Expectations have been that banks would cut back on lending to oil firms amid low crude prices. It doesn’t seem like this is the case as reported by Reuters after reviewing disclosures by 19 shale oil and gas companies. Only five firms reported cuts while 11 said their borrowing capability remained the same or increased.
Whether this is symptomatic for the whole sector is too early to tell. A clearer picture should emerge after the loan reset deadline on the 1st of October. Many more companies will be reporting then. But the extent of banks pulling seems so far to be less severe than anticipated. (Read full article)
Wednesday, Mexico followed up July’s bust of an oil drilling rights auction with exponentially higher results for the second.
The Mexican government is working to turn around its declining oil production rate that has been trending downward for more than a decade. The country recently ended a 75-year state monopoly on the commodity to entice foreign investment to help revitalize its oil industry. But the first auction held in July did not meet their expectations because of strict regulations attached to the first blocks that were up for bids. As a result, only two of the 14 blocks up for bid were awarded contracts. The country’s National Hydrocarbons Commission quickly made adjustments to the regulations after the failure of the first auction. (Read full article)
Saudi Arabia’s attempt to force US shale companies into bankruptcy has failed, so far. However, oil prices need to be stabilized and, as a result, both Saudi Arabia and Russia will find that they have mutual interests. That is the premise of an article journalist Salman Rafi wrote for the website Asia Times.
Though the best option for Saudi Arabia to impact current oil market trends is by establishing an alliance with Russia, but several political matters will need to be addressed first. The idea of an oil alliance has been confirmed by Igor Sechin, CEO of Russia’s state-owned Rosneft, in an interview with the Financial Times. (Read full article)
Royal Dutch Shell announced Monday they are pulling out of oil exploration in the Artic. The decision was made after a test well produced unsatisfactory amounts.
After high expectations for drilling in Alaska, this is a disappointment for the company. The main reason is because of the billions invested in the project.
In a company statement to The Hague, Shell stated, “for the foreseeable future” they are ending exploration in the region and called it “a clearly disappointing exploration outcome.” (Read full article)