Page 14 - NorthAmOil Week 44 2020

NorthAmOil PROJECTS & COMPANIES NorthAmOil

Engie backs out of proposed US LNG deal

FRANCE-US FRENCH utility Engie has abandoned talks The news prompted criticism from US poli-
with US-based NextDecade over a proposed ticians, including North Dakota Senator Kevin
LNG supply deal involving gas from the planned Cramer, who sent a letter to French President
Rio Grande LNG terminal in South Texas. This Emmanuel Macron arguing that importing US
comes after NewsBase reported last week that LNG would result in lower emissions than buy-
Engie had delayed signing a deal with NextDec- ing the fuel from Russia.
ade following pressure from the French govern- Indeed, NextDecade has been trying to
ment – which has a 23.6% stake in the utility – to position itself as a future low-emissions – or
seek cleaner supplies instead. even no-emissions – provider of LNG. The
Engie’s exit from talks The French government banned domes- company redesigned its Rio Grande facility
over a supply deal tic hydraulic fracturing in 2011 and has since this year, and announced last month that it
comes as a blow to expressed misgivings over importing gas that could reduce emissions from the project by
NextDecade’s efforts is produced using the technique. And such gas, around 90% using carbon capture and storage
to secure offtake produced from shale formations and involving (CCS) and proprietary processes. The com-
agreements. the use of fracking, is what US LNG export ter- pany says it is continuing to work on address-
minals are using for feedstock. ing the remaining 10%, with an eventual aim of
NextDecade, which is seeking offtake agree- carbon neutrality.
ments to underpin its proposed Rio Grande However, Engie’s exit from talks over a supply
LNG export terminal, was initially reported to deal comes as a blow, given that NextDecade is
be continuing to pursue a deal. However, Engie trying to secure offtake agreements for an addi-
confirmed to media this week that it had aban- tional 9mn tonnes per year (tpy) of LNG in order
doned talks over the deal. France’s Le Monde to reach a final investment decision (FID). This
newspaper attributed this to the deal being at is in addition to the 2mn tpy deal the company
odds with Engie’s energy transition strategy. already has for Rio Grande.™

Diamondback not seeking to

add scale through acquisition

PERMIAN BASIN DIAMONDBACK Energy’s CEO, Travis Stice, beginning to see the benefits from high-grading
said during his company’s third-quarter earn- our development programme after the down-
ings call that the firm saw no need to purchase turn began earlier this year,” Stice said.
a competitor in order to boost its performance. Diamondback reported a net loss of $1.11bn,
This comes as other companies focused on the or $7.05 per share, for the third quarter of 2020.
same region – the prolific Permian Basin – are On an adjusted basis, the company earned $0.62
consolidating. per share, with Refinitiv IBES data showing that
In late September, Devon Energy and WPX this beat analysts’ expectations of $0.37 per share.
Energy have announced that they are merging Diamondback projects that its production at the
into a company whose acreage position will be end of 2020 will amount to roughly 170,000-
underpinned by assets in the Permian’s Delaware 175,000 barrels per day (bpd), with output likely
sub-basin. This was followed by Permian-fo- staying flat in 2021.
cused Pioneer Natural Resources and Parsley Stice said growth was “off the table” until oil
Energy striking a merger agreement in October. prices rise significantly. In the meantime, the
Diamondback, however, is taking a different company continues its efforts to lower costs.
approach. Diamondback said it expects to execute its
“We do not need to increase our scale to fur- maintenance capital plan for 2021 with 25-35%
ther lower costs,” Stice said during the company’s less capital than 2020, which it said implies a
earnings call, noting Diamondback’s well costs reinvestment ratio of around 70% with West
are about 30% lower than they were in 2019. “We Texas Intermediate (WTI) at $40 per barrel.
prefer not to make rash decisions at the bottom A Morningstar analyst, Stephen Ellis, said in a
of the cycle,” he added. note that Diamondback’s promise to live within
“Our drilling and completion operations free cash flow (FCF) and lower debt “sends
continue to become more efficient, and we are exactly the right signal to shareholders”.™

P14 www. NEWSBASE .com Week 44 06•November•2020