Commodity Corner: Debt Talks Boost Crude

- Commodity Corner: Debt Talks Boost Crude

Tuesday, July 26, 2011
Rigzone Staff
by Saaniya Bangee

Crude prices briefly passed the $100-mark Tuesday as investors remained uncertain about the U.S. economy.

Tuesday's trading volumes were moderate as oil traders anticipated the upcoming deal. Oil prices fluctuated between $97.76 and $100.62 during the trading session. Republican and Democrat lawmakers are trying to compromise on a deal to raise the federal government's debt ceiling ahead of the Treasury Department's Aug. 2 deadline.

Likewise, the political maneuvering surrounding the debt ceiling prompted the dollar to drop against the euro. Against a basket of six other major currencies, the dollar index fell 0.6 percent to 73.595.

Light, sweet crude for September delivery settled at $99.59 a barrel Tuesday.

In other economic news, consumer confidence rose to 59.5 in July, according to a Conference Board report. In addition, the Commerce Department reported a 5-month high in new single family homes.

Its European counterpart, Brent crude added 34 cents, settling at $118.28 a barrel. Brent prices traded between a range of $116.59 and $118.98 Tuesday.

Meanwhile, natural for August delivery slid lower Tuesday, ending the session at $4.37 per thousand cubic feet. Natural gas prices fluctuated between $4.316 and $4.391 Tuesday.

The front-month contract expires at the close of Wednesday's trading session.

RBOB gasoline added 1.68 cents to settle at $3.15 a gallon. The intraday range was $3.095 to $3.17 Tuesday.

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Commodity Corner: Oil Climbs on Europe Debt Plan

- Commodity Corner: Oil Climbs on Europe Debt Plan

Thursday, July 21, 2011
Rigzone Staff
by Saaniya Bangee

On Thursday, oil futures settled at their best since early June, briefly peaking above $100 a barrel, as European leaders made progress on a plan to deal with its debt crisis.

Crude for the new front-month contract gained 73 cents Thursday, settling at $99.13 a barrel. Prices peaked as high as $100.16 a barrel early in the session.

Top European officials met in Brussels today to discuss releasing a rescue package for Greece. The leaders agreed to lower interest rates on European Financial Stability Facility loans while extending loan maturities. Details from the plan are expected to be released soon.

Meanwhile, Brent crude fluctuated between $116.95 and $119.19, before settling at $117.51 a barrel.

Earlier Thursday, the International Energy Agency (IEA) said it won't release additional emergency oil reserves. Last month, the IEA released 60 million barrels of oil to alleviate the disruption of supplies from Libya.

August natural gas fell 11 cents, ending the session at $4.395 per thousand cubic feet after government reports reported an increase in natural gas stockpiles. The U.S. Energy Administration said natural gas stockpiles grew by 60 billion cubic feet, totaling 2.671 trillion cubic feet for the week ended July 15.

The intraday range for natural gas was $4.37 to $4.59 per thousand cubic feet.

Gasoline futures decreased nearly 5 cents, settling at $3.10 a gallon. RBOB prices peaked at $3.16 and bottomed out at $3.09 Thursday.

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Eliminating Tax Deductions on U.S. Energy Cos Could Increase Debt -Study

- Eliminating Tax Deductions on U.S. Energy Cos Could Increase Debt -Study

Wednesday, July 13, 2011
American Energy Alliance

Louisiana State University Endowed Chair of Banking and nationally-renowned economist Dr. Joseph R. Mason released a just-completed study that finds the Administration's proposal to carve out U.S. energy firms from receiving certain tax deductions would have a net negative impact on federal revenues. In his study, "Budget Impasse Hinges on Confusion among Deficit Reduction, Tax Increase and Tax Reform: An Economic Analysis of Dual Capacity and Section 199 Proposals for the U.S. Oil and Gas Industry," Dr. Mason finds repealing tax deductions for American energy manufacturers would result in:

• $30 billion in Federal tax revenue at the expense of some $341 billion in economic output;
• Over 155,000 lost jobs, $68 billion in lost wages, and $83.5 billion in reduced tax revenues; and,
• A net fiscal loss of $53.5 billion in tax revenues.

"The administration's proposal to eliminate tax deductions on U.S. oil and gas companies is grossly counterproductive toward the goal of increasing federal revenues," Dr. Mason said. "Such a move would have a net negative impact on revenue, thereby increasing federal deficits.

"If the goal is deficit reduction, a far more meaningful approach would be reforming federal tax and business policies that encourage economic growth. Expansion of oil and gas exploration and production on the Outer Continental Shelf, for example, would generate an estimated $11 billion annually in Federal tax revenue in the short run, and $55 billion annually in Federal tax revenue in the long run.

"Reform supports business development in both developing and developed countries, alike. The best reformers have several things in common. First, their reforms are part of a broad agenda of boosting global competitiveness and, second, they never stop. Even developing countries previously stung by fiscal imbalances and committed to business reform rarely retreat to increased taxes as a way to raise revenues. The U.S. should also step up to the challenge of reform."

Dr. Mason's conservative economic analysis employs the same government modeling – the U.S. Commerce Department's RIMS II system.

Dr. Mason's report was sponsored by the American Energy Alliance ("AEA"). To learn more and get exclusive information on upcoming projects, sign up for AEA's In The Pipeline.

Thomas Pyle, president of the American Energy Alliance, issued the following statement in response to the study's findings:

"This study confirms that President Obama's insistence on imposing discriminatory tax changes on American oil and gas companies has nothing to do with deficit reduction – it has everything to do with satisfying his anti-energy agenda. The president's insistence on these senseless tax hikes is further proof of his outright hostility to the oil and gas industry - an industry that provides over 9 million jobs and billions in revenue to the federal government."

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Commodity Corner: Oil Ends Lower on Greece Debt

- Commodity Corner: Oil Ends Lower on Greece Debt

Monday, June 27, 2011
Rigzone Staff
by Saaniya Bangee

Crude prices slipped lower Monday on an upcoming vote debating Greece's debt crisis.

This week the Greek parliament will vote on a $40 billion austerity package in order to receive another bailout from the European Union and the International Monetary Fund. The budget-cuts could affect other European countries.

Crude for August delivery lost 55 cents Monday settling at $90.61 on the New York Mercantile Exchange. Crude retrieved earlier losses on reports that French banks had agreed to accept slower repayment of Greece's debt. The intraday range for oil was $89.61 to $91.30 Monday.

Oil prices were also pressured by the Commerce Department's reports indicating flat U.S. consumer spending for May.

For the first time in three sessions, Brent crude gained ground. The European benchmark gained 0.8 percent Monday ending the session at $105.99 a barrel. Prices swung between $102.28 and $106.40, responding to each update on the Greek vote.

Front-month natural gas rose 2.7 cents Monday settling at $4.26 per thousand cubic feet. Futures for natural gas increased on weather forecasts predicting above-average temperatures for this week. Prices peaked at $4.28 Monday.

After trading between $2.74 and $2.82, gasoline futures settled at $2.81 a gallon.

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Samson O&G Repays Debt Facility

- Samson O&G Repays Debt Facility

Wednesday, June 01, 2011
Samson O&G Ltd.

Samson O&G has fully repaid its debt facility. After this final repayment of the facility, which once stood at US $21 million, Samson no longer has any debt on its balance sheet, and its current cash balance is approximately US $61.2 million. Samson holds its cash and cash equivalents in three US dollar denominated bank accounts ($54.8 million) and one Australian dollar denominated account (A $6.0 million).

EVERETT #1-15H (31% WORKING INTEREST)

The Everett #1-15H well has reached a total measured depth of 17,350 feet, as planned, and is currently conditioning the hole prior to running the 4 1/2 inch production liner. This liner will enable a 20 stage fracture stimulation to be undertaken. Oil and gas shows consistent with the balance of the Bakken wells in this field were observed whilst drilling the final part of the lateral.

The Everett #1-15H well is located in Township 154N, Range 99W, Section 15 in Williams County, North Dakota. The Everett #1-15H well is Samson’s sixth Bakken well in the North Stockyard Field.

EARL #1-13H (32% WORKING INTEREST)

As expected, the remaining parted tubing was extracted from the stuck point and was tripped out of the hole to the vertical part of the well bore. As the fish was moved, a marked increase in the flow rate was observed, and this flow rate of approximately 1,200 BOPD was too high to safely trip the balance of the tubing out of the well at that time. The work over crew then stood down for the holiday weekend.

Forecasted high winds in the area have curtailed operations today, but the forward strategy is to pump a well control fluid into the well and trip the fish out of the hole. Inspection of that recovery will determine the next step; if the entire bottom hole assembly is recovered, then the balance of the plugs will then be drilled out.

The Earl #1-13H well is located in Township 154N, Range 99W, Section 13 in Williams County, North Dakota.

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Chrysler Fully Repays Government Loans, Fiat Stake Increases To 46%

Chrysler Fully Repays Government Loans, Fiat Stake Increases To 46%



May 24, 2011

Chrysler said today it has fully repaid the U.S. and Canadian governments, more than six years earlier than it was required to, making final payments of $5.9 billion to the U.S. Treasury and $1.7 billion to the governments of Canada and Ontario.

"Less than two years ago, we made a commitment to repay the U.S. and Canadian taxpayers in full and today we made good on that promise," Chrysler and Fiat CEO Sergio Marchionne said in a statement today.

Mr. Marchionne noted that Chrysler repaid its bailout loans faster than the last time the company got a bailout from the federal government back in the late 1970's when Lee Lacocca led the company.

As a result of the repayment, Fiat's stake in Chrysler will rise to 46%, putting the company close to its goal of 51% by the end of 2011. Once Chrysler develops a vehicle that gets 40 miles per gallon on a Fiat platform, a development expected in the fourth quarter, Fiat can increase its stake to 51%.

Chrysler paid more than $1.2 billion in interest on its debt in 2010, and is swapping out government debt with cheaper debt from institutional investors. The refinancing will not reduce the company's debt load, but will save the company more than $300 million a year in interest expenses.

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Commodity Corner: Crude Tumbles on S&P Debt Outlook

Commodity Corner: Crude Tumbles on S&P Debt Outlook

Monday, April 18, 2011

Rigzone Staff

by Saaniya Bangee

Front-month crude futures plummeted Monday after Standard & Poor (S&P) changed its outlook for U.S. debt from stable to negative. The shift in outlook has increased concerns of the U.S. economy's stability and cuts in government spending.

Oil prices fell by $2.54 Monday, settling at $107.12 a barrel on the New York Mercantile Exchange (NYMEX). Prices fluctuated between $106.54 and $109.44. The S&P move came on the possibility that policymakers may not reach an agreement on how to address long-term fiscal pressures.

Over the weekend, China's central bank announced it would increase bank reserve requirements. In its fourth attempt this year, China hopes to control inflation and curb energy demand. Following the U.S., China is the world's second largest energy consumer.

Additionally, Saudi Arabia's Oil Minister Ali al-Naimi said Sunday that the kingdom has reduced oil production by 800,000 barrels due to lack of demand. Crude output was 8.3 million barrels a day last month, compared to February's 9.1 million barrels a day. Naimi anticipates an increase in April production.

On Monday, the greenback rose against the euro and other currencies further pressuring prices. The euro fell on concerns that Greece will have to restructure its debt. A stronger dollar makes oil more expensive, less attractive to foreign buyers.

May natural gas prices fell for a second day Monday, settling nearly seven cents lower at $4.14 per thousand cubic feet. Analysts do not foresee any near-term pressure increasing prices due to near-average storage and below-average prices. The intraday range for natural gas was $4.087 to $4.27 per thousand cubic feet.

Likewise, gasoline futures fell 1.1 percent, peaking at $3.29 before bottoming out at $3.23. Gasoline priced ended Monday's trading session at $3.25 a gallon.

S&P's Ratings Services Affirmed Credit Ratings For US, Revised Its Outlook To Negative

S&P's Ratings Services Affirmed Credit Ratings For US, Revised Its Outlook To Negative



Apr 18, 2011

Standard & Poor's Ratings Services affirmed its 'AAA' long-term and 'A-1+' short-term sovereign credit ratings on the U.S., according to a Bloomberg report.

It also revised its outlook on the long-term rating to negative from stable.

The revised outlook reflects the U.S.'s "very large budget deficits and rising government indebtedness" relative to its triple-A peers.

Credit Suisse Lowers U.S. GDP Forecasts for First Half 2011

Credit Suisse Lowers U.S. GDP Forecasts for First Half 2011



Credit Suisse has revised down its U.S. GDP forecasts for the first half of 2011. The firm now expects 2.5% real GDP growth in Q1, down from its previous forecast of 3.5%. Its Q2 forecast was also revised down to 3.3% from 3.7%. However, the firm's 2011 second half forecasts remain unaltered at 3.8% and 4.0% for Q3 and Q4, respectively. Credit Suisse expects full year 2011 growth of 3.4% on a year-over-year basis and 3% on an annual average basis. This is down from its previous estimate of 3.8% and 3.3%, respectively. The firm sees 4.0% real GDP growth in 2012.

Credit Suisse issued a statement saying: The first quarter's forecast revision is mostly due to current quarter accounting. The monthly building blocks that add up to GDP have consistently printed below expectations this quarter, defying the much rosier readings from other parallel evidence on the economy (such as the ISM surveys). The list of GDP "source data" disappointments includes home sales, housing starts, capital goods shipments, non-residential construction, federal spending, and a sharp increase in the trade deficit. Most importantly, the GDP's largest building block - consumer spending - is slowing sharply on a sequential basis, on track for less than 2% growth in Q1, compared to 4% growth in Q4. Our revision to second quarter growth is partly a consequence of higher oil prices and the negative effect on real income growth. Consumer confidence gauges also fell sharply in March, presumably due to higher gasoline prices. Another reason for our Q2 downgrade is housing, particularly the 22% plunge in February housing starts. Falling starts will impact future readings on construction outlays and the associated GDP component - residential investment.