BY JOHN P. TRETBAR
West Texas Intermediate crude for July delivery gained 21 cents on the Nymex by lunchtime Monday to trade at $53.70 a barrel. The near-month contract dropped more than five percent on Friday (5/31), to its lowest weekly finish in nearly four months.
The current posted price for Kansas Common crude at CHS in McPherson by Monday was $43.75 per barrel. That’s three dollars less than the posted price last Thursday.
The weekly rig report from Independent Oil and Gas Service showed showed a 62% drop in the number of active drilling rigs in Kansas last week. The total in Western Kansas was down 15 to just eight active rigs. That matches the statewide increase in rigs listed as “pending their next location assignment.”
Baker Hughes reported an increase of three oil drilling rigs nationwide last week to 984 active rigs. New Mexico was up two while Texas and Oklahoma each dropped one rig.
Last week saw six new drilling permits approved across Kansas, all of them west of Wichita including one in Barton County. Regulators have approved 364 permits for drilling at new locations across Kansas so far this year.
Independent Oil & Gas Service reported 18 newly completed wells last week, 655 so far this year. There were four new well-completions east of Wichita and 14 in Western Kansas including one in Stafford County.
Royal Dutch Shell and the Italian oil company Eni face additional corruption allegations over a Nigerian oil deal. Bloomberg reported the West African country’s government filed additional claims in its lawsuit, saying it believes a handful of executives, including CEOs, were tied to more than $1 billion in bribery payments. In court documents filed in early April, the Nigerian government said the oil companies’ senior managers agreed in 2011 to make a large payment for an offshore oil block, understanding the money would trickle down to government officials and senior executives from both companies. The allegations are the latest bombshells in a years-old dispute over exploration rights that has spread to courtrooms throughout Europe.
Pioneer Natural Resources Co. is asking senior managers to retire as the Texas shale oil driller shrinks spending, sells assets and raises dividends. About one third of the company’s top executives were asked to leave, according to an announcement by CEO Scott Sheffield. That announcement shortly after the explorer disclosed plans to sell or find partners for some oil fields including the divestiture of its entire South Texas portfolio. That deal was expected to trigger a pre-tax, non-cash loss of $550 million.
One of the ways Occidental Petroleum hopes to cut costs to help pay for its very expensive takeover of Anadarko Petroleum is to sell that company’s fleet of aircraft. The move is steeped in irony, as Oxy’s corporate jets were recently the focus of activists digging into the company’s shareholder returns. As reported by Bloomberg, Occidental is not selling its own planes, which became notorious as executives flew to Paris, the Hague and Omaha, Nebraska in what became a very visible effort to line up backing for its $38 billion acquisition of Anadarko. Occidental said Anadarko’s four planes would be on the company’s hit list when the takeover closed. The company said it sees about $2 billion in annual cost cuts once it closed the deal.
Mexico has moved to bolster investor confidence in its embattled state oil company. Officials including the president announced an $8 billion syndicated loan and some huge new tax breaks for the energy producer. Pemex officials signed the financing agreement with three financial groups including with JPMorgan Chase. The company will use $2.5 billion of the funds to refinance existing debt, while the remaining $5.5 billion will replace some credit lines.
One of the world’s largest oilfield services companies filed for Chapter 11 Bankruptcy protection last month. World Oil reports the move may give Weatherford International enough room and time to turn around its struggling operations. The firm announced that it has executed a restructuring agreement with a group of senior note-holders that collectively holds 62% of the company’s senior, unsecured notes. The proposed restructuring plan should significantly reduce the company’s long-term debt and related interest costs. World Oil says it should also provide access to additional financing and establish a more sustainable capital structure.
It not clear how long the rule-making process will take, but there are some in the state of New Mexico that are hailing a new law as one of the “greatest environmental accomplishments” ever to come out of the state Legislature. The Albuquerque Journal reports the law will allow the oil and gas industry’s produced wastewater to be recycled for use outside the industry. The newspaper reports New Mexico’s “Produced Water Act” takes effect in July, and could mark a sea-change in the desert state’s future. They could see some 40 billion gallons of new water resources each year. One company has already filed an application for a permit. Encore Green Environmental hopes to use wastewater from booming operations in southeastern New Mexico to increase vegetation for ranching and erosion control in desert areas.
The U.S. Energy Information Administration says New Mexico now boasts two of the top crude-oil-producing counties in the nation. Both are in the Permian Basin in the southeast corner of the state along the Texas border. EIA said Lea County was the No. 2 oil-producing county in the country in January behind North Dakota’s McKenzie County. McKenzie County produced 17.3 million barrels in January while Lea County produced 14.6 million barrels. Lea County had more than twice the number of operating rigs as McKenzie County. New Mexico’s Eddy County was listed as the No. 6 top oil-producing county, pumping 10 million barrels during January.