Chesapeake to boost gas output on acquisitions
Chesapeake Energy will increase natural gas production sharply this year following $4.8bn in acquisitions that expand the company's footprint in natural gas-rich areas of Appalachia and along the US Gulf coast.
Chesapeake this year plans to increase its oil and gas output to 670,000-690,000 b/d of oil equivalent (boe/d), up by 47pc from its 2021 output. Gas output was projected to reach about 3.65 Bcf/d (103mn m³/d), or about 92pc of the total, up from 2.2 Bcf/d in 2021. Gas represented about 85pc of the company's output during the fourth quarter.
The sharp increase in gas output, both in volumes and as a percentage of the company's production mix, underscores a rebound in natural gas prices this year as demand continued to recover from the depths of the Covid-19 pandemic amid a surge in exports of US LNG, robust demand from the US power sector and sluggish domestic production growth. Spot prices at the Henry Hub, the delivery point for gas traded in the Nymex futures market averaged $4.74/mmBtu in the fourth quarter, up by 90pc from a year earlier.
The company said during a conference call today that it plans to take advantage of market opportunities. Chesapeake is in talks with parties about sending more of its gas production abroad as LNG and is willing to step in if new pipeline takeaway capacity becomes available from the Marcellus shale.
"We welcome access having access to more markets," said chief executive Nick Dell'Osso.
Chesapeake last year expanded its position in two of the most prolific gas production areas of the US through the purchase of privately held Vine Energy and Chief E&D.
The $2.2bn purchase of Vine boosted Chesapeake's holdings in the Haynesville shale, a prolific gas field in east Texas and northern Louisiana, while its $2.6bn bid for Chief increases its acreage in the Marcellus shale in Pennsylvania and the surrounding states. Chesapeake completed the Vine acquisition in November and plans to finalize the Chief acquisition during the first quarter 2022.
Chesapeake is operating 11 rigs, up from an average of nine in the fourth quarter. It plans to use two rigs to develop the Marcellus, six in the Haynesville and three in the Eagle Ford. Chesapeake plans to bring 40-50 wells on line during the first quarter.
Chesapeake, once the largest producer of US gas by volume, filed for bankruptcy protection in June 2020 as high US output, swelling inventories and an economic slump related to the Covid-19 pandemic caused gas prices to tumble below $2/mmBtu. Oil prices also dropped to unprecedented lows in April 2020, creating untenable market conditions, the company said. Chesapeake emerged from bankruptcy in February 2021.
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Austrian regulator consults on gas tariff changes
Austrian regulator consults on gas tariff changes
London, 3 May (Argus) — Austrian energy regulator E-Control has revised up its planned increase in gas tariffs from the start of 2025 but adjusted its commodity charge lower. E-Control on Friday published draft amendments to its gas system charges ordinance that would codify planned changes to how it calculates tariffs. It largely retains its revised methodology from April, but has modified its planned outright tariffs and commodity charge. The regulator had in February proposed a shift to a capacity-weighted distance (CWD) model for its reference price methodology, along with a change to a 50:50 entry-exit revenue split from roughly 20:80 at present. The proposed changes would have tripled entry costs from Germany and quadrupled them from Italy from 2025, as well as other significant changes for the distribution system and storages. Austria's system operators supported the changes , but almost all other respondents to the consultation were highly critical , warning that the changes could threaten diversification, lower utilisation and increase tariffs further and harm liquidity. E-Control last month walked back on several of the proposed changes . Most significantly, it revised the entry-exit split to 25:75, limited the increase in exit tariffs to the distribution zone, introduced a 50pc discount on exit fees to storage facilities, and equalised entry tariffs at all points. The switch to a CWD model was retained, however. The most notable modification from the changes proposed in April is a roughly 7pc increase in capacity-based tariffs, as the new amendments use final prices as opposed to indicative prices previously (see table) . The difference "results from the findings over the course of the cost approval procedure during the past few months", E-Control told Argus . In contrast, the commodity charge on gas entering and exiting the Austrian grid has decreased as a result of "lower expected fuel energy costs", E-Control told Argus . It now plans to charge around €0.04/MWh on entry flows and €0.13/MWh on exit flows, compared with €0.12/MWh and €0.13/MWh, respectively, in the original proposal. There is no commodity charge in place for this year. The final change is an update of the multipliers for capacity bookings depending on their duration. The regulator now proposes multipliers of 1.25 for quarterly products, 1.5 for monthly, two for daily, and three for within-day. Interested parties may submit comments to the regulator by 16 May. Final tariffs will then be published in June, and will be applicable from 1 January 2025. By Brendan A'Hearn Austria 2025-28 estimated tariffs €/kWh/h/a Entry/Exit Capacity type* 2025 (final) 2026 (preliminary) 2027 (preliminary) Baumgarten Entry FZK 1.30 1.37 1.48 Oberkappel Entry FZK 1.30 1.37 1.48 Uberackern Entry FZK 1.30 1.37 1.48 Uberackern Entry DZK 1.17 1.23 1.33 Uberackern Exit FZK 4.25 4.59 4.98 Uberackern Exit DZK 3.82 4.13 4.48 Arnoldstein Entry FZK 1.30 1.37 1.48 Arnoldstein Entry DZK 1.17 1.23 1.33 Arnoldstein Exit FZK 5.96 6.62 7.39 Murfeld Exit FZK 3.73 4.19 4.71 Mosonmagyarovar Exit FZK 2.15 2.49 2.80 Distribution area Exit FZK 1.26 1.45 1.67 Storage Penta West Exit FZK 2.12 2.29 2.49 Storage MAB Exit FZK 1.07 1.19 1.34 *FZK = Firm, freely allocable capacity; DZK = dynamically allocable capacity — E-Control Austria 2025 final tariff vs current €/kWh/h/a Entry/Exit Capacity type* 2025 Current ±% Baumgarten Entry FZK 1.30 0.85 53 Oberkappel Entry FZK 1.30 0.97 34 Uberackern Entry FZK 1.30 0.97 34 Uberackern Entry DZK 1.17 0.88 33 Uberackern Exit FZK 4.25 3.26 30 Uberackern Exit DZK 3.82 2.93 31 Arnoldstein Entry FZK 1.30 0.97 33 Arnoldstein Entry DZK 1.17 0.68 72 Arnoldstein Exit FZK 5.96 4.35 37 Murfeld Exit FZK 3.73 1.90 97 Mosonmagyarovar Exit FZK 2.15 1.23 75 Distribution area Exit FZK 1.26 0.42 200 Storage Penta West Exit FZK 2.12 0.44 383 Storage MAB Exit FZK 1.07 0.44 144 *FZK = firm, freely allocable capacity; DZK = dynamically allocable capacity — E-Control Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US job growth nearly halved in April
US job growth nearly halved in April
Houston, 3 May (Argus) — The US added fewer jobs in April as the unemployment rate ticked up and average earnings growth fell, signs of gradually weakening labor market conditions. The US added 175,000 jobs in April, the Labor Department reported today, fewer than the 238,000 analysts anticipated. That compared with an upwardly revised 315,000 jobs in March and a downwardly revised 236,000 jobs in February. The unemployment rate ticked up to 3.9pc from 3.8pc. The unemployment rate has ranged from 3.7-3.9pc since August 2023, near the five-decade low of 3.4pc. The latest employment report comes after the Federal Reserve on Wednesday held its target lending rate unchanged for a sixth time and signaled it would be slower in cutting rates from two-decade highs as the labor market has remained "strong" and inflation, even while easing, is "still too high". US stocks opened more than 1pc higher today after the jobs report and the yield on the 10-year Treasury note fell to 4.47pc. Futures markets showed odds of a September rate cut rose by about 10 percentage points to about 70pc after the report. Average hourly earnings grew by 3.9pc over the 12 month period, down from 4.1pc in the period ended in March. Job gains in the 12 months through March averaged 242,000. Gains, including revisions, averaged 276,000 in the prior three-month period. Job gains occurred in health care, social services and transportation and warehousing. Health care added 56,000 jobs, in line with the gains over the prior 12 months. Transportation and warehousing added 22,000, also near the 12-month average. Retail trade added 20,000. Construction added 9,000 following 40,000 in March. Government added 8,000, slowing from an average of 55,000 in the prior 12 months. Manufacturing added 9,000 jobs after posting 4,000 jobs the prior month. Mining and logging lost 3,000 jobs. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Indonesia’s Tangguh LNG facility offers Jun-Jul cargoes
Indonesia’s Tangguh LNG facility offers Jun-Jul cargoes
Singapore, 3 May (Argus) — Indonesia's 7.6mn t/yr BP-operated Tangguh LNG facility is offering four LNG cargoes for June-July loading, through a tender that closes on 6 May. The Tangguh LNG project in Indonesia's west Papua province is offering four cargoes on a fob basis for loading on 17, 22, 27 June, and on 2 July, or two cargoes on a des basis. But the delivery windows are unclear. The firm was last in the market in March , when it offered four cargoes on a fob basis for loading during 28-29 April, 1-2 May, 3-4 May and 17-19 May, or three cargoes on a des basis for delivery over 6-8 May, 8-10 May and 12-14 May. But it is unclear if these cargoes were sold eventually. This offer adds to a growing pool of availability for June and July cargoes, as summer restocking demand among traditional major importing region northeast Asia is poised to be lower this year. This is mainly owing to higher inventories after the winter season and more than sufficient contracted term deliveries, buyers in the region said. This is despite Japan and South Korea forecasting higher summer temperatures this year as compared to the previous year, according to the Japan Meteorological Agency and Korea Meteorological Administration on 23 April. Spot prices have remained relatively rangebound at around high-$9s to low-$10s/mn Btu since the end of March despite weak demand. Spot prices have been tracking some strength in Dutch TTF contract prices, which has reduced importers' incentive to step up spot purchases since imported spot has no obvious price advantage. The front half-month of the ANEA — the Argus assessment for spot LNG deliveries to northeast Asia — was last assessed on 3 May at $9.955/mn Btu, lower by about 11¢/mn Btu from a week earlier, but about 71¢/mn Btu higher from a month earlier. Spot demand has been mostly confined to south and southeast Asian importers. Most of southeast Asia is currently experiencing a heatwave, which is likely to continue driving spot LNG demand from firms like Thailand's state-controlled PTT. The firm has issued another tender seeking three deliveries over 1-2, 7-8 and 10-11 July that closed on 3 May. It may have awarded the tender, but further details are unclear, traders said. By Rou Urn Lee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
FTC clears Exxon-Pioneer deal but bars Sheffield
FTC clears Exxon-Pioneer deal but bars Sheffield
New York, 2 May (Argus) — US antitrust regulators signaled they will clear ExxonMobil's proposed $59.5bn takeover of Pioneer Natural Resources but banned the shale giant's former chief executive officer from gaining a seat on the board. A proposed consent order from the Federal Trade Commission seeks to stop Scott Sheffield, Pioneer's former chief executive, from taking part in "collusive activity" that would potentially raise crude prices and cause US consumers to pay more at the pump. The order paves the way for ExxonMobil to close its blockbuster deal for Pioneer, which will make it the leading producer in the prolific Permian shale basin of west Texas and southeastern New Mexico. It is also the top US oil producer's biggest transaction since Exxon's 1999 merger with Mobil. ExxonMobil's Permian output will more than double to 1.3mn b/d of oil equivalent (boe/d) when the acquisition closes, before increasing to about 2mn boe/d in 2027. The FTC, which has taken a tougher line on mergers under the administration of President Joe Biden, has paid close attention to oil deals announced during the latest phase of shale consolidation. Only this week, Diamondback Energy said it had received a second request for information from the regulator over its $26bn proposed takeover of Endeavor Energy Resources. And Chevron's planned $53bn acquisition of US independent Hess has also been held up. The FTC alleged in a complaint that Sheffield exchanged hundreds of text messages with Opec officials discussing crude pricing and output, and that he sought to align production across the Permian with the cartel. His past conduct "makes it crystal clear that he should be nowhere near Exxon's boardroom," said Kyle Mach, deputy director of the FTC's Bureau of Competition. ExxonMobil said it learnt about the allegations against Sheffield from the FTC. "They are entirely inconsistent with how we do business," the company said. While Pioneer said it disagreed with the FTC's complaint, which reflects a "fundamental misunderstanding" of US and global oil markets and "misreads the nature and intent" of Sheffield's actions, the company said it would not be taking any steps to stop the merger from closing. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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