Oil & Gas UK 2016 Activity Survey: Impressive improvements no match for oil price headwinds
In another time, the performance of the UKCS over the last year would be a cause for celebration. As reported in today’s Oil & Gas UK 2016 Activity Survey (click here), oil and gas production from the North Sea increased by 9.7% in 2015 from 2014 levels, representing the first production increase seen since the turn of the century.
Read more...Majors still believe in higher long term pricing
Despite current low oil prices driving dividends being paid out of debt, BP did not cut its dividend yesterday. The BP board and management must therefore strongly believe that the current oil prices are temporarily low.
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Oil Macro outlook 2016 - oversupply in the short term
Edison published its latest oil and gas macro outlook on 27 January 2016. Below are highlights of the short term thoughts.
Market thesis: Oversupply to remain in the short term
The oil markets have been in turmoil now for 16 months, with recent trading at its most tumultuous in years as crude prices have plummeted to levels not seen since mid-2004. A Saudi-led OPEC market-share protectionist policy has driven a marked increase in inventories over 2015, with lifting of Iranian sanctions and potentially slowing Chinese demand set to extend the supply overhang.
Governments need to adapt to the oil price too
The oil price is having a huge effect. Falling cash generation means oil companies are cutting capital expenditure to balance the books. Not even this is enough - many IOCs are paying dividends out of debt.
Read more...Exploration Watch - West of Shetland
West of Shetland remains the least-developed area of the UKCS despite the first significant discovery occurring there almost 40 years ago. A combination of technical challenges means the region has remained relatively immature, with an estimated 95% of resources yet to be developed. Until recently only three fields, the BP-operated Foinaven/Loyal and Schiehallion, were in production. Joined in early 2016 by Total’s Laggan-Tormore gas field and Premier’s Solan project, only the latter is a notable successful development by an independent to date. However, recent independent activity includes Hurricane Energy’s appraisal of the 207mmboe Lancaster discovery and Chrysaor’s Mustard discovery within tie-back distance of Solan.
Read more...100% success rate continues offshore Mauritania/Senegal
Kosmos Energy’s play extending gas discovery well Marsouin-1 continues the 100% success rate seen offshore Mauritania and Senegal in the last year. Kosmos’ success follows on from its Tortue gas discovery earlier this year, while Cairn Energy had back to back oil discoveries to the south in Senegal towards the end of 2014. Now both companies are undertaking full appraisal and exploration programmes that will see activity continuing in the region into 2017.Together these two programmes offer the potential of up to twelve exploration and appraisal catalysts over the next eighteen months, a rare occurrence in the current low oil price environment.
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