26 July 2019

Total reports fall in profit to $2.9bn in Q2 2019

French oil and gas company Total has announced its results for the second quarter (Q2) of 2019, reporting decreased profits as a result of lower oil and gas prices.

The company’s adjusted net income in Q2 2019 was $2.9bn, or $1.05 per share, a 26% decrease from Q2 2018. Total adjusted net income for the first half (1H) of 2019 was $5.6bn or $2.07 per share, a 12% decrease compared to 1H 2018.

Adjusted net operating income for Total’s Exploration and Production division was $2.022bn in Q2 2019 and $3.744bn in 1H 2019, a 13% decrease from Q2 2018 and a 9% decrease from 1H 2019. Total cited lower Brent and natural gas prices as the reason for this drop in income.

Total chair and CEO Patrick Pouyanné said: “Markets remained volatile with Brent averaging $69 per barrel in the second quarter, an increase of 9% compared to the previous quarter, but natural gas prices were down 36% in Europe and 26% in Asia.

“In this context, with a slight increase in production to 2.96 Mboed, adjusted net income increased by 5% compared to the previous quarter to $2.9bn, and the return on equity remained above 11%.”

Total’s hydrocarbon production was 2,957 kilo barrels of oil equivalent (kboed), an increase of 9% compared to Q2 2018. The company attributed this increase in production to the start-up and ramp-up of new projects, noting that it was partially offset by natural decline and maintenance.

These projects also accounted for LNG sales increasing by 65% to 4.1 metric tonnes (Mt) in Q2 2019 compared with the 2.5 Mt sold in Q2 2018.

Pouyanné said: “Exploration & Production benefited from the higher Brent with a 15% increase in operating cash flow before working capital changes.

“Although gas prices fell sharply, Integrated Gas, Renewables and Power increased its operating cash flow before working capital changes by 42% thanks to 8% production growth and a 10% increase in LNG sales. Compared to the second quarter 2018, operating cash flow before working capital changes increased by 77%, driven by a doubling of LNG sales.”


26 July 2019

Inpex to acquire 40% stake in four blocks in US Gulf of Mexico

Inpex US Offshore, a subsidiary of Japanese exploration and production (E&P) company Inpex, has signed an agreement with Anadarko Petroleum to acquire a 40% participating interest in Keathley Canyon blocks 921 and 965 and Walker Ridge blocks 881 and 925 in the US Gulf of Mexico.

Anadarko is an independent oil and natural gas exploration and production company and is the operator of the blocks.

The four blocks, located around 380km off the coast of the State of Louisiana, cover 93.2km² where the water depth ranges between 2,150m and 2,700m. The blocks are located near the Lucius Oil Field and Hadrian North Oil Field. The Japanese company, through its American subsidiary, has participating interests in these oil-producing fields.

After the acquisition, Anadarko will continue to be the operator with a 60% participating interest in the blocks, and Inpex will hold the remaining 40% interest.

Inpex intends to drill an exploration well in partnership with operator Anadarko, subject to approvals from the managements of Inpex and Anadarko and additional evaluation. The company has placed the Gulf of Mexico as one of the priority exploration areas in its Medium-term Business Plan.

Inpex said that the acquisition of the blocks is also in tune with the company’s pursuit of sustainable growth of oil and natural gas E&P activities, a target stipulated in the ‘Vision 2040’ announced in May 2018.

The company said that the acquisition would have minimal impact on the company’s consolidated financial results for the year ending December 2019.


26 July 2019

US-China trade war and Middle East tensions push oil prices higher

Oil prices recorded marginal gains on Friday on continuing tensions in the Middle East, offset by a sluggish global economic growth outlook amid the US-China trade war.

Brent crude futures LCOc1 increased by 7 cents at $63.46 a barrel, a gain of 0.1%, compared to 0.3% in the previous session.

US West Texas Intermediate crude CLc1 was 18 cents higher at $56.20 a barrel, an increase of 0.3% compared to 0.25% overnight, Reuters reported.

Singapore-based brokerage Phillip Futures commodities analyst Benjamin Lu said: “Growing challenges in the macroeconomic environment have kept bullish bets in check as risk appetites remain soft over potential weakness in global fuel demand.”

The US-China trade war continues to worry economists, as this is likely to deepen a global economic growth rut, despite expectations that major central banks will cut rates or ease policy further.

The report said that increasing pessimism is evident from the latest Reuters polls of over 500 economists conducted from 1-24 July, which revealed a downgraded or unchanged growth outlook for 90% of more than 45 economies polled. This outlook also applied for 2020.

While concerns over supply disruptions in the Middle East have contributed to the recent increase in prices, oil has been under pressure due to worries about global economic growth amid signs of escalating Sino-US trade war over 2019.

Vanguard Markets managing partner Stephen Innes said in a note: “Bullish wagers will be held hostage to the soggy global growth outlook.”

Meanwhile, Britain sent a warship to accompany British-flagged vessels through the Strait of Hormuz, a week after Iran seized a British-flagged tanker in the Gulf. The government had previously said that it did not have the resources to do so.

Amid the tensions between Tehran and Washington, US Secretary of State Mike Pompeo said in a television interview on Thursday that he was willing to travel to Iran for talks, if necessary.


25 July 2019

Equinor reports fall in profit to $1.13bn for Q2 2019

Norwegian energy company Equinor has announced its results for the second quarter (Q2) of 2019, reporting “solid operational performance” despite decreased profits.

The company’s adjusted earnings after tax for Q2 2019 were $1.13bn, a 34% decrease from $1.7bn in Q2 2018 and a decrease from $1.5bn in Q1 2019. Net operating income for Q2 2019 was $3.52bn, a decrease from in $4.73bn in Q1 2019 and $3.84bn in Q2 2018.

Total equity production in Q2 2019 was 2,012 million barrels of oil per day (MMboe/day), a decrease from 2,178 MMboe/day in Q1 2019 and 2,208 MMboe/day in Q2 2018. Equinor attributed these results to expected natural decline, adding that this decline was offset by production from new wells and fields.

According to the company, production was maintained at a high level but a combination of high turnaround activity, lower prices and “quarter-specific items” impacted results. Equinor also stated that underlying operating costs and administrative expenses per barrel increased somewhat from Q2 2018 as a result of new fields coming on stream.

Equinor president and CEO Eldar Sætre said: “We deliver overall solid operational performance and maintain high production in a quarter with lower commodity prices and high maintenance activity.

“I am pleased that we demonstrate continued strong cost focus and capital discipline. Combined with efficient project execution, this enables us to reduce our organic CAPEX guiding for 2019 to 10-11 billion dollars.”

Adjusted exploration expenses were $235m in Q2 2019, a decrease from Q1 2019’s expenses of $268m but roughly the same as in Q2 2018. As of Q2 2019, Equinor has completed 21 exploration wells with seven commercial discoveries.

Sætre said: “We continue to progress our highly competitive projects delivering production growth towards 2025. Today we announce that we have improved the world-class Johan Sverdrup project even further.

“With a planned start up later this year, and faster ramp up to reach plateau production during summer next year, the project will produce and create substantial value for decades to come.”


25 July 2019

Eni discovers gas and condensate in Song Hong Basin offshore Vietnam

Italian oil and gas company Eni has announced that its exploration well located in Block 114, Song Hong Basin, offshore Vietnam has discovered the presence of gas and condensate in the Ken Bau prospect.

The company said that the result of the exploration well indicates a significant potential of the hydrocarbon accumulation. The Italian company’s subsidiary, Eni Vietnam, is the operator of Block 114 with a 50% share, while Essar E&P holds the remaining 50%.

Eni said that the exploration well, Ken Bau 1X, has been drilled at a depth of 95m below water level. The well, which reached a depth of 3,606m, encountered several pockets of gas and condensate sandstone interbedded with Miocene age shale. The company has estimated the net reservoir thickness at more than 100m.

Eni said that it has plugged and abandoned Ken Bau 1X well earlier than the original plan due to technical issues, before reaching deeper levels that could hold additional resources. Eni said that it is already planning a drilling campaign for early 2020 to assess the substantial upside of the discovery.

The results of Ken Bau 1X well represent a breakthrough for evaluating the exploration potential in the Song Hong Basin. Eni Vietnam also operates with a 100% stake in the neighbouring Block 116.

Eni has been operating in Vietnam since 2013. The company currently operates four blocks, all located in the underexplored Song Hong and Phu Khanh basins, offshore central Vietnam.

Previously, Eni and Qatar Petroleum signed an agreement under which the Qatari national oil company will acquire a 13.75% share in the exploration blocks L11A, L11B and L12, in deep offshore Kenya.

The three blocks, L11A, L11B and L12, are located in water depths ranging from 1,000m to 2,700m. The blocks cover a surface of about 15,000km² and have a high exploration potential. Currently, Eni and Total hold 55% and 45% interest in the blocks respectively, with Eni as the operator. Qatar Petroleum will acquire 25% interest in each of the blocks, of which 13.75% will be from Eni and the remaining from Total.


25 July 2019

Petrobras signs contracts to sell offshore fields for $1.5bn

Brazilian company Petrobras has signed two contracts for the sale of shallow-water oilfields in Campos and Santos Basins for $1.5bn.

Petrobras’ contract also provides for the additional contingent payment of up to $200m, depending on oil prices in the future.

The company will sell 100% of its interest in the Pampo and Enchova clusters in shallow waters in the Campos Basin to Trident Energy’s subsidiary Trident Energy do Brasil for $851m.

Located off the coast of Rio de Janeiro, the Pampo and Enchova Hubs include the Enchova, Enchova Oeste, Marimbá, Piraúna, Bicudo, Bonito, Pampo, Trilha, Linguado and Badejo fields. Together, these fields produce about 25,500 barrels of oil and gas per day through the PPM-1, PCE-1, P-8 and P-65 platforms.

The transaction will make Trident the operator of these concessions with 100% stake.

As part of its contract with Karoon Petróleo & Gás, a subsidiary of Karoon Energy, Petrobras agreed to sell all its interests in the Baúna field in the Santos Basin off the coast of the state of São Paulo for $665m.

The Baúna field, which comprises Baúna and Piracaba oil reservoirs, commenced its operations in February 2013 and has a current output of about 20,000 barrels of oil per day through the FPSO Cidade de Itajaí.

The deal is subject to final regulatory approval from Brazil, which is expected in the first half of 2020. Following the acquisition, Karoon will become the operator of the field with a 100% stake.

Karoon managing director Robert Hosking said: “Baúna will provide Karoon shareholders with material oil production (currently approximately 20Mbopd before development workovers) and a platform for future growth.

“The acquisition of Baúna opens a new phase for Karoon as a significant ASX listed oil producer. It is expected to generate significant operational and logistical synergies with Karoon’s other 100% owned southern Santos Basin exploration and development assets.”


24 July 2019

Aker BP discovers oil near Alvheim field in North Sea

Norwegian oil exploration and development company Aker BP has struck an oil column in the primary exploration target of 28 metres in sand layers in the wildcat well 25/2-21 (Liatårnet).

Aker BP, the operator of production licence 442 in the North Sea, said that the discovery had good reservoir quality. The 25/2-21 well was the ninth exploration well in production licence 442, awarded in APA 2006.

The well was drilled 40km north-east of the Alvheim field in the central North Sea and 200km north-west of Stavanger. The company claimed that the well encountered an oil column and did not encounter oil/water contact.

Aker BP said that the primary and secondary exploration targets were intended to prove petroleum in reservoir rocks from the Early Miocene period, called the Skade formation. The secondary exploration target comprised a water-bearing sand layer of 12m, and this also had excellent reservoir quality.

Aker BP said that according to preliminary estimates, the size of the discovery was between 13m standard cubic metres (sm³) and 32sm³ of recoverable oil.

However, the company said that the flow potential and recovery rate were uncertain and would have to be clarified before the preparation of a possible development plan. It added that the well was not formation tested, but the company carried out extensive data acquisition and sampling.

The Norwegian company said that the well was drilled to a vertical depth of 1,170m below the sea surface and was terminated in rocks from the Oligocene age, called the Hordaland group. Water depth at the site was 110m and the well has been plugged and abandoned.

The Deepsea Stavanger drilling facility will now be used to drill wildcat well 6608/6-1 in production licence 762 in the Norwegian Sea. Aker BP is the operator of this licence.


23 July 2019

Adnoc and CNOOC sign agreement on oil and gas collaboration

The Abu Dhabi National Oil (Adnoc) has signed an agreement with China National Offshore Oil (CNOOC) to collaborate in the upstream and downstream sectors and liquefied natural gas (LNG).

Adnoc Group CEO Sultan Ahmed Al Jaber and CNOOC chairman Yang Hua exchanged the Strategic Framework Agreement in the presence of Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed Al Nahyan and Chinese President Xi Jinping.

The two companies agreed to share knowledge, best practices and technologies in ultra-sour gas development to improve operational efficiency in gas processing and treatment, deliver efficiency, performance and reliability for drilling operations and develop field and reservoir development plans.

They also decided to consider Offshore Oil Engineering for engineering, procurement and construction opportunities, China Oilfield Services for the supply of oilfield services, and explore collaboration opportunities in offshore oil and gas field assets in Abu Dhabi.

Adnoc and CNOOC will jointly explore LNG sales and purchase opportunities, share knowledge and expertise in LNG markets, as well as evaluate partnerships and joint investment opportunities in the LNG value chain.

In the downstream sector, they will analyse business opportunities, including collaboration in new integrated refining and petrochemical assets in China; cooperation in CNOOC’s refining assets; and a partnership and joint investment in the refining and petrochemical value chain.

Al Jaber said: “The future collaboration opportunities agreed today with CNOOC reinforce ADNOC’s strategic approach to partners that offer technology, capital or market access to maximise value from Abu Dhabi’s vast oil and gas resources.

“In addition, the collaboration opportunities underpin our 2030 smart growth strategy as well as our focus on key economies and Asian growth markets such as China.”

Adnoc intends to increase oil production capacity to five million barrels per day (bpd) by 2030 and continues to focus on downstream expansion in China and Asia, where petrochemicals and plastics demand is forecast to double by 2040.

Hua said that the agreement enables CNOOC to develop its overseas oil and gas business, diversify import resource and optimise the industrial chain of upstream, mid and downstream.

He said that CNOOC will continue the implementation of the Belt and Road Initiative, strengthen energy cooperation and contribute more value to the China-Arab friendship.