[ROCKMAN]

True OF2. And I suspect by the time those projects require commitments oil prices will be back up. As you know it's this cyclic nature that gives the planners fits.

[TheDude]

WSJ: Oil Slump Threatens Iran's Plans

$this->bbcode_second_pass_quote('', 'R')ecently, Tehran has plowed much of its oil revenue back into the industry. That has helped to make up for natural decline rates characteristic of Iran's mature fields.

National Iranian Oil Co. is spending $16 billion on petroleum projects this year, up from $12 billion last year, according to government figures. With government coffers flush, parliament this year allocated an additional 3% of Iran's oil income to the South Pars offshore natural-gas development.

But that sort of increased government funding is now in danger as oil prices fall. Akbar Torkan, Iran's deputy oil minister for planning, said in an interview that Iran needs an oil-export price of about $90 a barrel to keep from running a budget deficit.

Assuming Iranian prices average just $60 a barrel for the second half of the year, the full-year average would still be between $92 and $93 a barrel, according to Iranian figures.

While this year's spending looks safe, oil-industry investment next year could suffer because of the drop in crude prices, Mr. Torkan said.

"The first effect of this reduction of the income will be on projects in the field of oil development and gas development," he said.

[AirlinePilot]

Anecdotaly I'm starting to see a lot of commentary on short term project development and financing being "safe", but longer term, into next year is appearing to be in jeopardy.

It's something that is going to be held closely to the vest with the financial turmoil going on. No one is freely going to admit they are cancelling production projects for fear of their stock prices taking a hit.

I think we all knew that a dive in price like we have seen is going to have a huge impact on the near term future in the oil patch. Not surprising at all to me.

[AirlinePilot]

Adding to the growing list....

Refinery project impacts

[TheDude]

Thanks for that, AP.

Rigzone: Low Oil Prices, Credit Woes Could Spell Trouble for UK North Sea

$this->bbcode_second_pass_quote('', 'E')xpensive Proposition

But most of the remaining oil and gas is in small, technically challenging reservoirs that aren't cheap to produce from.

"In the North Sea there are two inescapable facts. The size of the opportunities is relatively small and unit costs aren't the cheapest in the world," said Mike Wagstaff, chief executive of Venture Production PLC, which specializes in squeezing the last drops of oil and gas out of small or depleted North Sea fields. "We are looking at a $100-a-barrel cost world and a $50- to $60-a-barrel revenue world."

Two-thirds of Venture's output is natural gas, the price of which has held up much better than oil in the U.K. "Projects on our books all make sense...at the expected commodity prices," he said, but companies will probably slow down North Sea projects and cut budgets in the current environment. "We will take our foot off the pedal in the short term, to see how the market goes."

Venture has produced an average of 43,500 boe per day this year, generating enough cash to see it through a rough patch. But not every company has that luxury.

"It's an impossible task for small companies who have no cash flow. A lot of them are living out of their bank facilities... Their business model is very difficult," said Endeavour's Transier.

"The situation for many oil and gas juniors is nearing critical. The doors to equity and capital are fast closing. A number of companies are already beginning to warn of uncertainty as to their ability to continue as a going concern," said Alec Carstairs, oil and gas partner at consultancy Ernst and Young.

For example, Canada's Oilexco Inc., which has been very active in the U.K. North Sea in recent years, last month lowered its 2008 production estimates and said it was having difficulty raising its credit lines. Transier said Endeavour has enough cash to get through two or three tough years, but he worries about how quickly he will be able to move his projects forward.

Small and medium-sized companies like them are important to the North Sea because most of the remaining oil and gas reserves are in pockets too small to be of much interest to the major international oil companies. "Of more than 28 projects planned in the North Sea, only a handful hold more than 100 million barrels," said the IEA.

Companies such as Royal Dutch Shell PLC, one of the pioneers of production in the region, are still investing in mega-projects like the Ormen Lange gas field in the Norwegian sector of the North Sea, but are selling some of their mature fields on the U.K. side.

If smaller companies fail, "you are going to see (production) decline rates get steeper than they have been. I think we are going to lose reserves that might have been there," said Transier.

[TheDude]

Reuters: FACTBOX-Global energy investment hit by financial crisis. A little of everything in there, with oil sands the biggest loser.

[ROCKMAN]

Interesting article Dude...thanks. Been chatting with a few buds around Houston. There are a growwing number of delayed or effectively cancelled projects by the public oils which aren't being announced. I gather that unless joint venture agreements or the SEC require such disclosure the compamies aren't advertizing the changes for the sake of diminishing interest in their stock. Can't really quantify this factor yet but I suspect it's not insignificant.

[dorlomin]

I am guess that this may make a big cut into the UKs actual reserves as projects become uneconomical and some that are shut down may not be feasible to restart?

[rockdoc123]

$this->bbcode_second_pass_quote('', 'I') am guess that this may make a big cut into the UKs actual reserves as projects become uneconomical and some that are shut down may not be feasible to restart?

[AirlinePilot]

More fun and games...Seems the news is really starting to pour in about loss in investment and shrinking project planning.

Conoco cuts 20%

[copious.abundance]

On the other hand . . .

--> Rigzone <--
$this->bbcode_second_pass_quote('', '[')b]Energy Companies Find Money Pipeline Is Open Again
by Tom Fowler, McClatchy-Tribune Information Services
Thursday, January 22, 2009

Credit markets are showing some signs of life after months of inactivity, with energy companies helping to lead a surge in new debt and equity deals in recent weeks.

Companies have started to raise funds through sales of debt and equity at a pace not seen since last spring, according to data tracking firm Dealogic.

Globally, new corporate debt sales totaled $91.4 billion last week, the highest since last May when $103 billion was sold.

So far this year energy firms have raised $6.8 billion in debt in the U.S., while globally energy firms account for $37.5 billion in new debt. The surge has included firms with strong Houston ties.

In December, Kinder Morgan Energy Partners, Enbridge Energy Partners and El Paso each raised $500 million in debt. And earlier this month Devon Energy, Weatherford International and Nabors Industries raised close to $1.2 billion each.

Most of the companies are the kind that benefited from the high oil prices last year or have steady cash flows through assets like pipelines, said Bryce Linsenmayer, an attorney with Haynes & Boone in Houston.

"But I'm still surprised at how January has started," Linsenmayer said.

[...]

[AirlinePilot]

Right back at ya!!!

Oil and Gas Journal

[copious.abundance]

^
As noted elsewhere in this forum, that rig count decline is mostly for NG:
$this->bbcode_second_pass_quote('', 'O')f the rigs still working this week, 1,185 were drilling for natural gas, down 50 from the previous week. Those drilling for oil declined by 6 to 318, while 12 rigs were unclassified. Directional drilling fell by 33 rigs to 290. Horizontal drilling increased by 10 units to 558.

[AirlinePilot]

I got plenty of stuff....the list is growing.

Link 1
Link 2
Link 3
Link 4

[ROCKMAN]

With regards towards rig activity I’ve warned one of our cohorts here to be careful about extrapolating the current rig decline as a linear function. We’re running 18 rigs today. In 2 months we’ll be running 4. Not exactly linear. I doubt the industry count will drop in one big scoop like that but I won’t be surprised if we see a big jump in the next couple of months. Even if all the companies decided to drop 100% of their rigs on 1 Dec 2008 it would take several months for that move would take complete effect.

Looks like I’ll be back to overseas rotating gigs in a few months. International projects and the Deep Water can’t adjust their rig lines nearly as fast as the onshore US. About 12 to 18 months from now we might start seeing the body count build of quick in that area. We just cut a deal to sublease one of our Deep Water GOM to another operator. Even though we’re suspending drilling on that project it won’t show up as a rig decrease because the other operator is taking it over and accelerating his rig line.

[AirlinePilot]

Another link.....

Link

[TheDude]

FT.com / Americas - Petrobras in talks over $174bn development

That's talking to governments, no less.

$this->bbcode_second_pass_quote('', 'B')y Carola Hoyos in London

Published: February 2 2009 17:50 | Last updated: February 2 2009 22:51

Petrobras, Brazil’s national oil company, is in direct talks with governments including Washington and Beijing to help finance the $174bn development of its huge reserves.

The partially traded group recently discovered the biggest oil fields in Latin America in the past 30 years and industry leaders, such as Tony Hayward, BP’s chief executive, believe the waters off Brazil’s south-eastern coast hold oil reserves as big and important as those discovered in the North Sea in the 1970s.

But that still leaves the company with a large financial hole it will need to plug to realise its goal of increasing current oil and gas production of 2.2m barrels a day to 3.3m b/d by 2013 and to 5.7m barrels a day by 2020.

“It’s going to be tough, it’s going to be challenging, but it is not impossible.” he said. “We have had several talks with different countries, not only China, even the US. We think this is going to be an important source of financing for us.”

The UAE is also thought to have shown interest.

In the US, Mr Gabrielli said Petrobras had held conversations with Export-Import Bank and Overseas Private Investment Corporation, which he said wanted to improve the presence of US companies in Brazil. But he said his conversations in Washington were hampered by the fact there was not one central institution.

[AirlinePilot]

Continued rig declines and speculation that it gets worse before it gets better.

Link

[ROCKMAN]

Great link AP. Wall Street is so freaking dumb it's hard to believe. They bump up oil service stocks because the general market is up. I just spent most of January on a drill rig in S La. and watched the daily body count mount higher and higher. The oil service companies are cutting folks faster then ever before in the oil patch. Many are expecting income drops exceeding 50%. And some even greater drops. If I were a short player I know exactly who I would be betting on to be beaten to death in the next 10 months.

[AirlinePilot]

For a while about a year ago, before i pulled my money out of any stock/mutual funds, I was long the services.
its almost like watching lemmings when you follow these indexes. All they do is follow the general market trends with little respect to what is actually going on in those sectors.

Rockman,

Your posts and insight into what is actually happening is refreshing and scary at the same time.