Oil Prices

[greengiraffe]

The only survivor for this prolonged drought are the lean and financially strong producers. I would stay away from any O&G plays on SGX until we see blood on the streets.

I always like to re-iterate my experience in the 90s when FELs has 0 rig order for almost a decade...

With a substantially higher operating costs in Singapore, even repair and upgrading works may not be the way for local yards...

Jul 27 2015 at 1:24 PM Updated Jul 27 2015 at 8:31 PM

Oil groups have shelved $274bn in new projects as low prices bite

The plunge in crude prices since last year has resulted in the deferral of 46 big oil and gas projects with 20 billion barrels of oil equivalent in reserves. Reuters
by Christopher Adams

The world's big energy groups have shelved $US200 billion ($274 billion) of spending on new projects in an urgent round of cost-cutting aimed at protecting investors' dividends as the oil price slumps for a second time this year.

The sell-off in oil has been matched by a broader slump in copper, gold and other raw materials, pushing the Bloomberg commodities index to a six-year low over concerns of weaker Chinese growth and rising supplies across the board.

The plunge in crude prices since last year has resulted in the deferral of 46 big oil and gas projects with 20 billion barrels of oil equivalent in reserves - more than Mexico's entire proven holdings - according to consultancy Wood Mackenzie.

Among companies postponing big production plans while they wait for costs to come down are UK-listed BP, Anglo-Dutch Royal Dutch Shell, US-based Chevron, Norway's Statoil, and Australia's Woodside Petroleum.

Research from Rystad Energy, a Norwegian consultancy, found in May that $US118 billion of projects had been put on hold, but the Wood Mackenzie survey shows the toll is now much greater.

The decline in Brent crude, which has more than halved in the past year, was triggered by OPEC's decision not to cut output in the face of a US supply glut and weaker-than-expected demand. After stabilising in March, oil prices have faced renewed pressure, with Brent falling below $US55 a barrel this month - a 20 per cent decline from a five-month high reached in early May.

More than half the reserves put on hold lie thousands of feet under the sea, including in the Gulf of Mexico and off west Africa, where the technical demands of extracting crude and earlier inflation have pushed up the cost of projects.

Deepwater drilling rigs cost hundreds of thousands of dollars a day to hire and these projects could yet proceed if contractors' costs fall far enough.

Canada is the biggest single region affected, with the development of some 5.6 billion barrels of reserves, almost all oil sands, having been deferred.

"The upstream industry is winding back its investment in big pre-final investment decision developments as fast as it can," Wood Mackenzie said in a report to be released on Monday. "This is partly because it is one of the quickest ways to free up capital in response to low oil prices."

It added that the number of major upstream projects expected to be fully approved during 2015 could probably be counted "on one hand".

Shell, which stunned the energy industry with a £55 billion agreed offer for BG Group in April, will this week set out deeper cuts to its capital spending this year, revising downwards its most recent estimate of $US33 billion expenditure.

France's Total is expected to reveal it has managed greater efficiency savings than expected just a few months ago, while it is thought BP is likely to spell out the impact of falling supplier costs on its overall spending.

The Europe-based integrated oil groups should reveal second-quarter earnings about 20 per cent below those for the first three months of 2015, with Brent having averaged $US63 a barrel, more than 40 per cent below levels a year ago, said Neill Morton, an analyst at Investec. Lower trading profits and seasonal maintenance could offset the impact of improved refining margins.

Financial Times

[lilvestor]

HOUSTON -- The total number of active U.S. rigs drilling for oil climbed as of Friday, according to the latest weekly rig count data from Baker Hughes. Oil-directed drilling went up by 21, increasing the total number of oil rigs to 659. Gas-directed drilling dropped by two rigs to 216, for a total U.S. rig count of 876, including one miscellaneous rig.

The largest jump in oil rigs in 15 months was likely response to WTI price at $60/bbl in May and June. Since then, the WTI price has plummeted below $50/bbl, a possible reaction to the Iran nuclear accord that will lead to the resumption of Iranian crude oil back to world markets. As a result, most analysts expect the oil rig count to resume its downward slide during the coming weeks.

The total number of oil rigs has now risen in three of the last four weeks, but is still down significantly from an October high of 1,609. Oil companies have cut back on drilling as the price of crude oil collapsed last fall.

The sharp decline helped to buoy oil markets early this year, as traders mostly expected less drilling to translate into fewer barrels of oil. But production has proved more resilient than expected, and oil prices began to slide again this month after briefly stabilizing near $60/bbl. The WTI crude oil futures fell by 31 cents to $48.14/bbl Friday, the lowest close for the next-month contract since March.

The weekly Canadian rig count went up by eight rigs to 200 and the monthly international rig count was by 12 rigs to 1,146 from May 2015.

Rig counts went up as soon as oil traded above $60, this is proof that shale is different beast from traditional oil drilling (offshore or onshore), its so easy to restart production. I don't see any upside for oil unless these shale producers go bust.

[BlueKelah]

WSJ - Sudden drop in Crude Oil Prices Roil US Rebound

According to the article, US energy firms raised USD21 billion in equity and USD73billion in new debt, no wonder the chickens have not come home to roost yet.

The support of equity and debt market, can U-turn, overnight. Let's see...

Haha if really u-turn might be possible to see $30 oil

Hmm... I thought the U-turn, will bring more US "energy firms" down, and oil supply will go down, thus oil price will go up???

Short term may be low oil price and shale oil production down, medium to longer term in couple years time maybe oil revert back up from lack of shale oil. But seems a bit depends on how much iran and opec can pump out. Over next few months i think iran has around 20million barrel to start getting rid off, and those traders with oil stored in ships hoping for a rebound may eventually have to also sell at lower prices if the oil price slump continues for longer time and global demand drops, Tesla seems to be ramping up its battery factory for electric thingies soon.

sent from my Galaxy Tab S

[greengiraffe]

Jul 29 2015 at 6:11 AM Updated Jul 29 2015 at 6:25 PM

Oil industry starts new round of cost cuts amid lower prices

Chevron says it's eliminating 1500 jobs to curb spending by about $US1 billion. Reuters
by Javier Blas and David Wethe
BP and Chevron have fired the opening salvo for a further round of cost cuts by major oil companies grappling with low energy prices.

"It's really tough times for the industry," BP Chief Executive Officer Bob Dudley said Tuesday, comparing the market to 1986 when tumbling prices forced drastic cost savings.

Oil explorers are seeking large discounts from contractors and sending some projects back to the drawing board to find cheaper ways to build them after crude prices dropped by half in a year. Many already announced multibillion-dollar cuts three months ago when they released first-quarter results in a bid to reassure investors they would be able to pay dividends.

Producers are now feeling the layoff pain that has mostly plagued oilfield service providers over the past year.

Chevron said it's eliminating 1500 jobs to curb spending by about $US1 billion. The job cuts announced by the San Ramon, California-based producer ahead of its earnings release on July 31 represent 2.3 per cent of its global staff.

ConocoPhillips has said it's continuing layoffs while it, too, strives to slash $US1 billion in spending over two years. The company has cut close to 1500 jobs since the downturn began in June 2014, according to Graves & Co, a Houston-based adviser that has closely tracked the cutbacks.

'ADDITIONAL CUTS ARE INEVITABLE'

Job cuts at exploration and production companies have accounted for roughly 10 per cent of the more than 150,000 layoffs globally throughout the industry, according Graves. That compares to more than 100,000 eliminated from service providers and drilling contractors.

The E&P job cuts should continue to climb this year as the financial picture worsens, said John Graves, whose firm assists in oil and gas deals with audits and due diligence.

"As long as we're going to have such a severe glut in terms of oil supply, additional cuts are inevitable," Graves said. "A lot of this really hadn't hit the E&P side of the business yet."

Meanwhile, Saipem, Italy's biggest oil and gas contractor, reduced its earnings target for this year and announced job cuts after posting an unexpected loss in the second quarter.

The company posted a second-quarter net loss of 997 million euros, after total writedowns of 929 million euros. Analysts were expecting a 39.1 million-euro profit.

"The further steep fall in the oil price has resulted in a major disruption, which is not likely to be reversed in the short-to-medium term," said chief executive Stefano Cao.

Saipem plans 1.3 billion euros of savings through 2017, including a workforce reduction of 8,800 people. The company will exit businesses, downsize its presence in Brazil and Canada, where lower-margin contracts led to previous target cuts, and scrap five vessels. It forecasts a net loss this year of 800 million euros.

The slump in crude followed a decision by the Organization of Petroleum Exporting Countries to maintain output to defend market share, helping to create a global supply glut. Brent oil on Tuesday touched $US52.28 a barrel, compared with a price in June 2014 of almost $US116.

Bloomberg

[Dosser]

Interesting that the BP CEO compares the oil market to 1986. Look at what happened in 1986/1987 in Singapore. The local economy tanked (early signs of that now? The wife keeps remarking on how few people she sees shopping, other than basic necessities), the property market tanked (early stages now, falling rents, lots of supply coming online), the S$ dropped a lot (now down from US$1.25 to US$1.37, but wait until MAS decides the economy needs a boost and manages it down further), big cuts in CPF (not yet, but wait until times get hard). If the correlations hold, we have the equivalent of the October 1987 Dow Jones crash, which took most other markets down as well, to come. Happy times - lots of opportunities to make money after the crash, most of which I missed.

Jul 29 2015 at 6:11 AM Updated Jul 29 2015 at 6:25 PM

Oil industry starts new round of cost cuts amid lower prices

Chevron says it's eliminating 1500 jobs to curb spending by about $US1 billion. Reuters
by Javier Blas and David Wethe
BP and Chevron have fired the opening salvo for a further round of cost cuts by major oil companies grappling with low energy prices.

"It's really tough times for the industry," BP Chief Executive Officer Bob Dudley said Tuesday, comparing the market to 1986 when tumbling prices forced drastic cost savings.

Oil explorers are seeking large discounts from contractors and sending some projects back to the drawing board to find cheaper ways to build them after crude prices dropped by half in a year. Many already announced multibillion-dollar cuts three months ago when they released first-quarter results in a bid to reassure investors they would be able to pay dividends.

Producers are now feeling the layoff pain that has mostly plagued oilfield service providers over the past year.

Chevron said it's eliminating 1500 jobs to curb spending by about $US1 billion. The job cuts announced by the San Ramon, California-based producer ahead of its earnings release on July 31 represent 2.3 per cent of its global staff.

ConocoPhillips has said it's continuing layoffs while it, too, strives to slash $US1 billion in spending over two years. The company has cut close to 1500 jobs since the downturn began in June 2014, according to Graves & Co, a Houston-based adviser that has closely tracked the cutbacks.

'ADDITIONAL CUTS ARE INEVITABLE'

Job cuts at exploration and production companies have accounted for roughly 10 per cent of the more than 150,000 layoffs globally throughout the industry, according Graves. That compares to more than 100,000 eliminated from service providers and drilling contractors.

The E&P job cuts should continue to climb this year as the financial picture worsens, said John Graves, whose firm assists in oil and gas deals with audits and due diligence.

"As long as we're going to have such a severe glut in terms of oil supply, additional cuts are inevitable," Graves said. "A lot of this really hadn't hit the E&P side of the business yet."

Meanwhile, Saipem, Italy's biggest oil and gas contractor, reduced its earnings target for this year and announced job cuts after posting an unexpected loss in the second quarter.

The company posted a second-quarter net loss of 997 million euros, after total writedowns of 929 million euros. Analysts were expecting a 39.1 million-euro profit.

"The further steep fall in the oil price has resulted in a major disruption, which is not likely to be reversed in the short-to-medium term," said chief executive Stefano Cao.

Saipem plans 1.3 billion euros of savings through 2017, including a workforce reduction of 8,800 people. The company will exit businesses, downsize its presence in Brazil and Canada, where lower-margin contracts led to previous target cuts, and scrap five vessels. It forecasts a net loss this year of 800 million euros.

The slump in crude followed a decision by the Organization of Petroleum Exporting Countries to maintain output to defend market share, helping to create a global supply glut. Brent oil on Tuesday touched $US52.28 a barrel, compared with a price in June 2014 of almost $US116.

Bloomberg

[greengiraffe]

1987, 97, 07... 17?

Singapore costs base substantially higher now... been asking which sector in Singapore is bright yet to get a good response but so many still buying new prop when its so clear that vacancies rising, rental falling...

Prop cos going overseas to hunt for opportunities is also a tell-tale sign...

Blur liao...

Interesting that the BP CEO compares the oil market to 1986. Look at what happened in 1986/1987 in Singapore. The local economy tanked (early signs of that now? The wife keeps remarking on how few people she sees shopping, other than basic necessities), the property market tanked (early stages now, falling rents, lots of supply coming online), the S$ dropped a lot (now down from US$1.25 to US$1.37, but wait until MAS decides the economy needs a boost and manages it down further), big cuts in CPF (not yet, but wait until times get hard). If the correlations hold, we have the equivalent of the October 1987 Dow Jones crash, which took most other markets down as well, to come. Happy times - lots of opportunities to make money after the crash, most of which I missed.

Jul 29 2015 at 6:11 AM Updated Jul 29 2015 at 6:25 PM

Oil industry starts new round of cost cuts amid lower prices

Chevron says it's eliminating 1500 jobs to curb spending by about $US1 billion. Reuters
by Javier Blas and David Wethe
BP and Chevron have fired the opening salvo for a further round of cost cuts by major oil companies grappling with low energy prices.

"It's really tough times for the industry," BP Chief Executive Officer Bob Dudley said Tuesday, comparing the market to 1986 when tumbling prices forced drastic cost savings.

Oil explorers are seeking large discounts from contractors and sending some projects back to the drawing board to find cheaper ways to build them after crude prices dropped by half in a year. Many already announced multibillion-dollar cuts three months ago when they released first-quarter results in a bid to reassure investors they would be able to pay dividends.

Producers are now feeling the layoff pain that has mostly plagued oilfield service providers over the past year.

Chevron said it's eliminating 1500 jobs to curb spending by about $US1 billion. The job cuts announced by the San Ramon, California-based producer ahead of its earnings release on July 31 represent 2.3 per cent of its global staff.

ConocoPhillips has said it's continuing layoffs while it, too, strives to slash $US1 billion in spending over two years. The company has cut close to 1500 jobs since the downturn began in June 2014, according to Graves & Co, a Houston-based adviser that has closely tracked the cutbacks.

'ADDITIONAL CUTS ARE INEVITABLE'

Job cuts at exploration and production companies have accounted for roughly 10 per cent of the more than 150,000 layoffs globally throughout the industry, according Graves. That compares to more than 100,000 eliminated from service providers and drilling contractors.

The E&P job cuts should continue to climb this year as the financial picture worsens, said John Graves, whose firm assists in oil and gas deals with audits and due diligence.

"As long as we're going to have such a severe glut in terms of oil supply, additional cuts are inevitable," Graves said. "A lot of this really hadn't hit the E&P side of the business yet."

Meanwhile, Saipem, Italy's biggest oil and gas contractor, reduced its earnings target for this year and announced job cuts after posting an unexpected loss in the second quarter.

The company posted a second-quarter net loss of 997 million euros, after total writedowns of 929 million euros. Analysts were expecting a 39.1 million-euro profit.

"The further steep fall in the oil price has resulted in a major disruption, which is not likely to be reversed in the short-to-medium term," said chief executive Stefano Cao.

Saipem plans 1.3 billion euros of savings through 2017, including a workforce reduction of 8,800 people. The company will exit businesses, downsize its presence in Brazil and Canada, where lower-margin contracts led to previous target cuts, and scrap five vessels. It forecasts a net loss this year of 800 million euros.

The slump in crude followed a decision by the Organization of Petroleum Exporting Countries to maintain output to defend market share, helping to create a global supply glut. Brent oil on Tuesday touched $US52.28 a barrel, compared with a price in June 2014 of almost $US116.

Bloomberg

[Porkbelly]

I have no empirical evidence.

Yet, I believe that there is lots of money floating around. Mild tweeks to TDSR and quantity of COE will trigger buying sprees.

There seems to be high confidence in people holding on to jobs.

Besides...
-Oil prices dropping
-Interest rates will not rise beyond .25 basis and likely to stay there for a long time.
-Online shopping has taken off

I have 2 kids who buy everything online... food, speciality clothing, cosmetics, health supplements... the brick & mortar will decline further.

( both are working adults.. no allowance from me)

[CityFarmer]

I have 2 kids who buy everything online... food, speciality clothing, cosmetics, health supplements... the brick & mortar will decline further.

( both are working adults.. no allowance from me)

I am observing the trend, since retailer is in my portfolio.

IMO, the online sales is going up, from a very low base. I reckon, brick & mortar stores will survive together with online stores, at a balance point. I have seen online store supplements its sales with physical stores. I saw brick & mortar stores go also online. A very interesting trend, but not disruptive at the moment.

(sharing a view, which may not be relevant in this thread)

[greengiraffe]

http://www.cnbc.com/2015/07/30/shell-say...nturn.html

Shell plans for 'prolonged downturn' in oil prices
Holly Ellyatt | @HollyEllyatt
4 Hours Ago
CNBC.com

Royal Dutch Shell warned on Thursday that lower oil prices could continue for several years, and said it was planning for a prolonged downturn.

It comes as the Anglo–Dutch multinational reported that earnings in the second quarter, on a current cost of supplies (CCS) basis, came in at $3.4 billion - down from $5.1 billion for the same quarter a year ago. CCS is a way of reporting income that takes into account changes in expenses over the period.

An employee holds a control panel as barrels are filled with lubricant oil for shipping at Royal Dutch Shell Plc's plant in Torzhok, Russia, March 21, 2014.
Andrey Rudakov | Bloomberg | Getty Images
An employee holds a control panel as barrels are filled with lubricant oil for shipping at Royal Dutch Shell Plc's plant in Torzhok, Russia, March 21, 2014.
Shell also revealed plans to further reduce 2015 capital expenditure (capex) to $30 billion, down by 20 percent from a year ago on the back of a downturn in oil prices, and said it planned to cut 6,500 jobs over the year.

CEO Ben van Beurden said that the company was successfully "reducing our capital spending and operating costs, and delivering a competitive performance in today's oil market downturn."

"We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery. We're taking a prudent approach, pulling on powerful financial levers to manage through this downturn, always making sure we have the capacity to pay attractive dividends for shareholders," he said in a statement.

Shell said it remained committed to a dividend of $1.88 per share in 2015, and "at least" the same amount in 2016.

Shell's BG deal

Earlier this year, Shell launched a £47 billion ($69 billion) cash-and-share bid for BG Group. On Thursday, van Beurden said the company was making "good progress" with the recommended combination of the companies.


The merger would enhance Shell's "free cash flow, create an international oil company leader in LNG (liquefied natural gas) and deep water innovation, and be a springboard to change Shell into a simpler and more profitable company," he added.

This backdrop of lower oil prices - which have halved since last June - is weighing on the entire oil industry.

Read MoreShell's BG deal: The biggest oil price bet yet?
On Tuesday, BP reported a second-quarter replacement cost loss of $6.3 billion and warned that low oil prices were here to stay. The replacement costmeasure takes into account changes in the price of oil and is used to report earnings.

Meanwhile, on Wednesday, French oil giant Total reported that net profit fell 2 percent in the second quarter, and the company stepped up its cost-cutting drive.

Follow us on Twitter: @CNBCWorld

Holly Ellyatt
Assistant Producer, CNBC.com

[bear]

A report by www.thstreet.com on Saudi Arabia's plan to cut back on oil production.
I don't think it will change the poor outlook of oil prices a bit at least for next one to two years.

link
http://www.thestreet.com/video/13236846/...ummer.html

Saudi Arabia to Cut Oil Production Levels at the End of Summer.
The world's number one oil exporter, Saudi Arabia, is planning to scale back oil production at the end of the summer. The latest reports suggest that Saudi Arabia will reduce its crude output to 10.3 million barrels a day, cutting around 300,000 barrels per day. According to reports, the country will slow its record-breaking output in response to domestic demands, as the need for air conditioning subsides in September. The Street's Jim Cramer said that Saudi Arabia's reductions will have a dramatic impact on the price of oil, despite the potential Iran deal on the horizon. Cramer said the cutback will make it 'unlikely we will visit the $43 level again. We all know that our production has already peaked and I expect it to decline pretty precipitously.' He added that the latest developments provide 'the missing piece of the puzzle, that should cause oil to trade at these levels and not go much lower.' Saudi Arabia currently produces around 10 percent of the world's crude oil.