GM July Sales Rise 8%

- GM July Sales Rise 8%



Aug 2, 2011

General Motors Company (NYSE:GM) says its U.S. sales climbed almost 8% last month, led by fuel-efficient vehicles such as the Chevrolet Cruze car.

But GM's increase may not be the standard. Analysts foretell that sales of new cars and light trucks in the U.S. rose slightly from a year earlier as few deals and economic worries kept car shoppers home.

Vice President of Sales Don Johnson reports that unemployment, low consumer confidence and uncertainty over the federal debt ceiling scared some buyers off.

GM sold 214,915 vehicles in July, including almost 25,000 Cruzes. That could potentially make it America's top-selling car for the second straight month.

Sales of the Chevrolet Equinox and GMC Terrain small crossovers rose nearly 80%.

General Motors has a potential upside of 56.8% based on a current price of $27.71 and an average consensus analyst price target of $43.45.

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Report: E&P Capital Spending to Rise 12% in 2011

- Report: E&P Capital Spending to Rise 12% in 2011

Tuesday, August 02, 2011
Rigzone Staff
by Karen Boman

Capital spending on exploration and production (E&P) by 139 publicly traded oil and gas companies is expected to rise by 12 percent to $406 billion in 2011. Spending growth this year is largely fueled by strong oil prices and builds on gains of 19 percent in 2010, according to a new report by IHS.

While the increase is less than the 19 percent increase seen last year, oil and gas companies, which spent considerably less during the economic downturn of two years ago, are continuing to increase their upstream portfolio investments, particularly for oil-weighted projects, said Aliza Fan Dutt, senior analyst at IHS and author of the IHS Herold Global E&P CAPEX Review.

"Despite recent volatility and a wobbly economy recovery, oil prices remain relatively strong, which supports higher capital spending. In addition, investments in oil and unconventionals continue at a rapid clip, which conventional gas outlays remain relatively depressed."

The shift to drilling on oil and liquids-rich properties that began in 2010 accelerated through the year and continues today, according to the report. According to Fan Dutt, "those companies that shifted their portfolios earlier will benefit more than those that moved more slowly." Fan Dutt cited EOG Resources as an example of such a company. EOG, a natural gas producer, shifted to the oil side much earlier than most of its peers. AS a result, oil now contributes 60 percent of the company's revenues; EOG is posting strong earnings growth."

"Cost inflation will continue to be a key issue, with more companies competing for oil services and equipment during a time of elevated oil prices," said Fan Dutt. "Cost containment will be particularly important for natural gas-weighted producers as they struggle to achieve strong margins amid weak natural gas prices."

Mid-size U.S. E&P companies should increase spending by 25 percent, while U.S. integrated oil companies are expected to reduce their spending rate to 14 percent this year. However, as a group, integrated oils are planning to continue their massive investments in oil and gas projects worldwide.

Marathon Oil Corp., the most aggressive of the integrated U.S. companies, is ramping up spending by 37 percent as it drills on expanded U.S. acreage in the Anadarko Woodford play, the Niobrara play in the Denver-Julesberg Basin in Colorado and Wyoming and in its Bakken shale position.

The largest North American E&Ps will increase capital outlays by only three percent, which will be buttressed by spending on unconventional resources in shale basins, according to the report. "For example, Pioneer is increasing its spending by 53 percent, with its expansive holdings in the Spraberry field and Eagle Ford shale play, where it was an early entrant."

Global integrated oil companies will continue to make massive investments in oil and gas projects worldwide with a "muted" nine percent spending increase, down slightly from last year. Canadian integrated oil companies are slightly more eager to spend with a planned increase of 13 percent. Husky Energy leads this group with a 44 percent increase on operations mainly in Western Canada and offshore Canada's east coast.

Spending by integrated oil companies outside North America is expected to rise by 13 percent in 2011, the same growth rate seen last year. IHS attributed the increase to strong spending in Latin America and Russia. Colombia's state-owned oil company Colombia will spend 56 percent more this year on top of a 34 percent increase last year. Brazil's state energy company Petrobras also continues to invest heavily on its upstream portfolio with an estimated 24 percent increase. Additionally, Russia's Lukoil is expected to spend 55 percent more this year.

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Oil Prices Fall As Gasoline Supplies And Pump Prices Rise

- Oil Prices Fall As Gasoline Supplies And Pump Prices Rise



Jul 27, 2011

The price of oil is falling after the government announced the nation's oil and gasoline supplies increased last week.

On Wednesday morning, Benchmark West Texas Intermediate crude for September lost $1.50 to $98.90 per barrel at the New York Mercantile Exchange.

The Energy Department stated that oil inventories increased 2.3 million barrels to 354 million barrels last week. Supplies of gasoline raised to 213.5 million barrels. The demand for gas over the past four weeks remains below year-ago levels.

Prices at gasoline stations rose about half a cent on Wednesday to a national average of $3.698 a gallon which is just about $1 more than a year ago.

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Upstream O&G Costs Rise Anew, IHS CERA Reports

- Upstream O&G Costs Rise Anew, IHS CERA Reports

Friday, July 01, 2011
Rigzone Staff
by Barbara Saunders

Inflation is again no stranger to the upstream petroleum sector, as the costs of building and operating upstream oil and natural gas facilities continued to increase in the past six months to the highest level since the recession began in 2008, according to two cost indices newly updated by IHS CERA.

And, there's no relief on the near horizon, the company forecasts.

The indices show that upstream construction and operating costs registered their largest increases since 2008 during the third quarter (3Q) of 2010 through the first quarter (1Q) of 2011.

The IHS CERA Upstream Capital Costs Index (UCCI) tracks costs associated with the construction of new oil and gas facilities. Between 3Q 2010 and 1Q 2011, the UCCI rose five percent to a score of 218, the company said. Meanwhile, the UCCI's counterpart, the IHS CERA Upstream Operating Costs Index (UOCI), rose two percent over the same period to register an index score of 178, the company reported.

The indices are proprietary measures of cost changes similar in concept to the Consumer Price Index (CPI) and draw upon proprietary IHS tools to provide a benchmark for comparing costs around the world. Values are indexed to the year 2000, meaning that capital costs of $1 billion in 2000 would now be $218 billion. Likewise, the annual operating costs of a field would now be up from $100 million in 2000 to $178 million.

Costs recently began trending upwards during the period studied after falling steadily for a year after their peak in the 3Q of 2008, IHS CERA noted. The strength of the latest increases adds momentum as costs continue their march to pre-recession levels, the company continued.

"The steady rise of upstream costs is a product of confidence changing outlook," said Daniel Yergin, IHS CERA chairman and author of the Pulitzer Prize-winning book, The Prize. "That perspective—reflecting expectations for stronger oil and gas demand—is taking the form of an increased rate of new project construction."

Steel Costs Paramount Factor

The five percent increase in upstream capital costs was driven especially by rising costs of steel, equipment and labor.

Among the indices' highlights:

• Upstream steel costs rose 13 percent, continuing its year-long rise after falling nearly 34 percent from the 3Q of 2008 through the same quarter of 2009. Costs for all steel-making raw materials rose and steel manufacturers took advantage of low inventories to pass through aggressive price increases, the company reported.

• Rising steel costs also helped drive the increase (three percent) in equipment costs as suppliers passed those costs along to operators, IHS CERA said. The company added that rising oil prices also led to increased demand as activity levels increase to take advantage of higher prices.
• Costs for construction labor and engineering and project management posted strong gains, nine percent and six percent, respectively. However, the rise in costs was mostly driven by South America and Asia, IHS CERA noted. Demand was especially strong in Brazil, where the country's aggressive development plans for ultra deepwater pre-salt fields and need to import talent drove rates upward. Growth in North America continues to be slow, IHS CERA said, as the continent deals with the after-effects of the recession and the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.
• Offshore rig and offshore installation costs were once again the only two of the UCCI's 10 markets to register declines. This was driven by lower activity in the Gulf of Mexico, coupled with increased supply entering the market. However, both of these markets began to show upward movement in the latter half of the six-month period, suggesting a possible change in momentum, IHS CERA said.

CERA noted: "The Upstream Operating Costs Index rose two percent during the 3Q of 2010 through the 1Q of 2011 and is now just two index points below its 2008 peak level. The increase was driven by market fundamentals, personnel costs and markets that are impacted by high oil prices such as chemicals and transportation. Maintenance costs, which were flat, reflected the only market tracked by the UOCI not to register an increase during the six-month period."

Operating costs rose eight percent, driving the UOCI's overall rise. Sustained high oil prices that resulted in higher gasoline and diesel costs were a major factor. Petroleum-derived products, such as cleaning solvents and feedstocks, also rose significantly. Manpower costs also climbed due to increased production levels and the extension of the life of existing fields in an attempt to take advantage of higher crude prices.

Talent Crunch = Retention Costs

"Companies have had to draw from an ever-tightening pool of talent and this has made retaining personnel more difficult," said Jeff Kelly, a director in IHS CERA's cost consulting group. "Compensation is usually frozen during the year, but businesses are now granting more adjustments out of cycle, among other things, in an attempt to retain talent."

Among the other costs that rose were for logistics and wells, which rose two percent and one percent, respectively. Logistics costs rose despite an oversupply of larger platform supply vehicles (PSVs) in some regions, in the face of rising food and fuel costs. "High demand for PSVs and the departure of some vehicles to other regions kept day rates up," IHS CERA said. "Also, service companies in the U.S. Gulf of Mexico (GOM) have been hesitant to pass along rising food and fuel prices to operators due to competitive pressures. Emergency response and recovery vehicle (ERRV) costs have also held steady despite reduced activity in the U.S. GOM as operators used to the time to send ships to dry dock for routine maintenance.

Rising onshore well services costs, due to higher activity levels in North America, Russia and the Middle East helped generate the increase in overall well costs. An uptick in materials costs also contributed to the overall rise. Demand for proppant and steel tubular was particularly strong, driven by higher per-ton prices from mills in North America, China, Russia and Latin America. Fracturing activity in North America as well as overseas seems to be pulling the weight of this market, IHS CERA observed.

IHS CERA expects costs to continue rising in 2011, driven by competition for labor and the rising costs of steel and consumables such as chemicals, food and fuels.

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Rise of Oil Brings A Visit from Ghana

- Rise of Oil Brings A Visit from Ghana

Tuesday, June 14, 2011
Houston Chronicle
by Jenalia Moreno

Ghana has long relied on its exports of cocoa and gold.

But oil is becoming much more important to its economy since production began last year at Ghana's offshore Jubilee field.

The emerging Ghanaian oil industry brought the nation's vice president, John Dramani Mahama, to Houston this week for meetings with energy companies to encourage investment in the western African nation.

"With this trip, we're going to build a partnership between Ghana and Texas," he said during a news conference Monday at the Greater Houston Partnership.

Total annual trade between Houston and Ghana rose to $244 million in 2010 from $159 million in 2009, according to the partnership.

Since the Jubilee discovery a few years ago, several foreign energy companies have set up operations in Ghana. But the region's offshore geology makes exploration challenging.

"Drilling on the west coast of Africa is very tricky business," Mahama said.

Many of the companies working in Ghana are from developing nations, he said.

"Their businessmen are crawling over Africa and looking for opportunities," he said.

His delegation also visited the Port of Houston, and at the news conference Mahama discussed his nation's transportation needs .

Ghana must upgrade its rail lines and roads to make it easier to move products through Africa, he said.

Partnership officials said they are pushing for a nonstop flight from Houston to Ghana's capital of Accra. United Airlines plans to start flying between Houston and Lagos, Nigeria, later this year.

Copyright (c) 2011, Houston Chronicle

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Iran's South Azadegan Oil Field's Crude Output to Rise

Iran's South Azadegan Oil Field's Crude Output to Rise

Thursday, April 14, 2011
Knight Ridder/Tribune Business News
by A.Yusifzade, Trend News Agency, Baku, Azerbaijan

Iran 's South Azadegan oilfield's crude production is expected to reach 320,000 barrels per day (bpd) after completing the first phase of the development project during the next four years, the Managing director of Iran's Petroleum Engineering and Development Company Naji Sadouni said, according to Shana.

Sadouni said that completing the second phase of the project will boost the output up to 600,000 bpd.

China will invest $2.5 billion in developing the projects of the South Azadegan oilfield on Iran's side of the Iraqi border, Sadouni told Mehr news agency.

The first phase of the development project has already been started, Sadouni added.

Sadouni put the current output of the field at about 55,000 bpd.

He did not specify which Chinese company would deal with the development.

In 2009, the China National Petroleum Corporation and the National Iranian Oil Company signed a $1.76 billion deal to develop the neighboring North Azadegan field, where they hope to extract 75,000 bpd.

At present, Sinopec is engaged in the Yadavaran oilfield, which is adjacent to Azadegan oilfield.

Azadegan oil field, covering a 900 square km area, is located 80 km west of Ahwaz city in the south-western province of Khuzestan.

Azadegan is one of the world's largest deposits with 42 billion-barrel-reserves.

Iran has OPEC's second-highest oil output. After Russia, its natural gas reserves rank second in the world.

Va. Dem Bucks Administration on Offshore Leasing

Va. Dem Bucks Administration on Offshore Leasing

Wednesday, April 13, 2011
Daily Press, Newport News, Va.
by Cory Nealon

There's nothing like a politician not seeking re-election.

Case in point: U.S. Sen. Jim Webb, D-Va.

Since announcing in February he would not seek re-election, Webb has bucked President Barack Obama, a fellow Democrat, on a handful of issues.

First, he criticized Obama's handling of the turmoil in Libya. Next, he backed a bill that would've halted the U.S. Environmental Protection Agency from regulating greenhouse gases, which Obama favors because the Senate didn't pass energy legislation in 2009.

Now he's calling on Obama to open Virginia's coast to oil and natural gas exploration.

"As gas prices rise, in part due to America's dependence on foreign oil, we must pursue robust energy policies that include the expansion of our domestic energy resources in a safe and secure manner, as well as conservation and clean energy measures," Webb said in a statement issued by his office last week.

He also asked Obama to expand the 2.9-million acre tract -- slightly larger than Delaware -- located 50 miles off Virginia's shore that was previously considered for drilling.

The request comes a little more than a year after Obama announced he would open much of the East Coast, including Virginia, to drilling. Obama scrapped the plan, however, after last year's Gulf of Mexico oil spill, which killed 11 and caused untold damage to the gulf's ecosystem.

For those of you keeping tabs at home, the offshore drilling bill that Webb supports comes from Rep. Bob Goodlatte, R-Roanoke -- the same lawmaker trying to curtail the EPA's aggressive Chesapeake Bay Restoration plan.

Who says the House and Senate can't work together?

Global warming

I got a fair amount of feedback -- most of it critical -- about an article last week concerning global warming skeptic Roy W. Spencer.

Spencer spoke at the Environment Virginia Symposium at the request of Gov. Bob McDonnell's administration.

Spencer said that he agrees with most of what the Intergovernmental Panel on Climate Change -- the body of scientists that shared the 2007 Nobel Peace Prize with former Vice President Al Gore -- has to say about global warming.

However, he highlighted gaps in the panel's data and questioned whether mankind is causing the Earth to warm through its use of fossil fuels.

The view is not popular among environmental activists and scientists, both of whom have criticized the media for giving Spencer and similar-minded scientists a platform to expound their views.

What I haven't heard is anyone complaining that Spencer said something false or inaccurate. Instead, the gripes centered on his conservative and evangelical affiliations, which were pointed out in the article.

If you still feel he doesn't deserve a seat at the table, my phone number and email are below. As always, comments are welcomed.

Chevron Expects 1Q Earnings to Rise, Helped by Higher Prices

Chevron Expects 1Q Earnings to Rise, Helped by Higher Prices

Tuesday, April 12, 2011
Dow Jones Newswires
by Isabel Ordonez & Ben Lefebvre

Chevron said it expects first-quarter earnings to rise from the prior quarter, helped by higher oil prices and slightly offset by lower profits from its refining and marketing arm.

The outlook from the second-largest U.S. oil company by market value after Exxon Mobil Corp. signals that major oil companies will report a surge in quarterly earnings for the period ended March 31, boosted by climbing oil prices, which appreciated in average almost $20 a barrel compared with the same quarter a year ago, says Fadel Gheit, an analyst at Oppenheimer & Co.

Chevron said an interim earnings update released Monday afternoon that its exploration and production earnings for the first quarter will be higher than fourth quarter, but added that profits will be hurt by less production received due to the negative effect of production-sharing contracts signed with foreign governments. These type of contracts lower the reserves the company can book when oil prices rise.

Chevron said that, during the first two months of the quarter, the company received $88.23 a barrel for crude oil from its U.S. fields, up 11% from the prior quarter and up 20% from a year earlier. Natural-gas prices rose 14% from the prior quarter but fell 22% from the year-earlier period to $4.15 per thousand cubic feet.

San Ramon, Calf.-based Chevron said its U.S. production in the first two months of the quarter was 686,000 barrels of oil equivalent per day. For the full first quarter of 2010, production was 734,000 barrels of oil equivalent a day. International output was 2.07 million barrels of oil equivalent per day in January through February. For the entire quarter a year earlier, daily international production reached 2.05 million barrels of oil equivalent.

Shares rose 1.8% to $109.76 in after-hours action. As of the close, the stock had risen 36% in the past year.

Chevron said it expects its downstream quarterly earnings to sink as it processed less fuel to sell than during the same period of the year before. The company said its U.S. plants processed 870 million barrels of oil a day into gasoline, diesel and other fuels through February 2011, compared to 889 barrels a day for the first full quarter of 2010.

Despite the lower sales volumes, Chevron realized a higher profit margin for the fuel it sold during the quarter. Refining margins at its U.S. plants averaged $21.08 through March, 40% higher than in the full quarter of 2010.

The oil giant also said its refining and marketing earnings in the first quarter are expected to be negatively impacted by the adjustment in the accounting of the fair value of some assets tied to oil prices. Oppenheimer's Gheit said this is likely to mean the company's downstream earnings will be affected by the difference between the price the company paid for oil and what it was worth by the time it was delivered to the company's refineries.

Chevron also noted that it expects to post between $250 million and $350 million of after-tax charges for the quarter. It said it expects the total charges to be at the high end of the guidance range.

The company has reported better results of late, helped by higher prices. In January, Chevron said its fourth-quarter earnings jumped 72%.

Chevron is slated to report first-quarter earnings on April 29.

Total: UK Open to Mitigating Effect of Oil Tax Rise

Total: UK Open to Mitigating Effect of Oil Tax Rise

Wednesday, April 06, 2011
Dow Jones Newswires
by  James Herron

The U.K. government appears willing to consider measures to mitigate the effect of a recent large increase in tax on oil and gas producers, following a meeting with oil industry representatives last week, a senior executive at French oil company Total said Wednesday.

Representatives of the Department of Energy and Climate Change and the Treasury "realized that the concerns of industry are real...not just a selfish reaction," said Patrice de Vivies, Total's vice president of Exploration and Production in northwestern Europe.

Oil companies and many industry analysts have said the increase in the supplementary tax charge on their profits to 32% from 20% will hurt investment in the North Sea.
The measure was introduced in response to the rise of oil prices above $100 a barrel, but De Vivies said there is no justification for imposing the tax on gas fields, for which the price is equivalent to $55 a barrel.

"[They] will have to give extra incentives to gas fields," which make up the bulk of remaining U.K. resources, or face declining investment, he said. Total is reviewing all of its potential new projects in the U.K. following the change, he said.

Total Chief Executive Christophe de Margerie will meet soon with U.K. Chancellor of the Exchequer George Osborne to discuss the tax increase, De Vivies said.

Dow Jones Newswires put De Vivies' comments to the U.K. Treasury, who responded by referencing statements made by ministers in the wake of last week's meeting.
Energy and Climate Change Secretary Chris Huhne said at the time: "We're going to be considering some of the points that they [the industry] made. There are elements of what the Chancellor announced which were up for consultation, including the issue of the oil price at which the fair fuel stabilizer operates."

Separately, RWE Dea, the oil and natural gas unit of German utility RWE, said Wednesday the planned tax increase is "unpleasant" and should be retracted.
"We've learned about the U.K. government's plan to increase the tax and indeed found ourselves very flatfooted," said RWE Dea Chief Executive Thomas Rappuhn at the company's annual press conference in Hamburg.

[Oil and Gas Post] - Japan’s Coal, Gas Demand to Rise After Quake, New Hope Says

Japan’s Coal, Gas Demand to Rise After Quake, New Hope Says

March 22, 2011, 2:07 AM EDT
By Elisabeth Behrmann

(Updates to add closing share price in fourth paragraph.)

March 22 (Bloomberg) -- Japan’s coal and natural gas demand is likely to rise after the nation’s biggest earthquake this month knocked out nuclear-powered generators, said New Hope Corp., an Australian coal producer.

“I would expect increased requirements to burn coal and gas over the next few years,” Robert Neale, chief executive officer of the Ispwich, Queensland-based company, said today in a phone interview. Coking coal, in particular, would be needed “because you’ll have at least five or more years of reconstruction, which is going to require steel,” he said.

Japan, which depends on imported fuel for most of its needs, is seeking alternatives to nuclear power after the March 11 quake forced the shutdown of 11 reactors. Five years may be needed to rebuild after the disaster, the World Bank said.

New Hope fell 0.2 percent to A$4.89 at the 4:10 p.m. close in Sydney trading. Shares in the company have risen 0.8 percent this year, compared with the benchmark S&P/ASX 200 Index’s 2.2 percent fall.

New Hope reported first-half profit of A$407 million ($409 million), a rise of more than fourfold following the sale of the company’s stake in Arrow Energy Ltd. The company has a cash balance of about A$1.6 billion following the A$238 million acquisition of Northern Energy Ltd., Neale said.

Demand for coal will rise to make up for the lost nuclear capacity because it’s cheaper than oil and gas, and also due to negative public sentiment toward nuclear power, Andrew Harrington, an analyst Patersons Securities Ltd., said in a report. “We believe that the negativity surrounding nuclear energy will see increased demand for fossil fuels including and especially coal.”

Coal producers likely to benefit from increased demand include Gloucester Coal Ltd., New Hope, Whitehaven Coal Ltd. as well as developers Aston Resources Ltd., Cockatoo Coal Ltd. and Riversdale Mining Ltd., said Harrington.

--Editors: Keith Gosman, Andrew Hobbs
To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net
To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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