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In the battle for the world’s biggest oil market, the U.S. has a new advantage

By Alex Longley on 1/20/2020

LONDON (Bloomberg) - The U.S.-China trade agreement is set to intensify the battle for the world’s most prized oil market.

China’s imports of U.S. crude may reach 700,000 barrels a day or more this year, estimates from consultants show. That volume, 50% above the previous monthly record, would have put the U.S. among the top 10 suppliers to the Asian nation in the last month for which data is available.

As U.S. exporters look to re-establish their trade with the world’s largest crude importer, American barrels will find themselves in fierce competition with supplies from regions that produce similar quality oil, like West Africa and the North Sea. It’s China’s appetite for that lighter, less sulfurous crude, as well as the possible removal of a 5% tariff, that’s likely to dictate exactly how much U.S. oil flows there.

“If you look at the energy side it should translate into a rebound in Chinese imports of U.S. crude oil,” said Olivier Jakob, managing director of consultant Petromatrix GmbH in Zug, Switzerland. “If they come to realize what is written then a lot of the supply increase from the U.S. is going to go to China this year.”

U.S. exports to China, which surged through July 2018, slumped as trade tensions between the two countries escalated. The Asian nation, which accounted for two-thirds of oil demand growth in 2019, imposed a 5% tariff on U.S. oil from September, making it less economical for refiners. Read more…

EOG Resources sells saltwater disposal wells in New Mexico

Photo: Solaris Water Midstream LLC

Houston oil giant EOG Resources has sold nearly half of its saltwater disposal wells in the New Mexico side of the Permian Basin.

EOG Resources confirmed the sale of 23 saltwater disposal wells and 300 miles of oilfield wastewater gathering pipelines in southeastern New Mexico to Dallas-based Oilfield Water Logistics.

Financial terms were not disclosed but under the deal, EOG entered into a long-term contract with Oilfield Water Logistics for wastewater disposal services.

In a statement, Oilfield Water Logistics CEO Chris Cooper said the deal compliments the company’s current operations and doubles its geographic footprint in the Delaware Basin, an area of the Permian Basin that includes parts of West Texas and southeastern New Mexico. Read more…

Oil prices steady, on track for biggest yearly rise since 2016

Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain. - Spencer Platt | Getty Images
 

 

Oil prices held steady on the final day of the year on Tuesday, heading for their biggest annual rise since 2016, supported by a thaw in the prolonged U.S.-China trade dispute and supply cuts.

Brent crude futures for March delivery, the new front month contract, were at $66.66 a barrel, down 1 cent, by 0258 GMT. Brent for February delivery closed on Monday at $68.44 .

U.S. West Texas Intermediate (WTI) crude for February was down 3 cents at $61.65.

Brent has gained about 24% in 2019 and WTI has risen roughly 36%. Both benchmarks are set for their biggest yearly gain in three years, backed by a breakthrough in U.S.-China trade talks and output cuts pledged by the Organization of Petroleum Exporting Countries (OPEC) and its allies. Read more…

 
 

WaterBridge Raises $345 Million for Permian Expansion

Rachel Adams-Heard - Bloomberg

(Bloomberg) — WaterBridge Holdings LLC, a U.S. company that handles water for the fracking industry, is scooping up more infrastructure in the Permian Basin, this time from private equity-backed drillers.

The closely held company has acquired almost 100 miles (161 kilometers) of pipeline and seven disposal wells from Primexx Energy Partners Ltd., Warburg Pincus’s Tall City Exploration III LLC and Blackstone Energy Partners’ Jetta Permian LP, it said Wednesday in a statement.

“When you’re in your early phase of exploiting your resource, it’s very difficult to continue to grow at the pace you want by only drilling what your cash flow will allow,” David Capobianco, chairman of WaterBridge and chief executive officer of Five Point Energy, which backs the company, said in an interview. “It’s pushing these producers to sell their water midstream assets.”

To finance the deals, WaterBridge issued $195 million of common equity to private equity firm Five Point Energy, an affiliate of Singaporean sovereign wealth fund GIC Pte, and to its own management. It also issued $150 million of preferred equity to Magnetar Capital, which has the right to acquire another $100 million. Read more…

Oil tops $60, settles near 3-month high

Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 5, 2018. Benjamin Lowy | Getty Images News | Getty Images
 
Oil prices rose slightly Monday on hopes energy demand will benefit from the trade deal between the United States and China announced last week, but prices remained below the previous session’s three-month highs.

Brent crude oil futures rose 16 cents to $65.37 a barrel, while West Texas Intermediate crude rose 14 cents to settle near a three-month high of $60.21 a barrel.

On Friday, Washington and Beijing announced a “phase one” agreement. U.S. officials said some tariffs would be reduced in exchange for a big jump in Chinese purchases of American farm products and other goods.

Progress on trade could boost oil demand, but the market is still weighing the merits of the deal, said Phil Flynn, an analyst at Price Futures Group in Chicago. Read more…

 

WPX Energy expands in Delaware basin with $2.5 billion Felix deal

Business News - December 16, 2019 / 5:28 AM
 
(Reuters) - WPX Energy Inc (WPX.N) said on Monday it would buy privately held Felix Energy in a $2.5 billion deal, as the Permian basin operator looks to add oil-rich acreage in the Delaware region of the prolific shale field, sending its shares up more than 9%.

The Permian basin of Texas and New Mexico is at the heart of the shale boom that has helped the United States become the world’s biggest crude oil producer.

The deal gives WPX access to Felix’s about 1,500 gross undeveloped locations in the eastern part of the Delaware basin, with projected production of about 60,000 barrels of oil equivalent per day (boe/d).

“The transaction we’ve announced this morning checks all the boxes for us,” WPX Chief Executive Officer Richard Muncrief said on a conference call. Read more…

OPEC and its allies agree to deeper production cuts to prop up oil prices

London (CNN Business) - OPEC, Russia and other oil producing nations have agreed to deeper production cuts in an attempt to support crude prices in the face of a looming supply glut mainly due to booming US output.

Following a meeting in Vienna, OPEC said Friday the producer group would reduce supplies by an additional 500,000 barrels per day, bringing the total cuts to 1.7 million barrels daily.

Led by Saudi Arabia, OPEC and its allies have been limiting their production since 2017. Their existing agreement aimed to remove 1.2 million barrels per day from world markets and is due to expire in March 2020.

OPEC’s statement made no mention of extending the cuts through June or even December 2020, as some analysts had expected. Still, oil markets were supported by news of the additional cuts and pushed US crude prices up by 0.8% to $59 a barrel. Read more…

Drilling Down: Top 10 drilling rig companies in Texas and their customers

Some 368 horizontal drilling rigs are in operation in Texas, and more than half of them belong to three drilling companies.

In figures exclusively provided to the Houston Chronicle, the Austin oilfield data firm Enverus reports that Tulsa-based Helmerich & Payne is the top drilling rig operator in Texas with 117 horizontal rigs deployed across the state.

Nabor Industries, a drilling rig operator headquartered in Bermuda with principal offices in Houston, ranks second with 42 active horizontal rigs. Calgary oilfield service company Ensign Energy Services ranks third with 33 horizontal drilling rigs deployed in Texas. Read more…

 

Oil gains as optimism returns to US-China trade talks

Workers cross walkways between zones aboard an offshore oil platform in the Persian Gulf’s Salman Oil Field, near Lavan island, Iran, on Jan. 5. 2017.
Ali Mohammadi | Bloomberg | Getty Images

Oil prices rose on Tuesday on hopes of progress towards a trade agreement between the United States and China, the world’s biggest oil users, and predictions of a draw on U.S. crude inventories.

Brent crude, the international price benchmark, gained 34 cents, or 0.5%, to trade at $63.99, while West Texas Intermediate crude gained 23 cents, or 0.4%, to trade at $58.24 a barrel. Read more…

Drilling Down: Shell drills on state-owned lands in Permian Basin

 
European oil major Royal Dutch Shell filed for six horizontal drilling permits with the Railroad Commission of Texas for projects on five leases split between Winkler and Loving counties in the Permian Basin.

Half of those wells target the Wolfcamp geological layer while the others target the Bone Spring formation. Total drilling depths of the projects range from 10,000 to 12,300 feet.

Three of the wells are on a pair of leases in Winkler County managed by the state-owned mineral rights company University Lands. Royalties from those three wells will go to the Permanent University Fund, or PUF, a public account supporting the University of Texas and Texas A&M University systems. Read more…

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