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2019-02-25 11:55:00

U.S. SHALE OIL WEAKNESS

U.S. SHALE OIL WEAKNESS

REUTERSWeak returns at U.S. shale producers could cost more executives their jobs and lead to increasing battles with activist investors, analysts said following changes at two producers.

After years of outspending cash flow to expand oil and natural gas production, executives are under pressure to pull back on spending and deliver higher returns. Investors have sold shares in companies that increased their drilling budgets, and some have avoided the sector altogether.

Pioneer Natural Resources Co Chief Executive Tim Dove retired on Thursday after a two-year stint in the job, with founder and former CEO Scott Sheffield returning to the top role.

Halcon Resources Corp CEO Floyd Wilson and two other executives - finance chief Mark Mize and Steve Herod, executive vice president of corporate development - resigned the same day. The company said it began the search for a new CEO.

"It's a what-have-you-done-for-me-lately scenario," said Jason Wangler, analyst with Imperial Capital in Houston. "Not only are investors holding people accountable, they're watching every move." He expects management and board changes at other companies this year.

Activist investor Fir Tree Partners this month called for Halcon to appoint independent board directors, cut costs and sell itself. Fir Tree in a statement on Friday called the management changes "important first steps."

On Friday, Kimmeridge Energy Management Co announced an activist stake in PDC Energy Inc and urged the producer to cut expenses and pay a dividend. PDC in response said it was focused on capital discipline.

Such battles are likely to "be pretty steady in 2019," said Leo Mariani, an analyst at KeyBanc Capital Markets Inc. "The common complaint from activist investors is that a lot of these companies have relatively poor returns on capital and outspend cash flow."

While producers have pledged to pare spending, investors want proof. "There's a difference between saying and actually doing," said Morningstar Inc analyst Dave Meats.

Pioneer, one of the largest U.S. shale producers, last week released financial results that fell short of Wall Street expectations due to hedging-related costs.

Halcon was hard hit by the 2014 oil price drop and emerged from bankruptcy restructuring in 2016. The stock market values its land at less than $5,000 an acre, compared with peers whose land is valued above $20,000 an acre, Fir Tree said in a Feb. 4 letter.

Analysts expect the firm to report a loss of 8 cents per share when it releases quarterly results on Tuesday, according to Refinitiv data.

"They laid out a pretty aggressive growth strategy," Wangler said. "The market obviously has not been conducive to those types of stories, outspending cash to try to grow production."

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Earlier:

U.S. SHALE OIL WEAKNESS
2019, February, 18, 12:15:00
U.S. OIL PRODUCTION 11.9 MBD AGAIN
API - Strongest gasoline demand (8.9 million barrels per day, mb/d) for the month January on record since 1945. Record refinery and petrochemical demand for other oils’ in any month (5.7 mb/d) U.S. production of crude oil (11.9 mb/d) and natural gas liquids (NGLs) (4.9 mb/d) Refinery throughput (17.3 mb/d) and capacity utilization (93.1 percent) for the month of January.
U.S. SHALE OIL WEAKNESS
2019, February, 18, 11:55:00
U.S. TIGHT OIL PRODUCTION 7 MBD
U.S. EIA - In December 2018, U.S. shale and tight plays produced about 65 billion cubic feet per day (Bcf/d) of natural gas (70% of total U.S. dry gas production) and about 7 million barrels per day (b/d) of crude oil (60% of total U.S. oil production). A decade ago, in December 2008, shale gas and tight oil accounted for 16% of total U.S. gas production and about 12% of U.S. total crude oil production.
U.S. SHALE OIL WEAKNESS
2019, February, 18, 11:50:00
U.S. SHALE NEED INVESTMENT
REUTERS - On Thursday, the regional price of crude was at a $1.10 a barrel premium to U.S. crude futures, the strongest in more than a year as companies including Parsley Energy, Pioneer Natural Resources, Goodrich Petroleum Corp have pared their exploration budgets, easing the constraints.
U.S. SHALE OIL WEAKNESS
2019, February, 18, 11:30:00
U.S. RIGS UP 2 TO 1,051
BHGE - U.S. Rig Count is up 2 rigs from last week to 1,051 rigs, Canada Rig Count is down 16 rigs from last week to 224,
U.S. SHALE OIL WEAKNESS
2019, February, 15, 12:00:00
OPEC REMAINS HARD
PLATTS - "Our primary objective is to ensure that the oil market remains in balance throughout 2019 and beyond in order to build on the success of the past couple of years," added Barkindo.
U.S. SHALE OIL WEAKNESS
2019, January, 30, 10:55:00
OIL, GAS INVESTMENT DOWN
BLOOMBERG - Investment in oil and gas production collapsed by about $350 billion, or more than 40 percent, from 2014 to 2016 -- the sharpest contraction since the 1980s -- after crude fell from over $120 a barrel to less than $30, according to the International Energy Agency. The number of new projects approved in 2017 dwindled to the lowest in 70 years, the Paris-based agency said.
U.S. SHALE OIL WEAKNESS
2019, January, 21, 11:35:00
FLAT US E&P CAPEX
PLATTS - US onshore E&P capital investments in 2019 are likely to be flat to slightly down from last year, with international activity outside North America picking up slowly over the next several months, Schlumberger's top executive said.
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Tags: USA, SHALE, OIL