Land Rigs

Tuesday, July 2, 2013

Saudis, Iran Vie for Key OPEC Research Job

Saudi Arabia and Iran have both put forward candidates to replace the departed head of research at the Organization of the Petroleum Exporting Countries, Middle Eastern oil officials said Friday, as competition for influence in the group heats up between the two arch-rivals.

The two Middle East nations already have nominees to replace Abdalla Salem el-Badri as secretary general--the most important position at OPEC.

But the Middle East officials say a permanent replacement is being sought after the departure of Hasan Qabazard, the former director of OPEC research division. He has been replaced on a temporary basis by Oswaldo Tapia, the latest OPEC monthly report shows.

The position is important because it entails overseeing the monthly report, which spells out the group's views on oil markets and supply requirements.

Muhammad Ali Khatibi, Iran's OPEC governor, said "we have a candidate for the head of research and the secretary general," adding it had proposed one different person for each job. A Gulf delegate said Saudi Arabia has also put forward a "technocrat" for the job.

The competition for the job comes as OPEC members are facing a raft of new challenges, from mounting budget pressures fuelling higher oil-price needs and competition from non-conventional oil production in the U.S.

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Argentina to Create $2 Billion Oil, Gas Development Fund

BUENOS AIRES -

Argentina's government plans to put up to $2 billion into a new petroleum exploration-and-production fund as the South American nation struggles to become self sufficient in oil and natural gas.

The Argentine Hydrocarbon Fund is authorized to lend money, contribute capital and buy securities issued by oil companies in which the government has an equity stake, according to a resolution published Friday in the government-published Official Bulletin.

The government controls energy companies Enarsa and YPF SA.

It wasn't immediately clear how President Cristina Kirchner will capitalize the fund. Barclays said in a report it thinks the money will come from central bank's foreign currency reserves.

The 2013 budget earmarks almost $8 billion of reserves to pay creditors. But economic growth of just 1.9% last year means that Argentina won't have to pay several billion dollars to investors that own securities whose payouts are linked to the economy's performance.

"We expect, therefore, the treasury to tap reserves and issue a low-coupon hard-currency bond [most likely not marketable] to the central bank," Barclays economist Sebastian Vargas wrote.

A spokeswoman for the Economy Ministry didn't immediately reply to a phone call and email seeking comment.

The central bank, a virtual appendage of the Economy Ministry, is struggling to rebuild its reserves even as a bumper soybean harvest brings billions of export dollars into the country.

On Thursday, those reserves, which the government uses to pay its creditors and buy imported fuels like natural gas, slipped to a six-year low of $39.8 billion. Analysts blame the gradual erosion in reserves on the decline in the value of the bank's gold holdings and persistent capital outflows.

A fire last month that crippled YPF's largest refinery which supplies about 30% of Argentina's domestically produced fuel will force the state controlled company to import significantly more diesel and gasoline this year, putting even more pressure on reserves.

Mrs. Kirchner seized a controlling stake in Argentina's No. 1 oil and gas producer, YPF, from Spain's Repsol SA last year and has tasked the company with reversing years of declining production that have turned Argentina into a net energy importer.

Mrs. Kirchner accused Repsol of decapitalizing YPF through an overly generous dividend policy, which left the firm with scant resources to reinvest in its business. Repsol has denied those accusations and is suing her government for about $10.5 billion in compensation for its YPF shares.

YPF invested 16.48 billion pesos ($3.2 billion) in 2012, an increase of nearly 26% on the year.

The company is also seeking foreign investors to help it develop what are believed to be the world's third-largest shale gas deposits, which are mainly located in the Patagonian province of Neuquen.

Last year, YPF held talks with Norway's Statoil ASA, Russia's government-controlled gas company, Gazprom, and Chevron Corp., among others.

In December, YPF signed a preliminary agreement with Chevron to spend $1 billion to drill 100 wells in Neuquen, and in a separate deal it agreed to invest $1.5 billion with a company linked to Argentina's Bulgheroni family.

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Monday, July 1, 2013

Schlumberger: International, N. American Drilling Solid at Current Prices

Schlumberger Ltd. Chief Executive Paal Kibsgaard told analysts during an earnings conference call Friday that the recent drop in oil prices is not yet worrisome, and prices are still high enough to support drilling in North America and around the world.

"I'm not overly concerned," Mr. Kibsgaard said. "International activity and North American liquids activity is pretty solid at these levels."

West Texas Intermediate, the U.S. benchmark crude, has dropped by more than $10 a barrel from highs in early April, and front-month Brent, the European benchmark, has fallen by about $12 a barrel this month.

Mr. Kibsgaard said he still expects Schlumberger, the world's largest oilfield-services company, to grow international operations by about 10% this year, with "strong and consistent growth" in Sub-Saharan Africa, Russia, China and Australia.

Mr. Kibsgaard said a joint venture announced lasst week with Forest Oil Corp. (FST) in Texas's Eagle Ford shale is a "one-off" deal intended to serve as a showcase to demonstrate the company's technological capabilities.

Under the deal, Schlumberger will get a 50% stake in Forest's Eagle Ford acreage in exchange for paying $90 million in drilling costs in the form of services it will provide.

Mr. Kibsgaard said the company has invested in technology aimed at making shale wells more productive, but "uptake has been quite slow in the U.S." The joint venture is aimed at changing that and showing off technologies that he said the company is eager to bring to the marketplace.

Mr. Kibsgaard said he expects conditions onshore in North America to remain difficult. The company's margins there came in ahead of analysts expectations and were relatively flat from last quarter, and Mr. Kibsgaard said he hopes they'll remain steady next quarter.

"In pressure pumping, we're not pursuing share, we're looking to protect margins," he said.

During the quarter, growth in revenue in the U.S. Gulf of Mexico helped offset declines onshore in North America, but Mr. Kibsgaard said the need to change out faulty bolts on some rigs slowed work down there.

He said exploration and production companies are reevaluating plans in North Africa following the raid on the In Amenas natural gas field in Algeria.

Schlumberger expects activity to "remain subdued" in the area while companies re-evaluate their plans.

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WBENC Advocates Women-Owned Businesses in the Energy Industry

Women's Business Enterprise National Council (WEBNC) recently held a conference that recognized America's Top Corporations for Women's Business Enterprises (WBEs) with six energy companies making the list.

Founded in 1997, Women's Business Enterprise National Council (WBENC) is the nation's leading third-party certifier of businesses owned and operated by women, with nearly 11,000 WBENC-Certified Women's Business Enterprises (WBE). WBENC certification is accepted by more than 1,000 corporations representing America's most prestigious brands, in addition to many states, cities and other entities.

Six energy companies – BP America Inc., Chevron Corp., Energy Future Holdings Corp., Exxon Mobil Corp., Pacific Gas and Electric Company, and Royal Dutch Shell plc – made the 14th annual listing of America's Top Corporations for Women's Business Enterprises, the only national award honoring corporations for world class programs that level the playing field for women's business enterprises to compete for corporate business. WBENC recognized these corporations for developing and driving best practices across their organizations that result in productive business partnerships with women entrepreneurs and valuable products and services for their customers.

Rigzone recently conducted an interview with WBENC to find out more information on how this influential organization grooms, cultivates and recognizes women-owned businesses through development and collaborative success among corporate and government members of WBEs.

Rigzone: WBENC recognized several oil and gas companies for programs that level the playing field for women's business enterprises. Can you elaborate?

WBENC: The organization has seen consistent focus in developing opportunities and access for women's business enterprises among the energy companies that are top corporations for Women's Business Enterprises.

These companies set high goals for themselves to increase their sourcing with WBEs; and they advance innovative programs to identify, develop and sustain WBE growth as suppliers over the long term.

One key strategy is to ensure that procurement officers across their organizations are knowledgeable about and connected to quality WBEs that can deliver the products and services they need for their clients or employees. These officers can provide the WBEs with exposure to decision makers in upstream, midstream and downstream segments of the company. Companies also encourage prime suppliers to source and utilize WBEs as second and third tier suppliers.

Another is to offer strategic mentoring and development, so that the WBEs can build their capacity to take on more business with the corporation.

Rigzone: Considering the oil and gas industry is male-dominated, what does this recognition mean for women and the industry?

WBENC: WBENC as an organization is extraordinarily proud of all of the 32 Top Corporations. The fact that there are six energy companies on the list – including Energy Future Holdings which has been on the list in each of the 14 years that the award has been bestowed – demonstrates that this sector is committed to women's business success. These companies passionately believe in the value of women's business to their ability to serve their clients and their employees with superior goods and services that these WBEs deliver.

Rigzone: How does WBENC groom women or help them along the way of their chosen career path?

WBENC: First of all, WBENC delivers world-class certification of WBEs as 51 percent-owned and operated by women. WBENC currently certifies more than 11,000 WBENC-WBEs. Our corporate and government members rely on our WBEs' quality and they can access these WBEs through WBENCLink (a proprietary database) as well as the hundreds of events throughout the year presented by WBENC.

In fact, WBENC offers continuous development resources to WBEs throughout the year. This includes WBENC's major events, the Summit & Salute to WBEs where the Top Corporations were announced; and the upcoming 2013 WBENC National Conference & Business Fair, held June 25-27th in Minneapolis, which will attract some 3,500 corporations and women's businesses.

These WBEs have access to three days of nationally-acclaimed speakers, interactive workshops and business networking opportunities including the business fair with some 350 exhibitors. Workshops focus on what WBEs need to know to enhance their positions as suppliers: how to hone skills that are sought-after by their clients, leverage existing expertise for greater growth and build their capacity.

On an ongoing basis, WBENC offers a dynamic website with opportunities for WBEs to acquire important information on best practices for how to do business with major corporations, and the business trends affecting the marketplace.

Rigzone: With very few women CEOs in the energy industry, how can one pursue becoming a supplier to this industry without a mentor? How can they find one, if needed?

WBENC: We are speaking here of mentoring women business owners to become suppliers to major corporations, and once hired, to grow their business with them. WBENC's top corporations are exemplary in providing WBE development and access to direction and support in various forms. WBEs can and should also take the initiative to develop connections and present clear and compelling value propositions. To make connections with corporate decision makers, they should start by registering at the companies' supplier diversity websites, attend and network at the National Conference & Business Fair, and become involved in their RPOs.

Rigzone: With the energy industry seeking to diversify the companies they hire, what can they pull from WBENC?

WBENC: WBENC-certified WBEs are committed, established business owners. While they have families and outside interests, they come to WBENC events with a strategic business focus and a dedication to delivering quality products and services to their clients.

What we have found is that the entire WBENC community – with our marketplace access, inspirational speakers and recognition of women's business owners who have demonstrated success – empowers women to succeed.

Fifteen years ago, WBENC's goal was to level the playing field for women's businesses to compete and win corporate business. Today we have evolved to a point where we join forces and succeed together. We foster collaboration among corporations and WBEs to innovate, create improved products and services, and fuel economic growth. This lifts the conversation from "Can a woman-owned business succeed?" to "How do we work together to succeed." Our energy companies are at the heart of that positive conversation.

Rigzone: There are certain skills/personality traits one must possess to succeed in the business world. What are they and how can women pinpoint or instill this in young girls?

WBENC: Young women and girls interested in energy careers are strongly encouraged to pursue the Science-Technology-Engineering-Math (STEM) areas of expertise. Energy is a highly technical business, and many of the leaders of these companies have technical degrees. Technical training is also a very strong background for any young woman interested in starting her own business. Another key to success for a woman business owner is to take advantage of opportunities to surround her with peers and mentors who will help her grow her capabilities and business.

As an example of what energy companies are doing in this realm, Shell sponsored the 2012 Student Entrepreneur Program at last year's WBENC National Conference & Business Fair. This helped to prepare 15 promising young female entrepreneurs from historically black colleges and universities to fill the pipeline of future WBEs. This included cultivating mentors among leading WBEs and corporations, and attending the business fair and WBE workshops. Shell executives also worked with the students on the importance of building relationships, honing their technology expertise and building business skills.

With more than 10 years of journalism experience, Robin Dupre specializes in the offshore sector of the oil and gas industry. Email Robin at rdupre@rigzone.com.

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Nymex Crude Rises, Bouncing Off Recent 2013 Low

U.S. crude futures posted modest gains Friday following sharp declines early this week as traders paused to gauge whether weak demand will keep prices moving lower.

Light, sweet crude for May delivery settled higher by 28 cents, or 0.3%, at $88.01 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange for June delivery settled 52 cents higher at $99.65 a barrel.

Oil prices fell 3.6% this week, and are down nearly 10% in April amid high domestic crude-oil supplies and a broader investor retreat from commodities markets. With futures trading near 2013 lows, some investors say a brief rebound is likely even if further declines are ahead.

"Traders are looking for a reason for why this thing might bounce back," said Pete Donovan, an oil broker at Vantage Trading in New York.

Earlier Friday, crude futures rose after Venezuela's oil minister Rafael Ramirez said the Organization of the Petroleum Exporting Countries was discussing holding a special meeting after Brent crude fell below $100 a barrel. But prices pared gains when three OPEC officials said the group isn't taking formal steps to gather, making such an event unlikely before a scheduled conference at the end of next month.

Venezuela officials have made frequent calls to hold an oil-price "floor" of $100 a barrel.

Meanwhile, many analysts and investors have grown concerned in recent weeks about weak fuel demand, particularly with the approach of the summer driving season in the U.S.

Last week, the U.S. Energy Information Administration predicted spring-summer demand for gasoline will fall to a 12-year low of 8.877 million barrels a day.

The slump also coincides with a broader turn from commodities markets. Traders have fled from gold, silver, copper and several energy markets in recent weeks. In addition to weaker demand for oil in the U.S., many commodity investors are concerned that slowing growth in China will also limit demand for raw materials.

"Commodities may face a slow growth environment for the next few quarters," said Barclays analysts in a research report Friday.

Mark Waggoner, head of Excel Futures, said any rebound in oil will be brief.

"The market may try and bump up a little bit, but that's it. It's going down," he said, though he added that market activity on Friday was muted, possibly because people were following the search for a suspect in the Boston Marathon bombing. "Most of the people are just talking about Boston."

Front-month May reformulated gasoline blendstock, or RBOB, settled 1.69 cents higher at $2.7724 a gallon. May heating oil settled 0.85 cent higher at $2.7876 a gallon.