- 25965, 1,112, CLR, Rehak Federal 4-25H, Alkali Creek, t5/14; cum --
- 26498, drl, Hess, GN-Ringabeu-158-98-1102H-1, Rainbow, no production data,
- 27104, 183, Petro Harvester Operating, Bratland 3-1H, Portal, a Madison well, t3/14; cum 21K 5/14;
Nine (9) new permits --
- Operators: Hess (4), KOG (3), EOG, American Eagle
Fields: Big Butte (Mountrail), Truax (Williams), Parshall (Mountrail), Skjermo (Divide)
This Explains Why Shares Like VLO Were Hammered Today
- The decision to allow two Texas companies to export condensates looks like a win for Eagle Ford Shale crude producers at the expense of refiners and companies planning to build processing plants along the Gulf coast.
- Today's selloff in refiners reflected concern that the groups will lose some of their competitive edge if condensate exports become common: Valero Energy, the largest U.S. refiner, dropped 8.3%, PBF tumbled 10.72%, PSX fell 4.2%, and HFC slid 6.7%.
- Oppenheimer notes that Pioneer Natural Resources PXD, DVN, MRO, COP and MUR produce the most Eagle Ford condensate, and could benefit if U.S. condensate prices close some of the gap with European prices; EOG, the largest Eagle Ford producer, produces little condensate and likely benefits little from the lifting of the condensate ban.
- Investor reaction toward Gulf Coast gathering and processing MLPs such as EPD, MMP, KMP and NGLS was more muted, since plans to build splitters in Texas may be undermined by even modest rule changes in the crude export ban that allow Eagle Ford producers to sell condensate after running it from the wellhead to their own nearby - and much cheaper - distillation towers.
My hunch: at the end of the day (but that may be several months/years from now) this will have less impact on the refiners than the price of oil and whether they can pass on high price of gasoline to consumers. But it certainly explains why VLO was hammered today.
Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. VLO getting hammered today reminds folks to stay diversified.
Update, June 26, 2014: RBN Energy provides background, insight, analysis to this week's story about the US lifting the four-decade ban on oil exports. Unfortunately RNB posts are generally only available for a short period of time before they disappear, and become available only by subscription.