GLG News(sm): Energy & Industrials

Total's sale of Colombian assets a further sign of caution and financial discipline

Michael Lynch — Fri, 10 Feb 2012 15:24:12 EST

Olivier de Langavant, senior vice president for Total, noted that the sale of these mature assets were in line with the company’s optimization strategy. This sale follows pipeline divestments in Norway and mature fields in Cameroon. In Colombia, selling the 7,000 bbl/day share of production from the mature Cusiana field will free up funds for exploration projects that have greater potential.

Tullow Oil finally gets good news from Ugandan government

Michael Lynch — Fri, 10 Feb 2012 15:15:02 EST

The Ugandan government has finally awarded Tullow Oil (U.K.) the three production licenses, bringing “extra flexibility” to the company’s balance sheet. Tullow followers expect this move to unlock $10 billion in future investment and clears up its refinery and pipeline problems. Bank of America Merrill Lynch noted that Tullow’s funding problems are now resolved.

Southern Co. nuclear reactor expansion project at Vogtle is not realistic

Hans Linhardt — Fri, 10 Feb 2012 12:10:47 EST

Southern Co. has received approval to expand its Vogtle, Georgia reactor plants by two new reactors each with 1,100 MW capacity. The federal government will provide $8.3 billion in loan guarantees to jump-start the new reactor construction.

Achieving exploration success

GLG Expert Contributor — Thu, 09 Feb 2012 17:40:00 EST

Oil exploration success can be measured in several ways. An examination of the past year’s successes shows that successful players employ a mix of what I call the red, white and blue ingredients. Blue is the rational component: science, process, targets etc; White is the innovative or creative component and red is people or ‘soft’ stuff such as culture and behaviors.

Pulp production expands in China

GLG Expert Contributor — Wed, 08 Feb 2012 14:47:06 EST

Chinese pulp mills increasingly have to rely on imported wood chips for their wood fiber needs. In 2011, record volumes were imported, mainly from hardwood plantations in Vietnam, Thailand and Indonesia. Imported wood chip costs from Vietnam have gone up 40% in two years and are closing in on the cost of chips shipped from Vietnam to Japan.

BP reorganized in 2011 to give greater value to shareholders

Michael Lynch — Wed, 08 Feb 2012 12:29:09 EST

Reporting on Q4 and full year results, BP CEO Robert Dudley said that operational momentum and improved cash flow during 2011 gave the company confidence in its ability to grow shareholder value. Operating cash flow for 2011 was $22 billion. BP announced a 14% increase in the dividend. In his presentation to the financial community, Dudley said that payments into the Gulf of Mexico Trust Fund (created after the Macondo incident) would be completed by year end 2012.

Newfield Exploration selling assets to rapidly become an oil company

Michael Lynch — Wed, 08 Feb 2012 12:23:23 EST

Newfield has been selling non-strategic assets to concentrate on drilling for crude oil and other liquid-rich plays on land. Last year the company disposed of assets worth $400 million and is planning additional sales this year of $335 million. Newfield plans to continue to focus on oil growth. The emphasis will be developing long-lived onshore resource plays. The company plans no further exploration in the Gulf of Mexico.

Exports of logs and lumber from the U.S. and Canada to China reached a record $2.6 billion dollars in 2011

GLG Expert Contributor — Wed, 08 Feb 2012 11:40:35 EST

The U.S. and Canada exported record volumes of logs and lumber to China in 2011. Exports in 2011 are likely double those seen in 2010 to reach an estimated value of $2.6 billion. Lumber shipments from Canada alone will reach almost over $1.1 billion. The North American share of softwood log and lumber import volumes to China increased from 5% in 2005 to 37% in 2011.

ExxonMobil's acquisition of XTO was a long term bet on natural gas

Michael Lynch — Tue, 07 Feb 2012 14:21:57 EST

ExxonMobil’s decision to maintain its current production of natural gas could possibly drive some smaller producers to the wall. Such consolidation could make ExxonMobil even more powerful than it already is. The news that the energy giant has no plans to curtail gas production puzzled some analysts. Others think the ExxonMobil decision will have little impact because the company operates only 30 rigs in the gas shale regions.

Santos basin shallow water wildcat may be game changer for Brazil's oil

Michael Lynch — Fri, 03 Feb 2012 17:04:00 EST

Eike Batista, CEO of Brazilian independent OGX, commented that wildcat 1-OGX-63-SPS located in BM-S-57 (Fortaleza) identified hydrocarbons in both the Aptian and Albian of the stratigraphic column. What makes this remarkable is that the well was drilled in 509 feet of water. The OGX-63 cut 361 feet of high pressure Aptian which caused a well control incident.

Argentinian politicians' efforts to increase production are likely to backfire

Michael Lynch — Fri, 03 Feb 2012 16:54:47 EST

Governors from 10 of the country’s oil producing provinces have planned a meeting for next week to pressure to oil companies. Last week President Cristina Kirchner attacked the industry for allowing production to decline. In 2011, Argentina imported $9.4 billion in fuel, double 2010 imports. Kircher added that oil companies should remember that they are working on land owned by the Argentine people.

Predictions come true, aquaculture can come to the rescue

Bill Manci — Fri, 03 Feb 2012 16:10:24 EST

The U.S. continues to run a huge trade deficit in seafood, but some important shifts have occurred over the past twelve months. I believe we have reached a tipping point of sorts, one that could mean the world for U.S. aquaculture.

Royal Dutch Shell to focus on frontier exploration in Arctic regions

Michael Lynch — Thu, 02 Feb 2012 10:48:57 EST

Shell CEO Peter Voser said in an interview that the company plans activity in Alaskan waters, offshore Greenland and in Russia’s far north. Most of the drilling will be in or near Arctic waters. Voser acknowledged that the Arctic environment is sensitive and challenging but added that he believes Shell can safely conduct operations there.

U.S. woody biomass prices have dropped the past three years

GLG Expert Contributor — Wed, 01 Feb 2012 14:00:11 EST

Relatively low fossil fuel prices have reduced the demand and prices of woody biomass throughout the U.S. during the past three years. The Pacific Northwest currently has the lowest biomass prices, slightly lower than the South, while the Northeast continues to see some of the highest prices in the country.

Sawlog prices decline broadly

GLG Expert Contributor — Wed, 01 Feb 2012 12:30:42 EST

Slowing lumber markets throughout the world have resulted in declining sawlog prices in many of the major lumber-producing regions in Europe and North America, according to the Wood Resource Quarterly. The biggest price reductions occurred in Japan, Sweden, Poland and Russia.

BNP Paribas asset sale puts small oil and gas companies on the spot

Michael Lynch — Tue, 31 Jan 2012 09:55:18 EST

The Financial Times reported last Thursday that BNP wants to dispose of its $11 billion oil and gas loan portfolio. The news is important for small companies because BNP has been a key player in funding frontier exploration projects. Risk appetite has changed for banks that lend to the oil and gas sector. Equity indicators for U.K.-listed companies are far from strong.

Railcar builders to enjoy another great year

Toby Kolstad — Mon, 30 Jan 2012 14:28:06 EST

Railcar orders stayed relatively close to deliveries during the fourth quarter of 2011, and the backlog stayed above 64,000 cars. Although many of the backlogged orders are for delivery beyond 2012, most will be built this year, propelling builder deliveries well beyond the 47,000 rail cars manufactured in 2011.

Funiwa Deep 1A may sand up and stop burning before the relief wells are drilled

Michael Lynch — Mon, 30 Jan 2012 13:49:51 EST

Chevron reported on January 27 that the fire burning at Funiwa 1A deep offshore Nigeria has diminished. The well caught fire during the early morning on January 17. By January 25, the KS Endeavor jackup rig had collapsed and no part of its structure was still above water. Chevron plans to drill two relief wells which could begin in the next seven to ten days.

Tullow stymied once again in sale of Uganda assets to Cnooc and Total

Michael Lynch — Mon, 30 Jan 2012 10:14:09 EST

In early 2011, Tullow reached an agreement with Total and Cnooc to sell two thirds of its landlocked crude oil discoveries for $2.9 billion. The Ugandan government has repeatedly found reasons to block the sale. The assets are located in the Lake Albertine rift valley. This time the objection is that the three proposed partners objected to the government’s desire to amend certain stabilization clauses which were intended to manage risk.

Chesapeake Energy bites the natural gas bullet

Michael Lynch — Wed, 25 Jan 2012 15:51:50 EST

Chesapeake plans to reduce its dry gas drilling by 50% to 24 rigs by Q2 2012. Its dry gas drilling expenses are expected to decrease to $900 million, down from $3.1 billion in 2011. The company will immediately curtail gas production by 500 million cubic feet/day, equal to 8% of current capacity. This will be the lowest level of dry gas spending since 2005.