A grim narrative plays out

US independents are bracing for their worst results in years when they begin reporting third quarter earnings in coming weeks. But a bleak oil market outlook raises the question: How much worse can it get?

“The narrative for Q3 earnings season will be grim, both with regard to current industry conditions as well as the threatening visibility heading into 2016,” investment bank Simmons & Company said in a recent note.  Continue reading

Autumn pruning season for E&Ps

If the early indications of the autumn asset redeterminations for US oil and gas explorers are accurate, it looks like producers are finding ways to weather the 10-30pc value cuts . That is, unless oil prices fall further.

Banks determine the value of producers’ oil and natural gas reserves twice per year, partly based on average prices. Reserves are key assets for any upstream company, serving as collateral for loans or lines of credit. They are worth a lot less with crude prices around six-year lows.  Continue reading

US shale M&A set to take off

It has taken almost a year of low crude oil prices. But the stage finally looks set for a step up in US shale M&As, with smaller deals expected to dominate rather than full corporate acquisitions.

Hedges that had hitherto cushioned the impact of falling prices are now rolling off, and an impending bi-annual redetermination by banks of oil and gas reserves has left producers with little option but to sell assets.  Continue reading

Are US indies giving up on 2016?

In the staring contest that’s lasted for more than a year between Opec and US oil producers, the indies may have blinked.

Recent commentary from US independent producers is pointing to a growing willingness to cut output next year — marking a turnaround from talk of continued output growth that dominated their second-quarter earnings reports just months ago. Continue reading

The worst in 30

The chorus of voices saying the current oil market downturn is coming close to that seen in 1986-87 — when prices collapsed to under $20/bl — is getting louder.

UK bank Barclays is among the latest to sing out. Global upstream spending will decline by 20pc this year over last and by another 3-8pc in 2016,  the bank said. That would be the first time since 1986-87 that upstream spending fell for two consecutive years. The projection comes from a Barclays survey of 175 oil and gas companies between 10 August and 2 September.  Continue reading