Page 8 - NorthAmOil Week 19

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is full of major challenges. The situation in Iraq has the potential for change and upheaval and, in line with recent editions of MEOG, it will continue to be followed very closely.
Specific sector downturns in Saudi Arabia and Kurdistan throw light on the extent of the current crisis and Israel’s Delek has been forced to offload its fuel storage and distribution arm after auditors expressed a “going concern” qualification. No doubt further such sell-offs or financial “adjustments” will follow in future weeks and months. News from Iranian internal energy developments and Syrian fuel subsidies also feature.
Although most of the news features oil, the effect on gas is highlighted in the postponement of drilling in the eastern Mediterranean and an update on gas transfer capacity in Iran.
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.
North American production cuts
More and more US shale producers are announc- ing plans to further scale back their activity as earnings season continues. Prolific Bakken player Continental Resources announced this week that it had cut 70% of its May oil output, more than double the amount it had planned earlier. The company now expects to spend 3-5% less than its revised 2020 capital expend- iture budget of $1.2bn. Continental also with- drew its outlook for the whole of 2020 and said it was suspending further guidance as a result of the current market conditions. (See Continental shutting in 70% of May output, page 13)
Marathon Oil, meanwhile, has said it is paus- ing “virtually all” completion activity during the second quarter of 2020. The company, which has
operations in the Eagle Ford and Bakken plays, among other shale regions, also said it was with- drawing its previous guidance, and now expects its US oil output to decline roughly 8% this year, when adjusted for asset sales.
EOG Resources, for its part, said it now expected to produce around 390,000 bpd of oil in 2020, marking a drop of 15% y/y. (See next story) The company has reduced the number of rigs it operates to eight from 36 over the past six weeks, and is planning to operate an average of six rigs for the remainder of the year. It is delaying com- pleting about 150 wells until the second half of 2020, and has also said it would shut down some existing wells, resulting in 125,000 bpd being taken off the market in May and 100,000 bpd in June. This will mark an increase from the 24,000 bpd that the company shut in during April.
And Pioneer Natural Resources, a leading Permian Basin independent, now expects to produce on average 198,000-208,000 bpd, about 7,000 bpd below previous guidance. The com- pany is among those that have warned there could be additional reductions in output if oil prices remain lower for longer.
Even with the cuts that are being made, producers remain concerned about spare stor- age capacity running out as demand remains depressed globally owing to numerous countries’ ongoing lockdowns. Indeed, Hess announced in its first-quarter results that it had chartered three very large crude carriers (VLCCs) to store 2mn barrels each during May, June and July of Bakken crude production that is expected to be sold in the fourth quarter of the year. (See: Hess turns to VLCCs for temporary storage, page 15)
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.™
Even with the cuts that are being made, producers remain concerned about spare storage capacity running out as demand remains depressed globally owing to numerous countries’ ongoing lockdowns.
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w w w . N E W S B A S E . c o m Week 19 14•May•2020