Page 11 - NorthAmOil Week 05 2021

NorthAmOil INVESTMENT NorthAmOil

Surge announces Midland Basin acquisition

as other Asian firms exit shale

US HOUSTON-BASED Surge Energy US Holdings returns for years to come.”
announced on January 31 that one of its subsid- The deal is expected to close later during this
iaries had signed a purchase and sale agreement quarter.
(PSA) to acquire leasehold interest and produc- According to Surge’s website, it currently
ing wells from Grenadier Energy Partners II. holds 93,000 net acres (376 square km) in the
The transaction is estimated to be worth around Permian Basin, where it has operated since 2015.
$420mn. The company was formed as a US subsidiary of
The assets are located in Texas’ Howard China-based Shandong Xinchao Energy to pur-
County, in the Permian Basin’s Midland sub-ba- sue acquisitions in US shale.
sin, and include production of around 9,000 News of the latest acquisition comes as cer-
barrels of oil equivalent per day (boepd), with oil tain other Asian companies are pulling back
accounting for roughly 75% of this. The acqui- from US shale. This week, Japan’s Sumitomo
sition comprises 18,010 net acres (73 square completed the sale of its Eagle Ford shale assets,
km), and the operated inventory on the acreage which were the last of its shale operations fol-
includes about 120 economic drilling locations, lowing the sale of its operations in the Marcellus
which Surge described as high-quality. play last year.
“This acquisition is consistent with our Also this week, India’s Reliance Industries
strategy of building a long-term, sustainable Ltd. (RIL) agreed to sell its entire stake in the
oil and gas company,” stated Surge’s CEO, Lin- Marcellus shale for $250mn. The RIL assets will
hua Guan. “The combination of both produc- be sold to US-based Northern Oil and Gas. This
tion and high-quality inventory supports both comes after RIL sold the first portion of its Mar-
near-term cash flow and strong economic cellus holdings in 2017.™

PERFORMANCE

LOOP oil exports to Asia hit record highs

US GULF COAST CRUDE exports from the Louisiana Offshore in the Middle East, and indeed the rise in ship-
Oil Port (LOOP) – the only US port that can ments from the LOOP comes as uncertainty
fully load very large crude carriers (VLCCs) – remains for the return of some production
achieved a new record in January. The increase from OPEC and its allies. Asia is OPEC’s largest
comes as Asian buyers are thought to be stock- regional buyer.
ing up on oil in anticipation of a post-pandemic Louisiana state data show that Mars Blend
rebound in fuel demand. crude output was estimated at over 500,000
Bloomberg reported this week that based barrels per day (bpd) in November. Bloomberg
on ship-tracking data it had compiled, eight cited a Kpler crude market analyst, Emmanuel
vessels sailed from the LOOP in January, car- Belostrino, as saying it was likely that most of the
rying nearly a combined 15mn barrels of oil exports from the LOOP were Mars Blend.
to South Korea, China and India. This dou- In January, some of OPEC’s largest oil pro-
ble the volumes exported from the port in ducers – Saudi Arabia, Iraq, Abu Dhabi and
December and notches up an all-time high for Kuwait – raised their monthly pricing for ship-
the LOOP. Most of the vessels were VLCCs, ments to Asia for February. The move came after
which have the capacity to carry up to 2mn Saudi Arabia announced it would cut its oil pro-
barrels of oil. duction by an additional 1mn bpd in February
Total US Gulf Coast crude outflows to Asia and March, causing crude prices to jump.
are reported to have risen to nearly 51mn barrels Analysts said at the time that the higher cost
in January. of Middle Eastern barrels could open up room
The LOOP receives the bulk of the high-sul- for other crudes, such as US oil. As a result, high
phur crudes produced in the Gulf of Mexico, flows of US crude to Asia from the LOOP and
including Mars Blend, a regional sour bench- other US ports are likely to continue over the
mark. This can replace sour crudes produced course of February.™

Week 05 04•February•2021 www. NEWSBASE .com P11