Page 8 - NorthAmOil 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. acquire Painted Pony Energy for CAD461mn
($347mn) including debt. (See: CNRL to
Middle East: Aramco update highlights a acquire debt-laden Painted Pony, page 14)
quiet week Indeed, the assumption of Painted Pony’s debt
It has been a quiet week, with companies makes up the majority of the transaction at
throughout the region returning to work fol- CAD350mn ($264mn), while CNRL will pay
lowing the Eid al-Adha break. The big news CAD111mn ($84mn) in cash for the company.
was Saudi Aramco’s Q2 earnings update, which CNRL is one of Canada’s largest produc-
showed that the company’s net income had ers, and the deal illustrates its desire to keep
dropped by a full 50% during the first half of the growing its footprint in the liquids-rich Mont-
year, with Q2 $10bn lower than Q1. Aramco put ney shale gas play in northeastern British
a characteristically brave face on the results, her- Columbia. A number of
alding the firm’s resilience, though much of the News of the deal comes within days of
financial hurt experienced by the company and CNRL reporting a better-than-expected loss shale producers,
its majority sovereign stakeholder was self-im- for the second quarter of 2020. The company’s
posed, given the Ministry of Energy’s direction adjusted loss came in at CAD772mn ($581mn) including
to Aramco to produce a single-day record in or CAD0.65 ($0.49) per share, while Refinitiv
early April. data showed that analysts had expected it to Pioneer Natural
For the energy sector, Aramco’s earnings post an adjusted loss of CAD0.85 ($0.64) per Resources and
update took some of the spotlight off the tragic share.
explosion in the port of Beirut that has brought Other second-quarter losses also contin- Devon Energy,
an already crippled economy to a near-complete ued to pile up over the past week, extending
halt, with the government set to resign en masse. a trend that quickly became clear after the have also
Countries around the world have jumped for- first North American producers reported
ward with humanitarian aid, though the wounds their earnings. Among those reporting a loss unveiled plans
are not just skin-deep. in recent days in the US was leading shale for a variable
Meanwhile, Baghdad announced last week producer EOG resources, which performed
that it would increase voluntary additional oil worse than analysts’ expectations. The com- dividend.
production cuts to 400,000 bpd below its 3.8mn pany posted a net loss of $909.4mn, or $1.57
bpd ceiling in August to make up for previous per share, for the second quarter of 2020, from
non-compliance with OPEC+ cuts. a profit of $847.8mn, or $1.46 per share, a year
ago. (See: EOG joins ranks of shale producers to
If you’d like to read more about the key events shaping report second-quarter loss, page 16)
the Middle East’s oil and gas sector then please click A number of shale producers, including
here for NewsBase’s MEOG Monitor. Pioneer Natural Resources and Devon Energy,
have also unveiled plans for a variable divi-
Quarterly losses mount in North America dend in an effort to keep rewarding sharehold-
Larger North American companies appear to ers as they struggle to deliver returns. Other
be gaining the confidence to make acquisitions shale players have also said they may consider
despite the continued uncertainty over the near- such a move. Pioneer’s CEO, Scott Sheffield,
term oil and gas outlook. has suggested this could be a new model for a
This week, Canadian Natural Resources volatile industry that had fallen out of favour
Ltd (CNRL) announced that it had agreed to with investors in recent years.™

P8 www. NEWSBASE .com Week 32 13•August•2020