http://energiapetroleoygasucv.blogspot.com/

miércoles, 29 de julio de 2015

Inti Lantauro on Lower crude prices (Total Scenery).


PARIS— Total SA said aggressive cost-cutting and an increase in oil output helped offset the fallout from lower crude prices on its bottom line, as its net profit fell by less than expected in the second quarter.
The French oil company’s strategy for stubbornly low oil prices has been similar to other major energy companies: extract as much oil and gas from current operations while cutting back aggressively on all costs and reducing investment in long-term projects. Along with boosted revenue from units like refineries and petrochemical plants—which do well when prices are low—Total, like other majors, has shown signs of resilience in the face of a historic market collapse.
Total said Wednesday its net profit fell 4% to $2.97 billion in the second quarter from a year earlier, while revenue contracted 29% to $44.72 billion. When adjusted to exclude the effect of inventories and other nonrecurring items, the company’s net profit fell to $3.09 billion from $3.15 billion in the same quarter a year earlier.
The adjusted profit data was higher than the $2.75 billion median forecast of eight analysts polled by FactSet.
Profit would have fallen much more if Total hadn’t scrambled to raise output to an average 2.3 million barrels of oil equivalent a day in the second quarter, from 2.05 million barrels a day in the same period a year ago, the company said.
The company now pumps more crude than the U.K. oil giant BP PLC, which said Tuesday that it produced an average of 2.1 million barrels of oil equivalent a day in the second quarter. Total’s results also compared favorably with BP, which posted a $6.3 billion loss in the second quarter, mainly because of a settlement for the 2010 Gulf of Mexico spill.
Total remains under pressure from crude prices that have fallen by more than half in the past year, down to the low $50s for a barrel of Brent crude, the global benchmark, from highs of $114 a barrel in 2014.
Total and others have responded with a regime of severe cost cuts and delays to big projects.
Known for his cost-cutting record when he was running the refining and petrochemical unit, Total’s Chief Executive Patrick Pouyanné focused on slashing spending when he took over in November after his predecessor died in a plane crash.
“It is a bottom-up exercise, every manager at every level has been incentivized,” Chief Financial Officer Patrick de la Chevardière said in a conference call.
There are no small savings for Total, Mr. de la Chevardière said. The company squeezed providers from Brunei to Congo, optimized logistics and supply chains and cut unneeded spending wherever possible. In Angola, for instance, the company has ordered its boats servicing offshore oil rigs to go slower and save fuel, the CFO said.
Total has said it is on track to cut its costs by $1.2 billion this year. The firm added it expects three projects to start production later this year.
Total was also helped by its refining business, one of the largest in Europe. Refineries had been a problem child for Europe’s major oil companies, but with crude prices so low, the plants now get cheap feedstock and higher profit.
Operating profit for refining and petrochemicals jumped fourfold in the second quarter compared with the same period a year ago.
“We are very happy to have the resilience that comes with being an integrated company,” Mr. de la Chevardière told investors in a conference call.


jueves, 16 de julio de 2015

Canada energy producers scenery mid-2015



Canadian energy producers are giving up hoping for a big rebound in oil prices, preparing instead to embark on a course of belated hedging if crude prices edge just a few dollars higher.

    As crude markets collapsed during the first half of this year, Canada's oil producers held back on hedging on concern they would lock in prices at barely break-even rates.

    That may be about to change. A rally in U.S. crude CLc1 from $60 (38 pounds) a barrel today to about $65 could trigger a wave of selling from Canadian companies eager to build up protection against a second price slump, according to market sources in Calgary. Many allowed their hedging activity to lapse since last year, when oil tumbled to a six-year low near $42 a barrel.

   Canadian producers are between 10 percent and 20 percent underhedged compared with the same time last year, banking sources in Canada's oil capital estimated. For example, Canadian Natural Resources Ltd (CNQ.TO) had hedged around 10 percent of its production by early May; a year earlier it had already hedged more than half its output.

    It was not immediately clear which Canadian companies were gearing up for more hedging. Dozens of them routinely use derivatives contracts such as swaps or options to provide a guaranteed price on future oil production, often to appease lenders who want secure cash flow.

Some firms may also hedge simply because they fear oil prices may fall further, potentially dropping below the cost of production in the energy-intensive oil sands, where per-barrel operating costs can top $35, according to consultancy Wood Mackenzie.

   "A lot of guys are saying we don't want to hedge at the bottom of a commodity cycle so there's been some hesitation," said Jeremy McCrea, an analyst at AltaCorp Capital in Calgary. “Clearly everyone is wishing they had hedged last year more.”

    McCrea said a number of producers were looking to hedge at around C$80 ($65) oil, and that less than half the oil companies covered by his research team have a structured hedging policy, preferring to add protection when needed.

    One source at a major bank said at least one client has put in orders to transact on their behalf as soon as crude hits $65 a barrel. Another source at a separate bank said clients were holding off for levels closer to $65 before hedging for 2016.

    David Leben, a director in oil products trading with BNP Paribas' in New York, said some producers were looking for even higher levels, around $70 to $80 per barrel.

    That strategy has its risks, however. Global crude supply is still robust and if demand falters prices could slide again, leaving producers exposed before they have a chance to hedge.

    "Some large Canadian producers have taken the stance that they will do nothing until we reach higher levels," Leben said.

   

    GRUDGING ACCEPTANCE

    Since oil prices started tumbling last June, producers have been reluctant to put on hedges in case a sudden recovery meant they missed out on potential hefty profits.

    But with crude trading between $57 and $62 a barrel since early May, many companies have accepted a return to over $100 a barrel is unlikely.

    Greater insurance could frustrate producer-group OPEC's aim of putting the brakes on North American crude output, part of the battle for global market share that saw oil prices more than halve over just a few months.

    There's a long way to go. As of May 6, Canadian Natural, the country's No. 1 independent crude producer and until recently one of the largest hedgers in Alberta, had only hedged about 50,000 barrels a day of production for the remainder of 2015, using price collars between $80-$120.54 Brent LCOc1, according to quarterly earnings statements.

    At the same time last year Canadian Natural had hedged approximately 297,000 bpd of forecasted 2014 crude oil volumes, more than half its production.

    The company declined to comment on its hedging policy.

    Heavy oil producer Baytex Energy Corp (BTE.TO) hedged about 62 percent of its West Texas Intermediate crude exposure at a weighted average price of US$99.47/bbl for the second quarter of 2014, but had only 33 percent of volumes hedged for the same period in 2015, mostly at a fixed price of $87.03 WTI.

    Baytex did not immediately respond to a request for comment.

    Many of biggest oil sands producers such as Suncor Energy Inc (SU.TO) and Husky Energy Inc (HSE.TO) do not hedge at all because their integrated refinery operations benefit from low crude oil prices.



(Reporting by Nia Williams in Calgary, editing by Jonathan Leff and John Pickering)