Most OPEC/non-OPEC deal countries support 9-month extension: Algerian minister

"I think we have a consensus and the majority of countries support the
proposal of Russia and Saudi Arabia," Boutarfa told reporters after talks with his Russian counterpart Alexander Novak in Moscow.

On Monday, Novak and his counterpart from OPEC kingpin Saudi Arabia,
Khalid al-Falih, said they agreed on the need for a nine-month extension of
the agreement, which expires at the end of June.

Boutarfa, who visited Russia after traveling to Iraq last week to discuss
the issue with Iraqi oil minister Jabber al-Luaibi, also reiterated that he
supports the proposal.

The countries participating in the agreement, including OPEC member
Algeria and non-OPEC Russia, are to meet in Vienna on May 24 and 25
to discuss the possible extension of the agreement between OPEC and non-OPEC oil producers to reduce oil production by some 1.8 million b/d from October 2016 levels.

Several African countries have expressed their interest in joining the
agreement of OPEC and non-OPEC countries, Boutarfa reportedly said, while speaking in Moscow.

"There are several African countries that have expressed their support to
the agreements. We'll consider this issue at a meeting in Vienna," he said, as reported by Prime news agency.

On Tuesday, Novak said some three to five new countries could join
the agreement next week, declining to name them.

Boutarfa also expressed satisfaction with the level of compliance with
production cut obligations among participants.

MORE SUPPORT

When asked if he is concerned about Russia fulfilling its obligations,
Boutarfa said: "As for the last month, the conformity is very high. For OPEC it's more than 100% and also you have good conformity from the non-OPEC countries. It's more than 95%," he said.

Russia said it has fully meet its obligation to reduce production by
300,000 b/d by May, with this cut level being achieved in the last days of
April.

The average daily output cut in April was at around 252,000 b/d. Unlike
some OPEC countries, Russia cannot regulate quickly its production and needs some time to achieve the output cut through reduced drilling.

Earlier this week, Kuwaiti oil minister Essam al-Marzouq lent his weight
to a growing consensus over the need to extend the OPEC/non-OPEC output cut deal into next year, offering the state's full support to the extension in a statement released by Kuwait Petroleum Corp Tuesday.

This followed Monday comment by Mohammed al-Rumhy, the oil minister of Oman, a key non-OPEC Arab producer, who also supported the extension.

Before Novak and Falih announced their proposal on Monday, a number of
other countries had expressed their support for the production cut extension, but at the time there was a perception that the possible extension would be for six months only. Among those who expressed their support then were OPEC members Iran, Iraq and Angola.

At the same time, Brazil's Petrobras on Tuesday ruled out joining the
non-OPEC group of countries participating in the deal, with its CEO Pedro
Parente saying in an interview with S&P Global the company is very heavily in debt and its financial situation would not allow it to do that.

Brazil was among a number of oil producers that were invited, but did not
join, the current OPEC-led output cut deal designed to reduce global oil stock levels and support oil prices.

Other countries that turned down an invitation to join the cuts included
Bolivia, Colombia, Turkmenistan, Trinidad and Tobago, Egypt, the Republic of Congo, and Uzbekistan.

https://www.platts.com/latest-news/oil/moscow/most-opecnon-opec-deal-countries-support-9-month-27832525

While many oil producers part of the OPEC/non-OPEC agreement to curb production have already stated their support to the deal extension for another nine months, Kazakhstan is going into next week’s meeting with little enthusiasm for rolling over its production cuts, as it plans to raise output from its major oil fields.

Kazakhstan’s Energy Minister Kanat Bozumbaev said earlier this week that his country would attend the meeting at which OPEC and partners are expected to hammer out the details of the cuts extension.

In the deal from November 30, OPEC pledged to cut 1.2 million bpd of its production, while Azerbaijan, Bahrain, Brunei Darussalam, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Republic of Sudan, and Republic of South Sudan committed to a collective cut of 558,000 bpd.

At that time, Kazakhstan promised to cut output by 20,000 bpd from an average 1.5 million bpd, Radio Free Europe says.

According to Bloomberg, Minister Bozumbaev has said that his country won’t automatically roll over the cuts it is implementing now.

Kazakhstan is seeking to increase production at its giant fields, especially Kashagan, which after years of delays and setbacks, resumed commercial-scale production in October 2016 at a rate of 90,000 bpd. In January, the company operating the field said that it was ramping up production to 180,000 bpd.

Just days before Saudi Arabia and Russia said that they agreed that the production cuts should be extended by nine months to March 2018, Bozumbaev said that Kashagan currently produces 140,000-150,000 bpd, and output would rise to 200,000 bpd in the second half of the year, and possibly to 300,000 bpd at the end of the year.

But the minister noted that it’s important for Kazakhstan that the price of Brent not drop below US$50 per barrel. The country’s budget is based on a US$50 Brent price, and therefore Kazakhstan will discuss the possibilities of an output cut extension.

A recently approved expansion at another field, Tengiz, plans for production to increase by some 260,000 bpd, to around 850,000 bpd.

Given its ambitious plans to grow production, Kazakhstan may be reluctant to sign up to cutting its output for another nine months.

http://oilprice.com/Latest-Energy-News/World-News/Aiming-To-Lift-Production-Kazakhs-May-Not-Play-Along-With-OPEC-Cuts.html

Full tanks and tankers: a stubborn oil glut despite OPEC cuts

After the first OPEC oil production cut in eight years took effect in January, oil traders from Houston to Singapore started emptying millions of barrels of crude from storage tanks.

Investors hailed the drawdowns as the beginning of the end of a two-year supply glut - raising hopes for steadily rising per-barrel prices.

It hasn't worked out that way.

Now, many of those same storage tanks are filling back up or draining more slowly than investors and oil firms had expected, according to global inventory estimates and more than a dozen oil traders and shipping sources who told Reuters about storage in facilities that do not make their oil volumes public.

The stalled drawdowns shed light on the broader challenge facing OPEC - the Organization of the Petroleum Exporting Countries - as it struggles to steer the industry out of the downturn caused by oversupply. With U.S. shale oil production surging, inventories remain stubbornly high and prices appear stuck in the low-$50s per-barrel range.

The market has not strengthened enough to drain many major storage facilities around the globe - which OPEC oil ministers had hoped would be a first step toward rebalancing what has been a buyer's market since late 2014.

Estimated inventories in industrialized nations totaled 3.025 billion barrels at the end of March - about 300 million barrels above the five-year average, according to the International Energy Agency’s latest monthly report.

Preliminary April data indicated stocks would rise further, the IEA said. Crude stocks stood at a record 1.235 billion barrels.

OPEC and other non-OPEC nations - most notably Russia - are now widely expected to extend production cuts for another nine months, through March 2018.

The ongoing struggle to thin supplies has forced economists to cut their oil price forecasts. Bank of America, for instance, last week lowered its 2017 target for Brent crude LCOc1 by $7 a barrel to $54.

During the two-year price war started by OPEC, about half a billion barrels of crude and refined products flowed into storage facilities as oil prices hit lows of less than $30 a barrel in early 2016.

Much of the inventory build-up came as traders started using storage to make easy money on the widening spread between rock-bottom spot oil prices and substantially higher prices for contracts to deliver the oil in future months.

That price spread - a market structure known as contango - allowed traders to profit even after they paid for expensive storage in facilities such as the Louisiana Offshore Oil Port (LOOP) - the only deep-water U.S. oil port and a major conduit for crude imports - or supertankers parked offshore in Singapore.

Although the storage trade has been less profitable since the OPEC production cuts, much of that oil remains in tanks, said Chris Bake, an executive committee member at Vitol, the world's largest independent trader, during an industry conference last week in London.

"This 550 million barrel-plus inventory build of crude and products that started in 2014 is still very much there," he said. "How much is going to come out? That is an ongoing debate among all of us."

"CLOGGED" WITH OIL

From the Malacca Straits in Asia to the ports of Northern Europe and the Gulf of Mexico, drawdowns of global inventories have slowed or even reversed.

In the Amsterdam-Rotterdam-Antwerp (ARA) region – one of the most expensive areas in Europe to store oil and the benchmark pricing point for fuel - crude is starting to flow back into storage because refiners are "clogged" with oil, an industry source handling deals in that region told Reuters.

Refined fuel inventories have also jumped suddenly, with gasoil in tanks in the ARA hub rising to an eight-month high earlier this month, according to Dutch consultancy PJK International. Gasoil includes jet fuel, diesel and heating oil.

At one of the world's largest oil storage facilities - on the shores of Saldanha Bay in South Africa - millions of barrels were sold in recent months, traders told Reuters.

But more cargoes are flowing right back into its tanks, which can hold 45 million barrels, as sellers struggle to find refiners to buy freshly loaded oil, the traders said.

In the Houston region, stored oil stocks touched record levels at the end of March, according to energy information provider Genscape.

The state of inventories appears more mixed in Asia.

In China, the world's second-largest oil consumer behind the United States, commercial crude stocks hit their lowest level in four years in March, according to the government-controlled Xinhua News Agency. But in nearby South Korea, inventories were near a record, according to the Korea National Oil Corp.

SLOW PROGRESS

While global inventories remain bloated, there are some signs that the OPEC cuts have dented supplies.

Recent data from the U.S. Energy Information Administration showed that nationwide stocks started draining in April this year - the first decrease for that month since 1999.

Declining costs for storage is another indication that traders and oil companies are putting less oil in storage than at the height of the price war.

At the largest U.S. storage facility at Cushing, Oklahoma, storage tanks costs about 35 cents a barrel per month, traders say, compared nearly 50 cents a year ago.

Parking oil in a supertanker off the shore of Singapore, Asia's refining hub, costs anywhere from 30 to 40 cents a barrel per month, down from 50 to 80 cents just a few months ago.

The futures contract LOSc1 for oil storage at the LOOP, off Louisiana's coast, dropped to about 24 cents per barrel recently, one of the lowest prices this year.

Still, the patchy evidence of draining storage has fallen far short of what investors expected after OPEC and non-OPEC nations agreed on production cuts last November.

"People were impatient and thought we'd start drawing 10 million barrels a day since the first week of January," said Amrita Sen, chief oil analyst at Energy Aspects. "We're still in excess, and there's lots of inventory around."

http://www.reuters.com/article/us-global-oil-stocks-analysis-idUSKCN18F0EO

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Attached Files

The cost of taking crude oil from West Africa to China on VLCCs has hit a near two-month low, due to slack demand from China and a weak Persian Gulf market, sources said.

The VLCC route from West Africa to China, basis 260,000 mt, was assessed at $11.95/mt on Tuesday, the lowest level since March 31, when it was valued at $11.85/mt, according to S&P Global Platts data.

NPI was heard to have taken the VLCC vessel Kondor on subjects at w55.5 for a voyage from West Africa to China with June 14-16 loading dates, which equates to $11.95/mt.

The leading VLCC market in the Persian Gulf is weak and this is depressing the Atlantic market as well, sources said.

Shipbroking sources estimate the tonnage over-hang at approximately 38 VLCC ships in the Persian Gulf, which is close to the highest level in three years.

"We are looking to the Atlantic for some hope, but the Caribs can't take everything, and there is not much to take Arabian Gulf ships away and reposition them in the Atlantic," said one shipbroker.

Chinese demand for Angolan crude has been slightly lower for May and June cargoes, with the country's teapot refineries reducing their purchases from earlier in the year.

"We have had high global refinery maintenance and don't have peak runs. The teapots haven't come back into the market and a lot of them have already used up their import quotas," said one trader.

The lower Chinese demand has placed downward pressure on Angolan differentials and made these barrels more attractive to European refiners. As the voyage time from Angola to Europe is considerably shorter than from Angola to China, VLCC ton mile demand has been reduced by the lower Chinese demand for Angolan crude.

https://www.platts.com/latest-news/shipping/london/tankers-waf-vlcc-freight-rates-soft-due-to-weak-26739920

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China has resumed imports of light cycle oil (LCO) after buyers cancelled shipments in April, as a planned Chinese consumption tax has not been announced, four industry sources said this week.

Less than 1 million tonnes of LCO are being shipped from South Korea to China in May and June, compared with a peak of 2 million to 3 million tonnes, said two of the sources, both from South Korean refiners. The lower volumes reflects cautious buyers, they said.

China had planned to impose consumption taxes on oil by-products such as mixed aromatics, light cycle oil and bitumen blend. The tax would close a loophole that allowed Chinese buyers to import light cycle oil, then sell it locally as low-grade diesel, avoiding taxes that would normally be levied on diesel.

The proposed tax was initially expected to be levied in May but no official announcement has been made, increasing uncertainty among buyers, the sources said.

At least two LCO cargoes for late-April loading from South Korea were cancelled last month ahead of the planned tax.

But shipments have resumed for May-loading cargoes, the sources said. They are likely being used for blending into fuel oil instead of being re-sold as diesel, one of the sources said.

Light cycle oil is the residue produced after running fuel oil through a catalytic cracking unit to produce gasoline and diesel.

LCO cargo premiums have dropped by about one-sixth from their peak, which is reducing the incentive for refiners to produce the oil and instead maximize their output of jet fuel and diesel, one of the sources said.

Premiums have also dropped to below $1 a barrel on a free-on-board (FOB) Korea basis for the cargoes, compared with a peak of about $6 a barrel earlier this year and $2 to 3 a barrel in April, the sources added.

"Buyers are still wary as no one knows the status of when the tax will be implemented," the source said

http://www.reuters.com/article/china-oil-imports-idUSL4N1IK310

Crude stocks at China's Shandong ports rise on maintenance at independent refineries

Crude oil stocks at major ports in eastern China's Shandong province had risen to a 13-month high because of heavy maintenance at independent refineries and high crude imports in the previous months, port sources told S&P Global Platts Thursday.

Discharge operations at the ports however, were not affected, they added.

Total crude inventory at the major ports of Qingdao, Longkou, Laizhou and Rizhao in Shandong rose 10% from mid-April to around 2 million mt as of May 11, the highest since April 2016, according to JLC data. JLC is a Beijing-based energy information provider formerly known as JYD.

And at Qingdao port, stocks have been hovering at relatively high levels of around 750,000-800,000 mt in recent weeks -- slightly above the average level of 700,000 mt over January-April.

A source at Qingdao port attributed the build in stocks to several independent refineries deferring moving crude from the port to their facilities in recent weeks, as they are facing ullage issues at their own crude storage tanks during turnarounds.

A total 12.8 million mt/year (256,000 b/d) of independent refining capacity had been shut for maintenance in May, up 41% from 9.1 million mt/year last month, according to Platts calculations.

Wantong Petrochemical's 4.3 million mt/year refinery was shut on April 28 for a month-long maintenance until end-May, while the 3.5 million mt/year Lijin refinery was shut on May 3 for a turnaround lasting one month. The 5 million mt/year Lianhe Petrochemical will restart in end-May from an ongoing maintenance that started in end-April.

With those plants undergoing full turnarounds, crude consumption is estimated to have been cut by about 1 million mt this month, according to sources.

Adding to a heavy turnaround program, high crude imports over the past months have also contributed to the build in crude stocks at the ports, according to sources.

Crude imports by Shandong independent refineries came at 8.3 million mt in April, down 17% from a record high of 10 million mt in March, a separate Platts monthly survey showed.

Despite the month-on-month drop, April crude imports were still the second highest level seen since Platts started tracking independent refinery imports in January 2016.

And imports are likely to fall further in May, as fewer crude cargoes have called at the berths this month, given that a few independent refineries are running low on import quotas.

CRUDE DISCHARGE OPERATIONS NOT AFFECTED

Meanwhile, crude discharge operations at the ports have not been affected by the high port stocks, according to sources at Qingdao and Laizhou ports.

Currently, Qingdao port is not facing any congestion and it takes about a week for a cargo to be discharged, which is the normal timing, said the Qingdao source.

Sources at Laizhou port also confirmed that there is no congestion, simply because fewer cargoes have arrived in the first half of the month.

A total 300,000 mt of crude have been discharged in the first half of May, falling nearly 29% from around 420,000 mt in the first half of April, according to the source.

No vessels were waiting outside Laizhou port as of Thursday. In contrast, three to four 100,000-mt vessels have waited outside port limits each day at its peak.

At Qingdao port, around six vessels were waiting to discharge on Thursday. This compares to a peak of around 15 vessels last year due to logistic issues.

https://www.platts.com/latest-news/oil/singapore/crude-stocks-at-chinas-shandong-ports-rise-on-27832617

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Attached Files

China has succeeded in collecting samples of combustible ice in the South China Sea, a major breakthrough that may lead to a global energy revolution, Minister of Land and Resources Jiang Daming said Thursday.

This is China's first success in mining flammable ice at sea, after nearly two decades of research and exploration, the minister said at a trial mining site in the Shenhu area of the South China Sea Thursday.

China found flammable ice, a kind of natural gas hydrate, in the South China Sea in 2007.

International scientific circles have predicted that natural gas hydrate is the best replacement for oil and natural gas

http://news.xinhuanet.com/english/2017-05/18/c_136294670.htm

Russia's Rosneft, the world's top listed oil company by output, is working to be ready to compete on global oil markets after the deal with OPEC on oil curbs expires, Chief Executive Igor Sechin said on Thursday.

Rosneft is key for Russia's efforts to meet obligations under the deal with the Organization of the Petroleum Exporting Countries, under which Moscow has promised to cut production by 300,000 barrels per day.

This week, Russia, which delivered the cut in full last month, and Saudi Arabia agreed on the need to extend the global deal until March 2018.

Sechin, on a visit to Berlin to open the Rosneft Deutschland office, said Rosneft will plan its work this year so as to be competitive on the global oil market when the agreement expires.

"We will plan our work till the year-end in the way that while complying with the agreements, paying a special attention to mature fields not to lose oil resources and do preparations needed for new field launches, so in case the deal is stopped be ready for competitive work on the markets and not to lose our market share," Sechin said.

He added Rosneft was cutting production at its newest fields under the OPEC deal, not touching mature fields as there was a risk that they may not come back on-line in full after the cuts.

Sechin repeated that both Russia and Saudi Arabia should work out mechanisms for a "smooth" exit from the agreement when it is over to avoid market shocks.

"I would not think beyond March of the next year," Sechin said when asked if the market would be balanced by then and if a further extension of the global deal may be needed. "We should see how shale oil production (in the United States) will perform."

http://www.reuters.com/article/us-russia-oil-rosneft-idUSKCN18E2P5

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Halliburton Co, the No. 2 oilfield service provider, expects to raise prices at least 10 percent and in some cases 20 percent or more this year, higher increases than many customers expect but ones that company executives said were crucial to fuel the oil industry's nascent growth.

The rising business activity comes as Jeff Miller prepares to become the 98-year-old company's chief executive officer next month, taking over from Dave Lesar, CEO since 2000.

"We will continue to implement our strategy," Miller said in an interview at the company's Houston headquarters just outside George Bush Intercontinental Airport. "North America is absolutely our growth story today."

Miller, Lesar and other executives have been in talks with customers for months about raising rates for Halliburton's myriad services, highlighting not only the company's scale but its experience.

Halliburton was the first company to hydraulically fracture, or frack, a well, pioneering the process in 1949.

Many customers had locked in service rates during the two-year price downturn when Halliburton laid off more than 35,000 employees. Today, with the American shale oil industry whirring again, Halliburton is at max capacity for many services and itching to charge more.

Like peers, Halliburton has said it will not refurbish old equipment for field use until prices rise and has no North American fracking crews available until at least the fall. That limits the ability of customers to bring new wells online.

"Customer urgency is the most-important part of that discussion today," said Miller, an accountant by training.

Lesar, who will retire as CEO but remain executive chairman until Dec. 2018, echoed those comments in an interview, adding that Halliburton is keen to work with producers to prevent rampant cost inflation.

"We and our customers have to co-exist in this environment," said Lesar, who became CEO after predecessor Dick Cheney was nominated to be U.S. vice president. "Everybody has got to make money."

Shares of Halliburton, which have lost about 14 percent this year, rose 24 cents, or 0.5 percent, on Thursday to close at $46.58.

OIL PRICES

Both executives expect oil prices CLc1 to remain near $50 per barrel for the foreseeable future, a level they believe will allow North American shale customers and Halliburton to grow in tandem.

"Clearly, the rising star at this point in time is the Permian" shale basin of Texas and New Mexico, Lesar said, adding that the DJ Basin in Colorado and the Utica in Ohio are other shale areas where Halliburton is growing.

Costs for sand used in fracking pressured Halliburton over the winter, since many mines are located in the northern United States. Still, both executives said they believe their supply costs should stabilize this year.

STAFFING & COMPETITION

Halliburton has hired more than 2,000 workers since the oil industry started to recover, more than half of them former employees. That points to the company's lucrative salary and perks, as well as its culture, both executives said.

"We've got a very loyal workforce," Miller said.

"Our position in North America is second-to-none," Lesar said. "We intend to hold that, no matter what the competition does."

http://www.reuters.com/article/us-halliburton-executives-growth-idUSKCN18E2Q4

WTI Stays near $49 if OPEC Cuts Continue: EnerCom

OPEC’s meeting to decide the future of production cuts is quickly approaching, and many expect that the group will extend their deal through at least the end of this year.

The production cuts, when they were first initiated, helped to bring both WTI and Brent crude oils back above $50 per barrel, but prices have struggled to maintain that position or go higher as unconventional drilling and U.S. production continue to ramp up.

In EnerCom Analytics’ Monthly Energy Industry Data & Trends for April, the firm examined the possible effects of OPEC’s decision making on WTI prices and forecasted that oil prices would hit $49.29 per barrel if the group maintained cuts and the members exempt from the deal reached their production targets.

When the deal was originally announced,  Libya and Nigeria were given exemptions from production cuts.

Iran has stated that it hopes to achieve 4 MMBOPD of output, the same amount it was producing prior to the implementation of international sanctions. Production in the Islamic Republic ramped up quickly following the end of sanctions, but many believe that it will need to attract foreign investment and partners in order to hit its 4 MMBOPD mark as it stretches its existing projects to the limits of their current capacity.

Libya has repeatedly claimed force majeure on its production as the country continues to struggle with a civil war, and Nigeria’s oil infrastructure continues to be a target for factions that are unsatisfied with the current government, making it difficult for either to increase and maintain, production.

If all three were able to reach their targets, however, with Iran hitting 4 MMBOPD, Libya maintaining its production at its peak of 1.1 MMBOPD, and Nigeria pushing output back to levels seen in 2015 as OPEC ramped up production, WTI prices would reach $49.29 per barrel, assuming compliance with the production deal remained high, according to EnerCom Analytics. WTI closed at $49.35 today, six cents higher than EnerCom’s April prediction.

At this point, it seems that the market has largely priced in the extended production cuts. If the group does confirm that cuts will continue, oil prices will likely remain largely unchanged.

Failure to extend cuts:  $47.50 oil

If the group is unable to reach an agreement on further production cuts and increases output to levels seen in December 2016, WTI could go as low as $47.50 as markets begin to absorb the increased production, according to EnerCom’s models. Even at those prices, however, most U.S. basins would remain economic, the report said.

At $45 WTI, the Eagle Ford, Delaware, Midland and Bakken are all able to generate 20% IRRs or better, meaning that even if oil fell to $47.50, many operators would be able to continue drilling. This, in turn, caps how far oil price would be able to rise beyond that point, however.

Adjusting for inflation, these prices are somewhat below the historical average going back to 1974. Over the last 43 years, WTI has averaged $36.26 nominally, but $54.67 per barrel once adjusted for inflation.

If you like to receive EnerCom’s predictions as soon as they are released, as well as the firm’s insight on a number of other topics, subscribe to Energy Industry Data & Trends. To learn more about the scenarios run by EnerCom, and how U.S. policies and increases in the strength of the dollar might affect WTI oil prices

https://www.oilandgas360.com/wti-stays-near-49-opec-cuts-continue-enercom/

U.S. offshore support vessel owner Tidewater has filed voluntary petition under Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware.

The move is intended to help Tidewater pursue a prepackaged plan of reorganization in accordance with its previously announced restructuring support agreement (the “RSA”) with certain lenders to “effectuate a comprehensive balance sheet restructuring.”

The company last week said it had entered into a debt restructuring support agreement with certain consenting creditors.

The U.S.-based vessel company has entered into the deal with lenders under its Fourth Amended and Restated Revolving Credit Agreement, dated as of June 21, 2013, and holders of Tidewater Senior Notes to put into force a proposed prepackaged plan of reorganization of the company.

As part of its debt restructuring plan, Tidewater plans to reject certain sale-leaseback agreements for leased vessels currently in the company’s fleet, and to limit the resulting rejection damages claims to approximately $131 million.

However, the Sale Leaseback Parties dispute the amount of the rejection damages claims and a final resolution of the amount of such claims will be subject to litigation, Tidewater said.

“As a result, there is no certainty as to the final amount of sale-leaseback rejection damages claims that will be treated pursuant to the Prepackaged Plan,” the company added.

The prepackaged plan is supported by lenders holding approximately 60% of the outstanding principal amount of loans under the Credit Agreement and Noteholders holding 99% of the aggregate outstanding principal amount of the Senior Notes. Collectively, these supporting Lenders and Noteholders also constitute a majority in number of the holders of General Unsecured Claims.

Debt reduction

Announcing its agreement with creditors last week, Tidewater said the plan would substantially deleverage its balance sheet and better position Tidewater “to weather the extended downturn in the offshore energy industry while maintaining the company’s position as a worldwide market leader in offshore vessel services.”

Tidewater expects that it will eliminate approximately $1.6 billion in principal of outstanding debt.

Under the plan, the consenting creditors will receive their pro rata share of $225 million of cash; common stock and, if applicable, warrants to purchase common stock, representing 95% of the pro forma common equity in reorganized Tidewater, and new 8% fixed rate secured notes due in 2022 in the aggregate principal amount of $350 million.

Furthermore, Tidewater’s existing shares of common stock will be cancelled, and the existing common stockholders of Tidewater will receive their pro rata share of common stock representing 5% of the pro forma common equity in reorganized Tidewater.

The existing shareholders will also be granted six year warrants to buy purchase additional shares of common stock of reorganized Tidewater.

These warrants will be issued in two tranches, with the first tranche (the“Series A Warrants”) being exercisable immediately, at an aggregate exercise price based upon an equity value of the Company of approximately $1.71 billion, and the second tranche (the “Series B Warrants”) being exercisable immediately, at an aggregate exercise price based upon an equity value of the Company of $2.02 billion, Tidewater said. The tranches will enable the existing shareholders to buy a number of shares equal to 15 percent (7.5% per tranche).

Business as usual

Tidewater expects to continue to operate the business as debtors-in-possession under the jurisdiction of the Bankruptcy Court and fully expects to continue existing operations and maintain staffing and equipment as normal throughout the court-supervised financial restructuring process.

“Tidewater has filed a series of motions with the Bankruptcy Court to ensure a seamless transition into chapter 11 and has sought the approval of the Bankruptcy Court to continue paying prepetition employee wages and salaries and to provide employee benefits without interruption. The Company continues to work closely with its suppliers and partners to ensure it meets ongoing obligations and business continues uninterrupted,” the company added.

Jeffrey M. Platt, Tidewater’s President and Chief Executive Officer states, “After much thought and successful negotiations with certain of our economic stakeholders, we decided that commencing the chapter 11 cases was necessary to create financial stability which would allow Tidewater to remain a formidable competitor given this unprecedented industry downturn. Throughout the chapter 11 process, we anticipate meeting ongoing obligations to our employees, customers, vendors, suppliers, and others. We will continue to provide our customers with dependable, high-quality services.”

To support and effect the restructuring, Tidewater has filed applications to retain, among others, Weil, Gotshal & Manges LLP as restructuring counsel, Jones Walker LLP as corporate counsel, Lazard Frères & Co. as investment banker, and AlixPartners, LLP as restructuring advisor.

Subject to the approval of the Bankruptcy Court, the Prepackaged Plan is expected to be consummated in approximately 45 days.

“Tidewater believes it has adequate liquidity to maintain its operations in the ordinary course and does not intend to seek any debtor-in-possession financing during the pendency of the bankruptcy cases,” the company said.

http://www.offshoreenergytoday.com/tidewater-files-for-chapter-11-bankruptcy-as-it-seeks-to-cut-debt/

Noble Energy, Inc. today announced that it has signed a definitive agreement to divest the holding company which owns a 50 percent interest in CONE Gathering, LLC and 21.7 million common and subordinated limited partnership units to a portfolio company of Quantum Energy Partners (“Quantum”) for total cash consideration of $765 million. The limited partnership units represent a 33.5 percent ownership interest in CONE Midstream Partners LP . CONE Gathering owns the general partner of CONE Midstream.

David L. Stover, Noble Energy’s Chairman, President and CEO, commented “CNNX has performed exceptionally well since its IPO in late 2014, exceeding forecasts despite a challenging macro-economic backdrop. Including this transaction, Noble Energy will realise more than $1 billion in total value from our Marcellus midstream business, which represents approximately three times our net invested capital. Going forward, our midstream efforts are focused on Noble Midstream Partners, supporting our DJ Basin and Delaware Basin growth areas.”

http://boereport.com/2017/05/18/noble-energy-sells-marcellus-midstream-to-quantum-energy-partners-for-765-million/

Digital H2O is a “digital oilfield water management solutions company.” What the heck does that mean?

Water is not only the key ingredient in life, it’s also the key ingredient in the shale industry. It takes a lot of water to drill and frack a shale well. Locating sources for that water, getting it shipped to and then from a well pad, and disposing of it, is a logistical challenge.

Digital H2O helps helps drillers source water, transport it, and dispose of it–at a cheaper cost than they otherwise could have. Digital H2O accomplishes this magic with a sophisticated computer software program–populated with all sorts of information (i.e. data).

Until now, Digital H2O has concentrated its service on the Permian and Bakken shale regions in Texas, North Dakota, and New Mexico. The company has now turned its attention to the Pennsylvania Marcellus and now offers it service in our neck of the woods…

http://marcellusdrilling.com/2017/05/digital-h2o-comes-to-the-marcellusutica/