Page 10 - NorthAmOil Week 08

NorthAmOil PERFORMANCE NorthAmOil
Ovintiv announces first results since renaming
NORTH AMERICA
OVINTIV, formerly known as Encana, has issued its first set of quarterly results since the company completed its renaming and its re-domicile from Canada to the US.
The now Denver-headquartered company said its results for the fourth quarter of 2019, as well as the full year, had exceeded consensus esti- mates. For the fourth quarter, Ovintiv reported a net loss of $6mn, or $0.02 per share, which it attributed primarily to a $264mn after-tax, non- cash unrealised risk management loss on hedge positions. This marked a drop from a net profit of $1.0bn in the fourth quarter of 2018.
For the whole of 2019, Ovintiv achieved net earnings of $234mn, or $0.90 per share, down from $1.1bn the previous year.
The company’s production reached 592,600 barrels of oil equivalent per day (boepd) on a pro forma basis in the fourth quarter of 2019, down slightly year on year (y/y) from 607,500 boepd. Fourth-quarter liquids production aver- aged 322,000 barrels per day (bpd), up y/y from 318,400 bpd.
For the full year, on a pro forma basis and excluding output from assets sold over the course of 2019, Ovintiv’s total production aver- aged 578,600 boepd, up 9% y/y. The company’s crude and condensate production, excluding the impact of asset sales, also grew 9% y/y last year.
Ovintiv said it expects its crude and con- densate output to grow 4% in 2020 to 229,000- 239,000 bpd. Including natural gas liquids (NGLs), the company anticipates its total liquids output to comprise 56% of total production, up 2%y/y.
The producer has set out a planned capital budget of $2.7bn for 2020. Around 80% of this will be allocated to development programmes in the US, while over 75% is earmarked for Ovin- tiv’s three core assets – the Permian and Ana- darko basins and Canada’s Montney shale play.
Ovintiv’s CEO, Doug Suttles, said on the company’s earnings call that its 2020 outlook was “consistent with our strategy to balance significant free cash generation with crude and condensate growth”.™
South Korea leans more heavily on US oil
US-SOUTH KOREA
SOUTH Korea’s imports of crude oil from the US more than doubled in 2019 as refiners sought to diversify their supply portfolios and 2020 is expected to follow a similar trend.
The Asian country’s imports of US crude climbed 126% year on year to 17.79mn tonnes (357,000 barrels per day) in 2019 from 7.87mn tonnes (158,000 bpd) in 2018.
South Korea’s imports are projected to expand nearly 20% y/y in the first quarter to 38.57mn barrels (429,000 bpd), Reuters reported on February 24, citing Refinitiv data.
South Korean buyers are buying US crude at a discount to oil sold by the Asian country’s big- gest supplier, Saudi Arabia. Reuters said South Korean buyers were paying on average $1.70 per barrel less for US oil, a marked change from the $0.97 per barrel premium they were paying in 2018.
“The US WTI crude discount against Dubai crude was steep last year. As Middle East crude OSPs are high because of OPEC supply cuts, we expect US crude to keep coming,” Korea Petro- leum Association official Cho Sang-bum told the newswire this week.
Cho added that South Korean importers also
benefitted from government rebates of about $2.11 per barrel on freight charges by diversi- fying supplies beyond the Middle East. South Korea’s free trade agreement (FTA) with the US also means the latter’s oil exports do not carry a tariff, while Middle Eastern crudes carry a 3% duty.
Energy Aspects analyst Stephen Wolfe said: “It is economically more attractive, and trade companies, midstream [firms] and producers have been aggressive seeking out buyers for American crude in Asia. Light sweet [crude] is attractive in [South] Korea as a substitute for Iranian South Pars, especially in petrochem- ically integrated plants, and especially after the implementation of IMO 2020 [shipping rules].”
The International Maritime Organization (IMO) mandated that from 2020 ships must not use fuel containing more than 0.50% sulphur from January 1.
An unnamed US crude exporter told the newswire: “These barrels are going to continue to move and it’s going to be OPEC’s problem. They hate it because shale’s breakeven price is below the general breakeven price for OPEC.”™
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w w w. N E W S B A S E . c o m Week 08 27•February•2020