Page 13 - NorthAmOil Week 19

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LNGL sells Magnolia LNG after appointing administrators
LOUISIANA
AUSTRALIA-BASED LNG Ltd (LNGL) has sold its proposed Magnolia LNG project in Louisiana, on the US Gulf Coast. The deal was announced after LNGL appointed administra- tors at the end of April, entering the Australian equivalent of bankruptcy proceedings.
LNGL said in a May 12 statement that it was selling the subsidiaries that own and operate Magnolia LNG, including Pecan, LNG Manage- ment Services and LNG Technology, to Global Energy Megatrend for $2.25mn.
The transaction improves the prospects for Magnolia LNG after the project recently found itself plunged into uncertainty. Singapore-based LNG9 had been planning to acquire LNGL for $75mn but withdrew its bid in mid-April after financing for the proposed takeover collapsed. LNGL warned at the time that it had sufficient cash reserves to meet all of its financial obliga- tions until May, but “urgently” needed to secure additional funds in order to continue operating beyond this point.
The proposed Magnolia LNG plant is author- ised to produce 8mn tonnes per year of LNG. A request to increase the facility’s production by a
further 800,000 tpy is still pending with federal regulators. A final investment decision (FID) has not been made, however, and LNGL had not locked in any buyers for Magnolia’s output – with one would-be offtaker dropping out in late 2018. However, LNGL had signed a non-bind- ing memorandum of understanding (MoU) with Delta Offshore Energy to supply 2mn tpy to the proposed Bac Lieu LNG-to-power project in Vietnam.
Global Energy Megatrend is incorporated in London but headquartered in Lafayette, Louisi- ana. The company has not commented publicly on the acquisition, but it is reportedly interested in participating in US gas fields, pipelines and liquefaction facilities. The company is also set to acquire the optimised single mixed refrigerant (OSMR) liquefaction technology that LNGL planned to use at Magnolia LNG.
LNGL noted that it would retain its own- ership of the proposed Bear Head LNG project in Eastern Canada. Bear Head LNG would also retain a perpetual licence to use the OSMR technology, the Australian com- pany added.™
PERFORMANCE
Continental shutting in 70% of May output
US
SHALE producer Continental Resources, which operates in North Dakota’s Bakken play and in Oklahoma’s Anadarko Basin, said in its first-quarter results that it would be curtailing 70% of its operated oil production this month.
The announcement comes after Reuters reported in late April that Continental had already halted most of its production in North Dakota.
The Oklahoma-based company reported a net loss of $185.7mn, or $0.51 per share, for the first quarter of 2020, compared with a profit of $187mn, or $0.50 per share, in the same quarter a year ago. The result included property impair- ment charges of $222.5mn, up from $25.3mn in the first quarter of 2019, illustrating the immedi- ate impact of the oil price collapse.
Like many other shale drillers, Continental is dramatically cutting back after reporting an increase in production during the first quar- ter of this year. The company’s output grew 9% year on year, averaging 360,841 barrels of oil equivalent per day (boepd). Within this, oil production averaged 200,671 barrels per day (bpd), up 3% y/y.
Continental claims to be the lowest-cost producer among its oil-weighted peers, with production expenses at $3.61 per boe in the first quarter, and total general and administrative (G&A) expenses at $1.31 per boe.
The company said it was currently operat- ing five rigs, and expects to reduce this to four by the end of the year, down 80% since the start of 2020. It added that it now has zero stimula- tion crews running in the Bakken and expects to average one stimulation crew in Oklahoma for the remainder of the year.
Continental previously revised its 2020 capital budget down to $1.2bn, and now said it is currently tracking 3-5% below this. It also anticipates reducing its 2020 G&A expenses by around $55mn through an ongoing evaluation of cost savings.™
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