Category Archives: capital spending

Big Oil’s $45 Billion of New Projects Signal Spending Revival – Bloomberg

Two projects worth $45 billion announced this month show the world’s largest oil companies are regaining the confidence to make big investments, emboldened by rising crude prices and low costs that promise to trigger more expansion ahead.

Source: Big Oil’s $45 Billion of New Projects Signal Spending Revival – Bloomberg

Oil Patch Braces for Financial Reckoning – WSJ

U.S. energy companies have defied financial gravity for more than a year, borrowing and spending billions of dollars to pump oil, even as crude prices plummeted. Until now. The oil patch is expected to finally face a financial reckoning, experts say, with carnage occurring as early as this month. One trigger: Smaller drillers are bracing for cuts to their credit lines in October as banks re-evaluate how much energy companies’ oil and gas properties are worth. But with oil trading below $45 a barrel, bigger oil outfits are struggling to stay profitable, too.Jim Flores, vice chairman of Freeport-McMoRan Inc., which pumps oil in the Gulf of Mexico, explained the industry’s conundrum this way: “It’s raining and it’s going to rain for a long time. We’re all going to get wet. A few people are going to drown. You just have to make it to the other side.”Mr. Flores’s friend Al Walker, chief executive of Anadarko Petroleum Corp., one of the biggest oil companies in the U.S., recently told the audience at a Barclays energy conference, “Frankly at the end of the day, none of us have a great sense for where oil prices are going.”

Source: Oil Patch Braces for Financial Reckoning – WSJ

Continental Resources announces further budget cuts | Bakken.com – Zach Koppang

Continental Resources (NYSE: CLR) has recently announced its plans to further cut its capital expenditures for the upcoming year but also projects the activity will increase production growth by up to 20 percent when compared to last year.Last month the company announced it would be cutting its budget from $5.2 billion to $4.6 billion. However, those figures have been updated and expenditures will now be cut from $4.6 billion to $2.7 billion. Since the summer, oil prices have dropped by nearly 50 percent with this month seeing prices hovering around $60 per barrel. Continental Chairman and Chief Executive Officer Harold Hamm said, “This revised budget prudently aligns our capital expenditures to lower commodity prices, targeting cash flow neutrality by mid-year 2015.”Additionally, the company plans to decrease its current operating rig count from 50 to about 34 by the end of the first quarter of 2015. Continental plans to keep 31 rigs in operation for the full year. Of these rigs, only 11 will be operating in North Dakota’s Bakken formation. Four of the remaining rigs will be operating in the Northwest Cana area of the Anadarko Woodford formation, and 16 will be operating in the South-Central Oklahoma Oil Province (SCOOP).

via Continental Resources announces further budget cuts | bakken.com.

Linn Energy: When Will The Pain Stop? – Seeking Alpha – Albert Alfonso

About a week ago, I discussed the impact of lower oil prices on Linn Energy (NASDAQ:LINE) (NASDAQ:LNCO). In that article, I noted that Linn Energy was starting to recover, up 30% over 2 days due to the closing of several major transactions, a large reduction of debt, and rumors of lower capital spending for 2015. However, this brief rally was snuffed out almost as fast as it started. The main culprit, in my opinion, are lower natural gas prices.LINE data by YChartsA look at natural gasOver the past few days, natural gas prices have been extremely volatile. The main concerns here are a forecasted mild winter and larger than expected increases in natural gas inventories.So far, December 2014 has been one of the warmest on record, keeping demand for natural gas low for uses such as home heating and power consumption. In addition, natural gas inventories have risen faster than anticipated, thanks to robust supply growth from the Marcellus Shale, while the most recent net drawdown came in below consensus estimates.

via Linn Energy: When Will The Pain Stop? – Linn Energy, LLC (NASDAQ:LINE) | Seeking Alpha.