Halliburton puts up business arm for sale

Halliburton puts up its drill bits, directional drilling and LWD/MWD businesses for sale. The announcement was made earlier today. The final sale is bordered around the company’s Board of Directors and final approvals of the Baker Hughes acquisition by competition authorities.

There strong speculations that the sale is as a result of the merger between Halliburton and Baker Hughes of which Baker Hughes has a bigger and stronger business arm of the drill bits, directional drilling and LWD/MWD.

Today saw Brent crude drop to $55 a barrel.

Royal Dutch Shell set to acquire BG group

It has been a while we saw any big merger from the oil company majors. With the plunge in oil prices we anticipated mergers and acquisitions in the oil industry due to devaluation of stock prices. Late last year we saw Haliburton buy over Baker Hughes the largest oil service companies after market leader Schlumberger. 

This has led to the present acquisition of BG group by Royal Dutch Shell Plc in a deal that will see Royal Dutch Shell pay $70 billion. BG’s shares had fallen over 50% since January last year, if Shell wants the easy way out it makes a lot of sense to buy BG now because it will cheaper to develop already existing assets. 

The two companies are set to save at least $2.5 billion dollars a year with this deal, so it is not necessarily about the size of the new mega company but a more efficient machine that eliminates the long supply chain process. 

Both companies are major players in the gas sector, so they are both looking deep water developments with BG having major stakes in East Africa and Australia. This move will see the combined company as the biggest LNG producer in the world. The fast growing LNG business needs to make energy consuming countries like China and India see the need to switch to cleaner energy sources that are equally cheap, also giving Europe an alternative to Russia's gas.


Courtsey

http://fortune.com/2015/04/08/5-things-to-know-about-the-biggest-oil-merger-in-a-decade/

Rig count drop affecting oil production?

Drilling contractors idled oil rigs for the 17th straight week, bringing the total count down to the lowest level in more than five years.

U.S. supplies may peak in April, prices need to stay low for longer to prompt slower output growth, Goldman Sachs Group Inc. said in an e-mailed report on Monday. Just yesterday we witnessed futures surge 6.1 percent, the most in two months, after Saudi Arabia raised prices for crude shipments to Asia and we found out Iran wont be producing its additional 1 million barrels at least in the next 6 months.

Production saw a plateau last week as was the first time in quite a while that production didn’t make a new record.

U.S. crude production dropped 36,000 barrels a day to 9.39 million in the week ended March 27, the first decline since January. That’s down from 9.42 million on March 20, the most in weekly estimates that started in January 1983.

The EIA cut its U.S. crude output projection for this year in its monthly Short-Term Energy Outlook on Tuesday. Production will average 9.23 million barrels a day in 2015, down 120,000 from the March estimate.

“U.S. crude oil production is expected to peak this year in the second quarter and then decline in the third quarter, before picking up again toward the end of the year as projected higher crude prices in the second half of 2015 make drilling more profitable,” EIA Administrator Adam Sieminski said in an e-mailed statement.

Rigs targeting oil in the U.S. fell by 11 to 802, the smallest decline since December, Baker Hughes Inc. said on its website April 2.

The recent increase in oil production has been attributed to additional production from unconventional oil production in the U.S.

Brent crude current price at $59.05 while WTI current price is at $53.90

* the crude oil prices quoted here are subject to price fluctuations and may change. The writer of this blog will not be held responsible for any financial decision made on it.

Courtesy

http://oilandgas.einnews.com/article/258734603/xeLrxVO4zTwqguAG

Indicators of higher oil prices this week

Today's price increase was largely due to Saudi Arabia's latest move. Industry traders believe there are at least two other reasons why traders should be more optimistic this week. Let us see how this pans out by Friday. Indicators are as follows:

1. Iran's framework agreement for their nuclear deal. Last week's framework agreement rendered it uncertain as to when or if the country will unleash 0.8 - 1M/bd. Iran is currently under sanctions where it can export only 1M/bd at the moment and even if the sanctions are dropped we may not see an immediate increase in production from Iran for at least 6 months. “People betting on Iran’s oil arriving tomorrow realise they may have to wait up to a year,” said Phil Flynn, analyst at Price Futures Group in Chicago.

2. Saudi Arabia raised prices for shipments to Asia, its largest regional market. This could be a sign of improved demand from Asia. Saudi Arabia is OPEC's largest exporter and we have seen the Gulf state struggle to maintain market share by introducing price cuts to the Asian market in the past. This is a strong indicator for better prices this week.

3. Fighting in the Yemen. Ongoing concerns over conflict in Yemen also supported prices Monday, as the conflict between a Saudi-led coalition and Shiite Houthi forces continued in Aden, a port city located near the Bab el-Mandeb Strait, a chokepoint between the Horn of Africa and the Middle East, and a strategic link between the Mediterranean Sea and the Indian Ocean. Closure of the Bab el-Mandeb could keep tankers from the Persian Gulf from reaching the Suez Canal or SUMED Pipeline, diverting them around the southern tip of Africa, adding to transit time and cost

Brent May crude was up $3.08, or 5.6 percent, to $58.03 a barrel at 1:01 p.m. EDT (1701 GMT), having reached $58.20 intraday.

U.S. May crude was up $2.78, or 5.7 percent, at $51.92 a barrel, just below its $51.95 intraday peak. 

visit references below 

www.oilpro.com

www.euronews.com