22% of the average WTI oil price during the quarter.

    Gulfport's second quarter of 2015 Utica Shale production was 457.6 MMcfe per day, or 97% of our aggregate net production, as compared to 93% and 79% of our aggregate production during the first quarter of 2015 and the second quarter of 2014, respectively. During the second quarter of 2015, in the Utica Shale Gulfport spud nine gross (6.7 net) wells and turned-to-sales 19 gross (14.5 net) wells, all located within the dry gas phase window of the play. As of June 30, 2015, Gulfport had approximately 137 gross (103.8 net) wells producing in the Utica Shale.

    Gulfport's realized prices for the second quarter of 2015 were $1.99 per Mcf of natural gas, $0.30 per gallon of NGL and $47.40 per barrel of oil, resulting in a total equivalent price of $2.60 per Mcfe. Gulfport's realized prices for the second quarter of 2015 include an aggregate non-cash unrealized hedge loss of $34.6 million. Before the impact of derivatives, realized prices for the second quarter of 2015, including transportation costs, were $2.23 per Mcf of natural gas, $0.30 per gallon of NGL and $50.15 per barrel of oil, for a total equivalent price of $2.84 per Mcfe.

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    Atlas Resource Partners Reaffirms $750 Million Borrowing Base

    Atlas Resource Partners, L.P. announces that its syndicated lending group has reaffirmed the borrowing base of $750 million on ARP's senior secured revolving credit facility.

    Atlas Resource Partners, L.P. is an exploration & production master limited partnership which owns an interest in over 14,500 producing natural gas and oil wells, located primarily in Appalachia, the Barnett Shale (TX), the Mississippi Lime (OK), the Eagle Ford Shale (TX), the Raton Basin (NM), Black Warrior Basin (AL) and the Rangely Field (CO).  ARP is also the largest sponsor of natural gas and oil investment partnerships in the U.S.

    Atlas Energy Group, LLC (ATLS) is a master limited partnership which owns the following interests: all of the general partner interest, incentive distribution rights and an approximate 26% limited partner interest in its upstream oil & gas subsidiary, Atlas Resource Partners, L.P.; the general partner interests, incentive distribution rights and limited partner interests in its private E&P development subsidiary; and a general partner interest in Lightfoot Capital Partners, an entity that invests directly in energy-related businesses and assets.
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    Goodrich Petroleum sells Eagle Ford Shale assets

    Goodrich Petroleum Corporation today announced that it has entered into a definitive agreement to sell its proved reserves and associated leasehold in the Eagle Ford Shale in LaSalle andFrio Counties, Texas for $118 million, subject to purchase price adjustments as provided for in the Purchase and Sale Agreement. The Company is retaining approximately fifty-eight percent (~ 17,000 net acres) of its undeveloped leasehold in the play for future development or sale. The asset being sold produced an average of approximately 2,850 barrels of oil equivalent ("Boe") per day (~75% oil) during the first quarter of 2015.

    The Company expects to book a gain of approximately $50-60 million on the sale at closing after factoring in customary closing adjustments. The Company plans to pay off its bank revolver and retain the difference in cash from the sales proceeds.

    Regarding the sale, the Company's President Robert Turnham stated, "The monetization of our proved reserves and associated acreage from our drilling efforts to date greatly improves our liquidity while maintaining a position in the Eagle Ford for future development or sale. Acreage retention was an important aspect of this transaction for us as it allows for additional future value creation from the asset in what we believe will be an improved oil price environment. The ability to pay off our bank debt and book the difference in cash in this difficult commodity cycle is an obvious benefit of the transaction as well. We continue to drive our well costs lower yet will remain conservative with our activity level, as we reiterate our full year capital expenditure budget of approximately $100 million, with sharply reduced capital expenditures in the last three quarters of the year."
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    Galp Energia beats profit expectations

    Portugal's Galp Energia posted an adjusted quarterly net profit nearly triple year-ago levels, beating expectations, and lifted its pretax earnings estimates for the year by almost 20 percent.

    The improvement was due to a recovery in refining margins and a steep increase in oil output in Brazil, where Galp expects a new offshore oil production platform on the Iracema North field to start pumping crude in the coming days, one quarter ahead of schedule.

    Two other floating production and storage platforms were on track to start producing at the giant Lula/Iracema field in the first half of next year, Galp said in a presentation.

    Galp, which said earlier this month that oil output in the second quarter rose by 65 percent, raised its forecast for 2015 earnings before interest, taxes, depreciation and amortization (EBITDA) to between 1.3 billion euros ($1.44 billion) and 1.5 billion euros from 1.1 billion to 1.3 billion.

    It expects an average working interest daily output of 43,000 barrels of oil equivalent in 2015, practically in line with that achieved in the second quarter.

    Galp had a net profit of 189 million euros in the April-June period, up from 68 million euros a year earlier. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 64 percent to 446 million euros. The results are adjusted to reflect changes in the company's stocks of crude.

    Analysts polled by Reuters had forecast, on average, an adjusted net profit of 150 million euros and EBITDA of 433 million euros. Galp shares rose 1.4 percent in early trading, outperforming the broader market in Lisbon, off 0.3 percent.

    Galp's refining margin in the quarter soared to $7.3 per barrel from minus $0.2 a year earlier and from $5.9 in the first quarter of 2015, also exceeding the market's benchmark margin of $5.2, the company said.

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    Plummeting natgas prices slash revenue of Marcellus shale producers

    The head of Pennsylvania's largest shale gas producer concluded his quarterly earnings call Friday with a dark view of the situation confronting drillers in the Marcellus.

    “I have been in this business over 30 years. I've seen a lot of cycles, and this is one of those draconian, down markets,” Dan O. Dinges, CEO of Houston-based Cabot Oil & Gas Corp., said after spending an hour answering analysts' questions, and talking about low natural gas prices and the promise of more pipelines.

    Cabot swung to a $27 million loss for the quarter from a $118 million profit the year before despite a modest increase in production.

    Expect to hear similar news from Appalachia's other shale producers as they discuss financial results in the next weeks, based on the prices they have been getting for their gas — less than $2 per million British thermal units — and early word from a few companies.

    “The realized price they're getting, that's just ugly,” S&P Capital IQ energy analyst Stewart Glickman said after Downtown-based EQT Corp. released its earnings last week. Pennsylvania's fifth-largest shale gas producer eked out a $5.5 million profit in the quarter — down 95 percent from the year before — but only because of increased revenue from its midstream pipeline operations.

    “It's a rough market to be in if you're trying to sell natural gas these days,” Glickman said, noting a 40 to 50 percent drop in the prices companies are reporting.

    Cecil-based Consol Energy Inc. warned investors it would report an operational loss Tuesday, when fellow producers Range Resources and Southwestern Energy will share results from the quarter. Other Top 10 Marcellus producers including Chevron, Anadarko and Chesapeake report later in the week and into the first week of August.

    Analysts expect losses at Consol, Anadarko and Chesapeake, and profits of less than 5 cents per share at Southwestern and Range, according to Bloomberg's consensus of estimates.

    Continued low prices combined with high debt at many companies will become a problem for them soon, said Kent Moors, editor of Oil & Energy Investor.

    “They need to be able to hedge their prices forward,” he said about the practice of locking in good prices now for later delivery.

    “We just don't see that opportunity today,” Dinges said.

    Read more:
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    US rig count jumps 19 units to 876

    The US drilling rig count jumped 19 units to reach 876 during the week ended July 24, according to data from Baker Hughes Inc.

    The gains came primarily from rigs drilling on land. Land rigs were up 17 units to 841. Those drilling in inland waters also increased, up 2 units to reach 4 rigs working.

    During the week, rigs targeting oil jumped 21 units to 659. Gas-directed rigs, meanwhile, were down 2 units to 216. Rigs considered unclassified were unchanged at 1 rig working.

    Rigs engaged in horizontal drilling increased 12 units to 662. Directional drilling rigs lost 1 unit to 83.

    Rigs drilling offshore and in the Gulf of Mexico were both unchanged this week, both maintaining counts of 31.

    Canada’s rig count continued its upward climb, increasing 8 units to an even 200. Its count has now risen in 9 of the last 11 weeks. This week’s gain was spurred by a rebound in gas-directed rigs, which were up 8 units to 102. Oil-directed rigs, meanwhile, were unchanged at 98 rigs working. Canada’s overall count is still down 195 year-over-year.

    Among the major oil- and gas-producing states, Texas was up 8 units to 374. Louisiana jumped 7 rigs to 76. Oklahoma, at 107 rigs working, was up 2. Four states were up 1 unit each: North Dakota, 69; New Mexico, 51; Pennsylvania, 44; and Ohio, 20. Eight states remain unchanged from last week: Colorado, 39; Wyoming, 21; West Virginia, 18; Alaska, 11; California, 11; Kansas, 11; Utah, 7; and Arkansas, 4.
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    China’s LNG imports in June rise

    China imported 1.72 million metric tons of LNG during the month of June, a 28.4% gain year on year, according to General Administration of Customs data.

    In comparison to the month of May, imports of LNG into China jumped 50% on what was the lowest level since 2012. In May, the country imported 1.12 million metric tons of liquefied natural gas.

    Platts reported that the majority of LNG imports came from Australia, while China also received cargoes from Equatorial Guinea LNG, Papua New Guinea LNG and Malaysia.

    Natural gas imports via a pipeline dropped 13.7% in June compared to the same month in 2014 while, together with LNG imports, China’s total natural gas imports increased 2.7% year on year, totalling 3.5 million metric tons.
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    Cabot Oil & Gas Corporation Announces Second Quarter

    Cabot Oil & Gas Corporation COG, -1.11%today reported its financial and operating results for the second quarter of 2015. "Despite our strategic decision to curtail Marcellus volumes in the second quarter due to the adverse price environment, Cabot still generated production growth and reduced unit costs year-over-year," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "Our top-tier Marcellus asset affords us the ability to reduce our gross production volumes by approximately 500 million cubic feet (Mmcf) per day and still report positive normalized results."

    Equivalent production in the second quarter of 2015 was 138.0 billion cubic feet equivalent (Bcfe), consisting of 128.4 billion cubic feet (Bcf) of natural gas and 1.6 million barrels (Mmbbls) of liquids (crude oil/condensate/natural gas liquids). These figures represent increases of 8 percent, 5 percent, and 68 percent, respectively, compared to the second quarter of 2014.

    Cash flow from operations in the second quarter of 2015 was $171.2 million, compared to $329.6 million in the second quarter of 2014. Discretionary cash flow in the second quarter of 2015 was $183.2 million, compared to $332.3 million in the second quarter of 2014. Net loss in the second quarter of 2015 was $27.5 million, or $0.07 per share, compared to net income of $118.4 million, or $0.28 per share, in the second quarter of 2014. Excluding the effect of selected items including a $36.5 million after-tax non-cash mark-to-market loss on natural gas derivatives, net income was $14.6 million, or $0.03 per share, in the second quarter of 2015, compared to $115.3 million, or $0.28 per share, in the second quarter of 2014. EBITDAX in the second quarter of 2015 was $203.9 million, compared to $367.1 million in the second quarter of 2014. Significant reductions in realized prices for both natural gas and oil were the primary drivers for the lower results in the quarter, partially offset by higher equivalent production. See the supplemental tables at the end of this press release for a reconciliation of non-GAAP measures including discretionary cash flow, net income excluding selected items, EBITDAX and net debt to adjusted capitalization ratio.

    Natural gas price realizations, including the effect of hedges, were $2.15 per thousand cubic feet (Mcf) in the second quarter of 2015, down 38 percent compared to the second quarter of 2014. Excluding the impact of hedges, natural gas price realizations for the quarter were $1.75 per Mcf, representing an $0.89 discount to NYMEX settlement prices. Oil price realizations were $56.10 per barrel (Bbl), down 43 percent compared to the second quarter of 2014.

    Total per unit costs (including financing) decreased to $2.52 per thousand cubic feet equivalent (Mcfe) in the second quarter of 2015, an improvement of 3 percent from $2.59 per Mcfe in the second quarter of 2014. "Our cash unit costs in the Marcellus during the second quarter were approximately $0.85 per Mcf, while our Eagle Ford cash unit costs were approximately $15.00 per Bbl," expressed Dinges. "With the expectation of prolonged weakness in commodity prices, we continue to focus on reducing costs and maximizing operating efficiencies throughout the organization."

    Cabot drilled or participated in a total of 37 net wells during the second quarter of 2015 and incurred a total of $228.2 million in capital expenditures associated with activity during the second quarter. "For a majority of the second quarter the Company's total rig count stood at four, with the expectation of holding this level flat through the remainder of the year and into the first part of 2016," commented Dinges. "We do not believe that accelerating activity and allocating incremental capital in this commodity price environment is the appropriate investment decision, especially in light of a more favorable outlook for Cabot's realized natural gas prices upon in-service of Constitution Pipeline in the second half of 2016."

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    Encana braces for job cuts; swings to heavy quarterly loss on charge

    Encana Corp. is expected to announce staff cuts on Friday following sharply weaker financial results as the company copes with the extended skid in oil prices.

    Early Friday, the company posted a loss attributable to shareholders of $1.61-billion (U.S.) or $1.91 per share for the quarter ended June 30. That compared with a profit of $271-million or 37 cents per share a year ago. Revenue fell to $830-million from $1.59-billion.

    The loss for the quarter included an after-tax $1.33-billion impairment charge as well as a $187-million after-tax hit related to an unrealized hedging loss.

    On an operating basis, Encana says it lost $167-million or 20 cents per share for the quarter compared with an operating profit of $171 million or 23 cents per share a year ago.

    Like the bulk of its rivals, Encana has scaled back drilling, especially in Canada, and that division is taking the brunt of the terminations, a source close to the company said.

    The cuts affect “a little over 200” staff, according to an internal memo from Encana chief executive Doug Suttles, issued late on Thursday.

    The layoffs represent the first sizable cut since the company introduced a new, more focused North America-wide strategy under Mr. Suttles in late 2013, a few months after he was hired. He was brought in to cure several ills at the company, including an overabundance of assets around the continent and heavy reliance on natural gas markets. At the time, 20 per cent of staff, nearly 1,000 workers, were let go.

    Encana’s latest reductions add to thousands of job losses in the Canadian oil patch since the collapse in oil prices late last year.

    Encana spokesman Jay Averill declined to discuss job reductions ahead of the release of financial results, but pointed to a statement issued to media in late June.

    “We’re aligning our organization with the well-documented and dramatic portfolio transformation we’ve delivered over the past year and a half. We expect some staff reductions, but not at the scale of what we undertook in 2013. Consistent with strategy we continue to build a company that can thrive through the commodity cycle,” the statement
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    Crude Oil Plunge Boosts Reliance Profit to Highest Since 2007

    Reliance Industries Ltd., operator of the world’s biggest oil-refinery complex, reported its highest quarterly profit in seven and a half years as lower crude costs boosted earnings from fuel sales.

    First-quarter net income rose 12 percent to 63.2 billion rupees ($987 million), or 19.5 rupees a share, in the three months ended June 30 from 56.5 billion rupees, or 17.5 rupees, a year earlie. That beat the 62.5 billion-rupee median of 16 analyst estimates compiled by Bloomberg. Sales fell 32 percent to 658.2 billion rupees as the value of products sold overseas almost halved to $5.1 billion.

    Reliance, among a handful of global refiners with the ability to process low-grade crude into high-value products and switch between fuels depending on market prices, is gaining from crude’s 42 percent slump in the quarter from a year ago. The company, controlled by billionaire Mukesh Ambani, is investing $12 billion to boost its petrochemicals capacity and build facilities to import ethane from the U.S., securing low-cost feedstock for polymer resins such as those used to make clothing and containers.

    “The company has top class assets,” D.K. Aggarwal, chairman of Mumbai-based brokerage SMC Investments & Advisors Ltd., said before the earnings. “With crude oil expected to remain on the lower side, Reliance should continue to show good numbers.”

    During the quarter, $10.40 was earned for every barrel of crude turned into fuels, compared with $8.70 a year earlier and $10.10 in the three months ended March 31, Reliance said in the statement.

    Raw material costs fell 40 percent to 489.8 billion rupees, reflecting lower crude prices in the period.

    The start of downstream expansions in the next 18 months will lift Reliance’s earnings before interest, taxes, depreciation and amortization by 75 percent over the next three years, Vikash Kumar Jain, an analyst at CLSA Asia-Pacific Markets, said .

    Upstream shale ventures in the U.S. were affected by declining prices, Reliance said in the statement. Henry Hub gas prices averaged $2.72 per million British thermal unit, 44 percent less than a year earlier. While the market outlook is curtailing near-term growth, the business holds long-term promise, Reliance said.

    Natural gas output from KG-D6 declined 13 percent to 37 billion cubic feet in the quarter from a year earlier, Reliance said. Oil production from the block declined 16 percent to 440,000 barrels and condensate output dropped 6 percent to 80,000 barrels.

    Reliance, which also runs stores selling fruits and clothes, has spent 1 trillion rupees to build a telecommunications network that will start by December this year, Ambani told shareholders in June. First-quarter revenue from the retail business grew 18 percent on year to 47 billion rupees. As on June 30, Reliance Retail operated 2,747 stores across 210 cities in India.
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    Aggreko issues profit warning due to oil and gas slowdown

    British temporary power firm Aggreko said on Friday that its pretax profit for this year would be between 8 and 15 percent lower than market forecasts, due to a slowdown in oil and gas and less favourable contract terms.

    Aggreko said its North American business had been hit by a lower oil price and declining activity there meant less equipment was being hired in both shale basins and the Gulf of Mexico.

    Elsewhere, the company said security challenges in Yemen meant it could not operate all of its generators and equipment, while in Bangladesh the terms of a contract extension now being finalised would not be as favourable as it had hoped.

    It said it now expected full-year pretax profit of between 250 million pounds ($387.73 million) and 270 million pounds at current exchange rates, for the year ending in December.

    A Thomson Reuters poll of 17 analysts has forecast a pretax profit of 293 million pounds.

    The company also said it had been affected by adverse exchange rate movements in recent months without giving details.

    Shares in the company, whose equipment powers major events and covers electricity shortfalls, plunged 15 percent to a five-year low, making the stock the top loser on Britain's mid-cap index.

    In March the company had said its profit this year would be unchanged from last year at 289 million pounds.

    "We have been cautious on the high valuation against an increasing risk profile for some time, the market will now need to realign this," said Investec analyst Andrew Gibb, who has a "sell" rating on the stock.

    Aggreko has in recent years benefited from expanding its business into emerging economies, some of which are now being affected by increasing geopolitical uncertainty or falling commodity prices.

    Equipment companies globally are being affected by the oil and gas slowdown. U.S. giant Caterpillar Inc said on Thursday that the good times were over and it would prune operations and cut costs to adapt.
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    VLCC rates rising to records

    A key benchmark route, Middle East Gulf (MEG) to Japan, rose to $93,038 per day which represents an increase of 17.7% compared to spot rates just a week earlier. It is also noteworthy that West African (WAF) routes have seen a massive jump as well moving up 14.9% to $92,081 per day to the USG (United States Gulf). Strong demand out of Asia, particularly India and China, has also sent the WAF to Far East route to new five year highs as well.
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    Shale Breakevens

    Image titleConsensus in November 2014. Average ~$60

    Image titleReality today. Average <$50

    Attached Files
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    Utica 20x bigger than original survey.

    University researchers and government agencies are pumping up the Utica shale play.

    It turns out that the natural-gas heavy underground formation that's led to millions of dollars in investment in eastern Ohio probably holds more gas than initially estimated.

    "(The Utica) is much larger than original estimates, and its size and potential recoverable resources are comparable to the Marcellus play, the largest shale oil and gas play in the U.S. and the second-largest

    The Utica, which is also increasingly being drilled in West Virginia and Pennsylvania, could have recoverable volumes of 782 trillion cubic feet of natural gas and almost 2 billion barrels of oil. That's about 20 times more than the U.S. Geological Survey's estimate just three years ago of 38 trillion cubic feet of gas. It also projected 940 million barrels of oil then.

    The Utica Shale Play Book Study comes from two years of research sponsored in part by a consortium of drillers in the area, including Chevron Corp. (NYSE: CVX), EnerVest Ltd. and Range Resources (NYSE:RRC).

    Attached Files
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    Alternative Energy

    Japan plans to fund solar power parks in India

    Clean Techinca reported that the Japanese International Cooperation Agency has finalised plans to fund solar power parks in various states of India.

    According to the recent announcement, the Japanese International Cooperation Agency plans to invest USD 500 million into the Indian solar parks. Other multilateral institutions like the World Bank, KfW, the European Investment Bank, and the Asian Development Bank also plan to provide low-cost debt financing for large-scale and rooftops solar power projects.

    The Indian government plans to set up 25 of these solar parks across the various states. Out of total 100GW solar power installation by 2022, about 20 GW is expected to come from solar parks.

    Over the years, the Indian solar power market has attracted significant foreign investment. The Indian government expects a total investment of USD 160 billion in the country’s renewable energy sector over the next 5 years. A large portion of this is expected to come from international private project developers and development banks, although Indian banks have started raising funds through green bonds as well.

    The government may also consider launching tax-free green infrastructure bonds to attract domestic long-term investments. In February, Indian banks and foreign investors pledged to provide funding worth USD 57 billion for renewable energy capacity addition in the country.

    According to earlier reports, the Indian government was in talks with various international development banks to raise USD 3 billion for the National Solar Mission. The government has already signed agreements with the US Trade and Development Agency and the US Export-Import Bank for a total debt funding of USD 3 billion. Currently India’s solar installed capacity is approximately 4 GW, meaning that it has to add 96 GW over the next 7 years.
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    Nuclear Deal Opens Market as Big as France for Iran Wind

    Iran’s quest to rejuvenate its energy industry after decades of sanctions is attracting renewable energy developers eager to plant turbines on windy ridges across the country.

    Since 2012 the government has pushed renewables as an alternative to the fossil fuels that supply 94 percent of its electricity. Developers such as GI Umweltconsult and turbine suppliers including Nordex SE are preparing to enter the market.

    While Iran’s renewables industry is concentrated mainly on hydro plants, the government plans to bolster wind as a way of preserving crude oil for export, and feeding the electricity needs of its more than 80 million people. With an ambition to install 5 gigawatts of renewable capacity by 2020, Iran would rank alongside France and the U.K. as an industry leader.

    “Every kilowatt-hour of extra wind power allows them to export more oil, meaning more foreign currency,” Michael Tockuss, managing director of the German-Iranian Chamber of Commerce, said in an interview in Hamburg.

    Umweltconsult, a renewable energy developer based in Berlin, is planning wind farms requiring investment of 300 million euros ($331 million) in Iran starting next year, Shahnaz Horvath, co-head of the company, said in an interview.

    Iran’s government set its renewable energy target in 2012 and has just 150 megawatts of clean power plants operating now. It adopted Germany’s feed-in-tariff model 10 years ago, granting developers a fixed price for electricity from renewables, and recently boosted the payout for wind by 3.9 percent to 5,300 rials (18 cents) per kilowatt-hour.

    With about 1,000 megawatts of new capacity planned a year, Iran’s onshore wind market may compare with France and the U.K., said Oliver Kayser, spokesman for the German turbine maker Nordex SE. The two European markets have contributed installation of about that much in most years for most for the last decade, according to data compiled by Bloomberg.

    “Iran does have some high-wind locations, for example in the mountainous regions north of Tehran,” said David Hostert, an analyst for Bloomberg New Energy Finance in London.

    Denmark’s Vestas Wind Systems A/S is eager to explore the Iranian market, said Michael Zarin, a company spokesman. The biggest turbine maker has installed 37 of its machines in the country, most recently in 2004, according to its website.
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    China Idles Solar Power for First Time Amid Grid Congestion

    China halted power flows from solar panels for the first time as congestion on its electricity grid prevented renewable energy from reaching customers.

    About 9 percent of the nation’s solar capacity sat idle in the first six months of the year, according to data from the National Energy Administration released Tuesday. Dormant generators were mainly in the northwestern region of Gansu and Xinjiang.

    China’s electricity grid is struggling to absorb quickly increasing flows from both renewables and coal-fired power plants. Authorities either delay hooking new plants to the grid or idle facilities whose output can’t be managed.

    Wind farms for years have suffered such delays, and solar now is joining. The problem is exacerbated by slower growth in electricity use and by more coal plants coming online.

    Gansu had the highest rate for idled solar plants, with 28 percent of power generation out of service. Xinjiang’s rate was 19 percent, the NEA said in a statement on its website.
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    SunPower profit falls 54 pct

    Solar panel maker SunPower Corp reported a 54 percent fall in quarterly profit due to lower revenue from its power plant business.

    The company's net profit fell to $6.5 million, or 4 cents per share, in the second quarter ended June 28 from $14.1 million, or 9 cents per share, a year earlier.

    Revenue fell 25 percent to $381 million.
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    China coal producer Shenhua plans $1 bln wind farm IPO in HK-IFR

    China's biggest coal producer, Shenhua Group, plans to list its wind farm assets in an initial public offering in Hong Kong valued at up to $1 billion, IFR reported on Monday, citing people familiar with the plans.

    The IPO is expected for the first half of 2016, according to IFR, a Thomson Reuters publication. The company has invited banks to pitch for the deal, though no mandates have yet been assigned, it reported.
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    China added 7.73 GW of solar capacity in H1 - energy regulator

    China increased its total solar power capacity by 7.73 gigawatts (GW) in the first half of 2015, China's top energy regulator said on Tuesday.

    The National Energy Administration said on its website ( that total solar power capacity now amounted to 35.78 GW.

    Of the total, 30.07 GW was in the form of solar power stations, with the remainder consisting of distributed power sources.
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    SunPower Acquisition of 1.5-GW of U.S. Solar Power Plant Assets

    SunPower has acquired 1.5 gigawatts of U.S. solar power plant development assets from Australia-based Infigen Energy. With the acquisition, SunPower has assumed ownership of projects in varying stages of development across 11 states.

    Included in the development portfolio are three projects totaling 55 megawatts (AC) with power purchase agreements with Southern California Edison. All three are located in Kern County, Calif. SunPower expects to start construction on these projects later this year with commercial operation anticipated in 2016.

    "The magnitude of this acquisition speaks to SunPower's financial strength as well as our expertise and leadership in global power plant development," said Tom Werner, SunPower CEO and president. "It provides an expanded and geographically diverse portfolio of solar projects in the U.S. that may all be generating cost-effective, emission-free power by the end of this decade."

    "SunPower brings significant experience and proven technology to ultimately transform these development assets into high-performing solar power plant projects, designed to reliably deliver value over the long term," said David Smith, CEO of Infigen Energy US. "Infigen is pleased to have completed this transaction with SunPower."

    SunPower expects to offer some of the acquired projects for sale to 8point3 Energy Partners LP (Nasdaq: CAFD), the YieldCo joint venture formed by SunPower and First Solar.

    "We expect this acquisition to deliver additional value to our shareholders through long-term power purchase agreements with leading energy buyers, while providing further growth opportunities for SunPower," continued Werner.
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    Offshore wind power gets foothold in US with Rhode Island project

    Rhode Island's Deepwater Wind began installing the foundations for North America's first offshore wind farm on Monday, a milestone the company says could pave the way for an industry long established in Europe but still struggling with opposition in the United States.

    The 30-megawatt wind farm, which will include five turbines located three miles (4.8 km) off the coast of the bucolic summer tourist destination of Block Island, will take more than a year to build and is scheduled to produce electricity for the tiny island community and the mainland by the end of next year.

    "Our belief is once Block Island is up and running, it will bring offshore wind from theory to reality in the United States and open up opportunities to build larger projects," said Jeffrey Grybowski, Deepwater Wind's CEO.

    A rival project, Cape Wind's proposed 130-turbine wind farm off Nantucket Sound, for example, was for years expected to be America's first such project but stalled in part due to a lack of local support. Other offshore wind projects are in limbo off Delaware, New Jersey and New York.

    Deepwater's project fits a different mold, according to Grybowski and the project's backers, French bank Societe Generale and Ohio-based Key Bank: It was relatively small and therefore easier to finance and is set in a location that has substantial built-in government and local support.

    "Rhode Island was very forward-thinking and had designated a specific development area," said Alexander Krolick, Societe Generale's energy project finance director for the Americas. SocGen and Key Bank have provided about $300 million for the project, according to Deepwater, which is based in Providence.

    Block Island was chosen as a wind power site by the state in 2007 in part as a solution to the island's own energy woes: Its 1,000 residents have for years relied on costly diesel-fired generators for electricity. Once the wind farm starts up, prices will drop 40 percent, according to a study by the Block Island Utility Task Group.

    "We have some of the country's highest electricity prices," said David Kane, who retired to the island a few years ago. "This is going to help us a lot."

    About 90 percent of the wind farm's power will be shipped to Rhode Island's mainland via an undersea cable where utility National Grid will buy it for 26 cents/kwh and mix it into the rest of the state's supply, which generally ranges between 6 and 10 cents/kwh. Although it will account for only 1 percent of the state's power supply, the higher cost represents the industry's biggest challenge.
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    Kenya to build $2.2bn of solar projects

    Kenya to build $2.2bn of solar projects

    Solar projects worth $2.2 billion (£1.4bn) are to be built in Kenya.

    Energy company SkyPower, which is investing the cash, will develop and build the projects in four phases across the country over the next five years.

    They will have a total capacity of 1GW and more than 25,000 jobs are expected to be created.

    The agreement was signed between the company and the Kenyan Ministry of Energy and Petroleum.

    Cabinet Secretary Henry Rotich said: “Sustainable electrification is a central policy issue in Kenya and we are committed to making this a reality for our citizens while accelerating economic growth in the process.”
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    China unveils new energy micro-power grid guidelines

    China will develop a renewable energy micro-power grid, to further promote the sustainable development of energy resources, according to the National Energy Administration on Wednesday.

    Micro-power, the opposite of large power stations, refers to electricity sources that are small, mass producible, quick to deploy, cost competitive and rapidly scalable.

    The micro-power grid is an innovative approach to energy saving and emission reduction, according to guidelines released by the National Energy Administration.

    The guidelines listed specific requirements on the technological and operational management of micro power.

    New energy micro-power grid should make use of a mix of various renewable sources such as wind, solar, natural gas and geothermal sources.

    The guidelines acknowledged recent developments in research on technology and application of new energy micro-power grid, adding that this gave them the ability to build test projects.

    Micro-power operation releases little carbon, and allows all kinds of groups including individuals to generate power, which could encourage competition in power generating industry.
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    Cameco sees 5-10 pct rise in 2015 revenue Q2 earnings down

    Canada's Cameco Corp , one of the world's largest uranium producers, raised its full-year revenue forecast, helped by increased capacity from its purchase of nuclear fuel broker Nukem Energy GmbH in 2013.

    The company said it expects 2015 revenue to rise 5-10 percent, up from its previous forecast of a rise of 5 percent.

    Cameco, which owns the world's largest uranium producing mine at McArthur River, Saskatchewan, reiterated its forecast for total uranium output of 25.3-26.3 million pounds in 2015.

    In the second quarter ended June 30, Cameco's uranium sales volume slipped to 7.3 million pounds from 7.4 million pounds a year earlier.

    The company's average realized uranium price rose only 1 percent to $46.57 per pound, and average unit cost of sales rose 14 percent to C$40.71 per pound.

    Cameco said the uranium market "continued to be flat" in the second quarter mainly due to an over-supplied market.

    On an adjusted basis, the company earned 12 Canadian cents per share during the quarter, missing the average analyst estimate of 20 Canadian cents per share.

    The company has been a beneficiary of India's recent move to limit the legal liability of U.S. suppliers in the event of a nuclear power plant catastrophe.

    Cameco secured a deal in April to supply 7.1 million pounds of uranium concentrate to India over the next five years.

    The company's net earnings attributable to its shareholders fell to C$88 million ($68 million), or 22 Canadian cents per share, in the quarter, from C$127 million, or 32 Canadian cents per share, a year earlier.

    Excluding special items, adjusted earnings in the period were C$46-million, or C$0.12 a share, down 41% year-on-year when compared with C$79-million, or C$0.20 a share, in the second quarter of 2014.

    Revenue rose 12.5 percent to C$565 million.

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    EDF and Areva agree outlines of alliance - sources

    French utility EDF and nuclear group Areva have reached an agreement on the broad outlines of a cooperation deal between the two state-controlled companies, two sources said on Wednesday.

    Nothing has been signed yet, but both sources with knowledge of the situation told Reuters the companies are finalising an agreement after months of difficult negotiations.

    "There is an agreement on the broad outlines of a deal," one of the sources said.

    Four consecutive years of losses have wiped out Areva's capital and the firm has a 1.25 billion euro ($1.4 billion)bond to repay in September 2016 and another 900 million euro matures in October 2017.

    As ordered by the government, EDF will buy a majority stake in Areva's nuclear reactor business. One source said EDF had agreed to value the division at 2.7 billion euros but did not know how big a stake EDF would buy.

    French newspaper Le Figaro reported on Wednesday that EDF would buy 75 percent of the Areva reactor unit.

    The same source also said the deal included an agreement on the terms under which Areva would provide nuclear fuel recycling services for EDF, which is its only client for that activity.

    The deal is expected to be announced on Thursday, when both companies report first-half results.

    There is no agreement yet on who will be responsible for charges related to Areva's long-delayed reactor project in Olkiluoto, Finland.

    Areva has a 3.5 billion euro claim against its Finnish customer Teollisuuden Voima (TVO), which has a counter-claim for 2.3 billion euros.

    Economy Minister Emmanuel Macron said earlier this month the Finland-related risks will not be passed onto EDF, but could not be left to Areva alone, meaning they may end up as a liability for French taxpayers.
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    Guangdong nuclear power capacity to reach 14 GW by 2017

    Southern China’s economic hub Guangdong province aimed to realize nuclear power installed capacity totaling 14 GW by 2017, according to a document released by the provincial Development and Reform Commission on July 15.

    In 2015, Guangdong plans to finish construction of unit 2# of Jiangyang nuclear plant and advance the preliminary work of the first phase project of Lufeng nuclear plant

    It targets to add 1.08 GW of new installed capacity this year, and complete investment up to 18 billion yuan ($2.94 billion), according to the document.

    Newly added installed capacity would reach 2.83 GW in 2016, as the province would complete unit 3# of Jiangyang plant (1.08 GW) and unit 1# of Taishan plant (1.75 GW) during the year, with investment of 21 billion yuan.

    While in 2017, another 2.83 GW of newly-added capacity would be installed, namely, the unit 4# of Jiangyang plant (1.08 GW) and unit 2# of Taishan plant (1.75 GW), with total investment at 17 billion yuan.

    Guangdong, China’s leading nuclear power generation province, has completed Jiangyang unit 1# and Daya Bay nuclear power base, with total installed capacity at 7.2 GW.

    In addition, Guangdong vowed to increase onshore and offshore wind power installed capacity to 4.2 GW and 0.3 GW by 2017, respectively, and total solar power installed capacity at 2.2 GW, according to the document.

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    Potash Corp profit drops 12 pct on weak nitrogen business

    Potash Corp of Saskatchewan Inc reported a 12 percent drop in quarterly profit, missing Wall Street estimate, hurt mainly by weak nitrogen earnings and lower phosphate sales.

    The company, the world's biggest fertilizer company by market capitalization, lowered the top end of its full-year profit forecast to $1.95 per share from $2.05. The low end of the guidance remained unchanged at $1.75.

    Analysts on average were expecting earnings of $1.81 per share, according to Thomson Reuters I/B/E/S.

    The company, the second-biggest potash producer by output after Russia's Uralkali OAO, also makes phosphate and nitrogen fertilizers.

    Potash Corp said nitrogen production, the company's second-biggest business, fell 2 percent to 1.6 million tonnes in the second quarter ended June 30, from a year earlier, while average realized nitrogen price fell 15 percent to $334 per tonne.

    Sales volumes at the company's third-biggest business, phosphate, fell 20 percent due to absence of production at the Suwannee River plant in Florida, Potash Corp said.

    The company's potash production remained flat at 2.5 million tonnes, while average realized potash price rose 4 percent to $273 per tonne.

    Potash gross margin jumped 5.6 percent to $417 million.

    The company changed its potash sales forecast for the year to 9.3-9.6 million tonnes from 9.2-9.7 million tonnes.

    The company's net income fell to $417 million, or 50 cents per share, in the second quarter, from $472 million, or 56 cents per share, a year earlier.

    The results came in below the average analyst estimate of 51 cents per share, according to Thomson Reuters I/B/E/S.

    Revenue fell 8.5 percent to $1.73 billion, below analysts' average estimate of $1.89 billion.
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    K+S asks German government to fend off takeover-Handelsblatt

    German potash and salt miner K+S has turned to economy minister Sigmar Gabriel for help in resisting an unwanted takeover approach by Potash Corp of Saskatchewan Inc, and has discussed the option of German state bank KfW taking a stake in K+S, a newspaper reported on Wednesday.

    K+S earlier this month rebuffed Potash Corp's 7.9 billion euros ($8.7 billion) proposed bid of 41 euros per share as too low and suggested the suitor was planning to shrink the company.

    K+S last week said it had rejected a new attempt by its Canadian suitor, which is due to report second-quarter results on Thursday, to entice it into takeover talks.

    KfW could take a blocking minority stake but Germany's economy ministry and finance ministry are doubtful they could come up with a "common-good" justification for such an intervention, Handelsblatt cited people familiar with the matter as saying.

    K+S declined to comment while the economy ministry only said there had been talks with the company about a "corporate matter" and would not comment further.

    A person familiar with the matter told Reuters that state development bank KfW had never before acted as a "white knight" to scupper a takeover and was unlikely to play such a role.
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    Pork prices are surging in China

    Since March 2015, retail prices have risen on average by 7% year-over-year on a monthly basis, and prices of the more expensive cuts have risen by as much as 20% year-over-year.

    This current price surge is bringing back memories of China's 2011 inflation nightmare. Back then, the spike in pork prices – a major Chinese food staple – was the major contributor to the sharp inflationary pressures.

    And on top of that, many are worried that the return of pork price inflation could bring China's monetary easing to a grinding halt.

    But those fears are overblown. "Our view is much more benign,” writes Qu Hongbin, HSBC Chief Economist for Great China.

    “Pork prices are surging, but impact on inflation will be largely offset by falling prices elsewhere. We expect full year CPI inflation at below 1.5%, and well below official target of 3%, leaving room for further monetary easing," he continues.HSBC Global Research

    Qu lists two major reasons why HSBC analysts believe that's the case:

    First off, pork price cycles have "moderated quite significantly" over the years since 2011, which Qu attributes to more rational supply side management and relatively subued domestic demand. Furthermore, he continues, Beijing now has a price-stabilization program, which could be used if necessary.

    Secondly, the prices of other food items are either stable (such as grains) or falling (such as fresh fruits and eggs.) "This, plus weak property prices and falling fuel prices will largely offset the inflationary impact of pork prices," writes Qu.

    But even if — worst case scenario — pork prices keep rising à la 2011, it's still not terrible news.

    Read more:
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    DuPont cuts full-year outlook on weak farm sales

    Chemical and crop company DuPont reduced its earnings forecast for the year to account for the spin-off of its performance chemicals unit and a weak demand for agricultural products.

    DuPont said it expects its full-year operating earnings of about $3.10 per share. The company in April had forecast earnings at the low end of the $4.00-$4.20 range for the period.

    The company, whose international business accounts for about 60 percent of its overall sales, also reduced the impact of a strong dollar to its full-year earnings to 60 cents per share from 80 cents, due to the spin-off.

    Shares of DuPont, which completed the spin-off of Chemours Co on July 1, were down about 1.5 percent at $55.89 in premarket trading on Tuesday.

    The company in May defeated a campaign by Trian Fund Management to land seats on DuPont's board, delivering a landmark setback to one of the most influential activist investor firms.

    DuPont's agriculture business, which accounted for about 37 percent of its sales, is being weighed down by weak global demand for crop protection products, reduced corn farming in Latin America and lower soybean volumes in North America.

    On an operating basis, DuPont reported earnings of $1.18 per share, in line with analysts' average estimate, according to Thomson Reuters I/B/E/S.

    Net income attributable to DuPont fell to $940 million, or $1.03 per share, in the second quarter ended June 30, from $1.07 billion, or $1.15 per share, a year earlier. Net sales fell 11.5 percent to $8.60 billion.

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    Holiday baking season boosts egg prices.

    Image title

    Chicago • U.S. egg prices, already at a record after an outbreak of avian influenza earlier this year, will rise even higher in the fall with the onset of the so-called holiday baking season, according to one supplier.

    While prices are stabilizing now, supplies of eggs won't recover until farms affected by bird flu come back online, which may take about 18 months, said Charles Lanktree, chief executive officer of Eggland's Best Inc.

    In November with colder temperatures, Americans will fire up their ovens to bake holiday fare such as Christmas cookies, weakening supplies and lifting prices again, he said Monday in a Bloomberg Television interview.

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    Precious Metals

    OceanaGold to buy Romarco for $660 million

    OceanaGold Corp. agreed to buy Romarco Minerals Inc. in a deal worth C$856 million ($660 million) to gain control of its bullion project in South Carolina.

    OceanaGold will pay 0.241 of its shares for every one in Romarco, the Melbourne-based company said in a statement on Thursday. That values each Romarco share at C$0.68, a 73 percent premium on the July 29 closing price, OceanaGold said.

    A decline in the gold price, which last week fell to the lowest since February 2010, is spurring deals after asset valuations tumbled. OceanaGold said in April it was seeking to buy more assets after agreeing to pay $101 million for Newmont Mining Corp.’s Waihi mine in New Zealand.

    After completion, OceanaGold shareholders will own about 51 percent and Romarco investors about 49 percent. Adding the Haile mine, which is targeting first production in 2017, will boost the combined company’s annual gold output to about 540,000 ounces.
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    First Majestic announces friendly acquisition of Silvercrest Mines

    First Majestic Silver Corp. and SilverCrest Mines Inc. are pleased to announce that the companies have entered into a definitive agreement pursuant to which First Majestic has agreed to acquire all of the issued and outstanding common shares of SilverCrest for consideration of 0.2769 of a common share of First Majestic plus C$0.0001 in cash per SilverCrest common share.

    The offer implies a value of C$1.30 per SilverCrest share based on the closing price of First Majestic's common shares on the Toronto Stock Exchange on July 24, 2015. The offer represents a premium of approximately 37% to SilverCrest's 30-day volume-weighted average price on the TSX for the period ending July 24, 2015 and a 35% premium to SilverCrest's previous closing price.

    The transaction will be implemented by way of a plan of arrangement (the "Arrangement") under the Business Corporations Act (British Columbia).

    In addition, shareholders of SilverCrest will receive shares in a newly formed company ("New SilverCrest") which will hold certain exploration assets currently held by SilverCrest and First Majestic.
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    The price of diamonds is collapsing

    Market prices for diamonds are in a long, slow, five-year decline and it's causing havoc for diamond producers.

    Petra Diamonds reported a 10% sales drop in the first half of the year to $425 million today, while luxury brand De Beers saw a 23% collapse in profits to $360 million last week.

    The diamond price is to blame, driven by falling demand in, you guessed it, China. Diamond prices have dropped about 12% over the last five years.

    Here's the Idex diamond benchmark over the last five years:


    De Beers, 85% owned by mining company Anglo-American, said that Chinese retailers hold more inventory than they first thought.

    They were hit by a slowdown in luxury spending in Hong Kong and Macau, which in turn has been blamed on the Chinese government's corruption crackdown.

    Read more:
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    Gold Bears come out to play

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    Platinum industry shrinks as Lonmin becomes first to cut output

    The platinum industry is seeing the first big mine closings in two years, and it may be just the beginning.

    Lonmin, the third-biggest miner of the precious metal, said Friday that it will reduce annual output by 100,000 ounces over the next two years and eliminate as many as 6,000 jobs. Other producers will have to do the same to bring a turnaround in prices, which sank to a six-year low last week, according to Wayne McCurrie, who helps manage $8 billion at Momentum Holdings in Pretoria, South Africa.

    “The others will do exactly the same as Lonmin did,” McCurrie said. “They’ve got to cut out the unprofitable production that’s not making money. If everyone caps production, the excess will eventually disappear.”

    Platinum has been in a bear market for two years, and South African producers, the world’s biggest, are losing money on three out of every four ounces they mine. Prices have plunged 19% this year on a glut of metal from stockpiles and recycled material.
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    De Beers has weak first half, looks forward to H2

    Diamond mining giant De Beers on Friday said that, despite a challenging first half, it still achieved a solid operating performance. However, its underlying earnings before interest and taxes (Ebit) decreased by 25% to $576-million for the six months ended June, compared with $765-million in the first half of the prior year. 

    This was primarily owing to softer rough diamond demand, resulting in weaker revenue, which was partly offset by lower operating costs and favourable exchange rates. Unit costs declined by almost 10% in comparison to 2014, with the effects of inflation being more than offset by foreign exchange benefits and cost control. Total sales decreased by 21% to $3-billion, with rough diamond sales decreasing by 21% to $2.7-billion

    Lower rough diamond revenue reflected a 27% reduction in consolidated sales volumes to 13.3-million carats, while average realised diamond prices increased by 7% to $206/ct, owing to the sale of a stronger product mix, despite a 4% lower average rough price index for the period. CEO Philippe Mellier said the “okay” performance saw the company trim down on production, tightening its overheads, working on its costs and trying to reduce the impact on profit. 

    De Beers had used operational flexibility at some mines to make marginal adjustments to production plans. The diamond miner saw a continuation of the market weakness of late 2014 during the first six months of 2015, resulting in a 25% underlying Ebit decrease. 

    In response to these market conditions, the business had revised production guidance for 2015 to 29-million to 31-million carats, while continuing to focus on its operational metrics. It also reduced its unit costs by 10% in dollar terms in the six months under review. 

    Mellier, meanwhile, gave an update on De Beers’ expectations for the various regions during the second half of the year. “In the US, by far the biggest market in the world, with more than 40%, we are cautiously optimistic. “The first quarter was weak, mainly owing to climatic conditions on the [US’s] East coast – it was really cold. The second quarter and the third quarter look like [they might be] pretty good quarters and we anticipate a pretty good selling season,” he said, adding that the company would have a strong marketing campaign at its Forevermark brand. In this regard, 

    De Beers opened a $10-million facility in Surat, in India, which would provide greater grading and inscription capacity, while its investment in microjet technology developer Synova would enable its customers to access better technology to increase efficiency.

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    Base Metals

    First Quantum mulls development delays to conserve cash

    Base-metals miner First Quantum Minerals will consider delaying some work at major development projects to preserve cash as it grapples with slumping commodity prices and power supply cuts at facilities in Zambia.

    The Canadian company, which recently raised C$1.4 billion ($1.01 billion) in an equity offering designed to cut debt and fund projects, said on Thursday that cash conservation and cost reductions remain its top priority.

    "In the event of a continued and protracted weakened price environment, we do have options available to us to protect the balance sheet further," Chairman Clive Newall said on a conference call with analysts.

    Vancouver-based First Quantum maintained its C$1.4 billion budget for 2015 capital expenditures, including C$600 million for its Cobre Panama copper mine in Panama, but said 2016 spending could drop dramatically.

    "Already, we have identified how we can defer a significant amount out of our next year's Cobre Panama budget without affecting its construction schedule," Newall said.

    The company said it is studying how it can save money by adjusting the timing of capital expenditures. At Cobre Panama, for example, it is buying less power equipment and deferring its use, while still keeping the project on track.

    "The capital expenditure for next year, we think, will be less than C$1 billion and probably more in the region of C$800-C$900 million," said Chief Executive Philip Pascall.

    Newell said the company could also defer expansion of a sulphide circuit at its Kansanshi copper mine in Zambia, by "a year or so", without affecting long-term production.

    First Quantum, which primarily mines copper, but also nickel and gold, is trying to alleviate the impact of a 24 percent reduction in power supply in Zambia.

    It shut its Sentinel copper processing development this week, after Zambian power utility Zesco Ltd reduced power supplies, a result of low water levels at hydro-electric plants due to a drought.

    Rainfall doesn't typically resume until December, Pascall said, and supply problems will likely continue through to January February.
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    MMG to produce less zinc as Dugald mine delayed

    MMG Ltd., the listed unit of China’s biggest state-owned metals trader, expects to produce less zinc through 2018 as a new $1.4 billion mine is delayed and an existing deposit closes.

    Dugald River in Queensland, Australia, will start production in the first half of 2018 with output of about 160,000 metric tons a year, Andrew Michelmore, chief executive officer of Melbourne-based MMG, said Wednesday.

    The Century mine, Australia’s largest open-cut zinc operation, is being wound up this month after 16 years, according to a filing. MMG initially estimated Dugald River would start in late 2015 with as much as 220,000 tons a year. It also supplies zinc from its Golden Grove and Rosebery mines.

    “There will be a gap,” Michelmore said on a conference call. “That will probably help the price.” The company reviewed its plans for Dugald River after discovering faults in the orebody that required technical work, he said. Capital expenditure has been cut by $100 million, he said.
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    Zambia's CEC to reduce power supply to mines - industry official

    Zambia's Copperbelt Energy Corporation will cut power supply to mines it services by 30 percent from midnight, a senior industry official said on Thursday.

    Copperbelt Energy buys electricity from state power company Zesco Ltd and supplies it to companies including Vedanta Resources, Glencore and Vale.

    "Copperbelt Energy Corporation informed us this morning that it will cut power supply to the copper belt mines it supplies by 30 percent from midnight. Obviously this will have a negative impact on production," Zambia Chamber of Mines President Jackson Sikamo told Reuters.

    Zesco has already reduced supply to mines it directly deals with, by 24 percent.

    Power cuts in Africa's second-biggest copper producer have already affected production at mines run by Canada's First Quantum Minerals and Barrick Gold, the chamber said on Tuesday.
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    Antofagasta to buy Barrick Chile mine, eye more partnerships

    Barrick Gold Corp agreed on Thursday to sell 50 percent of its Zaldivar copper mine in Chile to copper miner Antofagasta Plc for $1 billion in cash, and both parties stressed that this was just the start of more cooperation.

    The emergence of family-owned, Chilean-based Antofagasta as the winner of the competitive bidding process for a mine once dubbed the "Andean ATM" is a surprise after market speculation centered on either a Chinese or global miner as the buyer.

    Both Barrick and Antofagasta said the deal was a launch pad for future co-operation, likely in Chile where Barrick owns large, unbuilt projects such as Pascua-Lama and Cerro Casale.

    "Antofagasta has an outstanding track record of building and operating mines in Chile, and we see this as the first step in an ongoing, collaborative partnership," Barrick Co-President Kelvin Dushnisky said in a statement.

    Barrick spokesman Andy Lloyd declined to comment on any specific projects for future partnerships.

    Antofagasta would become the operator of Zaldivar, an open pit mine, and would be overseen by a board consisting of three nominees from each company.

    Zaldivar is situated in northern Chile's main copper-producing area right next to BHP Plc and Rio Tinto-owned Escondida, the world's largest copper mine. Both BHP and Escondida itself had been tipped as potential buyers, as was China Molybdenum Luoyang Co.

    Zaldivar last year produced around 100,000 tonnes of copper at a net cash cost of $1.79 a pound and generated $244 million before tax. That cash cost is still well below spot copper prices, which were last at $2.38 a pound, near six-year lows.

    The purchase of Zaldivar "represents a rare opportunity to acquire a substantial interest in an established, low-cost mining operation that generates strong cash flow," Diego Hernandez, Antofagasta's chief executive, said in a statement.

    Barrick, the world's biggest gold producer, said that including the sale of Zaldivar, it has now announced debt-reduction related deals worth around $1.85 billion.

    The Toronto-based company has said it wants to reduce its debt by at least $3 billion this year. The latest deal brings it to nearly two-thirds of that total.

    Barrick also said it was "actively exploring" a number of other joint venture and sales opportunities. It would update the market on Aug. 5 when it releases its second-quarter results, the miner said.
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    Zambia’s H1 copper output rises 2.1%

    Zambia’s copper production increased by 2.1 percent in the first half of 2015 versus the same period last year as mining companies in Africa’s No.2 producer of the metal ramped up output in May and June, the statistics office said on Thursday.

    “Increase in copper production in May and June of 2015 was the main reason for the increased output,” the Central Statistical Office (CSO) said in a statement.

    “Actual copper output increased from 324,654 tonnes over the period January to June 2014 to 331,511 tonnes in the same period of 2015,” it said.
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    Aluminium Bahrain H1 net profit doubles

    Aluminium Bahrain (Alba) posted a net income of BD66.9 million ($178 million) in the first half of the year as compared to BD32.3 million ($86 million) for the same period in 2014, marking a year-on-year increase of 107 per cent. Net income for the second quarter (Q2) of 2015 stood at BD29.8 million ($79 million) compared to BD15.2 million ($41 million) in Q2 2014, an increase of 96 per cent.

    The board has recommended an interim cash dividend of 5.5 fils per share, which is BD7.9 million ($21 million) to be paid in September.

    Alba’s total sales for the first half of 2015 were up by 8 per cent year-on-year to reach BD405.9 million ($1.080 billion) versus BD376.4 million ($1.001 billion) in H1 2014 thanks to favourable management performance, a company statement said.

    Total sales for the second quarter of 2015 were BD199.3 million ($530 million) compared to BD193.6 million ($515 million) for the same period in 2014.

    Daij bin Salman bin Daij Al Khalifa, chairman Alba, said: “Alba was able to outperform the industry and continue to deliver on safety. We plan to use this positive momentum as we gear-up for Line 6 Expansion Project which will make Alba the largest single-site aluminium smelter in the world.”

    Alba’s chief executive officer Tim Murray said: “Alba continues to excel in what we control -- which is Safety, Production and Cost. As we look ahead for the remainder of 2015, we see a large drop in the all-in-aluminium prices; however, we expect to deliver solid results despite these challenges.” – TradeArabia News Service

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    Freeport's Indonesia export permit may be delayed

    Reuters reported that the implementation of an export deal reached earlier this week by Indonesia and Freeport-McMoRan has been delayed indefinitely due to the sickness of a senior trade ministry official.

    Mr Didi Sumedi, director of export industry and mining product at the trade ministry told reporters on Wednesday “The recommendation from the mine ministry came yesterday. With the current situation, perhaps we'll need some more time. The director general is currently recovering from a health condition, but I think it won't be long.”

    He added that the permit would need the director general's signature.

    Mr Partogi Pangaribuan is the Indonesian trade ministry's director general for foreign trade and Mr Sumedi said Mr Pangaribuan is due to retire on Aug. 1 and be replaced soon after.

    Arizona-based Freeport, which runs one of the biggest copper mines in Papua, reached an agreement with the Indonesian government to export 775,000 tonnes of copper over the next six months on Monday, after proving sufficient progress on the construction of a second domestic smelter.
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    Indonesia's Timah says rule delays to halt tin exports until mid-Aug

    Indonesia's PT Timah will be unable to export tin for much of August due to bureaucratic delays in the implementation of new rules for shipments, a senior official at the country's top tin miner said on Thursday.

    Indonesia, the world's top exporter of the solder material, is introducing new rules for shipments from Aug. 1, but delays in the issuing of export documents by the mines ministry could impede all exports.

    "Earliest mid-August or latest by end of August," Corporate Secretary Agung Nugroho told Reuters in a text when asked when Timah would be able to make shipments next month.

    A new license that will track export volumes for individual companies was still to be issued by the mines ministry, said Nugroho, adding that it would likely be completed this week but then take a month to be rolled out.

    Indonesia is tightening its rules for tin shipments in a fresh bid to crack down on environmental damage and smuggling, and to enforce payment of royalties and taxes on shipments.

    The Southeast Asian country is concerned about the scale of illegal tin mining and smuggling, while green groups and electronics firms have expressed worries over the environmental damage it can cause.

    The new government rules, which were first announced in May, also include the need for tin producers to hold "clean and clear" (CnC) certification from Nov. 1 to show that the tin ore they use originates from government-certified mines.

    Government guidance for tin exporters was unclear, Jabin Sufianto, president of the Indonesian Association of Tin Exporters (AETI) told Reuters, adding that discrepancies were found in separate trade and mines ministry tin decrees relating to the new rules.

    "This will cause all exporters to not be able to export (from) Aug. 1," Sufianto said about the delays, adding that his group had held two meetings with the mines ministry to discuss the matter.

    Coal and Minerals Director General Bambang Gatot told reporters this week that the mines ministry was processing the registration of tin exporters "one by one", but said he was unable to say how many had been completed.

    Benchmark tin hit $16,345 a tonne earlier this week, its highest since May 6 and a gain of more than 20 percent since the contract hit a six-year low of $13,365 on June 30.

    Given that tin suppliers have been ramping up exports ahead of the change in rules, any impact on supply was likely to be minimal for a disruption lasting less than three months, said a Shanghai based trader.
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    Antofagasta cuts annual copper output forecast on Antucoya project delay

    Chilean miner Antofagasta cut is annual copper output forecast for the second time this year on Wednesday due to a delay in the start-up of its Antucoya project, as it posted a double-digit-percentage decline in half-year copper production.

    The London-listed miner, which has been hurt by a steep fall in prices, declining ore grades, unfavourable weather and environmental protests, produced 303,400 tonnes of copper in the first half, down 12.9 percent from a year earlier and below analysts' forecasts.

    It cut its full-year copper production guidance to 665,000 from 695,000 tonnes due to the delayed commissioning and subsequent ramp-up of its Antucoya project stemming from a technical issue.

    "Construction of Antucoya was completed on budget but we have experienced some commissioning issues on the crusher circuit which means we now expect first production to be delayed until the end of the first quarter," the company said in a statement.

    Torrential downpours in a desert region of northern Chile and environmental protests hit its first-quarter output, forcing it to reduce its annual production forecast by about 15,000 tonnes earlier this year.

    The firm is focusing on its $1.9 billion Antucoya greenfield project and other brownfield expansions to cope with a fall in production due to aging mines and declining copper grades.
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    Southern Copper profit drops in first half on copper price slump

    Southern Copper Corp said on Tuesday its net income dropped 12.6 percent drop in the first half of the year due to the slump in global metal prices, but it said it was well-positioned to weather the "temporary downturn".

    The global mining company controlled by Grupo Mexico said first-half net income was $577.1 million compared with $660.6 million in the first half of last year.

    "Even though the current economic scenario is affecting metal prices, we believe this is a temporary headwind that will eventually fade, making the strong copper market fundamentals prevail," said German Larrea, chairman of the Southern Copper board and Grupo Mexico chief executive officer.

    Sales fell 6.5 percent to $2.658 billion compared with the same period in 2014 as a higher sales volume was unable to offset lower prices.

    Output rose 8.6 percent to 356,701 tonnes, the company said.

    Peru is the world's third largest producer of the red metal and its production of copper, gold, and silver will likely rise by 13 percent this year, the country's mines minister told Reuters last month. Zinc is set to rise 18 percent.

    Southern Copper said its earnings before interest, taxes, depreciation and amortization declined 13.3 percent to $1.193 billion in the first half of 2015.

    "We believe that Southern Copper s excellent reserve base, low cash cost, conservative capital structure and growth program, makes us the industry s best prepared company to weather this temporary downturn in metal prices," said Larrea.

    The company operates mines in Mexico and Peru, where it is on track to expand its Toquepala mine but has faced delays in rolling out its Tia Maria project amid protests.

    Southern Copper said last month it hoped to reach an agreement with protestors in time to begin construction of the planned $1.4 billion mine before the end of 2015.

    Mining conflicts in recent years have held up billions of dollars worth of investment in which is expected to contribute a significant amount to future global supplies.
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    OK Tedi PNG copper mine output stalled by low river water

    OK Tedi Mining Limited is preparing to temporarily shut down its copper mine in Papua New Guinea because dry weather is making operations difficult, the company said in a statement.

    "River traffic on the Fly River into and out Ok Tedi's main river port at Kiunga has been unreliable for some weeks due to low water levels," state-owned OK Tedi Mining said.

    "Transport of copper concentrate product to Port Moresby for on-shipment has also been unreliable creating uncertainty with regard to cash inflows necessary to sustain operation."

    Analysts say the mine produced about 76,000 tonnes of copper last year.

    The company added that the low river flow also affected operation of the Ok Menga power station, which is the main source of power for its operations.

    "Concurrent with the planned stand down of the workforce due to the dry weather event, the permanent workforce number of expatriates will be reduced by 30 percent and nationals by 15 percent," it said.

    "These changes are essential to help position OTML to better cope with a low commodity price environment on resumption of operations."
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    Glencore CDS surges too

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    Does Teck have a problem?

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    Indonesia, Freeport agree 6-month export permit extension

    Indonesia and Freeport-McMoRan reached a deal on Monday that will allow the U.S. mining giant to export up to 775,000 tonnes of copper over the next six months.

    The agreement is a relief for the Phoenix, Arizona-based company, which saw its stock sink last week due to uncertainty over its mining contract at the Indonesian mine in West Papua.

    “Freeport principally has fulfilled the requirements, so tomorrow the government can issue export approval for the next six months,” Coal and Minerals Director General Bambang Gatot told reporters.

    As part of the deal, the company agreed to deposit the last $20 million installment into an escrow account for the building of a second copper smelting facility.

    A Freeport official said the company expected copper shipments from one of the world’s largest copper mines to take place this weekend.

    The government may also lower Freeport’s export tax to 5 percent from 7.5 percent, as it progresses in building smelters in the Southeast Asian nation.

    The two sides also continue to negotiate terms of a contract or license that could extend to 2041.

    A current contract of work expires in 2021, but by law in Indonesia they cannot extend this contract until 2019 at the soonest.

    Contract certainty is crucial, Freeport has said, because it will spend $15 billion on an underground expansion at its Grasberg copper and gold mine, and must commit to a new smelter, estimated at $2 billion-$2.5 billion.
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    First Quantum says Zambia power cuts hit mining operations

    Canadian-based copper miner, First Quantum Minerals, said that power cuts imposed by Zambia's state-run electricity company have hit its mining operations in the north western province of the country.

    "Facilities at the Kansanshi mine, smelter and the Sentinel project are currently operating at reduced capacities while various options to alleviate the effect on production are being evaluated," it said in a statement released on Monday.

    First Quantum said it was unable to provide estimates on how long the power supply reduction would last or its impact on production.

    Zambia, Africa's No.2 copper producer, said earlier in July that it planned to cut power supplies to mines by up to 30 percent after water levels at its hydro-electric projects dropped due to drought, sources told Reuters.

    The country's power provider ZESCO has contracted independent power producers to procure more electricity by the end of 2015, First Quantum said.

    First Quantum's Zambian smelter, which ramped up in February, is expected to produce over 300,000 tonnes of copper metal from around 1.2 million tonnes of concentrate a year, when it reaches full operation.

    Other foreign companies running mines in the southern African nation include Glencore, Barrick Gold Corp and Vedanta Resources
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    Chile copper union vows to intensify strike after miner shot dead

    A Chilean mining contract worker was shot dead by police on Friday during a protest against state-owned copper company Codelco, prompting union leaders to say a four-day strike would intensify.

    Contract workers with the Confederation of Copper Workers, or CTC, have blocked roads at Codelco projects around the country demanding the right to negotiate a benefits package similar to that offered to direct Codelco employees.

    The CTC did not elaborate on how it would escalate the labor dispute, which has already forced the suspension of operations at Codelco's Salvador mine. Last year the mine produced 54,000 tonnes, or just under 1 percent of the company's total copper output.

    "The conflict obviously will keep going and, in fact, it will intensify. We're not going to let the death of our colleague be in vain," CTC President Manuel Ahumada said by telephone.

    A union representing Codelco's direct employees called on the copper company to draw up a proposal to improve the conditions of contract miners, but stopped short of calling on its members to join the strike.

    The CTC said contractor Nelson Quichillao had been shot while protesting near Codelco's Salvador mine in northern Chile.

    Codelco reported that four other mines targeted by striking workers continued normal operations.

    On Thursday the company said the halt at Salvador was costing it about $500,000 daily and that equipment had been damaged by striking workers.

    Codelco said this week that increasing benefits for contract workers was "not compatible" with current market conditions. The price of copper is at multiyear lows, dragged down by worries over demand in key buyer China.
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    Freeport: Indonesian copper mine uncertainty rattles market

    Shares of diversified miner and energy producer Freeport-McMoRan sank for a second session on Friday, as uncertainty around Indonesian mining contracts added to worries about spending plans, high debt and falling commodity prices.

    The Phoenix, Arizona-based company has assured analysts it fully expects the Indonesian government to issue a six-month export renewal on Saturday, when the current permit expires.

    According to the Indonesian government, however, the firm still needs to show its commitment to building a second copper smelting facility by setting aside an estimated $80 million into an escrow account.

    "They haven't completed the terms," Coal and Minerals director general Bambang Gatot told reporters late on Friday, adding that his next meeting with executives is on Monday. It was not immediately clear if Freeport's exports would be stopped.

    "It depends what happens in the field," Gatot said. "The port may still allow them."

    Questions also remain surrounding its longer-term contract.

    Freeport, whose chairman is currently in Indonesia for talks with the government, is also negotiating terms of a contract or license that could extend to 2041.

    Contract certainty is crucial, Freeport said, because it will spend $15 billion on an underground expansion at its massive Grasberg copper and gold mine, and must commit to a new smelter, estimated at $2 billion-$2.5 billion.

    "Right now, more than 75 percent of our reserves are going to be produced after 2021,"
    Freeport Chief Executive Richard Adkerson said on a conference call Thursday.

    A current contract of work expires in 2021, but by law in Indonesia they cannot extend this contract until 2019 at the soonest.

    Freeport is looking to raise funds as it eyes a $1.2 billion to $1.6 billion investment to boost energy production.

    Analysts worry there may be a weak appetite for a planned initial public offering of up to 20 percent of Freeport's oil and gas business this autumn.

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    Steel, Iron Ore and Coal

    ArcelorMittal profit falls 21%, maintains full-year target

    ArcelorMittal’s second-quarter profit fell 21% as iron-ore prices slumped and Chinese steel exports rose.

    Earnings before interest, taxes, depreciation and amortization declined to $1.4 billion from $1.76 billion a year earlier, the world’s largest steelmaker said Friday in a statement. The result beat the $1.34 billion average of 12 analyst estimates compiled by Bloomberg.

    The company, based in Luxembourg, maintained its full-year Ebitda forecast of $6 billion to $7 billion.

    ArcelorMittal is fighting to sustain profit on two fronts as prices for iron-ore it mines fell to the lowest in at least six years and record Chinese steel exports pushed prices for the metal lower. The company previously reduced its 2015 profit guidance in May.
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    China sources 84% of H1 iron ore from Australia, Brazil; share seen rising

    China's iron ore demand is falling, but its share of imports from mining giants Australia and Brazil is rising, which is squeezing smaller miners and curbing their supply.

    China imported 453.1 million mt of iron ore in January-June, with 83% of it coming from Australia and Brazil, up from 74% in H1 2014, according to General Administration of Customs data released last week.

    Australia's top three miners Rio Tinto, BHP Billiton and Fortescue Metals Group, as well as top global miner Vale, all announced higher output in April-June.

    "When ore prices fall below $60/dmt level, it is difficult for domestic miners to survive," a Beijing-based trader said.

    "When the price fall below $50/dmt level, it is below the cost curve for many overseas small miners."

    The trader said output from smaller miners has fallen sharply this year. The Platts IODEX CFR China price was assessed at $56.75/dmt Wednesday, up from a record low of $44.50/dmt on July 8.

    Capesize freight rates from Australia to China have increased 15.9% in the same period to $6.20/wmt Wednesday, from $5.35/wmt on July 8.

    "If the price stays below $45/dmt for three months, some big producers may have financial problem not to mention small ones," an international trader said.

    Supply from smaller miners has as a result become less stable, leading some steel mills to prefer buying from the top miners. But others have continued to seek out smaller miners for deals.

    "For the same iron content, non-mainstream ores is $3-$5/dmt cheaper than mainstream ores," said a steel mill source that buys regularly from small miners, adding that the discount applies mostly to low iron content fines used for blending.

    Another steel mill source said most products are currently difficult to source in the spot market except for Pilbara Blend fines from Rio Tinto, and Newman fines and Yandi fines from BHP.
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    China rejects domestic thermal coal for excess trace elements, sulphur or ash

    China’s quality watchdog has rejected a series of domestic thermal coal cargoes that failed the test for trace elements, sulfur or ash, making market participants speculating domestic product may be facing similar quality inspections as for imported coal.

    The General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) has marked 13 cargoes of domestic thermal coal as "unqualified" in the second quarter of this year, accounting for 14.7% of the 87 batches of product inspected.

    With samples from 18 producing provinces including Shanxi, Shaanxi, Inner Mongolia, etc., most of the unqualified cargoes contained excess fluorine, while a few failed in test for ash or sulphur.

    Boasting the advantage of premium quality, China’s large miners such as Shenhua, China coal Energy, Datong Coal and Yitai had no products deemed "not up to the standard".

    These rejected cargoes came from small coal companies in Inner Mongolia, Shaanxi, Jilin, Heilongjiang, Jiangxi, Sichuan and Guizhou including Inner Mongolia-based Wuhai Tianyu Energy, Shaanxi-based Huangling No. 2 Mine, etc.

    This may come as a blow to the bulk of the coal miners in China, which have already been battling sagging demand and competition from imported coal.

    Actually, the quality inspection standard for commercial coal, which was released last September and came into force on January 1, has specified that the requirement should apply to both domestic and imported coal.

    But since the implementation of the standard, market participants appeared to have paid more attention to the trace elements test on imported coal, betting the government would use this standard mainly for curbing imports.

    According to the standard, commercial coal should contain mercury below 0.6μg/g, arsenic below 80μg/g, phosphorus below 0.150%, chlorine below 0.300% and fluorine below 200μg/g.

    The sulphur content of commercial coal should been less than 1.5% for lignite and below 3% for other coal varieties, while the ash content should be below 30% for lignite and 40% for other varieties.
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    JSW Steel gets shareholder approval to raise INR 14,000 crore

    PTI reported that JSW Steel announced that its shareholders have approved company's proposal to raise a total of Rs 14,000 crore through private placement and qualified institutional placement (QIP) route. The firm's shareholders at the Annual General Meeting (AGM) earlier this week approved raising up to Rs 4,000 crore through QIP and Rs 10,000 crore by selling non-convertible debentures (NCDs).

    Both the proposals were through special resolution, JSW Steel said in a BSE filing.

    The fund will be utilised for planned capital expenditure including refinancing of expensive debt and reducing interest costs, among other corporate purposes, JSW had said in its annual report.

    The NCD sale may be carried out in one or more tranches in the current fiscal on a private placement basis.

    The firm said it will be completing its present brownfield expansion to reach 18 million tonnes per annum (mtpa) capacity by the end of financial year 2015-16. It is targeting 40 MTPA capacity by 2025 with significant investment in mineral resources such as iron-ore and coal.
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    Vale overcomes iron ore slump to return to profit in Q2

    Vale SA, the world's biggest iron ore producer, returned to profit in the second quarter, bolstered by higher output and cost cutting and keeping up pressure on Australian rivals in the fight for market share.

    The Brazilian miner overcame a slump in iron ore prices to report a net profit of $1.68 billion for the quarter on Thursday, moving into the black for the first time in a year. The profit was up 17.3 percent from the same quarter last year, and more than four times an average forecast of $408 million by six analysts in a Reuters poll.

    A big part of the improved result was a reduction in cash costs, with Vale lowering its cost of producing a tonne of iron ore to $15.8 per tonne, from $18.3 per tonne in the first quarter. With the iron ore price .IO62-CNI=SI about half what it was a year ago, mining companies have focused their attention on reducing costs in order to survive the slump.

    For Vale, one of the lowest-cost producers of the steelmaking raw material alongside Australia's Rio Tinto and BHP Billiton, the result is a welcome boost after a series of losses.

    The profit announcement comes a week after the Rio de Janeiro-based company announced record mine output for the second quarter.

    Crucially, Vale said its realized price, a measure of how much it earned on ore sales, rose to $50.6 per tonne, up from $46 per tonne in the first quarter.

    But as the Brazilian miner battles to increase margins, Vale said iron ore production next year will likely be less than the 376 million tonnes it had previously forecast.

    "Probably we'll be between the guidance we gave... and the 340 million tonnes we are producing in 2015," iron ore chief Peter Poppinga told analysts on a conference call, adding the company was phasing out higher-cost production.

    Attached Files
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    Shanxi H1 coking coal output down 5.9pct on yr

    North China’ leading coal-producing province of Shanxi produced 255 million tonnes of coking coal in the first half of the year, down 5.9% on year, showed the latest data from industry portal China Coal Resource (CCR).

    That accounted for 42.19% of China’s total output, the first year-on-year decline since 2011, mainly due to sluggish demand from downstream coke and steel sectors.

    Shanxi’s raw coking coal output in June hit the highest of the year to 49.54 million tonnes, down 3.34% year on year but up 9.69% from May – the second consecutive monthly increase, showed the CCR data.

    In June, Shanxi’s washed coking coal output stood at 18.97 million tonnes, up 0.26% on year and up 5.68% on month; total output over January-June fell 3.57% from the year before to 96.5 million tonnes, said the CCR.

    Over January-June, China’s coking coal consumption reached 266 million tonnes, down 3.36% on year, said the CCR.

    On July 29, the CCI Met Shanxi Premium Low Vol index assessed ex-washplant price of Liulin Premium low-sulphur primary coking coal at 640 yuan/t with VAT, unchanged on week; while CCI Met Shanxi High Sulfur Low Vol index was 470 yuan/t, down 5 yuan/t from the previous week.
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    Cliffs Natural posts Q2 profit on lower costs

    Iron ore and coal producer Cliffs Natural Resources Inc reported a second-quarter profit, compared with a year-ago loss, on lower costs and said it expects "improved" profitability in the second half of the year.

    The company's shares were up 5 percent at $3.18 before the bell.

    "As actions are taken to combat the influence of unfairly-traded steel in the United States, we expect to see improved industry operating conditions and profitability in the second half of this year," Chief Executive Lourenco Goncalves said in a statement.

    U.S. steel companies in June had filed a complaint with the U.S. government over cheaper imports of corrosion-resistant steel from China, India, Italy, South Korea and Taiwan, kicking off a process that could end in import duties.

    Cliffs has taken a hit from weak prices for iron ore, caused by excess supply from major iron ore miners such as Vale SA , Rio Tinto Plc and BHP Billiton Plc and a drop in demand from steel mills.

    Cliffs cut its 2015 sales volume forecast for its U.S. iron ore operations by 1.5 million tons to 19 million tons of iron ore pellets on Wednesday, blaming a supply glut created by heavy steel imports.

    The company its cost of goods sold fell nearly 22 percent to $440.8 million in the second quarter ended June 30.

    The company said net profit attributable to shareholders was $60.2 million, or 39 cents per share, compared with a loss of $1.9 million, or 2 cents per share, a year earlier.

    The Cleveland, Ohio-based company's revenue fell 33.4 percent to $498.1 million.
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    Iron’s Back in a Bull Market -- Just Don’t Expect It to Last

    Call it the world’s most unlikely bull market. Iron ore advanced for a third day, taking gains to 25 percent from a six-year low even as the world’s top shipbroker predicted renewed losses.

    Ore with 62 percent content delivered to Qingdao climbed 4.6 percent to $55.89 a dry metric ton on Wednesday, according to Metal Bulletin Ltd. That was the biggest increase since July 9. While the gain of more than 20 percent from the July 8 low met the common definition of a bull market, prices remain 22 percent lower this year.

    “The rebound will be short-term and lower prices are expected, we still have an oversupply market,” Kelly Teoh, an iron ore derivatives broker at Clarkson Plc in Singapore, said on Wednesday before the price data. “It seemed there’s still some tightness in the physical spot cargoes.”

    Iron ore’s been whipsawed this year, tumbling to a then six-year low in April on rising supply and stalling demand growth, before rebounding into a bull market later the same month. Since then, it’s shifted back into bear-market territory, set a new low, and rallied again. Banks including Goldman Sachs Group Inc. forecast further losses, with Citigroup Inc. saying last week that bets on iron ore declines were its top commodity trade as raw materials traded at the lowest level since 2002.

    “I see around $50 in the second half as a reasonable average but expect volatility,” said Daniel Morgan, an analyst at UBS Group AG in Sydney. “The entry of Roy Hill slated for October will be a catalyst to watch,” he said, referring to the mine backed by Australian billionaire Gina Rinehart that’s scheduled to begin shipments before year-end.

    Stand Out

    Iron ore’s latest rally stands out amid losses in raw materials tracked by the Bloomberg Commodity Index, which fell 11 percent this year. Oil in New York entered a bear market last week, while copper in London fell to a six-year low on Monday.

    Gains for iron ore contracts on the Dalian Commodity Exchange preceded the advance in the Metal Bulletin price, which is issued once a day. Futures in China advanced 2.6 percent to close at 369 yuan ($59.43) a ton. Prices are up 5.9 percent from this year’s closing low on July 24.

    “Speculation steel mills are purchasing iron ore at ports has supported futures and physical markets,” said Huang Huiwen, a Shanghai-based analyst at Shanghai Cifco Futures Co.

    While maintaining its bearish outlook over the rest of 2015 and into next year, Goldman Sachs highlighted what it said were disappointing exports from Australia this month, according to a report on Monday. Scheduled maintenance at some terminals may be affecting shipments, analyst Christian Lelong wrote. The bank sees lower prices for each quarter through to June 2016.

    Port stockpiles in China will probably extend a rebound as supply rises, according to Clarksons Platou Securities Inc. analyst Jeremy Sussman, who predicted a drop to $35 a ton this half before Wednesday’s gain. The inventories, at 82.5 million tons last week, may climb to 95 million tons by September, said Australia & New Zealand Banking Group Ltd.
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    U.S. Steel posts wider loss, revenue decline

    U.S. Steel Corp. posted a wider loss and reported a 34% revenue decline as the steel market remained "significantly challenging."

    The company said cost-cutting efforts have partly offset depressed volumes and low prices in tubular and flat-rolled markets and the effect of imports.

    U.S. Steel expects market conditions to improve in the second half of the year as supply chain inventories rebalance, primarily in flat-rolled markets.

    The company reported a loss of $261 million, or $1.79 a share, compared with a loss of $18 million, or 12 cents a share, a year earlier.

    The latest quarter included a write-down of 93 cents a share of its retained interest in U.S. Steel Canada, which applied for bankruptcy protection in late 2014.

    The loss excluding items was 79 cents a share.

    Net sales fell to $2.9 billion from $4.4 billion.

    Analysts polled by Thomson Reuters projected a loss of 65 cents a share on revenue of $3.04 billion.

    In April, U.S. Steel lowered its pretax 2015 earnings forecast, citing "massive" amounts of imports, low oil prices and excess inventories. The company said at the time it expected adjusted earnings before interest and taxes of between $115 million and $315 million, from a prior projection of between $550 million and $850 million. The company said Tuesday it continues to expect results within this range.

    Across the board, steelmakers in the U.S. are reeling as prices have dropped to their lowest levels since the 2009 financial crisis.

    A sharp decline in oil prices has led to a pullback by energy producers and lower demand for steel pipe for drilling.

    Under Chief Executive Mario Longhi, who took over in 2013, U.S. Steel has been aggressive about laying off workers and cutting costs.
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    EU backs dumping duties on stainless steel from China, Taiwan

    EU members have backed the imposition of anti-dumping duties on imports of cold-rolled flat stainless steel from China and Taiwan, according to sources familiar with the decision.

    The European Union will charge tariffs of between 24.3 and 25.3 percent for sheet, coil and strip imports from China and of 6.8 percent for Taiwanese product, following a complaint lodged in May 2014 by the European steel producers association Eurofer.

    The European Commission launched its investigation in June 2014, determining that the provisional duties should apply in March.

    Those provisional duties are of 24.2-25.2 percent for China and of between 10.9 and 12.0 percent for Taiwan.

    Definitive measures, which are typically in place for five years, were put to a vote by the EU's 28 member states last week, with a sizeable majority supporting them. The Commission has until Sept. 25. to impose them.

    Eurofer has said China and Taiwan shipped 620 million euros ($686 million) of cold-rolled stainless steel into the EU in 2013, some 17 percent of the overall market, and were guilty of dumping, or selling at unfairly low prices.

    Imports from the two countries more than tripled from 2010 to 2014, Eurofer said, because of overcapacity there rather than market growth in Europe.

    Analysts have said the tariffs would probably not end imports from China, but were high enough to have a considerable impact.

    The companies affected include China's Shanxi Taigang Stainless Steel Co, Baosteel Stainless Steel Co and Taiwanese manufacturers Tang Eng Iron Works Co, Yieh United Steel Corp (Yusco).
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    Peabody turns to cost cuts as coal prices slump

    Peabody Energy Corp said it was suspending its quarterly dividend, reducing production of steel-making coal and cutting jobs to stem losses as coal prices remain stubbornly low.

    The coal miner also reported a much bigger second-quarter loss on Tuesday as it took $900.8 million impairment charges.

    Prices for thermal coal used in power production have slumped as utilities switch to cheaper and cleaner natural gas. Prices for metallurgical, or steel-making, coal have also dropped due to weak demand from Chinese steel mills.

    Consol Energy Inc reported a much bigger quarterly loss earlier on Tuesday and said it was delaying a planned initial public offering of a unit holding steel-making coal assets due to weak prices.

    Peabody said it was cutting 550 jobs, including 300 across mines in Australia and 250 corporate and regional support positions, and closing some offices in Wyoming. The company had 8,300 employees as of Dec. 31.

    The miner said it was lowering annual production of steel-making coal by about 3 million tons. Peabody produced nearly 18 million tons of metallurgical coal in Australia in 2014.

    The company, which gets more than a third of its total revenue from mining operations in Australia, cut its metallurgical coal sales target for 2015 by about 1 million tons.

    Peabody also slashed its total sales volumes forecast for the year to 225-245 million tons from 235-255 million tons.

    The miner, which slashed its dividend by 97 percent in January, said it would suspend its quarterly dividend payout.

    It also said its board had authorized a reverse stock split, subject to shareholder approval.

    Net loss attributable to Peabody's common shareholders widened to $1.04 billion, or $3.84 per share, in the quarter ended June 30 from $73.3 million, or 27 cents per share, a year earlier.

    Revenue fell nearly 24 percent to $1.34 billion.
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    China to punish coal mines in illegal construction or production

    China has vowed to "punish" coal mines in illegal construction or production, instead of the previous milder wording of "curb", in a bid to accelerate rebalance of the market supply and demand, 12 Chinese ministries concertedly said in a statement on July 27.

    New coal mines or mines in capacity expansion without approval, mines in production beyond capacity and mines under great safety risk will fall into the category, the statement said.

    All the coal mines under construction but in lack of official approval will be ordered to stop for rectification within a prescribed period of time.

    For mines already built without approval but qualified to get through relevant formalities, the approving authority will ask these mines to shut backward capacity in proportion to the new capacity.

    The government will set stricter conditions for illegal mines with regard to project approval, outdated capacity elimination target, power supply, governmental fund support, rail transport quota, etc.

    In early June, China pledged to curb illegal coal production, while the focus seemed leaning to requirement on power companies, of which power generation quota would be reduced if they buy thermal coal from mines under illegal production.
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    China H1 large and medium steel mills loss 21.68 bln yuan, CISA

    China’s large and medium-sized steel mills posted a total loss of 21.68 billion yuan ($3.54 billion) in core businesses in the first half of the year, compared with a loss of 4.9 billion yuan a year ago, said the China Iron and Steel Association (CISA) on July 27.

    During the first half of the year, total crude steel output of China dropped 1.3% on year to 409.97 million tonnes, compared with a 3% growth from the same period last year, the first decline over the past 20 year, the CISA said.

    Meanwhile, China’s apparent crude steel consumption dropped 4.71% during the same period, compared with a 3.2% decline in 2014 and a 7.1% growth in 2013, signaling that steel consumption may have entered the peak period, said the CISA.

    China’s steel sector is suffering from falling demand from traditional steel guzzlers, persisting low prices and increased trade friction caused by high exports of steel products, said the CISA.
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    Rio's Mozambique coal assets eyes expansion

    Image Source: Rio TintoReuters reported that a year after Rio Tinto pulled the plug on its Mozambique coal venture, the Indian company that bought the assets is planning an ambitious expansion.

    Mr Nirmal Chandra Jha director of ICVL's Mozambique said that the Benga mine acquired from Rio by International Coal Ventures Private Limited (ICVL) has a current production capacity of about 5.3 million tonnes per year but its target is 13 million tonnes in five years' time.

    Mr Jha, speaking at a Mozambique coal conference, said the mine is currently producing about 4 million tonnes per year, less than half of which is export quality. Any expansion will hinge on upgrades to Mozambique's rail system, which can only handle about 6 million tonnes per year.

    He said that "We hope that in five years, the infrastructure will also improve. That's a big hope."

    Infrastructure challenges were a big reason behind Rio's decision to exit Mozambique, which has some of the world's largest untapped sources of coal but is still recovering from a civil war that ended two decades ago.

    The coal assets Rio bought through a USD 4 billion acquisition of Riversdale in 2011 were sold for just USD 50 million to ICVL.

    Depressed prices are an obstacle to investment and expansion in the present environment. But ICVL was set up by the Indian government to acquire and develop coal assets to meet the needs of state-owned firms such as the Steel Authority of India, and so the company has potentially deep sources of finance to tap.
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    First-ever fully laden Valemax discharges iron ore at Chinese port

    Sohar Max, the first-ever fully laden Valemax, discharged iron ore at North China's Dongjiakou port over the weekend, according to local media reports Monday.

    The vessel, of 400,000 dwt, had a draft of 23 meters when she entered the port indicating she was fully laden at the time, according to Platts' vessel tracking tool, cFlow.

    She loaded iron ore from Ponta Da Madeira port in Brazil from June 2-4, and headed directly to Dongjiakou port, without calling at Vale's transshipment hubs in Philippines' Subic Bay or Malaysia's Teluk Rubiah.

    Up to February this year, fully-laden Valemaxes were banned from docking into Chinese ports by the Chinese officials citing safety concerns.

    The ban was lifted by the Ministry of Transport when an amendment was made to the Design Code of General Layout for Sea Ports, allowing the enlistment of dry bulk cargo ships of 400,000 dwt.
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    China's coal output down 5.8% to 1.8 bln tons in H1

    China's coal output delivered a year on year drop of 5.8% to 1.79 billion tons in the first half of this year, according to figures released by the National Development and Reform Commission (NDRC).

    In the first half of this year, China's coal imports plunged 37.5% year on year to 99.87 million tons.

    As of the end of Jun, coal storage at major ports of China shrank 16.4% to 39.67 million tons. Meanwhile, China's national coal storage at major power plants stands at 65.41 million tons and will be available for 22 days by the end of Jun.

    In the Jan-Jun period, total electricity consumption rose a meager of 1.3% to 2,662.4 terawatt hours, 4.1% lower than in the same period of 2014 and hit the lowest level since 1980.
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    Mozambique port accident deals blow to Vale coal project -sources

    A coal stacker has collapsed at the Mozambique port of Nacala, dealing a blow to Brazilian miner Vale's effort to start coal shipments from the African nation in the third quarter, sources told Reuters on Monday.

    The giant piece of machinery, which is used to handle coal and other bulk materials, buckled last week, according to a mining industry source with knowledge of the situation.

    "The contractors are investigating and an official report is expected within a couple of weeks," the source said, adding that no one was hurt in the accident.

    Another source said it could take months to fix the equipment.

    In an emailed statement Vale confirmed that the coal stacker, which was in the final stages of construction, collapsed last week. A team is studying the cause of the accident, the company said.

    Vale is reliant on the port and connecting railway, together known as the Nacala Corridor, to reach capacity at its Moatize coal mine in northwest Mozambique.

    Vale expects Moatize's production to reach 11 million tonnes of coal per year by mid-2016 and 22 million tonnes by 2017. Current output is around 7 million tonnes.

    A third source said Vale had been experiencing problems with its wash plant at the mine site, an issue that could see it miss its production target for this year. In its statement Vale said the outage was due to scheduled maintenance and that processes were working normally.

    Vale's Moatize project has been beset by logistical problems, with the difficulties in building and expanding the Nacala railway and port holding back production increases at the mine.

    The rail line runs for 900 km (560 miles) through land-locked Malawi to the port of Nacala on the Indian Ocean. Vale had originally said it expected to ship coal from the new port in the first quarter of 2015.

    Last December, it sold a stake in the project to Japanese trader Mitsui & Co Ltd in order to share the cost of getting it up and running. Mitsui bought a stake of just under 15 percent in the mine and 35 percent in the rail and port.
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    China H1 coal industry profit down 67pct

    China’s coal mining and washing industry witnessed a year-on-year slump of 67% to 20.04 billion yuan ($3.27 billion) over January-June, showed data from the National Bureau of Statistics (NBS) on July 27.

    During the same period, the coal mining and washing industry realized revenue of 1.26 trillion yuan, down 13% from a year ago.

    Total profit of the country’s entire mining industry registered a drop of 58.8% on year to 139.6 billion yuan in the first half of the year, data showed.

    Meanwhile, profit in ferrous and non-ferrous metal mining industry dipped 47.5% and 17.4% on year to 18.64 billion and 21.39 billion yuan, respectively.

    However, the power and heat generation industry saw its profit climb 17.7% from the year before to 233.88 billion yuan, attributed largely to the slump in coal prices.
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    EU tries again for compromise on deal to phase out coal aid

    EU bosses are pushing to resolve a clash between industry and environmental policy with a new strategy to phase out funding to export coal technology to developing nations, ahead of a meeting of leading economic powers on the issue.

    The European Commission, the EU executive, urges tougher rules on when subsidies, known as coal export credits, can be used in a paper seen by Reuters, ahead of interim talks this week.

    Political pressure is growing to reach agreement on restricting the coal subsidies before United Nations climate change talks in Paris at the end of the year. But opposition is also strong.

    Negotiations at the Paris-based Organisation for Economic Cooperation and Development (OECD) in June ended in statemate as Japan, the biggest user of export credits that help companies such as Toshiba Corp to sell coal plant and mining technology abroad, led resistance.

    Another OECD meeting on the issue is scheduled for September.

    Experts from EU member states will meanwhile meet in Brussels on Wednesday to debate their position to take to the OECD talks, EU sources said.

    An unpublished paper from the European Commission says the proposal from the chairman of the OECD export committee, which failed to produce a deal in June, was "in principle" balanced, but the EU should strengthen it.

    Changes could include shortening the time period to repay coal export credit preferential loans and reducing the number of countries that could benefit.

    The World Bank, for instance, says there is an argument for exporting coal technology to the very poorest countries that have no other fuel options, while the coal industry says export credits ensure cleaner, more efficient technology is used than would otherwise be the case.

    Environment campaigners disagree and want an early end to all fossil fuel subsidies, especially for coal.

    The European Union, which accounts for around two-thirds of the OECD grouping of major economies, could have a big impact on negotiations. Environment campaigners, however, have voiced concern it might fail to agree a stronger position.

    Despite EU aspirations to be at the helm of any U.N. deal on limiting global warming, some in European industry also oppose an abrupt end to coal export credits and say proposed requirements on carbon capture and storage (CCS) to neutralise emissions have to be realistic as the technology is still in its infancy.

    The Commission paper raises the possibility of allowing coal export credits for plants suitable for CCS, a step back from a previous suggestion they can only be permitted for plants with operational CCS.
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    India to sell high-grade iron pellets to Iran as ties strengthen

    An Indian state company has agreed to sell high-quality iron ore pellets to Iran, its chairman told Reuters, in what could be a $200 million annual deal that signifies expanding business ties between the countries as sanctions against Tehran ease.

    India had remained one of Iran's top oil buyers despite trade curbs over Iran's nuclear programme and the two countries are now exploring partnerships worth billions of dollars in ports, steel, aluminium and power.

    Iran and India started talks on the pellet deal even before the United States, European Union and United Nations earlier this month agreed to lift sanctions on Iran, in exchange for Tehran agreeing to long-term curbs on its nuclear programme.

    KIOCL Ltd, owned by India's steel ministry, could sell as much as 2 million tonnes of pellets to Iran to meet substantial local demand, Chairman Malay Chatterjee said.

    Keyvan Ja'fari Tehrani, head of international affairs at the Iranian Iron Ore Producers and Exporters Association, said a final agreement was yet to be struck. But he agreed the demand was there.

    "The production of pellets in Iran is not sufficient," Tehrani said, adding there's a need to import between 7 and 8 million tonnes a year. Iran produced 21 million tonnes of iron ore pellets last year while demand reached 28 to 29 million tonnes, he said.

    KIOCL has been in talks with Tehrani as well as Iran's state-owned mines and metal holding company IMIDRO and the Iranian Mines and Mining Industries Development and Renovation Organisation, said Tehrani.

    Negotiations are also going on to bring in 1 million tonnes of low-quality iron ore from Iran, process it at KIOCL's coastal facilities in India, then export pellets to Iran, said Chatterjee.

    A senior steel ministry official confirmed the talks.

    KIOCL will initially buy 80,000 tonnes of high-grade concentrate containing 67 percent iron from Anglo America's Brazil operations by September, convert it into pellets and then sell to Iran for about 500 million rupees ($7.8 million), Chatterjee said.

    Based on that figure, the value of a 2 million tonne deal would be about $200 million.

    Most of Iran's iron ore is low grade and needs to be converted to pellets to be used to make steel. It is targeting annual steel output of 55 million tonnes by 2025, up from about 16 million.
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    Guangdong Jun coal imports down 15.9pct on yr

    Southern China’s economic hub Guangdong province imported 4.17 million tonnes of coal in June, dropping 15.9% year on year but up 30.7% from May -- the tenth consecutive year-on-year drop, according to the latest Chinese customs data.

    Total value of the June imports was $248.15 million, which translates to an average price of $59.51/t, up $5.92/t on month but down $3.8/t on year.

    The rise in the average price of imported coal was mainly due to a jump in the imported tonnage and price of coking coal.

    Customs data showed that Guangdong province imported 0.7 million tonnes of coking coal in June, quintupling the month-ago level and up 7.7% on year. The import price averaged $97.41/t, up $7.7/t from May’s $89.71/t.

    Imports of thermal coal, mainly used for power generation, stood at 3.45 million tonnes in June, up 13.1% month on month and down 23.7% year on year. The average price was calculated at $52.0/t, up $0.2/t on month.

    Of this total, lignite imports accounted for around 40% or 1.38 million tonnes, down 23.8% from May and down 48.9% year on year. About 1.33 million tonnes or 96.4% of the total lignite imports were from Indonesia.

    In the first half of the year, the province imported a total 21.96 million tonnes of coal, down 31.5% year on year, data showed.

    Total thermal coal imports during the same period reached 19.76 million tonnes, down 28.5% on year, with lignite imports at 10.51 million tonnes, down 24.5%; while coking coal imports was 2.14 million tonnes, surging 59.7%.
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    Hebei's Tangshan city tightens environmental regulation, coke and steel targeted

    Hebei-based Tangshan city, which produces nearly half of the province’s steel output, has launched a new round of environmental protection campaign this month, with coke and steel producers being the main targets.

    The campaign aims to accelerate process of desulfuration, denitration and dedusting in industries including coke, steel and cement, the municipal government said in an environment protection action plan.

    The city of Tangshan vows to speed up closure and relocation work of coke plants and steel mills in the surrounding areas, containing Xinxing Coke Plant, Zhenannan Coke Plant, Beigang Steel Mill, etc.

    In 2015, Tangshan aims to reduce 2 million tonnes of coal consumption and eliminate 1,463 sets of coal-fired boilers, the municipal government said in a statement.

    The city also targets to use 0.7 million tonnes of clean coal this year, and push poor-quality coal out of the local market, the statement said.

    By end-July, 104 blast furnaces at 28 steel mills should lower the concentration of particulate matters emission to within 15mg/m³, it said.

    Dust-removing, desulphurization and denitration facilities upgrading will be conducted on converters, sintering machines and heating furnaces before the end of October, affecting operation of over 160 steel companies

    The clearer and stricter requirements on environmental protection may forebode further slide in capacity utilization rates at steel mills in Tangshan, which stay at an average of 80%.

    Lots of local steel mills have already conducted large-scale furnace maintenance and some even closed operation in response to slack demand and widening losses.
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    Shenhua hit by declining Chinese coal demand in H1 2015

    Coal sales at China’s largest coal mining company, Shenhua, dropped by almost a quarter in 1H15.

    The company said that “For the first half of 2015, the coal sales of the company decreased by 24.2% y/y, primarily due to the y/y decrease in domestic coal consumption resulting from certain factors, such as the demand from downstream sectors, climate and heightened press fore environmental protection.”

    Coal sales dropped from 234.6 million t in 1H14 to 177.8 million t in the first six months of this year – a drop of 24.2% - with coal production down from 155 million t to 139.4 million t.
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    ArcelorMittal South Africa steps up push for steel tariff protection

    Africa’s biggest steelmaker, ArcelorMittal South Africa, could shut one its mills if the government does not impose anti-dumping duties on cheap Chinese imports, it said after flagging a dramatically wider half-year loss.

    Shares in the world’s largest producers of steel are trading around their lowest levels in more than a decade amid a global supply glut and the company has said that South Africa’s high labour costs, poor rail infrastructure and slowing economy have forced it to consider cutting back operations and jobs.

    “This company has made losses for five or six years. I don’t have an open chequebook,” Chief Executive Paul O’Flaherty said.

    He confirmed that steel baron Lakshmi Mittal was in South Africa in June, where he briefed President Jacob Zuma’s government on the challenges facing the industry and asked for intervention to counter cheap Chinese imports.

    ArcelorMittal South Africa had applied for tariff protection of between 10 percent and 15 percent and O’Flaherty said the government appeared “sympathetic” to the company’s request.

    The steelmaker said it could be forced to shut its Vereeniging mill on the outskirts of Johannesburg, which employs 1,200 workers.

    “The announcement of a potential closure of Vereeniging is not putting a gun to anybody’s head. It is not a statement. It’s a reality of business,” O’Flaherty said. “When you have got bleeding, you must stop the bleed.”

    In a trading statement released earlier, the company warned of an up to fourteenfold increase to its half-year loss, citing tough trading conditions and higher finance costs. The headline loss for the six months to June 30 is expected to be between 25 cents and 30 cents per share, it said, against a loss of 2 cents per share a year earlier.

    ArcelorMittal rival Evraz Highveld Steel and Vanadium has applied for protection from creditors and plans to reduce its 2,200 workforce by about a half.
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