Coronavirus, The Crude Price Slide, And OPEC Production Cuts -- RBN Energy -- February 25, 2020

DOC: the RBN Energy blog today discusses the DOC, see more below the cut.

We start with a review of the OPEC-Plus production cuts, which were originally agreed in the Declaration of Cooperation (DOC) signed on December 6, 2016. The DOC called on 11 OPEC members and 11 non-members to cut output by a total of 1.8 MMb/d, starting on January 1, 2017.

The agreement was to last only six months, but it now runs through March 31, 2020, and might be extended again. Responding to market changes, DOC participants have deepened their agreed-to cuts twice and changed baselines against which reductions are measured. And while the DOC has been in effect, OPEC has gained two members, Equatorial Guinea (originally a non-OPEC participant in OPEC-Plus) and the Republic of Congo; it also lost a member, Qatar. Also since the signing of the DOC, OPEC has lifted and added exemptions from ceilings for members with production hampered by external sanctions or domestic problems. Libya and Nigeria didn’t have ceilings under the December 2016 agreement. Now, Libya, Iran and Venezuela are exempted from its production caps.

Re-arranging chairs on the Titanic: former Saudi Arabian energy minister, Prince Alfalfa, has been named the new minister of investment. Good luck. He will need it.

Liberty: back on April 13, 2013, the very first pipeline I highlighted was the "Liberty Pipeline," a Phillips 66 / Bridger Pipeline joint venture. It's back in the news.

Liberty Pipeline ops: Phillips 66 Partners gets 50%.

• Phillips 66 Partners LP to acquire 50% interest in the Liberty Pipeline project
• $75-million deal
• cost of the pipeline: $1.6 billion (gross); about $800 million net to the partnership;

Mexico: politics threatens investment interest -- that was the takeaway regarding an article on the giant Zama oil field; Zama oil field?

• one of the world's biggest shallow water oil fields discovered in the past 20 years;
• 35 miles off the coast of Tabasco, Mexcio
• two billion boe
• operated by Talos Energy; apparently can't close the deal;
• Talos: 35%
• Sierra Oil and Gas (40%)
• Premier (25%)
• discovered in July, 2017
• if you look at the map, and imagine where "that meteor [asteroid/comet]" hit 66 million years ago, Zama is at the circumference of that impact, at the 6:00 p.m. location

66 million years ago:

• the Cretaceous-Paleogene extinction event; commonly known as the "K-Pg boundary;
• a mass extinction in which 75% of plant and animal species on Earth became extinct;
• most famous casualty: all non-avian dinosaurs
• quick: spell the name of the supposed "impactor"

Noble? Not so much any more -- Noble Corp receives NYSE notice -- Noble has six months to bring its share price and thirty trading-day average share price above $1.00
can you say "reverse split"?

• my dad always told me that he did not like reverse splits

Disclaimer: this is not an investment site.  Do not make any investment, financial, career, travel, job, or relationship decisions based on what you read here or think you may have read here.

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Back to the Bakken

Active rigs:

$51.40	2/25/2020	02/25/2019	02/25/2018	02/25/2017	02/25/2016
Active Rigs	49	66	57	40	39

Four wells coming off the confidential list today.

Tuesday, February 25, 2020:

• 35830, conf, CLR, Imsland 5-31H1, 
• 35829, conf,  CLR, Imsland 4-31H,
• 35421, conf, MRO, Beatrice USA 31-15TFH, 
• 33424, conf,  Sinclair Oil, Crosby Creek 5-5H,

RBN Energy: Coronavirus, the crude oil price slide, and OPEC production cuts. Nice history (archived).

Oil-production restraint by OPEC and 10 cooperating countries grows more challenging with time, and just when market projections began to hint at relief for the OPEC-Plus group, the spread of the new coronavirus in China and beyond became a sudden and possibly serious impediment to global economic growth and oil demand. Yesterday’s slide in crude oil prices amid newly heightened concern about the potential pandemic’s effects will only add to the challenges that OPEC-Plus countries will face in managing crude supply. So far, the OPEC-Plus group has achieved unprecedented compliance with its production ceilings, which it implemented in January 2017 and has adapted a few times since in response to market pressure. That effort has kept the crude price above the ruinous levels of 2015, memories of which have encouraged quota discipline. But the threat of a major, coronavirus-related slowdown in global oil demand could seriously undermine OPEC-Plus’s efforts, which already had been hurt by dissent within its ranks. Today, we continue our series with a look at Monday’s price drop, the latest supply and demand forecasts and a discussion of the obstacles that might affect OPEC-Plus going forward. 

Prices for West Texas Intermediate (WTI) and Brent dropped by 4% on Monday, February 24, on news that reported cases of coronavirus — a.k.a. COVID-19 — have surged in South Korea, Italy and Iran. While energy markets and entities such as the International Energy Agency (IEA), the U.S. Energy Information Administration (EIA) and OPEC already had built in their forecasts at least some slowdown in economic growth and oil demand, new fears that COVID-19 could have a much broader impact — as reflected in yesterday’s oil price decline — may well result in further reductions in forecasted demand for oil over the next few months. And that could quash OPEC-Plus’s hope that, after more than three years of ratcheted-up production restraint, pressure on the group for still more cuts in production might ease as soon as next year. Of course, how this all plays out will not only impact oil prices but U.S. shale producers’ drilling-and-completion plans for 2020 and 2021.