Monthly Archives: May 2017

What's happening

Shares of nearly every major offshore drilling company are up big on May 5, with shares ofAtwood Oceanics, Inc.(NYSE:ATW),Noble Corporation Ordinary Shares (NYSE:NE), Diamond Offshore Drilling Inc(NYSE:DO), ENSCOPLC (NYSE:ESV),Transocean LTD(NYSE:RIG), andSeadrill Ltd(NYSE:SDRL) up between 7% and 11% at 12:20 p.m. EDT.

Today's big news revolves around Noble Corporation, which released its first-quarter earnings after market close on May 4 and held its earnings call with analysts before market open on May 5.

Noble Corp reported revenue of $363 million in revenue and a loss of $1.24 per share. Revenue was down 41% from last year, but that wasn't a big surprise as the offshore sector is going through its biggest and longest downturn in decades. Its loss was heavily driven by a one-time non-cash tax item, totalling $260 million, or $1.07 per share. When adjusting for this non-recurring, non-cash item, Noble's quarterly loss would have been $0.15 per share.

Image source: Getty Images.

Noble's cash-based results were much better, with the company generating $142 million in cash from operations, and management remains confident that the company will generate positive cash flows in 2017, which will be used in part to repay debt.

Noble also announced that it had been awarded $650 million in new contracts in the quarter, further evidence that the worst of the downturn could be coming to an end. In April, Seadrill announced that it had signed $1.4 billion in new contract awards.

In general terms, managements across the segment are increasingly optimistic that the worst of the downturn is coming to an end. Contract awards are picking up, and a significant amount of vessel rationalization has happened over the past couple of years.

NE Price data by YCharts.

Investors should note that, just because there has been an uptick in contract award activity, the current state of the industry is still ugly. Many of the new contract awards have been extensions to existing work and haven't been putting idle vessels back to work, and there's still an oversupply of drilling vessels, even with significant scrapping and idling over the past 18 months.

And because of that, don't expect offshore drillers to start reporting markedly better results next quarter. 2017 is still likely to be a pretty ugly year overall since the majority of new contract awards won't begin until 2018. Frankly, offshore drillers as a group will probably generate less revenue in 2017 than last year.

Put it all together, and it's likely that we will see plenty more big-move days like today for offshore drilling stocks this year, and unfortunately, some of those days will be big moves down. Prudent investors would be served well to not "go big" on offshore just yet, but instead continue to monitor the industry, and invest in a prudent manner -- preferably based on evidence that the downturn is well and truly ending, and the industry is returning to growth after several very ugly years of contraction.

Jason Hall owns shares of Atwood Oceanics, Diamond Offshore Drilling, Ensco, Noble, Seadrill, and Transocean. Jason Hall has the following options: long July 2017 $3 calls on Seadrill. The Motley Fool owns shares of and recommends Atwood Oceanics. The Motley Fool has a disclosure policy.

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Noble Corporation Reported Earnings, and Offshore Drilling Stocks ... - Motley Fool

Photo: Steve Gonzales, Staff

Vendors tear down their displays as the 2017 Offshore Technology Conference (OTC 2017) officially closed Thursday, May 4, 2017, in Houston. ( Steve Gonzales / Houston Chronicle )

Vendors tear down their displays as the 2017 Offshore Technology Conference (OTC 2017) officially closed Thursday, May 4, 2017, in Houston. ( Steve Gonzales / Houston Chronicle )

A closed sign on the registration desk as the 2017 Offshore Technology Conference (OTC 2017) officially closed Thursday, May 4, 2017, in Houston. ( Steve Gonzales / Houston Chronicle )

A closed sign on the registration desk as the 2017 Offshore Technology Conference (OTC 2017) officially closed Thursday, May 4, 2017, in Houston. ( Steve Gonzales / Houston Chronicle )

The NRG Center's carpet is rolled up as the 2017 Offshore Technology Conference (OTC 2017) officially closed Thursday, May 4, 2017, in Houston. ( Steve Gonzales / Houston Chronicle )

The NRG Center's carpet is rolled up as the 2017 Offshore Technology Conference (OTC 2017) officially closed Thursday, May 4, 2017, in Houston. ( Steve Gonzales / Houston Chronicle )

Down come the letters after the Offshore Technology Conference, which had attendance of just under 65,000. people.

Down come the letters after the Offshore Technology Conference, which had attendance of just under 65,000. people.

Vendors pack away their wares. The mood at the OTC darkened as oil prices, which started the week just under $50 a barrel, slid to $45.52 on Thursday.

Vendors pack away their wares. The mood at the OTC darkened as oil prices, which started the week just under $50 a barrel, slid to $45.52 on Thursday.

Workers roll up a carpet Thursday at NRG Center. OTC attendance has declined nearly 40 percent since 2014.

Workers roll up a carpet Thursday at NRG Center. OTC attendance has declined nearly 40 percent since 2014.

OTC attendance down as offshore loses its groove

Attendance at Houston's annual Offshore Technology Conference, a bellwether for the oil and gas industry, fell for the third consecutive year, sliding to the lowest level in more than a decade as deep-water drillers struggle to match the country's budding shale recovery.

Just under 65,000 people wandered the exhibits at Houston's NRG Park, down from 68,000 last year and 95,000 in 2015. Attendance has plunged nearly 40 percent since hitting a record 108,000 in 2014, the peak of the last oil boom.

RELATED:Deep-water drilling faces shallow future

The latest decline represents an inflection point for the conference and the offshore sector, which has become increasingly diminished as companies shift money, workers and equipment to Texas and other U.S. shale fields that are far less expensive to exploit.

With analysts expecting oil prices to remain low for the next several years, many exhibitors and visitors said the halcyon days of record OTC attendance, over-the-top displays and expensive swag appear over - at least in the near term.

"The money is moving onshore," said Gary Fransen, sales manager at Houston oil services company Agar Corp.

The annual trade show, billed as the world's largest energy trade show, kicked off Monday with a sense of optimism that the worst was behind the oil and gas industry and the recovery that began in the Permian Basin and other productive shale formations would spread to other sectors. The mood was noticeably more upbeat than the 2016 conference, which was just two months removed from the bottom of the downturn, when prices hit a 13-year low of just over $26 a barrel.

The mood, however, became subdued as prices, which started the week just under $50 a barrel, slid to $45.52, the lowest settlement since November and just $1.20 higher than a year ago. Crude fell $2.30 a barrel, or about 5 percent, on Thursday alone over concerns of growing supplies in global markets - despite OPEC production cuts that went into effect earlier this year.

Much of that concern arises from the growing output of U.S. shale drillers.

To read this article in one of Houston's most-spoken languages, click on the button below.

"Producers are victims of their own success in getting oil out of the ground faster, cheaper than the market expected," Houston oil analyst Andy Lipow said. "For the offshore world, it means they're on a longer time frame for a wholehearted recovery."

Despite hopes that attendance would rebound after last year's plunge, visitors and exhibitors early on noted signs of another disappointing turnout. Traffic was light, and parking spaces were easy to get. Some major companies were absent.

Tenaris, the giant Argentine oil and gas piping manufacturer, was back, but it pushed its steel for wells drilled in the North American shale basin.

"The OTC, it's the Onshore Technology Conference," CEO Paolo Rocca said. "That's what we call it. It's onshore and offshore at this point in time."

Houston-based Micro-Smart Systems, an oil field services provider that makes devices to measure well data, also said it is focusing investment onshore. But Micro-Smart has had a booth at OTC for two decades. Giving up the spot - as many companies did last year when oil prices hit rock bottom - would mean losing their premier location.

Agar Corp., a 25-year attendee, made the same calculus.

"The growth is going to be onshore, but we are still here," Fransen said.

There were notable absences this year. GE Oil and Gas, which is merging with the Houston oil and gas services giant Baker Hughes; FMC Technologies, now part of TechnipFMC; and Cameron International, now part of Schlumberger, all skipped.

GE opted to give up its OTC booth in favor of a sponsorship that put the company name on lanyards and tote bags. The decision to give up the booth had nothing to do with the Baker Hughes acquisition, spokeswoman Stephanie Cathcart said.

The amount of freight moved to the trade show - blowout preventers, valves, pipes, drill bits and frac trucks, as well all the trappings required for trade-show booths - fell by about 1 million pounds from last year, according to the movers. Attendance was the lowest since 2006, when just over 59,000 came.

The challenge for the offshore industry now is to cut production costs if they are to compete in the "lower for longer" price environment, industry officials and analyst said. The biggest oil companies said they are doing just that by standardizing equipment and technology that can be used and moved to different platforms and rigs, instead of customizing each project.

British oil giant BP has managed to make several Gulf of Mexico projects, including Mad Dog 2, profitable at $40 a barrel, compared with about $80 a few years ago, regional president Richard Morrison said.

Chevron Corp. said it is working to collaborate better with other oil companies in deep-water development as a way to minimize costs. But in November, Chevron executives said that when it comes to new investments, the company's operations in the Permian get the first call.

Despite the likelihood that offshore's recovery will lag behind land-based sectors, Neal Anderson, CEO of the energy research firm Wood Mackenzie, said that offshore drilling is far from dead. Deep-water operators have plenty of places to cut costs, although broad reductions have yet to happen.

Not all companies will be able to rely on the Permian Basin, said Julie Wilson, a research director for global exploration at Wood Mackenzie, and some might find success with existing offshore projects.

"They still have to grow," Wilson said, "and can grow profitability with good offshore projects that can break even at $50 or below."

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OTC attendance down as offshore loses its groove - Houston ... - Houston Chronicle

French presidential front-runner Emmanuel Macron has accused websites linked to the Kremlin of attempting to undermine his campaign by spreading fake news and lies about alleged offshore accounts in the Caribbean. Macron isnt just sounding off the pro-EU candidatefiled a lawsuitThursday against those spreading the misinformation.

Macron filed a complaint with prosecutors in Paris thataccused unknown actors of spreading false information in an attempt to influence the outcome of the election. While his opponent Marine Le Pen isnt mentioned by name, the lawsuit was filed a day after the far-right candidate accused Macron of having a secret bank account in the Bahamas during a live TV debatein advance of the Sunday election. Macron calledthe allegation as defamation.

Speaking on French radio Thursday, Macron called the allegations fake news and lies, and claimed that some of the sites repeating them were linked to Russian interests. Authorities in France and across Europe have repeatedly warned of disinformation campaigns directed by the Kremlin hitting key elections on the continent this year.

The fact that Le Pen is not named means that the lawsuit Macron filed will act as a warning to anyone thinking about repeating the rumor online, showing that the centrist candidate is willing to take anyone to court who spreads the story.

In an interview with BFM TV on Thursday, Le Pen backed away from the claims she made during the debate, saying she had no proof of the secret account, and if she had, she would have raised them with the court.

Macron extends lead

Despite Le Pens allegation made during a debate watched by 16.5 million people an opinion poll published Friday showed that Macron had extended his lead as the candidates entered the final day of campaigning ahead of a quiet day on Saturday.

The poll, conducted immediately after the debate, showed Macron on 62 percent compared to Le Pens 38 percent. Macron had slumped slightly to 59 percent in a previous poll, his lowest ranking in three months.

Another survey suggested that many French voters were disillusioned with both candidates. This poll, carried out by the Odoxa Institute for France Info, says Sundays vote will have the lowest turnout of any second-round presidential election since 1969. Far-left voters particularly those who voted for Jean-Luc Mlenchon in the first round were particularly unlikely to vote.

Following the debate, both candidates received hostile receptions from the electorate, with Le Pen pelted with eggs as she visited a town in the western region of Brittany. Macron on the other hand was booed when he met with trade union members at a glassworks in Albi as a result of his plans to liberalise labor laws.

Russian influence

This is not the first time Russia has been accused of interfering with Macrons campaign. Back in February, French authorities warned Russia not to interfere with the election after alleging that cyberattacks against Macrons website were carried out by hackers linked to the Kremlin.

This form of interference in French democratic life is unacceptable and I denounce it, Foreign Minister Jean-Marc Ayrault said at the time.

According to researchers monitoring the activity of pro-Kremlin accounts and blogs, the disinformation campaign in France didnt kick into gear until January, when Francois Fillons campaign stumbled as a result of a corruption scandal and Macron surged in the polls. The resulting efforts however were somewhat ham-fisted. The disinformation machine tried to go from a car being in neutral to a car being in sixth gear, and it kind of stalled, Ben Nimmo, senior fellow at the Atlantic Councils Digital Forensic Research Lab, told VICE News.

Cover: ASSOCIATED PRESS

Continued here:

Macron files lawsuit over offshore rumors spread by websites linked to Russia - VICE News

In some versions of a story May 3 about a lawsuit seeking to maintain a drilling ban in the Arctic and Atlantic Oceans, The Associated Press reported erroneously the name of one plaintiff. It is the Center for Biological Diversity, not the Center for Biological Development.

A corrected version of the story is below:

Groups sue to stop Trump from renewing offshore drilling

Environmental and Alaska Native groups are suing to maintain a U.S. ban on oil and gas exploration in most of the Arctic Ocean and select areas of the Atlantic after President Donald Trump took steps to put the waters back in play for offshore drilling

By DAN JOLING

Associated Press

ANCHORAGE, Alaska (AP) Environmental and Alaska Native groups sued Wednesday to maintain a U.S. ban on oil and gas exploration in most of the Arctic Ocean and select areas of the Atlantic after President Donald Trump took steps to put the waters back in play for offshore drilling.

The drilling ban was a key part of former President Barack Obama's environmental legacy, aimed at protecting polar bears, walrus, ice seals and Native villages that depend on the animals from industrialization and oil spills. Waters of the Atlantic continental shelf also support whales, swordfish, bluefin tuna, sea turtles and businesses heavily dependent on the health of the ocean ecosystem, according to the lawsuit.

In an executive order Friday, Trump ordered Interior Secretary Ryan Zinke to review the ban with the goal of opening offshore areas to job-creating energy exploration.

"With one careless stroke of his pen, Trump ignored the law and put our oceans at new risk of a devastating oil spill," said Kristen Monsell, an attorney for the Center for Biological Diversity, one of the groups that filed the lawsuit in Anchorage.

White House spokeswoman Kelly Love said by email that the administration is confident Trump's commonsense decision to boost the country's energy sector will be vindicated by the courts.

The federal lawsuit claims Trump exceeded his constitutional authority and violated federal law.

Congress has the power to regulate federal land under the Constitution. Lawmakers have authorized presidents to halt drilling in unleased lands of the outer continental shelf but did not allow them to reopen areas, according the lawsuit.

Presidents Dwight Eisenhower, Richard Nixon, George H.W. Bush and Bill Clinton made permanent or time-limited withdrawals from drilling under the Outer Continental Shelf Land Act.

"It says nothing about the authority to undo those withdrawals," said attorney Erik Grafe of Earthjustice, one of two law firms representing the 10 groups. "No president has reversed a withdrawal in the past except for ones that have express end dates. President Obama's withdrawals were permanent."

In 2015, Obama halted exploration in coastal areas of the Beaufort and Chukchi seas and the Hanna Shoal, an important area for walrus. On Dec. 20, he withdrew most other potential Arctic Ocean lease areas about 98 percent of the Arctic outer continental shelf.

Abigail Hopper, Obama's director of the Bureau of Ocean Energy Management, said at the time that oil and gas activity in the harsh and undeveloped Arctic was not worth the risks when the nation had ample energy near existing infrastructure.

Josh Kindred, environmental counsel for the Alaska Oil and Gas Association, said Trump's executive order has been portrayed as dramatic when it merely reverts to policy in place for most of the Obama administration.

"It brings us back to the status quo of where we were four months ago," Kindred said.

Obama spent a lot of time developing a five-year Arctic leasing plan, then he halted drilling in Arctic waters without consulting with the state of Alaska and coastal villages, Kindred said.

"It seemed to be a hard-right turn," he said.

In the Atlantic, Obama banned exploration in 5,937 square miles (15,377 square kilometers) of underwater canyon complexes, citing their importance for marine mammals, deep-water corals, valuable fish populations and migratory whales, according to the lawsuit.

Trump's executive order encourages seismic surveys, mandates expedited seismic permitting and directs a reconsideration of offshore safety and pollution control regulations. It calls for development of a new five-year leasing program in the Arctic and Atlantic.

Industry officials have expressed interest in moving into areas now banned, according to the lawsuit.

"We're suing to preserve the protections that were put in place before oil companies rush in," Grafe said.

The rest is here:

Correction: Trump-Offshore Drilling story - ABC News

Lawmakers, pushed by Gov. Paul LePage, made the horrible decision in 2013 to push a potential $70 million worth of potential investment in clean energy away from Maine. The current Legislature should not make an even worse mistake this year.

A bill under consideration by the Energy, Utilities and Technology Committee would require that an offshore wind test project be moved away from Monhegan Island. This would undo years worth of research, jeopardize $40 million in federal funding that is headed to Maine and, once again, prove that the state is not an honest partner in business dealings.

LD 1262 would kill a decades-long University of Maine energy research and development project by disallowing its use of a state-designated test area off Monhegan Island to test two full-scale wind energy-generating turbines. It would be the first test of floating turbines in North America. There are numerous wind farms in Europe, but they use turbines that are fixed to the seafloor. This limits their placement to near shore, where the wind is less powerful.

If the Maine test, which will use a university-patented technology, is successful, it could propel the state to a leadership role in offshore wind energy, which could mean more investment and much-needed jobs.

Three test areas off the Maine coast were designated by the state in 2009, after a lengthy review process that included 25 meetings with local officials, commercial fishermen and others in communities along the coast. There were also five public hearings. The Monhegan site, about 2 miles off the Lincoln County island, was designated for use by the University of Maine System for testing of prototype and full-scale wind energy generation facilities.

Voters, in 2010, approved a $26.5 million bond that included money for an offshore wind demonstration site.

In 2014, the Maine Public Utilities Commission approved an agreement between Central Maine Power Co. and the Maine Aqua Ventus project, the name of the University of Maine test project, under which CMP would buy power generated by the project for 20 years.

Last year, the U.S. Department of Energy picked the UMaine project as one of two out of 70 slated to receive $40 million in federal funding if they clear several hurdles by early next year. The university is continuing to conduct environmental impact studies and working toward obtaining state and federal permits.

Now, this is all in jeopardy.

The bills only sponsor, Republican Sen. Dana Dow of Waldoboro, said the turbines must be moved to protect the scenic beauty that draws visitors to Monhegan and to preserve the islands culture.

That culture includes some of the highest electricity bills in the state. Monhegan residents now pay about 70 cents per kilowatt hour for power, which comes from a diesel generator on the island. Under the terms of the PUC order, during the test phase, which lasts for 20 years, island residents will receive free electricity from the project or another benefit the community choses.

Longer-term, Aqua Ventus hopes to lower the price of electricity from its project to 7.7 cents per kilowatt hour, making offshore wind power a viable source of electricity to power vehicles and to heat homes.

The two turbines will be visible from three houses on Monhegan. The owners, including famed painter Jamie Wyeth, are supportive of the UMaine project. So is the Monhegan Fishermens Alliance, which represents the islands lobstermen.

Change is hard to accept when one loves a place and has known it for a long time. But we can no longer think of ourselves only, Robin McCoy, a seasonal Monhegan resident and granddaughter of painter N.C. Wyeth, told committee members on Tuesday.

She warned lawmakers that if they pass LD 1262, they will not only force UMaine to lose $40 million, they will end Maines bid for leadership in an industry that is already becoming competitive as a clean alternative to coal and natural gas.

The Monhegan Island saga is reminiscent of the backroom dealing in 2013 that lead Statoil, which has proposed a wind energy project off the coast of Boothbay, to abandon Maine. It has since built offshore energy-generation facilities in Scotland and may soon do so in other states.

Even though the PUC approved a contract with Statoil, LePage convinced lawmakers to renege on the deal in favor of supporting the UMaine project. Now, he is also in favor of pulling the rug out from under that project as well.

Lawmakers must reject LD 1262 or risk reminding the world that Maine is not serious about reducing energy prices and is not a place with consistent rules for doing business.

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Maine can't afford a second colossal mistake on offshore wind energy - Bangor Daily News

E&P

OTC EXTRA: UPS Systems Safeguard Power Supplies On Offshore Rigs E&P When it comes to power on an offshore oil rig, there is no on/off switch for crew shift changes. For safety as well as operational and productivity reasons, the flow of energy must be 24/7 and completely protected from possible blackouts and ... and more »

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OTC EXTRA: UPS Systems Safeguard Power Supplies On Offshore Rigs - E&P