Friday, February 14, 2020

WTI Clawing Its Way Back Toward $53 -- February 14, 2020

Active rigs:
Active Rigs5665573641

Four wells coming off confidential list today: Friday, February 14, 2020: 41 for the month; 148 for the quarter, 148 for the year:
  • 36617, conf, MRO, Easton 44-20H, Murphy Creek, 
  • 36198, conf, MRO, Parmeter 14-21H, Murphy Creek,
  • 36197, SI/NC, MRO, Reagan 14-21H, Murphy Creek, has been producing since 8/19; cum 77K 12/19; API: 33-025-03737; FracFocus; fracked, 7/28/2019 - 8/9/2019; 7.7 million gallons of water; water 90.6% by mass;
  • 28190, 335, Oasis, Lewis Federal 5300 21-31 6B, 40 stages; 6 million lbs; Baker, t8/19; cum 76K 12/19;
RBN Energy: current bunker-fuel sulfur spreads justify IMO 2020 scrubber investments.
On January 1, 2020 the International Maritime Organization (IMO) implemented new fuel standards for oil-powered vessels, except those equipped with exhaust scrubbers to remove pollutants. In the absence of a scrubber, the IMO 2020 rule stipulates that ships' bunkers contain less than 0.5% sulfur. Using a scrubber allows the vessel to burn cheaper high-sulfur fuel. Last March, a shipowner’s estimated $2.5 million scrubber investment for a 2-MMbbl Very Large Crude Carrier (VLCC) would take just over three years to recover, based on average fuel prices during the first quarter of 2019. This year, barely a month after the new regulation came into force, the payback period has shortened dramatically, to less than a year, though the coronavirus’s effect on shipping demand and fuel prices, among other factors, could again put payout timing at risk. Today, we look at changing price spreads between high-sulfur and low-sulfur bunker and the scrubber payback economics that suggest a rosier outlook for vessel owners who invested in scrubber installations, at least for now.

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