Notes From All Over -- February 23, 2016; North Sea CAPEX Plunges

CAPEX in the North Sea is plummeting. Bloomberg is reporting:

Oil and natural gas producers in the U.K. North Sea will spend 40 percent less this year than in 2014 as low crude prices force them to tighten budgets, the industry’s lobby group said Tuesday.
The drop in spending could threaten future production, potentially halving it by 2025 from current levels if “fresh investment opportunities” fail to materialize.

That would put a brake on the recent increase in production from the U.K. North Sea.

Liquids and gas output rose 9.7 percent to 1.64 million barrels of oil equivalent a day last year, the first increase from the region since 2000. That was due partly to efficiency gains from existing assets as well as new projects coming on stream, the lobbying group said. Output is set to reach 1.74 million barrels of oil equivalent by 2018, provided investments keep pace.

Oil & Gas U.K. forecast a drop in capital expenditure to 9 billion pounds ($12.7 billion) this year from 11.6 billion pounds last year and 14.8 billion pounds in 2014, a decline that would affect the whole supply chain. Operators will approve less than 1 billion pounds of new projects, down from an average of 8 billion pounds a year in the past five years. 

The graph at Oil & Gas UK is staggering:

No matter how many times I look up "Brent" I always seem to forget something / learn something. From wiki:

Brent Crude is a major trading classification of sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content. Brent Crude is extracted from the North Sea and comprises Brent Blend, Forties Blend, Oseberg and Ekofisk crudes (also known as the BFOE Quotation). The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum. 

How did Brent come by its name? Two stories:

Originally Brent Crude was produced from the Brent oilfield. The name "Brent" comes from the naming policy of Shell UK Exploration and Production, operating on behalf of ExxonMobil and Royal Dutch Shell, which originally named all of its fields after birds (in this case the brent goose). 

But it is also an acronym for the formation layers of the oil field: Broom, Rannoch, Etive, Ness and Tarbert. (google Brent acronym)

From SeekingAlpha:

• Oil and gas producers in the U.K. North Sea will spend 40% less this year than in 2014 as low crude prices force them to tighten budgets, which has the potential to chop future production in half by 2025 if new investment opportunities fail to materialize
• Oil & Gas U.K. forecasts a drop in capex to £9B ($12.7B) this year from £11.6B last year and £14.8B in 2014, a decline that would affect the whole supply chain, and operators are expected to approve less than £1B of new projects, down from an average of £8B/year in the past five years
• Even with extensive cost cuts, Oil & Gas U.K. says 43% of all U.K. North Sea oil fields would operate at a loss if crude prices stay at ~$30/bbl this year, and more than 100 fields would cease production during 2015-20.

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Filloon On Whiting: Hedges

At SeekingAlpha. I have not read it yet. The link is likely to break or require a password in the future. Archived.

There are some very good points in the article, and especially in the comments, regarding fracking, mega-fracks, and most importantly, the "halo" effect. There is still a lot to be learned about the "halo" effect. So far, it's my impression that royalty owners are not seeing any "negatives" associated with neighboring fracks. But that doesn't mean there aren't any. 

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Fitzsimmons On Whiting: Will ExxonMobil Buy Whiting?

At SeekingAlpha. I have not read it yet. The link is likely to break or require a password in the future. Archived.

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Massachusetts Love Affair With EVs At Any Price Waning

EVobsession is reporting:

Massachusetts will be slashing the rebate available for electric vehicles with a base MSRP over (or equal to) $60,000 — down to $1,000 per vehicle, from the previous rebate amount of $1,500 or $2,500. Electric vehicles retailing for less than $60,000 are still eligible for a higher rebate.

The new rates will be effective beginning February 29, 2016 — meaning that anyone looking to receive the higher rebate amount needs to submit their application before the 29th.

From $1,500 to $1,000 for someone able to afford a $60,000+ EV is not exactly slashing.

The most important data point in that article: a reminder that this is leap year. It is very possible that North Dakota will produce more oil in February, 2016, than it did in the month of February, 2015, simply because of that one extra day. LOL.