Occidental Petroleum Acquires Permian Basin Assets for $2 Billion

http://www.wsj.com/articles/occidental-petroleum-acquires-permian-basin-assets-for-2-billion-1477949564

Occidental Petroleum Corp. said it acquired acreage and interests in enhanced oil recovery assets in the Permian Basin in transactions totaling roughly $2 billion, joining a series of deals in the prolific West Texas drilling field. 

The leasehold deal includes 35,000 net acres in Reeves and Pecos counties in Texas, expanding Occidental Petroleum’s position in the area to nearly 59,000 acres. The leasehold acreage includes production of roughly 7,000 barrels of oil equivalent a day. 

The enhanced-oil-recovery transaction increased Occidental’s ownership in several properties where it is the operator or an existing working interest partner. 

In “enhanced oil recovery” a number of techniques—including injecting carbon dioxide into wells—can be used to coax hard-to-reach oil out of mature energy fields. 

Write to Tess Stynes at tess.stynes@wsj.com

Oil Start-Up Wellesley Petroleum Eyes 30-40 Licenses Off Norway

 

http://www.rigzone.com/news/oil_gas/a/147260/Oil_StartUp_Wellesley_Petroleum_Eyes_3040_Licenses_Off_Norway

Oil company start-up Wellesley Petroleum is aiming to secure a portfolio of around 30 to 40 licenses in oil and gas fields off Norway, it said on Wednesday.

It plans to participate in around six wells each year, one or two of which it intends to operate, and is looking for "relevant professional staff", it said in an advertisement published in the Norwegian business daily Dagens Naeringsliv.

Wellesley Petroleum was set up with the backing of private equity firm Blue Water Energy in 2015 and received approval from the Norwegian Petroleum Directorate (NPD) to hold offshore stakes the same year.

The company is currently a partner in seven production licenses, NPD data showed.
(Reporting by Nerijus Adomaitis Editing by Gwladys Fouche and Mark Potter)

Weir frac pump reaches 1,000 hours of operation in harsh upstream conditions

 

http://fluidhandlingmag.com/display_news/11268/weir_frac_pump_reaches_1000_hours_of_operation_in_harsh_upstream_conditions/

Weir Oil & Gas has reached more than 1,000 hours of pumping time in harsh conditions with is SPM QEM 3000 frac pump.

Subsequently, the Fort Worth, Texas-based company reports it has agreed on a sale of a fleet of the pumps to Canyon Services Group, based in Calgary, Canada.

The two companies intend to deploy the SPM QEM 3000 frac pump to production sites in the Duvernay and Montney formations in the Western Canada Sedimentary Basin.

As outlined in the field test agreement, an inspection was performed at approximately 1,000 hours of operation, which showed minimal signs of the typical wear seen in previous generation pumps.

Due to this durability, Weir’s pump is projected to meet 6,000 hours before major overhauls, leading to the estimated 17% reduction in total cost of ownership.

The pump will return to the field for a minimum of 5,000 hours of additional testing.

James Rukin, divisional manager for pumping services at Canyon, says the company ran the Weir pump “harder than any other” in its fleet.

“Since putting the unit in service, we’ve experienced first-hand the reliability, ruggedness, and efficiency we were promised by Weir. The SPM QEM 3000 delivers on value, and we have made the strategic decision to add 11 units to our fleet.”

The SPM QEM 3000 is the industry’s first high-horsepower frac pump designed for 24/7 continuous-duty pressure pumping operations at a sustained 275,000lbs rod load, Weir says.

“It’s gratifying to see the hard work of our design and engineering teams come to fruition, but even more rewarding to have an industry leader such as Canyon put their trust in us,” said David Paradis, president of pressure pumping at Weir Oil & Gas.

“Adding our SPM QEM 3000 Frac Pump to their fleet demonstrates the value in delivering efficient, continuous-duty equipment with a lower cost of ownership,” he added.

Before sending the Canyon unit to the field, a SPM QEM 3000 pump completed a 13 million cycle endurance test in Weir’s Research & Development Center located in Fort Worth.

As a traditional frac pump development process typically tests up to 1 million cycles, the extended test proves that the pump is unrivalled in terms of durability, cost-efficiency, long-term performance, and life span, Weir states.

Throughout the duration of the field-testing, the pump experienced a maximum flow rate of 11.3 barrels per minute (468gpm) and a maximum pressure rate 12,000psi (not concurrent), while the average flow rate was 8.2 barrels per minute (338gpm) and pressure 9,000psi.

The SPM QEM 3000 was situated behind a typical 2500HP drive train and the pump was able to utilise 100% of the available power and torque output.

GE to Combine Oil and Gas Business With Baker Hughes

 

http://www.wsj.com/articles/ge-to-combine-oil-and-gas-business-with-baker-hughes-1477908407

  

General Electric Co. reached a deal to combine its oil-and-gas business with Baker Hughes Inc., creating a publicly traded energy powerhouse that would give GE a cost-effective way to play any recovery in the industry.

GE will contribute its oil-and-gas business and $7.4 billion through a special one-time cash dividend of $17.50 for each Baker Hughes share. The new company will be publicly traded on the New York Stock Exchange and will be 62.5% owned by GE and 37.5% owned by Baker Hughes shareholders.

The Wall Street Journal reported last week that the companies were in talks about a potential transaction.

A combination creates a company with more than $32 billion in revenue that could cut costs to better compete with rivals such as Schlumberger Ltd. to provide equipment and services to oil rigs and wells. It would enable GE to benefit from an expected recovery in the industry without having to pay for a full acquisition of Baker Hughes. It would also enable the companies and their shareholders to benefit from savings and other synergies from putting the two businesses together.

After two brutal years for the oil-and-gas business, GE and some of its rivals in the industry have begun to see signs of hope. Crude prices, which plunged to $30 a barrel this year from more than $100 in 2014, have rebounded to around $50 recently.

GE expects the deal to add about 4 cents to its earnings per share in 2018 and 8 cents by 2020.

Lorenzo Simonelli, chief executive of GE Oil & Gas, will be chief executive of the new company and GE Chief Executive and Chairman Jeff Immelt will be its chairman. Baker Hughes Chairman and Chief Executive Martin Craighead will serve as vice chairman. The board of the new company will consist of five directors appointed by GE and four appointed by Baker Hughes.

GE shares rose 1.1% to $29.57 in morning trading in New York as Baker Hughes shares increased 0.2% to $59.22.

GE provided glimmers of improvement in the energy sector from the third quarter, noting that U.S. rig and well counts remained down 50% from the previous year but had ticked upward in the previous three months. Still, orders for services were down across all of GE’s oil business, the company said.

General Electric CEO Jeff Immelt Photo: Steven Senne/Associated Press 

 

In recent public comments, GE has said it is still committed to the oil and gas unit for the long term, but GE said operating profit in the unit will be down by 30% for the year. GE is cutting more than $1 billion in costs out of the company over two years.

The announced deal comes in what has already been a strong year for mergers and acquisitions. Such strength defies conventional wisdom, coming less than two weeks before the presidential election. The fact that companies are inking mergers at a breakneck pace ,without knowing who the next president will be, shows how strong the imperative to consolidate across industries is, bankers say. 

There is no guarantee a GE-Baker Hughes deal will be completed. The last merger agreement Baker Hughes entered into—a $35 billion proposed union with Halliburton Co.—was rejected by antitrust regulators this year amid a tough environment for deals in Washington. 

Before Baker Hughes and Halliburton had to abandon their merger plans, the companies held talks with GE to sell a package of assets valued at more than $7 billion to help win regulatory approval. 

A combination with Baker Hughes would be among GE Chief Executive Jeff Immelt’s biggest deals. The company has done more than $14 billion of acquisitions since 2007 to build its oil-and-gas business.

Mr. Immelt has pledged to be opportunistic about acquisitions in the segment and predicted that GE would exit from the oil downturn with a lean organization and a strong position against competitors such as National Oilwell Varco Inc. and Schlumberger.

Activist Trian Fund Management LP last year took a $2.5 billion stake in GE and has said the company must be more “disciplined” in its deal making. GE shares had done little since then and are still well below their high of more than a decade ago.

Baker Hughes has its own activist holder. ValueAct Capital Management LP purchased a stake after the Halliburton deal was announced that is now at 7%. ValueAct had suggested Baker Hughes could sell at least some of its businesses.

—Ted Mann and Austen Hufford contributed to this article.

Write to Dana Cimilluca at dana.cimilluca@wsj.com, Dana Mattioli at dana.mattioli@wsj.com and David Benoit at david.benoit@wsj.com

Goldman Sachs Upgrades Chevron (CVX) and Adds Stock to Conviction Buy List

 

Goldman Sachs upgraded Chevron (NYSE: CVX) from Neutral to Conviction Buy with a price target of $118, implying upside of 14%. Analyst Neil Mehta thinks Chevron is at inflection in terms of production growth, free cash flow generation and the relative multiple. 

Mehta explained, "First, we see a strong volume improvement story after a decade of relatively flat production, driven by: (1) Australia/Africa LNG projects, which now appear on track for growth; (2) the Permian in the US; and (3) long-term, from Tengiz in Kazakhstan. Second, as new projects ramp and oil prices improve to $50-$60/bbl WTI, we forecast a robust free cash flow improvement, more than covering the dividend yield of 4.2%. Third, we expect CVX will see further relative multiple expansion vs. XOM with ROCE improvement."

Discussing catalysts, the analyst said, "We see a series of positive catalysts over the next 12 months that we believe can help to unlock value at Chevron. In 4Q2017 results, we project a major step-up in production and cash flow from Gorgon and ALNG, providing evidence of LNG project execution. We expect the acceleration in asset sales, with as much as $8 bn in asset sales possible by YE2017, particularly in downstream. Additionally, we expect the company to provide more details on its Permian acreage and growth plans, which we view as a premier asset in the Chevron portfolio, particularly at the March 2017 analyst day."

For an analyst ratings summary and ratings history on Chevron click here. For more ratings news on Chevron click here.

Shares of Chevron closed at $103.82 yesterday.

http://www.streetinsider.com/Analyst+Comments/UPDATE%3A+Goldman+Sachs+Upgrades+Chevron+(CVX)+and+Adds+Stock+to+Conviction+Buy+List/12183773.html 

Shipping Markets

 

http://www.tankeroperator.com/ViewNews.aspx?NewsID=8092

In general VLCC chartering activity was slower during the week. 

 

Older tonnage built up in the MEG weighing down on rates, which fell to mid-WS50’s MEG/East, Fearnleys reported.

The tonnage list was somewhat thinner for the more modern VLCCs, as owners clearly expected rates to firm throughout the winter.

However, West Africa/East rates did not fall nearly as much as seen in the MEG and the rate difference between the trades widened by about WS10 points. Owners expected volumes to increase and rates for now may have bottomed out, Fearnleys said.

Suezmaxes in West Africa fell to WS67.5 levels as the tonnage hangover from October began to bite.

As the week progressed, there has been further softening and rates plateaued at WS65 for TD20.

Meanwhile, eyes have been focussed on the Novorossiysk and CPC programmes where activity picked up but the availability of ships has also increased due to West Med tonnage ignoring West Africa and focusing on the better TCE returns ex Black Sea.

The coming week will be challenging for owners in West Africa, as the latter part of the 2nd decade is overtonnaged due to sparse activity. The Black Sea is expected to stabilize as the heavy programme continues.

Last week was fairly busy in the North Sea and Baltic, and an increase in rates was expected by the majority of owners. The result was year to date’s smallest and most short-lived spike going up a staggering WS2.5 points for nearly a day.

However, softening rates for the week to come should be expected, due to upcoming maintenance at Primorsk.

In the Black Sea and Med, it has been an interesting week for everyone involved. Rates were under pressure at the end of last week, and high WS80s was paid from Black Sea early November loading dates.

After the weekend, we saw more prompt tonnage in place, and three cross-Med market quotes made owners give up putting the market back at low WS70s. The Black Sea programme should get extremely busy from next week, so the market has some upward potential for the rest of the month, Fearnleys concluded.

Sale and leasebacks are becoming an increasingly popular way of financing.

One of the latest deals to come to light was Singapore-based product tanker owner and operator BW Pacific’s sale of two LR1s on a lease back basis.

The vessels were thought to be the 2006-built ‘Compass’ and ‘Compassion’ which were said to have been sold to China’s Bank of Communications.

The price was not disclosed but each tanker was chartered back to BW Pacific for seven years.

Bank of Communications had earlier agreed sale and leaseback agreements for five MRs with commodity trader Trafigura.

Navig8 Product Tankers has taken delivery of the LR2 ‘Navig8 Guide’ from Guangzhou Shipyard International Co (GSI), formerly CSSC Offshore & Marine Engineering (Group) Co.

‘Navig8 Guide’ is the fourth of eight vessels contracted at GSI to be delivered to the company and is the fourth vessel to be delivered under the sale and leaseback agreements entered into with CSSC (Hong Kong) Shipping Co (CSSC).

Following her delivery from GSI, the LR2 was delivered to CSSC under the terms of the sale MOA and then taken back by the Company under a bareboat charter.

She has joined Navig8 Group's Alpha8 commercial pool.

Meanwhile, Navig8 Chemical Tankers has taken delivery of the ‘Navig8 Stellar’, a 25,000 dwt stainless steel chemical tanker from Kitanihon Shipbuilding.

She is the fourth of six vessels contracted at the yard to be delivered to the company and is the second and final vessel to be delivered under the sale and leaseback arrangements entered into with subsidiaries of SBI Holdings.

‘Navig8 Stellar’ will be operated in Navig8 Group's Stainless8 commercial pool.

Gener8 Maritime took delivery of the VLCC ‘Gener8 Miltiades’ on 25^th October, 2016 from Shanghai Waigaoqiao Shipbuilding (SWS). She is the 16th of 21 VLCCs due for delivery into Gener8 Maritime's fleet.  

Upon delivery, ‘Gener8 Miltiades’ entered Navig8 Group's VL8 Pool.

She is the sixth VLCC to be delivered by SWS, concluding the company’s new building programme at the yard.

Tsakos Energy Navigation (TEN) has taken delivery of the Aframax ‘Leontios H’ from Daewoo Mangalia Heavy Industries.

‘Leontios H’ entered into a long term contract to a northern European charterer that could generate gross revenues in excess of $100 mill, TEN said. She is the third vessel in a series of nine purpose built Aframax tankers on long term time charters at accretive rates.

The company also reported the delivery from Hyundai Heavy Industries of its second LNGC, the 174,000 cu m TFDE ‘Maria Energy’ and immediate charter to a major end-user for a minimum 18 months and a maximum of three years, which could generate gross revenues in excess of $70 mill if options were exercised.

George Saroglou, TEN COO, said. "Following the delivery of the ‘Leontios H’, TEN is in the midpoint of its 15 vessel growth program. With eight more tankers scheduled for delivery over the next five quarters, a minimum of $720 mill will be added to TEN's secured revenues from new vessels. This increases the company's minimum secured income to $1.5 bill and further solidifies TEN's bottom-line and provides healthy cash visibility going forward.”

d’Amico International Shipping (DIS) has launched three tankers at the Vietnamese shipyard Hyundai Vinashin Shipyard  - one Handysize (recently delivered) and two MRs.

 

The total investment in the three ships amounted to $104 mill.

With the delivery of the ‘Cielo di Salerno’ on 21st October, DIS’ fleet includes 51.8 ships. The delivery of the MR ‘High Wind’ is expected in the first half of November, 2016, while her sistership ‘High Challenge’ will be in operation by the start of 2017.

One of the tankers has already been chartered to an international oil major for three years, while the others will be placed on the spot market, DIS said.

“We have added three new assets of great value to our fleet, which is among the most innovative and updated on the international panorama,” said Paolo d’Amico, DIS chairman. “We are successfully working in partnership with a shipyard of the highest calibre, Hyundai Vinashin Shipyard, which guarantees us ecological, safe and exceptionally performing ships to offer our clients.”

In the charter market, broking sources reported the fixture of the 1999-built VLCC ‘Ridgebury Pioneer’ to Litasco for six months at $29,500 per day.

The 2000-built Suezmax ‘Sri Vishnu’ was said to have been fixed to BPCL for two years at $18,700 per day.

Jellicoe was believed to have taken the 2006-built Aframax ‘Jag Lyall’ for 12 months at $15,500 per day, while the 2003-built Aframax ‘Astro Sculptor’ was said to have been fixed to Teekay for 12 months at $17,000 per day.

Stena Bulk was thought to have fixed the 2015-built MR ‘Essie C’ for 12 months at $12,750 per day, while Koch was said to have taken the 2012-built MR ‘Nave Aquila’ for six months at $11,500 per day.

Frontline’s two VLCCs - the 1999-built ‘Front Circassia’ and the 2001-built ‘Front Ariake’ were believed sold to Russian interests for $50 mill en bloc.

Reported to be leaving the fleet was the 1994-built VLCC ‘Progress’ believed sold to Bangladesh breakers on private terms. She had been recently used as a storage vessel.

There were a few more orders reported this week. 

For example, Nordic American Tankers (NAT) has confirmed that it had entered into agreements with Samsung Heavy Industries for the construction of three Suezmaxes to be delivered during the second half of 2018. 

"This is another large step forward for Nordic American," said chairman and CEO Herbjørn Hansson. "By adding these ships, we substantially increase the dividend capacity and bolster our earnings potential. We believe that our solid balance sheet as well as our well-defined and transparent operating model are elements supporting the competitive position of NAT. The stock issue of about $120 mill that we completed 30^th September, will part finance this transaction. A 33 vessel homogenous Suezmax fleet is making NAT stronger and the company becomes even more attractive for our customers."

Gulf Navigation (GulfNav) has formed a strategic long-term partnership with Wuchang Group, which has led to the ordering of six chemical tankers.

Khamis Juma Buamim, Gulf Nav board member, managing director and Group CEO, said "This partnership with Wuchang Heavy Industry Group, which is one of the largest companies worldwide in its field, is a significant step that will enable us to strengthen the company’s capabilities by expanding our fleet with modern and advanced tankers. This will enhance our competitiveness in the transfer of chemicals; a market that is steadily expanding and is witnessing increasing demand.

“We started with Wuchang Group by signing an agreement to immediately begin building six chemicals tankers. At the same time, we discussed with them co-operation opportunities in various areas. One of the most important pillars of this agreement is to pave the way for Chinese investors and attract them to work in the local market, which will reflect positively on the region as a whole,” Buamim said.

A few smaller units were also ordered by Baltic Sea-based owners.

These included two dual fuel Ice Class 1A 25,600 dwt chemical tankers for ESL Shipping, contracted at Jinling for 2017-2018 deliveries. 

 

Furetank and Älvtank have also extended their orders with two more intermediate product/chemical tankers with LNG propulsion. They will be operated in the Gothia Tanker Alliance.

The latest two will also be built at Avic Dingheng Shipbuilding to the same design as the other vessels. They will be delivered during 2018/2019.

Including the previous order, Gothia Tanker Alliance now has six tankers on order - three for Furetank, two for Älvtank and one for Thun Tankers. They will be commercially managed by Furetank Chartering.

Worldwide fuel sulphur cap agreed for 2020

http://www.tankeroperator.com/ViewNews.aspx?NewsID=8083

On Thursday, the IMO rubber stamped 2020 as the start date for the 0.5% m/m global sulfur cap on bunkers.

 

This decision was taken this week at MEPC 70 following the outcome of a review, which was submitted to the session. 

A steering committee consisting of 13 member states, one intergovernmental organization and six international non-governmental organizations had overseen the review.

The original MARPOL rule, limiting sulfur oxide emissions from ships, provided for a 0.5% global cap to be implemented on 1st January, 2020, but also required a review of the availability of the required fuel oil to be carried out and concluded by 2018. 

If the review found that the required fuel would not be available in time, the 1^st January 2025 would have been the new date for the sulfur cap.

More details were due to be released later today, after Tanker Operator News was due to be circulated.

We will publish a roundup of other major decisions taken at MEPC 70 next week, including any news on the controversial ballast water equipment standards.