Natural Gas Daily: July 30th, 2020
Shell Earnings Tumble in Q2, But Trading Offers Bright Spot
Shell generated $638mn in second-quarter adjusted earnings, down 82% from $3.46bn a year earlier, it said, blaming the result on weaker prices for oil and gas as well as slim refining margins.
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- The Anglo-Dutch major is working on its new business strategy which it will announce next February, but for now CEO Ben van Beurden is convinced it will emerge leaner and more profitable as it adjusts to a lower-price, lower-carbon energy market.
Chinese Demand Unlikely to Rescue US LNG: Report
Chinese demand is not likely to come to the rescue of the ailing US LNG industry, according to a report published on July 29 by Institute for Energy Economics and Financial Analysis (IEEFA).
- “Even if China expands its gas use, the country will likely find cheaper sources of gas than US imports, including domestically produced gas, pipeline imports, and LNG from lower-cost global suppliers.”
Total Takes $8bn Write-down on Oil Sands Assets
French oil company Total booked a $8bn impairment on the value of its assets, mainly relating to its Canadian oil sands projects, after cutting its long-term forecasts for oil prices, it said on July 29.
- Fellow European majors BP and Shell have similarly taken on significant charges on the price outlook in response to the Covid-19 pandemic and global decarbonisation efforts.
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The major has also reviewed what it classifies as stranded assets – fields with high production costs that will not reach depletion by 2050 – in light of its May pledge to become net zero in the next three decades.
Lundin to Take Advantage of Norwegian Taxes
Swedish explorer Lundin Energy reported a positive Q2 result July 29, despite the oil price crash. Production was up two and a half times, at 162,900 barrels of oil equivalent (boe)/day, from last year's 76,100 boe/d, as the Johan Sverdrup field off Norway hit its stride.
- Johan Sverdrup reached its increased plateau rate of 470,000 b/day in April and another production well has been completed.
- "The company has identified up to eight potential new projects targeting over 120mn boe of net resources, which could benefit from these tax incentives," CEO Alex Schneiter said.
Oxy Eyes Sales in Africa, Middle East: Press
Texas-based Occidental Petroleum (Oxy) is in talks with Indonesia's state Pertamina on the sale of oil and gas assets in Africa and the Middle East, sources told Bloomberg on July 29.
- Oxy is saddled with some $40bn in debt, mostly relating to its takeover of Anadarko Petroleum last year, in which it outbid Chevron for the oil producer.
- Oxy sold Anadarko's assets in Mozambique, namely its share of the Mozambique LNG project, to Total in September, and had also hoped to transfer interests in Algeria and Ghana to the French major.
ConocoPhillips Says Adjusted Loss Reached $1bn in Q2
US major ConocoPhillips said special items, including unrealised gains on an Australian asset divestiture and on its equity investment in Canadian oil sands producer Cenovus Energy, allowed it to report Q2 2020 net income of $260mn, down from $1.58bn in the comparable period a year ago.
- Commodity price and demand recovery late in Q2 allowed it to begin reversing curtailments and ramping up production in Canada, Alaska and across the Lower 48 states.
