- DAILY GPI
- MEXICO GPI
- SHALE DAILY
More than three-quarters of the companies participating in NGI's 3Q2015 Top North American Gas Marketers Ranking, including heavyweights like BP plc, Shell Energy NA and ConocoPhillips, reported lower sales transaction numbers in the third quarter than they did in the same period last year, as they continue to wait for depressed commodities prices to right themselves.
Twenty-three leading gas marketers reported combined sales transactions of 104.41 Bcf/d in NGI's latest survey, a 3% decline compared with the 107.39 Bcf/d those same companies reported in 3Q2014. Eighteen of the participating marketers reported declines compared with the year-ago period.
NGI's survey of North American marketers hasn't reported an overall increase in sales since 1Q2014, when sales by participating companies increased 0.61 Bcf/d (about 0.5%) compared with 1Q2013. Prior to that, the last increase was recorded in 2Q2012, when participating companies sold a total of 135.86 Bcf/d.
For a second consecutive quarter, NGI'ssurvey found declines among the top four companies (see Daily GPI,Sept. 10), including perennial No. 1 BP, which reported 21.90 Bcf/d, a 5% decline compared with 23.10 Bcf/d in 3Q2014. The UK-based producer is becoming more competitive in the Lower 48 onshore following years of neglect, but natural gas prices under $3.00/Mcf Henry Hub put operations under more pressure, the company's upstream chief said in October (see Daily GPI,Oct. 27). BP's agreement to settle all the major federal, state and municipal claims related to the Macondo well blowout five years ago in the deepwater Gulf of Mexico led Moody's Investors Service to upgrade the ratings to “positive” from “negative” last month (see Daily GPI,Nov. 25;Oct. 5).
Shell reported 9.80 Bcf/d in 3Q2015, an 8% decline compared with 10.70 Bcf/d in 3Q2014. Parent Royal Dutch Shell plc said recently that it plans to close its Appalachian headquarters in Western Pennsylvania next summer, citing an "ongoing drive to enhance competitiveness" during the commodities downturn (see Shale Daily, Dec. 2). But the energy giant has gained necessary approvals for its proposed $70 billion buyout of UK rival BG Group plc, and expects to close the deal in early 2016 (see Daily GPI, Sept. 3; June 17; April 8).
ConocoPhillips, which had been plagued by double-digit declines since it implemented business model restructuring in North America following the spin-off of downstream operations three years ago (see Daily GPI, April 17, 2012), may have reached the bottom of that trough, reporting only a 1% decline compared with 3Q2015, the smallest decline of the survey's top four companies. And the company last month approved $900 million in funding for its Greater Mooses Tooth #1 development on Alaska's North Slope, a drilling project that is expected to come online in late 2018 and have peak production of 30,000 b/d (see Daily GPI, Nov. 20). Still, ConocoPhillips, the largest independent in the world, announced at the end of 3Q2015 that it would slash billions from its guidance for capital expenditures and operating costs for the remainder of 2015 (see Daily GPI, Oct. 30). That decision followed an announcement in September that the company would reduce its total workforce by 10% (see Daily GPI, Sept. 2).
Macquarie Energy reported 8.65 Bcf/d in 3Q2015, an 11% decline compared with 9.70 Bcf/d in the same period last year.
Tenaska, entrenched at the No. 5 spot in the survey, was one of six marketers reporting increases, with 7.50 Bcf/d in 3Q2015, compared with 6.10 Bcf/d in 3Q2014. Others reporting increases were Sequent (6.40 Bcfd, up 14% from 5.60 Bcf/d), J. Aron & Co. (5.31 Bcf/d, up 6% from 5.00 Bcf/d), Chevron (4.02 Bcf/d, up 3% from 3.90 Bcf/d), Direct Energy (3.85, up 196% from 1.30 Bcf/d), and Southwestern Energy (3.13 Bcf/d, up 26% from 2.49 Bcf/d). Direct Energy's increase is based in large part on the inclusion of its wholesale and retail sales (see Daily GPI, June 23).
All of the bottom dozen participants in the survey reported declines compared with the year-ago period, including Chesapeake (2.86 Bcf/d), Anadarko (2.16 Bcf/d), Castleton Commodities (2.04 Bcf/d) and Canadian Natural (1.65 Bcf/d).
There may be some light on the horizon for the depressed natural gas market in the second half of 2016, but until then, commodity price woes are putting the squeeze on oil and gas companies. With the oil and gas sector now accounting for 37% of total distressed debt, the U.S. distress ratio reached 20.1% in November, its highest level since September 2009, Standard & Poor's Ratings Service said in a recent report (see Shale Daily, Nov. 30). The distress ratio "generally trended lower since the second half of 2012" but has been "elevated since December," the firm said.
Throughout 2015, credit ratings agencies have been tracking an increase in stress on oil and gas companies resulting from low commodity prices, which has had a broader impact on U.S. debt markets (see Shale Daily July 31; May 20; March 30).
Moody's recently reported upward trends in both the U.S. speculative-grade default rate and the agency's liquidity stress index (LSI), both driven in large part by increased strain on oil and gas companies (see Shale Daily Nov. 17; Nov. 3; Sept. 4).
Of 79 defaults this year among Moody's-rated corporate debt issuers around the world, nearly a quarter were from the energy sector, Moody's said.
"The global commodity downturn is exceptionally severe in its depth and breadth and is expected to be a substantial factor driving the number of defaults higher on a global basis in 2016," Moody's said in a report issued Wednesday.
Halliburton Co. officials said during the No. 2 oilfield services operator and No. 1 hydraulic fracturing company's 3Q2015 earnings call that demand for onshore pressure pumping services has all but evaporated, and conditions may deteriorate even further into the first quarter of 2016 (see Daily GPI, Oct. 19). Schlumberger Ltd. recently offered a similar assessment (see Shale Daily, Oct. 16).
The NGI survey ranks marketers on sales transactions only. FERC tallies both purchases and sales. While production was rising, natural gas trading continued to decline last year compared with 2013, according to an analysis by NGI of 2014 Form 552 buyer and seller filings with the Federal Energy Regulatory Commission (see Daily GPI, May 28). Total volumes bought and sold declined for the third consecutive year, reaching 114,603 TBtu, down 3.0% compared with 2013. It was the lowest reported volume total since FERC began publishing Form 552 data six years ago (see Daily GPI, July 6, 2009).