Continuing the weekly Oil and Gas review with major headlines and news you need to know...
Chevron swings for a loss in energy earnings season...first loss since Q3 2002
Supermajor Chevron posted its first loss since Q3 2002 as a result of plunging oil prices. The company reported a net loss of $588M ($0.31 per share) VS a $3.5 Billion ($1.85 per share) profit a year earlier. Note that Fourth quarter earnings include impairments and other charges of $1.1 billion.
Full-year 2015 earnings were $4.6 billion ($2.45) versus $19.2 billion ($10.14) in 2014. Majority of the company's losses came from its upstream divisions, with its US upstream segment reporting a $1.95 billion loss.
Despite being able to cushion some of the shortcomings of the upstream division, Chevron saw its profit nearly halve to $496M for US downstream vs Q3 2015 earnings of $1.2 billion.
(Chevron Earnings Report)
Sharp decline in activity result in wider loss for Baker Hughes
Baker Hughes reported Q4 EPS of ($0.21), $0.11 lower than analyst estimates of ($0.10). Revenue for Q4 2015 came in at $3.4 billion, down 49% vs Q4 2014. Revenue for the year came in at $15.7 billion however, declines across all geographic regions and declining rig counts continues to pose challenges for 2016. Pending merger with Halliburton is still ongoing due to scrutiny from European regulators.
The 10,000 layoffs which were rumored to have occurred in December have been confirmed, taking total SLB layoffs to 30,000. The service operator continues to face abrupt work cancellation and was the prevailing theme in the earnings release.
Oil crash has resulted in 300,000 Texans forced out of work
From December 2014 to December 2015, an estimated 288,000 Texas jobs have been lost due to the oil price collapse. That includes an estimated 72,000 direct oil and gas jobs and 210-220,000 indirect/induced jobs, according to Karr Ingham, a petroleum economist for the Texas Alliance of Energy Producers. [Oilpro]
Iran confident that low oil prices will result in balance being restored
Iranian President Hassan Rouhani expressed confidence in oil price stabilization citing that low oil prices will not remain so for long. Keeping in line with its stance on Saudi Arabia, Rouhani blamed Saudi Arabia for the drop in oil prices.
In addition, Iran inked an agreement with French oil company TOTAL which agreed to purchase hundreds of thousands of barrels of Iranian crude oil a day. This agreement helps Iran ramp up production and draw in much needed foreign investment.
Feds give OK to WPX sale of SanJuan Basin for $309M
WPX Energy has signed an agreement to sell its San Juan basin gathering system for approximately $309 million to a portfolio company of ISQ Global Infrastructure Fund, managed by I Squared Capital.
The agreement increases the amount of WPX's recent divestitures to nearly $575 million, up from an original target of $400-$500 million.
Plains All American closes $1.6 Billion preferred unites private placement
Plains All American Pipeline LP closed the sale of about 61 million units of a newly authorized series of 8% Series A preferred units priced at $26.25 each. Primary purchasers included affiliates of EnCap Investments LP, EnCap Flatrock Midstream, The Energy & Minerals Group, Kayne Anderson Capital Advisors LP, First Reserve Advisors LLC and Stonepeak Partners LP (PAALP Website).
Howard Energy planning refined products terminals
Howard Energy Midstream Partners LLC is planning a $500 million system of refined products terminals and pipelines from the Texas Gulf Coast to Northern Mexico.
The project will connect output from Corpus Christi, Texas, refineries to Mexican markets in the aftermath of the energy reform finalized in 2014 that ended Mexican state-owned oil company Pemex's decades-long monopoly on oil sector activities.
Trading houses resume trading with Iran, but with caution
Major oil firms and trading houses are resuming energy trading with Iran but efforts remain very cautious and are facing legal obstacles.
Since the removal of sanctions, Iran has ordered a 500,000 barrel per day (bpd) increase in oil output, of which it said some 200,000 bpd will initially go to Europe. Prior to the sanctions Iran was exporting around 800,000 bpd of oil.
Iran, eager to jump start trade has lined up Greece's Hellenic Petroleum as the first nation to resume imports of oil from Iran. Italy, France, and Spain are set to follow.
fiat Chrysler confident oil to remain low
Chief Executive Sergio Marchionne expressed confidence that oil will remain low permanently. As a result and despite emissions requirements, Sergio Marchionne seems confident that consumers will continue buying trucks and SUVs.
More than three-quarters of fiat's U.S. sales volumes are light-duty trucks (Autodata). Selling more trucks and SUVs will turn 5 billion euros of net industrial debt into a net cash position of as much as 5 billion euros by 2018, Marchionne promises.
Plastics Maker Axiall Rejects $1.41 Billion Westlake Offer
Axiall Corp., North America's largest producer of vinyl building products, rejected a revived takeover bid from Westlake Chemical Corp. that values the U.S. company at $1.41 billion.
Houston-based Westlake, which also produces vinyl products and is controlled by the billionaire Chao family, disclosed the $20-a-share cash-and-stock offer in a statement on Friday.
The bid is more than double Axiall's closing share price on Thursday. The stock jumped as much as 104 percent in New York.
"We are surprised and disappointed by Axiall's summary rejection of our proposal," Westlake Chief Executive Officer Albert Chao said in the statement. "The combined company would be more diversified and have a stronger financial profile than Axiall." (PR Newswire)
Graph of the Week
U.S. oil production hit its peak last April at 9.6 M/bpd, the highest rate since 1971. Average US oil production fell to 9.4 M/bpd in May.
Despite the low crude prices EIA data suggests that US production is gradually slowing down and not an abrupt decline in production as previously assumed.