Page 8 - GLNG Week 32

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In other news, Russia and Argentina are mov- ing forward with plans for joint production of steel pipes for oil and gas projects. Ricardo Lago- rio, Argentina’s ambassador to Moscow, told Sputnik earlier this week that Tenaris, an inter- national company founded in Argentina, and Russia’s Severstal were working together to build a new welded pipe plant in Western Siberia. The facility is due to begin production next year and will reach full capacity in 2024, Lagorio said.
Elsewhere in Latin America, Mexico’s national electricity provider CFE is under fire for burning residual fuel oil at a plant near the capital that contravened regulations pertaining to maximum sulphur content. Shortly after a Reuters report brought the utility’s violations to light, a Mexican Nobel Prize winner called for a ban on the use of heavy fuel oil in power gen- eration. Residual fuel oil is plentiful in Mexico, as the country produces large amounts of heavy crude oil.
If you’d like to read more about the key events shaping the Latin American oil and gas sector then please click here for NewsBase’s LatAmOil Monitor.
Middle East: Aramco update highlights a quiet week
It has been a quiet week, with companies throughout the region returning to work fol- lowing the Eid al-Adha break. The big news was Saudi Aramco’s Q2 earnings update, which showed that the company’s net income had dropped by a full 50% during the first half of the year, with Q2 $10bn lower than Q1. Aramco put a characteristically brave face on the results, her- alding the firm’s resilience, though much of the financial hurt experienced by the company and its majority sovereign stakeholder was self-im- posed, given the Ministry of Energy’s direction to Aramco to produce a single-day record in early April.
For the energy sector, Aramco’s earnings update took some of the spotlight off the tragic explosion in the port of Beirut that has brought an already crippled economy to a near-complete halt, with the government set to resign en masse. Countries around the world have jumped for- ward with humanitarian aid, though the wounds are not just skin-deep.
Meanwhile, Baghdad announced last week that it would increase voluntary additional oil production cuts to 400,000 bpd below its 3.8mn bpd ceiling in August to make up for previous non-compliance with OPEC+ cuts.
If you’d like to read more about the key events shaping the Middle East’s oil and gas sector then please click here for NewsBase’s MEOG Monitor.
Quarterly losses mount in North America
Larger North American companies appear to be gaining the confidence to make acquisitions despite the continued uncertainty over the near- term oil and gas outlook.
This week, Canadian Natural Resources Ltd (CNRL) announced that it had agreed to
acquire Painted Pony Energy for CAD461mn ($347mn) including debt. Indeed, the assump- tion of Painted Pony’s debt makes up the majority of the transaction at CAD350mn ($264mn), while CNRL will pay CAD111mn ($84mn) in cash for the company.
CNRL is one of Canada’s largest produc- ers, and the deal illustrates its desire to keep growing its footprint in the liquids-rich Mont- ney shale gas play in northeastern British Columbia.
News of the deal comes within days of CNRL reporting a better-than-expected loss for the second quarter of 2020. The company’s adjusted loss came in at CAD772mn ($581mn) or CAD0.65 ($0.49) per share, while Refinitiv data showed that analysts had expected it to post an adjusted loss of CAD0.85 ($0.64) per share.
Other second-quarter losses also contin- ued to pile up over the past week, extending a trend that quickly became clear after the first North American producers reported their earnings. Among those reporting a loss in recent days in the US was leading shale producer EOG resources, which performed worse than analysts’ expectations. The com- pany posted a net loss of $909.4mn, or $1.57 per share, for the second quarter of 2020, from a profit of $847.8mn, or $1.46 per share, a year ago.
A number of shale producers, including Pioneer Natural Resources and Devon Energy, have also unveiled plans for a variable divi- dend in an effort to keep rewarding sharehold- ers as they struggle to deliver returns. Other shale players have also said they may consider such a move. Pioneer’s CEO, Scott Sheffield, has suggested this could be a new model for a volatile industry that had fallen out of favour with investors in recent years.
If you’d like to read more about the key events shaping the North American oil and gas sector then please click here for NewsBase’s NorthAmOil Monitor.™
A number of shale producers, including Pioneer Natural Resources and Devon Energy, have also unveiled plans for a variable dividend.
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