The Israel Defense Forces (IDF) are set to submit a proposal for its upcoming operation in Gaza’s Rafah region to the political authorities next week, local broadcaster Channel 12 reported on Friday. According to the media, the plan entails the transfer of residents from Rafah to different areas in south and central Gaza, excluding the northern part of the territory. Israeli Minister Without Portfolio Benny Gantz previously stated that if Hamas does not release the hostages held in the enclave before Ramadan, the Israeli military will intervene in Rafah.
Major Oil Companies Make Moves in Megamerger Frenzy
- Major oil companies like Chevron, Exxon, Occidental, and Diamondback have engaged in multibillion-dollar mergers, aiming to bolster their positions in the oil and gas market.
- These megamergers reflect a trend of consolidation in the U.S. oil sector, driven by higher oil prices and geopolitical uncertainties, with companies seeking to enhance their production capacities and competitiveness.
- The wave of mergers is reshaping the landscape of the U.S. oil industry, reducing the number of players and ensuring the dominance of a few major oil companies in the future. Over the last year, several oil and gas majors have undergone high-profile mergers as we enter the era of the megamerger. Big Oil in the U.S. appears to be undergoing a transition, as several well-known companies make large acquisitions to solidify their position in the future of oil and gas. In October, both Chevron and Exxon announced a major new deal, with Occidental following in December, and Diamondback in February, suggesting this is the new direction that U.S. oil and gas is going to go from now on. In October, Chevron announced it was buying Hess for $53 billion in stock. This provided Chevron with a 30 percent stake in Guyana’s Stabroek Block, giving the company a piece of an 11 billion barrel pie and a future in “low-carbon” oil production. This merger demonstrates Chevron’s aim to diversify its operations, allowing it to expand to new locations in Guyana and North Dakota – through Bakken shale operations. While it added just 386,000 bpd to Chevron’s output, it provides significant potential for future production. That same month, Exxon Mobil announced it had purchased Pioneer Natural Resources for $59.5 billion in an all-stock deal. This is Exxon’s largest merger since its acquisition of Mobil. In contrast to Chevron, this deal enhanced Exxon’s position in regions of existing operations, doubling its production volume in the Permian Basin. The merger added 711,000 bpd to Exxon’s portfolio. The mergers demonstrated clear ambitions from the two companies to continue investing in oil and gas operations, so long as the global demand for crude remains high. This follows several other mergers in the North American shale space last year, with a few large companies absorbing smaller operations to boost their output in the region. Bob McNally, the president of Rapidan Energy Group, stated, “These megadeals are just a prelude to this large investment wave I expect in coming years.” He added, “These deals signify the shift from a multi-year bust phase in oil that began in 2014 to a multi-year boom phase that should last well through this decade.” In December, another megamerger took place when Occidental Petroleum Corporation acquired local competitor CrownRock Minerals in a $12 billion deal. The deal is expected to be completed in the first quarter of this year. The merger supports CrownRock’s plan to develop a 100,000-acre space in the Midland Basin, which forms part of the Permian and produced 15 percent of U.S. crude in 2020. It will add 170,000 bpd of oil to Occidental’s output and add 1,700 undeveloped locations in the Permian to its portfolio. Occidental will finance the deal through $9.1 billion in debt and about $1.7 billion in common stock. This marks a distinct shift in the region as CrownRock is one of the last major private producers in the Permian, alongside Endeavor Energy Resources. Production in the Permian was once dominated by small producers that deployed new production techniques to access vast amounts of oil in the regions that many of the oil majors overlooked, establishing the U.S. as the world’s biggest crude producer. This encouraged large public companies to launch operations in the region, in addition to their global operations. This was only made possible after fracking technology was started being used, unlocking oil that was previously trapped in the region. This led a large number of companies to operate in the region. Mark Viviano, a managing partner at investment firm Kimmeridge Energy Management, explained “Consolidation is the last piece of the puzzle in rationalizing the shale industry.” This month, solidifying the shift in the region, Diamondback Energy announced plans to buy Endeavor in a $26-billion merger. This is expected to boost Diamondback’s value to $50 billion. There were rumours that Diamondback’s rival ConocoPhillips was also interested in purchasing Endeavor. The deal provides Diamondback with an additional 400,000 bpd of output in the Permian. Diamondback’s CEO Travis Stice, stated, “This is a combination of two strong, established companies merging to create a ‘must own’ North American independent oil company.” He added that the company would “have industry-leading depth and quality that will be converted into cash flow with the industry’s lowest cost structure”.The wave of megamergers has been spurred by higher oil prices over the last couple of years, and crude shortages following the sanctions imposed by the U.S. and Europe on Russian energy, following Russia’s invasion of Ukraine. Oil companies in the U.S. have been racing to increase their crude output to meet the growing demand for alternative supply chains. Several companies are using the massive profits they have earned over the last two years to invest in mergers, solidifying their position in U.S. oil production. This will reduce the number of companies operating in the U.S. oil regions and ensure a few oil majors’ positions in the future of the industry. NN: The big boys are gobbling up the next and most productive wave in breakthrough oil production technology. Its a game changer. Its the single biggest increase in oil well yields in history, And it greatly increases production at the well head and vastly decrees oil production costs. In 6 months the oil market ha s gone from resupplied to its biggest oversupply in history. And oil producers like the Saudis have immediately cancelled all plans and contracts to increase oil production.
Oil Majors Pursue Projects with $30 per Barrel Breakeven
- Oil majors are pursuing projects with lower breakeven costs.
- The news projects are about half the break-even level for oil projects just a decade ago.
- Improving drilling and cost efficiency have allowed oil companies to eke out a profit at much lower oil prices.
The U.S. and global oil and gas sector is currently enjoying a third year of relatively high energy prices with oil demand on a steady growth trajectory. WTI crude has traded above $70 per barrel for the better part of the past 12 months, well above the $54 per barrel average breakeven price for U.S. shale basins. However, U.S. oil majors are not allowing high energy prices to lull them into a false sense of security, rankled by the memories of the historic oil price crash of 2020.
Oil majors are now hedging their bets by targeting new oilfields that can be profitable even at $30 per barrel oil, reflecting executives’ belief that high prices are anything but guaranteed.
“After three major oil price crashes in 15 years, there is wide acceptance that another one is likely to happen,” Alex Beeker, director of corporate research at energy consultancy Wood Mackenzie, has told Reuters.
The U.S. and global oil and gas sector is currently enjoying a third year of relatively high energy prices with oil demand on a steady growth trajectory. WTI crude has traded above $70 per barrel for the better part of the past 12 months, well above the $54 per barrel average breakeven price for U.S. shale basins. However, U.S. oil majors are not allowing high energy prices to lull them into a false sense of security, rankled by the memories of the historic oil price crash of 2020. Oil majors are now hedging their bets by targeting new oilfields that can be profitable even at $30 per barrel oil, reflecting executives’ belief that high prices are anything but guaranteed.
“After three major oil price crashes in 15 years, there is wide acceptance that another one is likely to happen,” Alex Beeker, director of corporate research at energy consultancy Wood Mackenzie, has told Reuters.
“There’s just a lot of oil being left in the ground. Fracking’s been around for a really long time, but the science of fracking is not well understood,” Exxon Chief Executive Officer Darren Woods has said. Woods has revealed that Exxon is trying to improve productivity and lower costs by fracking more precisely along the well so that more oil-soaked rock gets drained and also by keeping the fracked cracks open longer so as to boost oil flows. Luckily for the U.S. shale patch, there’s already a proven technology that allows oil producers to give existing oil wells a second, high-pressure blast to increase output for a fraction of the cost of finishing a new well: shale well refracturing. Refracturing is designed to restimulate a well after an initial period of production, and can restore well productivity to near original or even higher rates of production as well as extend the productive life of a well. New research from the Eagle Ford Shale in south Texas estimates that North Dakota’s Bakken Shale straddles some 400 open-hole wells capable of generating an excess of $2 billion if refractured with oil prices at $60/bbl. According to Garrett Fowler, COO for ResFrac, a refrac can be up to 40% cheaper compared to drilling a well and can double or triple oil flows from aging wells. BlackMask Pod Cast:
War Winds Down So Does Oil
US retail sales down 0.8% in January
Seasonally adjusted advance estimates of retail and food services sales in the United States observed a monthly decline of 0.8% to come in at $700.3 billion in January, the Census Bureau said in its preliminary report published on Thursday. The figure stood lower than analysts predicted for the reported period. On an annual basis, retail and food services sales rose by 0.6% from January 2023. Meanwhile, January’s retail trade sales dropped by 1.1% month-on-month or 0.2% year-on-year. On an annual level, nonstore retailers surged by 6.4%, and food services and drinking places climbed by 6.3%.
OPEC Producers Are Delivering On Their Pledged Cuts
OPEC’s crude oil production slumped by 350,000 barrels per day (bpd) in January as the latest voluntary output cuts kicked in, but not all those who had pledged reductions delivered on their promises. As OPEC’s crude oil production from all 12 members fell by 350,000 bpd to 26.342 million bpd in January, the country with the biggest contribution to the cuts was Libya, one of the three OPEC members exempted from the cuts alongside Iran and Venezuela, according to the secondary sources in OPEC’s Monthly Oil Market Report (MOMR) for February published today. Libya’s oil production fell by 162,000 bpd in January from December, as the African producer was forced to shut down its largest oilfield, Sharara, in the first days of the New Year, temporarily taking some 300,000 bpd off the market. Force majeure on Sharara output was lifted on January 21. Of the OPEC members who pledged voluntary cuts for the first quarter of 2024, Saudi Arabia stuck to its production goal of pumping around 9 million bpd until the end of March 2024, as part of its unilateral extra cut of 1 million bpd that began in July 2023. Kuwait and Algeria more or less delivered on their pledges, with Kuwait cutting oil production by 109,000 bpd versus a pledge to reduce output by 135,000 bpd, and Algeria reducing production by 46,000 bpd compared to a 51,000 bpd cut pledged at the end of November. The United Arab Emirates (UAE) has promised a cut of 163,000 bpd, but its new quota as of January 2024 is 200,000 bpd higher to 3.219 million bpd. It looks like the UAE is sticking to the cut as its output in January was 2.927 million bpd, only 31,000 bpd higher than in December, when its quota was lower. The OPEC member that under-delivered most notably was Iraq, the second-biggest producer in the cartel. Iraq cut its oil production by 98,000 bpd to 4.194 million bpd in January, per OPEC’s secondary sources in the report. This compares with a pledged cut of 223,000 bpd. Earlier this week, Oil Minister Hayan Abdel-Ghani said Iraq is committed to its voluntary cut in the OPEC+ agreement and would produce no more than 4 million bpd of crude.
US, Arab allies allegedly to unveil plan for Palestinian state
The United States and several Arab countries are set to present a detailed plan for definite peace between Israel and the Palestinians that involves a precise timeline for a future Palestinian state, the Washington Post reported citing US and Arab sources. According to the report, the first phase of the plan would include a six-week ceasefire, which would be used to make the plan public, start its implementation, and form an interim Palestinian government. The plan also entails the evacuation of many Israeli settlements from the West Bank, the recognition of East Jerusalem as the capital of a Palestinian state, and combined security and governments for the Gaza Strip and the West Bank. The sources said Israel is expected to oppose the plan, but the idea is to persuade the Israeli authorities by offering them security guarantees and the normalization of relations with Arab countries, especially Saudi Arabia. NN: This 2 state diabolical is not going to happen anytime soon. its a matter of carrots and sticks. The game is to force Israel to back down and get some kind of peace deal and hostage for terrorists exchange. This will ratchet down the attacks and let the powerful shipping companies transverse the straights again. And it will take $10 off the price of oil. And the slowing global economy coupled with recording breaking US production is good for another $10.. Yes Brent in the sixties. It will take some time. But we play a patient mans game.
Oil prices down 1% as US inventories rise…… IEA: Global oil demand growth losing momentum
Commercial crude oil inventories in the United States, which are not taking into account those in the Strategic Petroleum Reserve, were up by 12 million barrels to 439.5 million barrels in the week ending February 9, the Energy Information Administration (EIA) revealed in its report on Wednesday. The country’s inventories now stand 2% below the five-year average for this time of year. US crude oil refinery inputs averaged 14.5 million barrels per day for the corresponding timeframe, which is 297,000 barrels per day less than the previous week’s average. Refineries operated at 80.6% of their operable capacity last week, while gasoline production increased, averaging 9.2 million barrels per day. Imports of crude oil in the country averaged 6.5 million barrels per day last week, decreasing by 437,000 barrels per day. Total commercial petroleum inventories rose by 5.2 million barrels in the reported week.
IEA: Global oil demand growth losing momentum
The International Energy Agency (IEA) said in its monthly report on Thursday that global oil demand growth is “losing momentum,” stressing annual growth eased from 2.8 million barrels per day (bpd) in the third quarter of 2023 to 1.8 million bpd in the fourth quarter of the year. The IEA attributed the decline in demand to a sharp drop in China and noted the pace of demand growth is expected to decelerate to 1.2 million bpd this year. Global oil supply was also reported to have fallen sharply, sliding by 1.4 million bod in January as a result of OPEC+’s output cuts and the Arctic blast that shut production in North America. Still, global supply is seen rising by 1.7 million bpd to a record 103.8 in 2024 and eclipsing the rise in demand, mainly due to strong production in the United States, Brazil, Guyana and Canada.
Brent Crude (ICE)
F WBS
NN: Brent in the low Seventies here we come.
Abbas urges Hamas to expedite prisoner swap deal…… US reportedly probes Israeli strike on Gaza refugee camp
Palestinian National Authority (PNA) President Mahmoud Abbas on Wednesday called on the Hamas movement to expedite the prisoner exchange deal to prevent further displacement of the Palestinian people and additional Israeli forces’ attacks on the southern city of Rafah in the Gaza Strip that could result in the loss of thousands of lives. The president underscored that “a comprehensive war” is being waged against all Palestinian people in the Gaza Strip, as well as in the West Bank and East Jerusalem and urged Washington and Arab nations to put in serious efforts to complete the prisoner exchange agreement between Israel and Hamas “as quickly as possible” to prevent the reoccurrence of Nakba, referring to the mass displacement of Palestinians during the 1948 Arab-Israeli war. The president’s remarks come following the latest meeting with United States Secretary of State Antony Blinken, during which the secretary expressed Washington’s support for the establishment of an independent Palestinian state.
US reportedly probes Israeli strike on Gaza refugee camp
The United States State Department is said to have opened an investigation into several Israeli airstrikes that led to the killing of civilians in the Gaza Strip, as well as its potential use of white phosphorus in airstrikes on Lebanon, sources told The Wall Street Journal on Wednesday. The sources revealed that the investigation will probe the airstrike carried out on Jabalia refugee camp near Gaza City on October 31, resulting in the deaths of over 125 people. During its operation, Israel claimed to have killed Hamas Jabalia battalion commander Ibrahim Biari. Namely, the United States officials speaking anonymously to the outlet said that Washington seeks to ascertain whether the weapons and missiles it supplied to Israel have been used in attacks that led to civilian casualties .hen to stand down. NN; Israel has got all its going to get. From here on out Israel starts playing a losing hand. Wisdom is to know when to fold.
Israel-Hamas cease-fire talks continue in Cairo
Egyptian officials say mediators have made progress in talks aimed at a truce in Gaza. Representatives from the US, Egypt, Israel and Qatar are meeting in Cairo, as international calls grow for Israel to halt plans for an assault on the southern city of Rafah. Meanwhile, German Foreign Minister Annalena Baerbock has expressed concern over Israel’s planned offensive in Rafah. At a news conference with the Palestinian Foreign Minister Riad al-Malki, Baerbock said that Israel had a duty to guarantee “safe corridors” for civilians in Rafah. NN: This looks to me like the last hurrah in this latest battle in the ongoing Palestinian Israel conflict before another shaky peace deal
Israel launches massive wave of airstrikes in Lebanon
Israel Defense Forces (IDF) have started a widespread wave of airstrikes in Lebanon, spokesman Daniel Hagari announced on Wednesday. Earlier today, Israeli National Security Minister Itamar Ben-Gvir said that this morning’s deadly attack in the northern city of Safed, which is believed to have been carried out by the Hezbollah militant group, serves as a declaration of war. According to Channel 12, the Israeli national security minister called for an emergency meeting with Prime Minister Benjamin Netanyahu over the incident. The Israeli Defense Forces (IDF) said earlier that they launched retaliatory strikes in what appeared to be an attack on Northern Command. However, Israeli media reported the rocket barrage killed one person and wounded eight others in the city near the Lebanese border.