Latest news with #upstream
Yahoo
5 hours ago
- Business
- Yahoo
SLB anticipates decrease in global upstream investment in 2025
Oilfield services giant SLB issued a cautionary statement on Friday, indicating a possible downturn in global upstream spending in 2025, especially in North and Latin America. North America is particularly vulnerable to these anticipated short-cycle expenditure cuts, whereas regions such as Asia and the Middle East appear more robust thanks to lower production costs, national energy security imperatives and investments in gas projects. The decline in crude prices by more than 21% in the April–June quarter compared to the previous year has heightened concerns over a wider-scale pullback in exploration and production investments, reported Reuters. SLB has highlighted the ongoing market uncertainty influenced by factors such as OPEC+ supply decisions, trade talks and geopolitical tensions. SLB CEO Olivier Le Peuch said: "The market is navigating several dynamics – including fully supplied oil markets, OPEC+ supply releases, ongoing trade negotiations and geopolitical conflicts. 'Despite this, commodity prices have remained range bound. Meanwhile, customers have selectively adjusted activity, prioritising key projects and planning cautiously, particularly in offshore deep-water markets.' The company also noted that the tariffs imposed by US President Donald Trump could impact its margins by 20–40 basis points in the latter half of the year. Despite these challenges, SLB reported total revenue of $8.55bn in the second quarter (Q2), surpassing the anticipated $8.48bn. SLB experienced a surge due to increased offshore activities and heightened drilling demand in the United Arab Emirates, Kuwait and Iraq. North American revenues saw a 1% increase to $1.66bn compared to last year, bolstered by advancements in data-centre infrastructure solutions. The company's earnings, excluding specific charges and credits, amounted to $0.74 per share for the quarter ending 30 June, marginally exceeding the average forecast of $0.73. Meanwhile, SLB also recently finalised the acquisition of ChampionX, a deal first announced in April of the previous year. The completion followed the receipt on Tuesday of the last required regulatory consent from UK authorities. "SLB anticipates decrease in global upstream investment in 2025" was originally created and published by Offshore Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Reuters
3 days ago
- Business
- Reuters
Oilfield services provider SLB flags risk of lower upstream spending
July 18 (Reuters) - Top oilfield services firm SLB (SLB.N), opens new tab on Friday warned of a likely decline in global upstream spending in 2025, led by weakness in North and Latin America, sending its shares down nearly 4%. North America remains the most exposed to the short-cycle spending cuts while Asia and the Middle East are proving more resilient, supported by lower breakevens, national energy security priorities, and gas project investments, it said. Crude prices fell more than 21% in the April–June quarter, from a year earlier, raising concerns about a broader pullback in exploration and production spending. U.S. energy firms have cut the number of active oil and gas rigs for an 11th straight week in the week ended July 11, for the first time since July 2020, according to Baker Hughes data. SLB, the first of the Big Three U.S. oilfield services providers to report quarterly results, said the broader market continues to remain uncertain with OPEC+ supply releases, ongoing trade negotiations and geopolitical conflicts. The company also flagged a 20-40 basis points hit on its margins from U.S. President Donald Trump's tariffs in the second half of the year. In the second quarter, SLB's total revenue fell 6% to $8.55 billion, but beat expectations of $8.48 billion. The results came in above expectations, which had been recently lowered following the company's forecast flagging weak activity levels in Saudi Arabia and Latin America, said Tudor Pickering Holt & Co analyst Jeff LeBlanc. SLB received a boost from higher offshore activity and increased drilling demand in the UAE, Kuwait and Iraq. North America revenue rose 1% to $1.66 billion from last year, helped by gains in data-center infrastructure solutions. Its earnings, excluding charges and credits, of 74 cents per share, for the three months ended June 30, narrowly beat the average expectation of 73 cents. Rivals Halliburton (HAL.N), opens new tab and Baker Hughes (BKR.O), opens new tab are scheduled to report their earnings next week.
Globe and Mail
3 days ago
- Business
- Globe and Mail
WTI Oil Price Nearing USD70 Per Barrel Mark: Boon for ConocoPhillips?
The price of West Texas Intermediate (WTI) is currently trading above the $68 per barrel mark, approaching $70 per barrel. The rising price of the commodity, being backed by renewed tensions in the Middle East, is a boon for the exploration and production activities of ConocoPhillips COP. The upstream energy major has low-cost resources both internationally and in the United States. ConocoPhillips is more confident in its resources within the United States, which it refers to as the Lower 48, comprising major shale plays like the Permian Basin, Eagle Ford and Bakken. This demonstrates resilience in ConocoPhillips' business model. With the oil price significantly higher than the break-even price in the prolific resources, where COP is operating currently, the ongoing pricing environment of the commodity is highly favorable for the company's overall business, thereby aiding its bottom line. Is the Current Oil Price Favorable for XOM & EOG's Businesses? Exxon Mobil Corporation XOM and EOG Resources, Inc. EOG are two leading energy players, having a significant presence in upstream businesses. XOM has a strong presence in prolific oil and gas resources in the Permian and offshore Guyana. Advantageous volume growth from both resources has been supporting ExxonMobil's upstream activities, which contribute to the large scale of the company's total earnings. Having crude reserves in the United States and Trinidad, EOG Resources is among the energy majors in the domestic market. Having operations in the leading shale plays in the United States, the company is well-positioned to capitalize on the handsome crude prices. COP's Price Performance, Valuation & Estimates Shares of COP have lost 16.3% over the past year compared with the 19.1% decline of the composite stocks belonging to the industry. From a valuation standpoint, COP trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 5.17X. This is below the broader industry average of 11.07X. The Zacks Consensus Estimate for COP's 2025 earnings has been revised upward over the past seven days. COP stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They include Stock #1: A Disruptive Force with Notable Growth and Resilience Stock #2: Bullish Signs Signaling to Buy the Dip Stock #3: One of the Most Compelling Investments in the Market Stock #4: Leader In a Red-Hot Industry Poised for Growth Stock #5: Modern Omni-Channel Platform Coiled to Spring Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%. Download Atomic Opportunity: Nuclear Energy's Comeback free today. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Exxon Mobil Corporation (XOM): Free Stock Analysis Report EOG Resources, Inc. (EOG): Free Stock Analysis Report
Free Malaysia Today
4 days ago
- Business
- Free Malaysia Today
Sabah set to gain more O&G investor interest
Petronas's upstream collaborations with ConocoPhillips, Eni, TotalEnergies, and Idemitsu have enhanced Malaysia's upstream credibility and allowed the company to hedge against operational and geopolitical risks. (AFP pic) PETALING JAYA : Sabah is outpacing Sarawak as a more appealing destination for foreign direct investment (FDI) in Malaysia's upstream oil and gas (O&G) sector, according to industry insiders. Economist Samirul Ariff Othman, an adjunct lecturer at Universiti Teknologi Petronas, said Sabah has recently been attracting more international oil companies, spurred by instability in the Middle East and Malaysia's comparatively stable investment climate. 'The 2025 Iran-Israel skirmish and heightened Red Sea tensions have made freight insurance, security costs and supply stability in the Middle-East and North America increasingly uncertain,' he said. 'Investors are looking for lower-risk (and) high-potential alternatives, and Southeast Asia fits that profile.' Samirul told FMT certain O&G zones in Malaysia will benefit more from these trends. He said that while the Langkasuka basin off Peninsular Malaysia's west coast is receiving a certain level of interest, monetisation may be slow on account of its less developed infrastructure. 'Presently, Sabah leads in near-term FDI flows, followed by Sarawak,' he said, adding that Conoco Philip's pivot away from Sarawak reflects a belief in the North Borneo state's underexplored deepwater blocks. 'With ongoing studies in Blocks SB409 and SB310, and Kota Belud's redevelopment, Sabah is poised for more activity in H2 2025,' said Samirul. Previously, it was reported that the O&G giant had pulled out of Sarawak, partly due to regulatory uncertainty. Samirul said that despite Sarawak's strong LNG infrastructure and active basins— including the SK318 and SK408 gas blocks, regulatory uncertainty continues to undermine investor confidence. 'Regulatory friction between Petronas and Petros remains a political risk variable,' he added. 'While Sarawak's state oil company Petros has bolstered its role in managing upstream resources, overlapping jurisdictions have added ambiguity in fiscal split and licensing processes.' In May, the federal and Sarawak governments announced a high-level agreement on a new arrangement which will see Petros take on the gas aggregator role in Sarawak. However, both companies remain locked in negotiations over the legal, operational and commercial terms, and the attendant overlaps and complications. Tricia Yeoh, associate professor at University of Nottingham Malaysia said Prime Minister Anwar Ibrahim's announcement of broad agreement reached in February this year with Sarawak Premier Abang Johari Openg had failed to clear the air sufficiently. She told FMT the announcement lacked regulatory clarity, leaving investor sentiment unresolved, especially with legal proceedings between Petronas and Petros over a RM8 million bank guarantee still ongoing. Yeoh said both parties should jointly withdraw the suit and establish a clear forward- looking agreement. She, however, identified one positive in the announcement, namely that all existing Petronas contracts with third parties will continue to be honoured, though there were broader ambiguities surrounding the Petronas-Petros relationship. 'Neither statement addresses Sarawak's claim (to resources) over 200 nautical miles of territorial waters, so that remains at large,' she said, referring to Anwar's speech in the Dewan Rakyat on Feb 17 and a media release issued by Abang Johari the following day. Samirul said domestic reform—particularly faster production-sharing contract (PSC) approvals and better regulatory clarity in East Malaysia—was needed to sustain FDI momentum through 2026 and beyond. He said that Malaysia's PSCs are competitive, especially compared to regional peers particularly Indonesia and Vietnam, with companies paying federal and state governments 5% royalty or cash payment each after 70% of revenue is used to pay for oil costs. However, the combined royalty burden of 10% can be high for smaller fields, especially offshore gas, and PSC approvals could be faster, said Samirul. Yeoh urged Putrajaya to outline in clear terms the conditions under which carve-outs or exceptions may be granted to specific states, along with the rationale behind each decision. 'Dragging this out for another year—or 10—would be horrifically detrimental to national oil and gas development,' she warned. 'As I have stated previously, there needs to be a joint Petronas-Petros committee (comprising lawyers, financial and technical representatives and members of the federal and state governments) that works out these details,' she said. Yeoh said the joint committee should be given the space to deliberate in private until a consensus is reached—after which the outcome should be made public. 'The nation can then move forward constructively,' she said. Stronger Petronas future Commenting on recent joint ventures, Samirul said Petronas has been strengthening its upstream collaborations with ConocoPhillips, Eni, TotalEnergies, and Idemitsu—including in Indonesia—enhancing Malaysia's upstream credibility while hedging against operational and geopolitical risks. 'With global upstream costs rising due to inflation, supply chain bottlenecks, and deeper offshore exploration needs, joint ventures are a rational de-risking strategy,' he said. Samirul explained that shared equity spreads exploration costs, reduces capital exposure and allows partners to pool advanced technologies. These partnerships also allow Petronas to gain technical know-how from international oil majors experienced in carbon management and digital E&P (exploration and production), which supports its energy transition goals, he added.
Yahoo
4 days ago
- Business
- Yahoo
Do Upstream Mergers Really Deliver Value for Shareholders?
I've been noodling around with an idea for a while now. The thing on my mind is when do investors actually gain from the big gobs of money E&P companies spend on M&A? A lot of promises are made in the early days. But as time wears on, I rarely see any effort made to reconcile results with these promises. So bear with me as I go through this little exercise. Now I am not saying that M&A isn't necessary as strong companies buy out smaller, weaker companies to get their premium assets. That part of the transaction is easily understood, and I will review that thought in the ExxonMobil/Pioneer Natural Resources case as we go through this exercise. My point here is investors are still waiting for these results to show up in their mail box. In fairness, not a lot time has elapsed, but I think trends are instructive. Let's dive in. Upstream M&A: Shell game? The upstream industry has been on a buying binge the last several years with hundreds of billions worth of transactions on the books. One of the most notable thus far has been ExxonMobil's (NYSE:XOM) acquisition of Pioneer Natural Resources, for approximately $253 per share or a substantial $64.5 billion, including debt, in an all-stock transaction. As noted in the deal slide from the announcement, this was an 18% premium to recent pricing for Pioneer. In exchange for XOM diluting current holders of its stock by about 255 mm shares or ~6%, the company made some firm promises in regard to the future upside for the combined company. Among other things XOM holders were told the transaction would be 'immediately accretive to EPS.' Hold that thought. Some time has gone by since the deal closed in May of 2024 and it seemed appropriate to peek under the hood to see how the company was delivering on these commitments. It's also worth reviewing just what drove Exxon's interest in paying a premium to Pioneer to obtain their Midland acreage. The Industrial Logic of ExxonMobil and Pioneer Industrial logic is the term applied to these mega deals. It's one of the terms, along with synergy and accretive, that are bandied about on announcement day. As you can see below, Pioneer's Midland basin acreage was like a missing puzzle piece to Exxon's prior footprint in the play. Exxon is a technology company with a track record of pushing the envelope to drive down costs and increase production, but to fully deploy their technical expertise, they needed more room. When you snap the two pieces together, you get a blocky, connected plot of land that runs for 50-75 miles east and west, and the better part of a couple of hundred miles north and south. 1.4 million acres is a sizeable chunk of dirt. That's significant and opens the door to huge numbers of 4-5 mile laterals, with centralized logistics, sand, water, the stuff of fracking, and helping lock-in low cost of supply. The easy stuff put in place, XOM engineers are free to work their magic wringing maximum barrels out of each foot of completed interval. That's all great for the company, but does this add to the value of the company in a way that benefits shareholders? Something real, and tangible that they can spend. Today. Like the stock price going up. Or special dividends. It seems like it should, and that's where we will look next for any sign the company is about to embark on an enhanced shareholder rewards package. Capitalization is one metric by which we might judge the impact of a transaction. Suppose company A, worth X, buys company Z, worth Y. In that case, logic suggests that company AZ should match the value of the two merger partners, or X + Y. Referring back to our ExxonMobil example, on May 2nd, the day before the merger closed the share price of XOM was $116.21 per share. With 3,998,000,000 shares outstanding that works out to a capitalization of $462 bn. At the agreed price of $253 per share for Pioneer their capitalization was $59.5 bn. The two together should have created an entity worth $521 bn, a point from which the merger driven success of the company should have been a value accretion launching pad. By the end of 2024 XOM stock was trading at $107.27. With 4,424 bn shares outstanding the company's capitalization stood at $474 bn. In about six months, some $47 bn in capitalization had vanished into thin air. Investors were promised the transaction would be immediately accretive to earnings per share. In June, 2024 reporting for the second quarter showed EPS to be $2.14 per share. For the fourth quarter EPS was $1.67 per share. So no immediate accretion. Perhaps patience will pay off. For the first quarter of 2025 EPS was $1.76 per share and the forecast for Q-2 is $1.55 share. One step forward and another back. What matters is that, thus far the combined company has not equaled its standalone performance. This is a sobering thought in light of the dilution visited upon shareholders, and the expense the company is going to repurchase shares.I may be piling on a bit here as the time elapsed since the merger is minimal. ROCE or Return on Capital Employed, shows little sign of being moved significantly higher in the merger. For a Twelve-Trailing Month-TTM period, Exxon's ROCE was 0.10882, a slight improvement from Full Year-2024's 0.1082. Moving in the right direction, but after spending $64.5 bn in stock dilution, one might hope for a teensy bit more. Like I said, perhaps not enough time has gone by to attach much weight to the change in ROCE. Summing up So, where does that leave us as we eagerly anticipate another mega merger? I refer, of course, to the one that now hangs in the balance for Chevron (NYSE:CVX) and Hess (NYSE:HES), with an arbitrator set to rule on XOM's claim of primacy in the pre-emptive right to buy HESS' share in the Stabroek field, offshore Guyana. If we buy into CVX today it will cost us $150 per share. If the arbitrator rules in their favor and the assets of Hess are merged into CVX, will the price of CVX then become X+Y-dilution? Or the CVX price plus the Hess price of $171 per share, less the amount of stock CVX will print~$351 mm shares to meet the deal price of $60 bn? Will the combined company have a capitalization of $327 bn? If history is any guide this outcome is unlikely. It is certainly food for thought as another serial acquirer comes to mind. I refer here to Occidental Petroleum, (NYSE: OXY), which after the Anadarko deal of 2019 for $57 bn, and then the CrownRock deal of 2024 for $12 bn- a combined cash and stock outlay of $69 bn for a company with a present day capitalization of $42 bn. Warren Buffett with a 26.92% stake in OXY, for which he's paid an average of $51.92 per share, is down 21% on his investment. I wonder what his response would be today if the OXY plane landed in Omaha with a deal in management's pocket. I have a pretty good idea actually. I will reiterate-the Industrial logic of upstream M&A is abundantly clear. As an industry matures size and scale matter, and perhaps (likely) this is where value shows up for shareholders who remain long for an extended period. The company can continue to develop oil and gas deposits long after the standalone company would have drilled itself out of existence. But over the short run, it looks like a shell game to me. By David Messler for More Top Reads From this article on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
