BP CEO `Very Bearish' on Oil as Storage Tanks Are Filling Up

BP is planning for oil prices to stay low for the first six months of the year and expects surplus production to only start diminishing when storage tanks fill up in the second half.

“We are very bearish for the first half of the year,” Chief Executive Officer Robert Dudley said at the IP Week conference in London Wednesday. “In the second half, every tank and swimming pool in the world is going to fill and fundamentals are going to kick in. The market will start balancing in the second half of this year.”

More than a year into a downturn sparked by OPEC’s decision to keep pumping to defend market share, prices are still 70 percent below their 2014 peak and companies are beset by plunging profits, dividend cuts and mass layoffs. As the oil industry gathers in London for the IP Week conference, bankers, traders and executives are warning that worst of the slump isn’t over. Crude could fall “into the teens,” according to Goldman Sachs Group Inc.

Global oil supply exceeds demand by as much as 1.7 million barrels a day, Igor Sechin, CEO of Russia’s largest producer Rosneft OJSC, said at the conference. The imbalance will probably ease by the end of this year and potentially become a supply shortfall of 700,000 barrels a day by the end of 2017, he said.

BP expects to see “a faster tightening” than Rosneft, Dudley said.

http://www.bloomberg.com/news/articles/2016-02-10/bp-ceo-very-bearish-on-oil-as-storage-tanks-are-filling-up

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Plunging oil prices have cost energy-producing companies and countries tens of trillions of dollars worldwide through declines in asset values. The chart tracks the estimated value of proved reserves, based on annual data compiled by the U.S. Energy Information Administration and averages for a Bloomberg oil-price index. Figures for 2015 and 2016 are based on 2014 reserves, the most recent available, and don’t reflect any required cutsbecause of lower prices. Owners of these reserves have suffered “staggering losses” and are reacting “as surely as falling U.S. home prices affected consumer behavior in the last recession,” Millennium Wave Advisors LLC President John Mauldin wrote Saturday in a report.

http://www.bloomberg.com/news/articles/2016-02-10/oil-s-drop-brings-staggering-losses-on-global-reserves-chart

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Asia to Pay Less for Iran Oil in Break From Link to Saudi Prices

Iran is selling its Heavy crude grade for March to buyers in Asia at a deeper discount to Saudi Arabia’s prices for the first time in a decade as it seeks to wrangle market share after international sanctions ended.

National Iranian Oil Co. will offer supplies to Asia at $2.60 a barrel below the average of Oman and Dubai grades for March, according to a company official who asked not to be identified because of internal policy. Iran, whose pricing has tracked Saudi Arabia’s since at least 2006, is giving buyers an additional 10-cent discount next month, according to data compiled by Bloomberg.

The fifth-largest producer in the Organization of Petroleum Exporting Countries is seeking to win back market share after economic sanctions were lifted last month. The Persian Gulf nation has said it will boost exports by 500,000 barrels a day immediately and is preparing to introduce a new heavy grade as early as March. Iran, which was OPEC’s second-biggest producer before more penalties were imposed in 2012, is diverging from its quarterly pricing structure amid weaker demand, according to the NIOC official.

“This is seen as a part of Iran’s method to win back its lost market share,” Will Yun, a commodities analyst at Hyundai Futures Corp. in Seoul, said by phone. “The country will need to have a good portion of its share restored before it can start negotiating with the Saudis and OPEC.”

State-owned Saudi Arabian Oil Co. last week offered a $2.40 a barrel discount on Arab Medium crude for March sales to Asia. Based on the quarterly pricing structure which the Tehran-based company has used previously, Iranian Heavy was expected to sell at $2.50 below the benchmark Oman-Dubai average, 10 cents less than Saudi Arabia’s price for its comparable grade.

National Iranian Oil also gave an additional 10-cent discount on its Forozan Blend to Asia, setting prices at $2.43 below the Oman-Dubai average for March, said the official. The company kept to the quarterly formula for sales of Iranian Light, offering it at 80 cents less than the benchmark.

http://www.bloomberg.com/news/articles/2016-02-11/asia-to-pay-less-for-iran-oil-in-break-from-link-to-saudi-prices

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Qatar Liquefied Gas Co., the world’s biggest producer of liquefied natural gas, signed a 15-year contract to supply Pakistan State Oil Co. with 3.75 million metric tons of fuel annually, the Qatari company said.

The supplier, known as Qatargas, plans to deliver the first cargo in March, the company said Wednesday in an e-mailed statement. Qatargas didn’t disclose the contract’s value. A proposed deal with Qatar for 1.5 million tons of LNG per year was worth $16 billion, Pakistan’s Petroleum Minister Shahid Khaqan Abbasi said during a visit to Doha in November.

Pakistan plans to import as much as 20 million tons of the super-chilled gas annually, enough to feed about 66 percent of Pakistan’s power plants. A fuel shortage has idled half the nation’s generators. A 75 percent drop in LNG prices since 2014 has reduced the cost of the South Asian country’s energy needs.

Qatargas, with annual capacity of 42 million tons, will supply Pakistan State Oil from joint venture plants it operates with ExxonMobil Corp. and Total SA. Pakistan State Oil shares rose 1.7 percent, the most since Feb. 4, to close as the leading gainer by points in Karachi’s benchmark 100 share index.

Talks between Qatargas and Pakistani officials date back to 2012. Pakistan intended to buy 3 million tons of LNG per year, split between long-term and shorter contracts. The country’s state oil company decided to cancel a tender for 60 cargoes of the fuel in January.

http://www.bloomberg.com/news/articles/2016-02-10/qatargas-clinches-15-year-contract-to-supply-lng-to-pakistan

Total SA posted fourth-quarter earnings that beat analyst estimates as rising oil and gas production, higher gasoline and lubricant sales, and profit from refining helped the French company weather a slump in crude prices. The company deepened cost and investment cuts.

Adjusted net income fell 26 percent from a year earlier to $2.08 billion, the company based outside Paris said in a statement Thursday. That exceeded the average $1.77 billion estimate of nine analysts surveyed by Bloomberg. Total reported a net loss of $1.63 billion after writing down the value of assets in Canada and Nigeria, among other projects.

“Upstream production increased by a record 9.4 percent, driven by the startup of nine projects” in 2015, Chief Executive Officer Patrick Pouyanne said in the statement. “Refining & Chemicals was able to fully benefit from good margins thanks to the high availability of its installations.”

The oil producer joins BP Plc and Royal Dutch Shell Plc in cutting operating costs and investments to protect its dividend as a plunge in prices dents earnings. The company said in September the measures will allow it to fund shareholder payouts in 2017 from the cash it generates pumping, refining and selling oil without the need to take on debt, even with crude at $60 a barrel.

Total kept its quarterly dividend unchanged from the third quarter at 61 euro cents a share and offered investors the option of taking the payout in stock discounted by 10 percent in a bid to conserve cash.

Total reiterated a plan to sell $10 billion of assets in the three years through 2017 including $4 billion this year, having already sold $4 billion last year. The company said it will exceed a target to save $3 billion by 2017 compared with its 2014 cost base.

Total will reduce investment to $19 billion in 2016 from $23 billion last year. In September it planned to invest $20 billion to $21 billion in 2016. For 2017, Total repeated a previous forecast to spend $17 billion to $19 billion.

Oil and gas production, which climbed 9.4 percent to 2.35 million barrels of oil equivalent a day last year, will rise by 4 percent this year with increased output from projects such as the Laggan and Tormore gas and condensate fields in the West of Shetland area, the company said.

Total repeated its target to boost production by 5 percent a year in the 2014 to 2019 period.

http://www.bloomberg.com/news/articles/2016-02-11/total-s-quarterly-profit-beats-estimates-on-oil-output-refining

Commenting on the firm’s year-end results, chairman and CEO Patrick Pouyanne said: “Hydrocarbon prices fell sharply in 2015 with Brent decreasing by around 50%. In this context, Total generated adjusted net results of $10.5billion, a decrease of 18% compared to 2014, the best performance among the majors.

“This resilience in a degraded environment demonstrates the effectiveness of the group’s integrated model and the full mobilisation of its teams.”

He said discipline on spending was reinforced in 2015 and the cost reduction allowed the group to save $1.5billion, exceeding the objective of $1.2billion.

Patrick de La Chevardiere, Total’s chief financial officer, said: “For 2015, our initial target for savings was $800million dollars. Then we moved it to $1.2billion, we achieved $1.5billion. There is a lot of fat in our industry.

“We can reduce costs. Contractors can reduce their costs. They can do.”

Total is one of the few companies which has yet to make any redundancies.

De La Chevardiere added: “We wanted to maintain our capacity, our technical skills at a reasonable level.

“We are not hiring any new people at the moment but we would like to maintain our ability to develop new projects in the upstream and in the downstream.

“This is our overall strategy to maintain our capacity.”

When asked if Total had any plans to consolidate like Shell and BG, he said up to 50 potential targets had been presented to him by bankers, but he had rejected them all.

He said: “The worst part of my job is that I meet bankers every day. Every day there is a banker giving me an idea for an acquisition.

“The price of these companies is much higher than what we can justify at let’s say in a $60 per barrel scenario.

He indicated that position would be reviewed if the price was right.

Organic Capex was $23billion a decrease of close to 15% compared to 2014 and upstream production increased by a record 9.4%, driven by the start up of nine projects.

Refining and chemicals was able to fully benefit from good margins due to the high availability of its installations and the marketing and services segment grew strongly with retail networks growing by 6% and lubricants by 3%, according to the firm.

Asset sales of $4billion were signed in line with the $10billion programme planned for 2015-2017.

At the same time, Total was able to prepare its future with a reserve replacement of 107%.

Gearing at year-end decreased to 28% as a result of the group’s financial strategy, designed to maintain a strong balance sheet through the cycle.

Mr Pouyanne said the results confirmed the success of the group’s strategy to further decrease its breakeven and capitalise on its market position.”

https://www.energyvoice.com/oilandgas/101394/total-pulls-off-best-financial-performance-of-all-the-majors/

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Eni SpA, Italy’s largest oil producer, is in the early stages of exploring a sale of gas and power retail assets as part of plans to reduce debt, according to people familiar with the matter.

The business, which provides gas and power to households in Italy, could fetch as much as 2 billion euros ($2.3 billion), depending on which exact assets are included in the carve out, said the people, asking not to be identified because the deliberations are private. The Italian company is discussing the potential divestment with advisers and could still decide against a sale, they said.

If Eni goes ahead with the auction, the business could attract private equity firms and utility companies, the people said.

Eni never comments on market speculation on corporate activities, and in this instance, in particular, any speculation would be premature, according to a e-mailed statement from a spokeswoman for the company.

The company has approved raising 2 billion euros in debt and scrapped its dividend and 6-billion-euro stock buyback plan as it looks for ways to conserve cash. Standard & Poor’s said this month that it may cut the debt rating of a number of major oil and gas companies, including Eni, as the industry adjusts to the collapse in oil prices.

http://www.bloomberg.com/news/articles/2016-02-10/italy-s-eni-said-to-explore-sale-of-gas-and-power-retail-assets

Colombia’s Ecopetrol SA has started turning off the taps at several oil wells across the Andean nation as the cost of production exceeds crude prices, an industry group said.

The state-controlled producer is shutting heavy-oil wells in Colombia’s central Meta province, as well as other locations, said Ruben Lizarralde, executive president of the country’s chamber of oil goods and services, or Campetrol.

The worst crude-market collapse in a generation has left producers worldwide, big and small, short of cash needed to fund drilling, pay dividends and service debts. Oil’s plunge of more than 70 percent since mid-2014 so far hasn’t abated as U.S. supplies and output from the Organization of Petroleum Exporting Countries have risen in past months as producers fight for market share. The Brent benchmark is trading close to $30 a barrel.

“Ecopetrol is closing wells,” Lizarralde said in an interview in Bogota Tuesday. “Why? Because it’s more expensive to produce than $30 a barrel.”

Ecopetrol didn’t reply to several e-mail and phone messages seeking confirmation since Tuesday evening.

Production Target

Colombia will struggle to meet the government’s 2016 oil production target of 944,000 barrels a day if oil prices remain at current lows, Lizarralde said. In addition, oil service companies including Weatherford International PLC are taking machinery to other countries in the region, threatening Colombia’s ability to ramp up production if oil prices rebound.

The average cost of producing a barrel of oil in Colombia is $35.30, the world’s seventh most expensive, Campetrol said in a Jan. 25 statement, based on data from consultants Rystad Energy. Many oil transportation companies in Colombia are charging excessive prices, Lizarralde said.

Production costs at the Rubiales field, operated by Ecopetrol’s partner Pacific Exploration & Production Corp., also exceed oil prices, according to Lizarralde’s estimates. Pacific denied that the costs exceed prices in an e-mailed response to questions.

http://www.bloomberg.com/news/articles/2016-02-10/ecopetrol-shutting-wells-as-costs-surpass-oil-price-group-says

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The insurance industry is becoming the latest casualty of the oil price slump, with postponements and cancellations of energy projects forcing down premium rates and income in a market that was already crowded.

Insurers forecast income could dive by 20 percent or more, possibly forcing some players to quit the energy part of a business that has attracted new entrants hoping for better returns during the era of ultra-low interest rates.

While most energy companies renew their policies in the first half of the year, the effects of the worst oil downturn in decades are already being felt by insurers and reinsurers, who take on a share of the risk in return for part of the premium.

Hannover Re's chief executive Ulrich Wallin used some understatement in describing how the low oil price and resulting cuts in exploration and production projects have diminished demand for insurance protection.

"It's a little bit of a crisis," Wallin told a conference last week. "We will see fierce competition ... on pricing."

Nick Dussuyer, global head of natural resources at Willis Towers Watson, said some of the broker's major clients had significantly reduced their insurance programme limits, "with a corresponding dramatic reduction in premium spend".

"If premium income levels continue to deteriorate, and capacity does not withdraw ... at some stage this portfolio is bound to become unprofitable," he told Reuters.

"It will be interesting to see at this stage which insurers will choose to withdraw and which will try and ride out the storm, anticipating a turning market."

In recent years, high returns in insurance and reinsurance in comparison with government bond yields have attracted new investors, ranging from hedge funds and private equity to pension funds and insurers from newer markets such as China.

This had already driven up competition and put pressure on premiums in the broader insurance industry, even before oil prices began diving in mid-2014.

Insurers are also likely to have further exposure to the oil market via their investments in corporate bonds issued by energy firms, according to ratings agency Fitch.

William Lynch, head of energy at broker Aon, said a potential 20 percent fall in premiums could prove to be a conservative estimate, given the drop in projects being carried out and overall lower rates.

Insurers are already suffering. Beazley said its energy business saw a 17 percent fall in rates in 2015, the strongest downward rating pressure of all its segments.

"Our expectation is it's going to continue with further rate reductions this year," Beazley chief executive Andrew Horton said.

http://www.reuters.com/article/oil-insurance-idUSL8N15N2MN

U.S. shale oil production will double over the next 20 years as drillers that became more efficient amid a slump in oil prices unlock new resources, British energy giant BP said on Wednesday.

In its industry benchmark 2035 Energy Outlook, BP forecast global demand for energy to increase by 34 percent, driven by growth in the world population and economy, with the share of oil declining in favour of gas and renewables.

U.S. shale or tight oil production using fracking technology was a key driver behind global supply growth in recent years. The sector, with relatively expensive production costs, has nevertheless been hard hit by a 70 percent decline in oil prices over the past 18 months to around $30 a barrel.

But in the longer term, shale production is set to grow from around 4 million barrels per day (bpd) today to 8 million bpd in the 2030s, accounting for almost 40 percent of U.S. production, according to the report.

"We see U.S. tight oil falling over the coming years but thereafter tight oil picks up," BP Chief Economist Spencer Dale said.

U.S. onshore production in the lower 48 states has declined by around 500,000 bpd since last spring and is expected to fall further in the near term as the global market readjusts before rebounding, Dale said.

According to the report, "technological innovation and productivity gains have unlocked vast resources of tight oil and shale gas, causing us to revise the outlook for U.S. production successively higher".

Globally, tight oil production will rise by 5.7 million bpd to 10 million bpd but remain primarily concentrated in the United States.

The head of Russian state-run oil company Rosneft, in which BP holds a near 20 percent stake, said on Wednesday he expected U.S. shale oil production to peak by 2020 and decline in the long term.

Dale also said global oil demand, which grew by 1.8 million bpd last year, would continue to grow "strongly" this year albeit at a slower pace.

"The market is responding very clearly to lower oil prices," Dale said.

HIGHER EFFICIENCIES

Fossil fuels, which include oil, gas and coal, will remain the dominant source of energy, accounting for around 80 percent of energy supplies in 2035. Gas remains the fastest-growing fossil fuel, rising by 1.8 percent per year compared to oil's 0.9 percent growth.

Coal is set to be the main casualty of the world's shift towards cleaner forms of energy, as its share in the energy mix is set to drop to an all-time low by 2035.

Renewable sources of energy such as solar and wind are projected to grow at around 6.6 percent per year, increasing their share in the energy mix from 3 percent today to 9 percent.

Yet at the current projection, the world is far from meeting goals set by the United Nations to limit global warming to 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels by the end of the decade.

While gross domestic product should more than double over the period, energy demand will grow by only one third due to higher energy efficiency and changes in economies such as China, which will become less energy-intensive, Dale said.

Much of the demand growth will be driven by an expansion of the global vehicle fleet, which will double by 2035 from around 1.2 billion today to 2.4 billion.

"Unless the global economy grows far more slowly than anybody thinks, you will get material growth in energy demand over the next 20 years," Dale said.

http://www.reuters.com/article/bp-outlook-idUSL8N15P36E

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U.S. crude oil refinery inputs averaged over 15.5 million barrels per day during the week ending February 5, 2016, 105,000 barrels per day less than the previous week’s average. Refineries operated at 86.1% of their operable capacity last week. Gasoline production increased last week, averaging about 9.6 million barrels per day. Distillate fuel production decreased last week, averaging about 4.4 million barrels per day.

U.S. crude oil imports averaged over 7.1 million barrels per day last week, down by 1.1 million barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.7 million barrels per day, 5.0% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 683,000 barrels per day. Distillate fuel imports averaged 201,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.8 million barrels from the previous week. At 502.0 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 1.3 million barrels last week, and are well above the upper limit of the average range. Finished gasoline inventories remained unchanged while blending components inventories increased last week. Distillate fuel inventories increased by 1.3 million barrels last week and are near the upper limit of the average range for this time of year.

Propane/propylene inventories fell 3.3 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories increased by 0.3 million barrels last week. Total products supplied over the last four-week period averaged over 19.8 million barrels per day, up by 0.3% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 8.9 million barrels per day, up by 2.6% from the same period last year. Distillate fuel product supplied averaged 3.6 million barrels per day over the last four weeks, down by 15.8% from the same period last year. Jet fuel product supplied is up 6.8% compared to the same four-week period last year.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 523,000 barrels. The increase brought stockpiles at the hub to a new record.

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

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                                               Last Week   Week Before   Year Before

Domestic Production '000......... 9,186             9,214            9,226

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

With "unusual timing" and at "distressed prices," Reuters reports that Phillips 66 - the major US refiner owned by Warren Buffett - dumped crude oil for immediate delivery into Cushing storage tonight. This sparked heavy selling of the front-month WTI contract (to a $26 handle) and crashed the 1st-2nd month spread to 5 year lows.

It was just last week when we said that Cushing may be about to overflow in the face of an acute crude oil supply glut.

“Even the highly adaptive US storage system appears to be reaching its limits,” we wrote, before plotting Cushing capacity versus inventory levels. We also took a look at the EIA’s latest take on the subject and showed you the following chart which depicts how much higher inventory levels are today versus their five-year averages.

 

 

And now with Reuters reporting on major US refiners dumping crude, sparking speculation that the move reflected advance warning of looming output cuts amid sluggish winter demand and record inventories...

Front-month WTI collapsed to a $26 handle...The unusual sales of excess oil crashed the March/April WTI futures spread... One trader described the market as a "bloodbath."

It was unclear how many barrels one of the largest U.S. independent refiners sold, but three traders confirmed at least two deals traded at negative $2.50 and $2.75 a barrel. Two sources said a second refiner was also looking to offload barrels but transactions were not confirmed.

 These deals drew notice among traders, who said the prices were distressed and the timing unusual... sending the cash-roll to 5 year lows...The so-called cash roll, which allows traders to roll long positions forward, typically trades in the three days following the expiry of the prompt futures contract. The trading period for February-March contracts concluded almost three weeks ago.

 Since then, however, oversupply has pressured refined products prices lower, and now some grades of crude are yielding negative cracking margins, traders say.

 "Midwest margins turned negative after operating expenses last week and forward cracks suggest margins will remain in the doldrums for some time," said Dominic Haywood, an analyst for Energy Aspects in London.

If Phillips 66 does cut refinery runs, it would be the third refiner to capitulate amid record gasoline inventories and negative margins.

Earlier on Wednesday, sources said Delta Air Lines' Monroe Energy refinery near Philadelphia had decided to cut output by 10 percent at its 185,000 barrels per day (bpd) refinery due to economic reasons.

 On Tuesday, sources said that Valero Energy Corp was planning to cut gasoline production at its 180,000 bpd Memphis, Tennessee, refinery by about 25 percent.

U.S. Energy Information Administration data on Wednesday showed inventories at the Cushing, Oklahoma delivery hub hit a record 64.7 million barrels last week - just 8 million barrels shy of its theoretical limit - stoking concerns that tanks may overflow in coming weeks.

And so, with the news that Phillips 66 is dumping in apparent size, it appears, as we detailed previously, that BP's warning that storage tanks will be completely full by the end of H1

"We are very bearish for the first half of the year," Dudley said at the IP Week conference in London Wednesday. "In the second half, every tank and swimming pool in the world is going to fill and fundamentals are going to kick in," he added. "The market will start balancing in the second half of this year.”

May be coming true a lot sooner.

http://www.zerohedge.com/news/2016-02-10/bloodbath-black-gold-buffetts-phillips-66-dumps-oil-cushing-crashes-crude-spreads-5-

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Continental Resources, Inc. today announced proved reserves of 1.23 billion barrels of oil equivalent (Boe) at December 31, 2015, compared with year-end 2014 proved reserves of 1.35 billion Boe. Year-end 2015 proved reserves were 57% crude oil, 87% operated by the Company, and 43% proved developed producing (PDP).

Harold Hamm, Chairman and Chief Executive Officer, commented, "The 9% year-over-year reduction in our proved reserves during 2015, compared with an approximately 50% reduction in crude oil prices, clearly validates the premier quality of Continental's inventory of assets."

Total production for full-year 2015 was 80.9 million barrels of oil equivalent (MMBoe), or 221,700 Boe per day, an increase of 27% compared to full-year 2014. Crude oil accounted for 66% of total 2015 production, or 53.5 million barrels of oil. Natural gas production for the year was 164.5 billion cubic feet.

Continental's year-end 2015 proved reserves had a net present value discounted at 10% (PV-10) of $8.0 billion. The Bakken play in North Dakota and Montana accounted for 663 MMBoe of Continental's year-end 2015 proved reserves, with a PV-10 value of $4.4 billion, or 56% of total proved reserves PV-10. The SCOOP Woodford and SCOOP Springer plays in Oklahoma accounted for 413 MMBoe of Continental's year-end 2015 proved reserves, with a PV-10 value of $2.5 billion, or 31% of total proved reserves PV-10. The Company completed its initial wells in the over-pressured window of the Oklahoma STACK play in the past year.

Proved reserves finding cost was an average $9.87 per Boe for 2015. Production reduced 2015 proved reserves by 81 MMBoe, while drilling activity added 253 MMBoe. The conversion through drilling activity of proved undeveloped assets (PUDs) moved 81 MMBoe from the PUD category to the PDP category.

PDP reserves increased 6% to 521 MMBoe at December 31, 2015, compared with year-end 2014. The Company had 1,860 gross (995 net) PUD locations at year-end 2015, with the Bakken accounting for 1,292 gross (705 net) PUD locations. Included in these PUD reserves are 179 gross operated (125 net) drilled but uncompleted wells (DUCs), representing 91 MMBoe in proved reserves. These DUCs have completion and equipping capital remaining to be invested to produce the additional PUD reserves.

The Company's 2015 price deck for calculating proved reserves, before adjustment for location and quality differentials, was $50.28 per barrel of crude oil and $2.58 per MMBtu for natural gas, compared to the 2014 price deck of $94.99 per barrel for oil and $4.35 per MMBtu for gas.

http://www.prnewswire.com/news-releases/continental-resources-announces-proved-reserves-and-production-for-2015-300218349.html

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In response to tumbling energy markets, the Texas shale explorer scrapped plans to increase outlays for drilling announced early last month, and instead will reduce spending about 9 percent from last year, according to an earnings report Wednesday. The company took a charge of $846 million for the lower value of oil fields and other assets.

The worst crude price collapse in three decades has left producers worldwide short of cash needed to fund drilling, pay dividends and service debts. Oil has fallen more than 70 percent in New York since mid-2014, and the rout has so far shown no signs of abating as U.S. supplies remain near record levels.

Pioneer, which sold new shares last month to raise cash, gave up on plans to boost spending to as much as $2.6 billion, from about $2.2 billion last year, and instead will budget $2 billion for new projects this year.

The drilling will be paid for with cash flow, cash on hand and proceeds leftover from a pipeline sale last year, according to the statement. The company’s cash flow estimate assumes crude will average about $36 a barrel this year. Oil closed at $27.45 a barrel in New York on Wednesday, down 26 percent this year.

Quarterly Loss

A fourth-quarter net loss of $623 million, or $4.17 a share, compared with profit of $431 million, or $2.91, a year earlier, Irving, Texas-based Pioneer said. Excluding one time items, the per-share loss of 18 cents was better than the 34-cent average loss of 38 analyst estimates compiled by Bloomberg.

Despite the spending cut, Pioneer said oil and gas production from its wells will expand by at least 10 percent this year. The statement was released after the close of regular U.S. equity trading. Pioneer has fallen about 29 percent in the past year.

http://www.bloomberg.com/news/articles/2016-02-10/shale-driller-pioneer-natural-writes-down-assets-amid-rout