Tag Archives: Oil and Gas Refining and Marketing (TRBC)

Exxon CEO sticks to spending targets as oil costs tumble

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NEW YORK (Reuters) – Two years into an formidable progress plan to revive earnings on the largest U.S. oil firm, Exxon Mobil (XOM.N) mentioned on Thursday it will persist with its spending plans whilst its rivals trim prices.

FILE PHOTO: Darren Woods, Chairman & CEO of Exxon Mobil Company attends a information convention on the New York Inventory Change (NYSE) in New York, U.S., March 1, 2017. REUTERS/Brendan McDermid

Exxon faces oil costs which have fallen over 20% this 12 months, the bottom pure gasoline costs in a long time, a long-term business outlook too is clouded by a push towards cleaner gas and stress from buyers for greater returns.

It plans to spend between $30 billion and $35 billion a 12 months by means of 2025, with about $33 billion in capital expenditure this 12 months.

The corporate’s progress technique “will result in sustained enchancment in shareholder worth,” Exxon’s Chief Government Officer Darren Woods mentioned in New York, the place the corporate held its annual investor day assembly.

Exxon’s progress plans embrace an enormous wager on U.S. shale, the place output has surged, making america the world’s largest oil producer, and on Guyana, the place an Exxon-led consortium has made one of many largest discoveries in years.

On Tuesday, Exxon’s closest U.S.-rival Chevron confirmed off its personal warfare chest by highlighting it has as much as $80 billion that it may use for shareholder returns over the following 5 years no matter buying and selling costs for oil.

As the 2 corporations race to turn out to be the primary to provide 1 million barrels of oil-equivalent per day in Permian, the highest U.S. oilfield, Exxon mentioned Thursday that it’s going to exceed that focus on by 2024.

The complete oil business has fallen out of favor with buyers, however Exxon, as soon as the business’s money stream and income chief, has tumbled significantly arduous.

Complete returns for Exxon over the past 5 years have fallen into destructive territory, whereas the S&P 500 returned 64%. Rivals Chevron, Complete and BP have seen constructive returns, whereas Royal Dutch Shell has been flat.

(This story corrects day in first paragraph to Thursday, not Tuesday)

Reporting by Jennifer Hiller in New York and Shariq Khan in Bengaluru; Enhancing by Arun Koyyur and Chizu Nomiyama

Our Requirements:The Thomson Reuters Belief Rules.

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Traders get misplaced in Huge Oil’s carbon accounting maze

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LONDON (Reuters) – Large variations in the best way oil corporations report their efforts to cut back carbon emissions make it troublesome to evaluate the danger of holding their shares because the world shifts away from fossil fuels, senior fund managers say.

FILE PHOTO: Oil pump jacks work at sundown close to Midland, Texas, U.S., August 21, 2019. REUTERS/Jessica Lutz/Recordsdata

Traders have poured cash into so-called sustainable funds, which take note of corporations’ environmental, social, authorized and different requirements, and funds are below strain from their clients and authorities to make these requirements sturdy.

Fund managers are additionally making use of environmental, social and governance (ESG) standards extra extensively in conventional investments to assist them decide how corporations will fare over the long run.

There’s a rising realization that some corporations’ income will shrink quicker than others as governments prioritize low-carbon vitality to satisfy the U.N.-backed Paris settlement’s objective of slicing emissions to “web zero” by the top of the century.

However oil and fuel corporations are among the many largest dividend payers, and main funds are reluctant to divest from them, arguing that by staying in they’re in a greater place to strain corporations to enhance.

“Do buyers have the information that we want? No, I don’t assume we’ve got the information that we want in any respect,” mentioned Nick Stansbury, funding strategist at British insurer Authorized & Common’s funding administration unit, Britain’s largest asset supervisor with round $1.three trillion below administration.

“Disclosure just isn’t essentially so we will search to vary the numbers, however so we will begin understanding and pricing the dangers,” Stansbury mentioned.

“A THOUSAND WAYS TO PARIS”

There are a lot of voluntary initiatives and frameworks to unify carbon accounting and goal setting; some overlap however none have been universally adopted. Additional tasks exist for different greenhouse gases reminiscent of methane.

The Greenhouse Fuel Protocol is one such set of requirements, established by non-governmental organizations and industrial teams within the 1990s.

Corporations can report their progress according to these requirements by way of non-profit CDP, previously often called the Carbon Disclosure Challenge, which then ranks them. Norway’s Equinor comes first in its listing of 24 oil main corporations, however not all of them report in yearly.

(GRAPHIC: Huge oil rating by the CDP – right here)

There’s additionally the Job Drive on Local weather associated Monetary Disclosures (TCFD), created by the G20’s Monetary Stability Board, in addition to business our bodies, in-house fashions at oil companies and banks and third-party verifiers and consultants.

“There are a thousand methods to Paris,” London-based BP’s Chief Govt Bob Dudley mentioned at a Chatham Home occasion earlier this yr referring to the 2015 accord aiming to maintain world warming properly beneath 2 levels.

BP Finance Chief Brian Gilvary advised Reuters BP would welcome extra consistency inside the sector to indicate what oil corporations are doing about emissions and that an business physique, the Oil and Fuel Local weather Initiative (OGCI), was discussing carbon accounting.

A plethora of third celebration ESG verifier corporations had been rising with various methods of measuring ESG metrics, he mentioned, including that some such companies would say to an oil firm, “We consider your rating is that this, and, by the best way, in case you spend $50,000 we’ll present you how one can enhance that rating.”

UBS, with $831 billion of invested property, has $2 billion in its Local weather Conscious passive fairness technique, which is partly primarily based on an organization’s emissions reporting.

In that technique “we tilt in the direction of corporations which are higher acting on a spread of local weather metrics and away from corporations that don’t carry out so properly on this respect,” Francis Condon, govt director for sustainable investing, mentioned.

“We don’t need to be accused of greenwashing or falling for it,” he mentioned, including that UBS commonly inspired corporations to organize for the local weather transition.

Utilizing a broad measure, world sustainable funding reached $30.1 trillion the world over’s 5 main markets on the finish of 2018, in keeping with the World Sustainable Funding Assessment. This equates to between 1 / 4 and half of all property below administration, as a consequence of various estimates of that determine.

Condon mentioned most buyers had been nonetheless extra centered on returns than wider sustainability standards however had been changing into involved that corporations could expose them to potential future climate-related monetary losses.

“There’s a very restricted urge for food for giving up efficiency for increased ESG. The query is extra: is administration taking over dangers it will possibly’t handle?”

To attempt to reply that query, the world’s largest monetary service suppliers are investing in corporations which offer ESG-related information.

This yr alone, Moody’s purchased Vigeo Eiris and 4 Twenty Seven, MSCI purchased Carbon Delta and the London Inventory Trade purchased Past Scores. S&P acquired Trucost in 2016.

Impartial local weather threat advisors Engaged Monitoring say they attracted two-thirds of their purchasers previously yr. All six corporations present information, assessments and consulting on the local weather publicity of corporations or bonds.

HOW TO COUNT

A central difficulty, mentioned at European oil majors’ shareholder conferences this yr, is how they cope with the emissions attributable to the merchandise they promote, reminiscent of gasoline or kerosene, that are often called Scope three emissions.

(GRAPHIC: Oil Majors’ Carbon emissions – right here)

Such emissions are usually round six occasions bigger than the mixed emissions from oil corporations’ direct operations and energy provide, also referred to as Scope 1 and a couple of emissions, in keeping with Reuters calculations.

Even when an organization publishes Scope three information, there are 15 completely different classes primarily based on the Greenhouse Fuel Protocol. These embrace use of bought merchandise reminiscent of gasoline alongside secondary elements reminiscent of enterprise journey or worker commuting.

Constantine Pretenteris at Engaged Monitoring mentioned some corporations achieved a excessive rating for comprehensiveness by disclosing information for a lot of the Scope three classes, however omitted the important thing ones, reminiscent of emissions from use of their gasoline.

“We’d like to see a basic commonplace which makes comparisons straightforward,” Sven Reinke of Moody’s mentioned. “It doesn’t totally exist as of late.”

RELATIVE OR ABSOLUTE

The vast majority of climate-related targets are primarily based on depth measures, which suggests absolute emissions can rise with rising manufacturing, even when the headline depth metric falls.

Complete recorded Scope three emissions from the world’s high public oil corporations are nonetheless rising, largely as a consequence of rising oil and fuel output, in keeping with Reuters calculations primarily based on information carried on Refinitiv’s Eikon platform and firm web sites.

They confirmed mixed Scope three emissions recorded by BP, Royal Dutch Shell, Exxon Mobil, ConocoPhillips’, Chevron, Eni, Complete, Equinor and Repsol rose round 1.6% over 2018, after a 1% related rise the earlier yr.

Particular person figures differ in keeping with the metrics an organization chooses to incorporate. Conoco mentioned its Scope three emissions had fallen 5%, whereas the opposite corporations’ particular person recorded Scope three emissions both rose or stayed roughly the identical.

Requested for remark, BP and Chevron pointed to absolute targets associated to their very own operations. Complete pointed to progress it had made in the direction of decreasing emissions depth per unit produced. Shell and Repsol referred to their short-term intensity-based targets and Equinor mentioned it couldn’t take accountability for emissions it doesn’t management.

U.S. agency Exxon didn’t reply to a request for remark. Eni had no fast remark.

Prime oil corporations have boosted funding in renewable vitality and low-carbon know-how lately, notably in Europe, however a lot larger sums are nonetheless going into growing oil and fuel.

“We can not change the patterns of consumption world wide – we can not make individuals fly much less. We are able to cut back the carbon depth of the merchandise we promote,” Shell Chief Govt Ben van Beurden mentioned in June.

Mark Lewis from BNP Paribas and a member of TCFD, mentioned total cuts had been what would depend ultimately. Repsol is at present the one main oil firm to have set absolute discount targets for all its output.

“The Paris Settlement is all a few carbon price range and that’s an absolute quantity. It’s not an depth quantity,” Lewis mentioned. “The environment works by way of absolutes not depth.”

Within the meantime, some buyers are avoiding oil corporations which others say needs to be supported for going additional than a lot of their friends.

London-based funding administration agency Sarasin & Companions mentioned in June it was promoting down its stake in Shell as a result of its spending plans had been out of synch with worldwide local weather targets.

Requested for remark, Shell pointed to feedback from representatives of the pension funds of the Church of England and Britain’s authorities Surroundings company, which praised the corporate’s transparency and mentioned others ought to comply with its lead.

(GRAPHIC: European Carbon costs – right here)

Modifying by Philippa Fletcher

Our Requirements:The Thomson Reuters Belief Rules.

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Exclusive: Repsol in advanced talks to buy Exxon assets in Gulf of Mexico – sources

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(Reuters) – Spanish oil giant Repsol SA is in advanced talks to acquire some deepwater assets in the U.S. Gulf of Mexico from Exxon Mobil Corp for about $1 billion, three people familiar with the matter said on Monday.

FILE PHOTO: An Exxon gas station is seen in Houston, Texas, U.S., April 30, 2019. REUTERS/Loren Elliott/File Photo

The deal would be a boon to Exxon’s plans to accelerate asset sales, as it seeks to raise cash to return to shareholders and fund major projects. Suppressed oil prices have weighed on the appetite of oil majors to buy such assets.

There is no certainty a deal will be agreed, the sources said. The transaction would require approval from partners in the assets, who may have preferential rights to buy them, said two of the sources.

The sources asked not to be identified because the matter is confidential. Representatives for Exxon and Repsol declined to comment.

Exxon began the process to jettison Gulf of Mexico assets last year with advice from JPMorgan Chase & Co, Reuters reported last October.

According to a document seen by Reuters dated Fall/Winter 2018, Exxon was marketing nine assets. These included its 50% stake in the large Julia oil field, which it operates, as well a 9.4% piece of the Heidelberg field and 23% of the Lucius oil and gas field, both of which are now operated by Occidental Petroleum Corp.

The exact number of assets that Exxon would sell to Repsol could not be learned.

The Irving, Texas-based company is trimming its portfolio to focus on promising acreage in offshore areas such as Guyana and Brazil, and onshore in the Permian Basin of Texas and New Mexico. This includes in the Gulf of Mexico, once considered a reliable basin for oil exploration and production.

Exxon’s Chief Executive Darren Woods said earlier this year the company was targeting $15 billion through 2021 from asset sales, although securing divestments has been difficult at a time when many oil developers, especially in the United States, are eschewing purchases to focus on existing portfolios.

However, the world’s largest publicly traded energy company said last week it was in exclusive talks with Var Energi in relation to Exxon’s Norwegian upstream assets, confirming a Reuters story that the duo were close to a $4 billion deal.

Reporting by David French and Jessica Resnick-Ault in New York; Additional reporting by Jennifer Hiller and Gary McWilliams in Houston; Editing by Lisa Shumaker

Our Standards:The Thomson Reuters Trust Principles.

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Exxon Mobil evacuates foreign staff from Iraqi oilfield: sources

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A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro, Brazil September 24, 2018. REUTERS/Sergio Moraes

DUBAI/BASRA, Iraq (Reuters) – Exxon Mobil has evacuated all of its foreign staff from Iraq’s West Qurna 1 oilfield and is flying them out to Dubai, three sources told Reuters on Saturday.

Production at the oilfield was not affected by the evacuation and work is continuing normally, overseen by Iraqi engineers, Iraqi oil officials said.

“Production is managed by Iraqi engineers anyway, the foreigners are advisers. We have a closed circuit television link with them (foreign staff) and can communicate with them whenever we need,” said an official at Iraq’s South Oil Company.

Staff were evacuated in several phases late on Friday and early on Saturday, either straight to Dubai or to the main camp housing foreign oil company employees in Basra province.

Those in the camp were en route to the airport on Saturday morning, the three sources – an employee at a security company contracted by Exxon, an Iraqi oil official, and a staff member of a foreign oil company – said.

“Last night 28 employees were evacuated to the airport and the rest were sent to the camp. This morning they were evacuated to the airport and no (foreign) staff remain in the field,” said a private security company official who oversaw the evacuation.

Days of saber rattling between Washington and Tehran have heightened tensions in the region amid concerns about a potential U.S.-Iran conflict.

The United States on Wednesday pulled non-emergency staff members from its embassy in the Iraqi capital Baghdad out of apparent concern about perceived threats from neighboring Iran, to which Iraqi Shi’ite militias are allied.

Washington has increased economic sanctions and built up its military presence in the region, accusing Iran of threats to U.S. troops and interests. Tehran has described those steps as “psychological warfare” and a “political game”.

Reporting by Hadeel Al Sayegh in Dubai and Aref Mohammed in Basra; Writing by Ahmed Aboulenein; Editing by Ros Russell

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From Paris to Omaha: How Occidental CEO out-maneuvered Chevron in Anadarko bid

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NEW YORK (Reuters) – Occidental Petroleum chief executive Vicki Hollub was caught off guard when U.S. oil giant Chevron swooped in last month with a $33 billion offer to buy Anadarko Petroleum, the oil and gas exploration and production firm she had been wooing for nearly two years.

FILE PHOTO: Vicki Hollub, President and CEO of Occidental Petroleum, speaks at the 2019 Milken Institute Global Conference in Beverly Hills, California, U.S., April 29, 2019. REUTERS/Lucy Nicholson/File Photo

Chevron, nearly five times larger than Occidental, appeared to have out-maneuvered its smaller rival. But on Sunday Hollub showed the fight was not over. After a whirlwind few days to raise more cash, Hollub offered a sweetened deal. By Thursday, Chevron had bowed out.

In edging out Chevron, Hollub leaned on global relationships and knowledge forged from 35 years in the oil industry, according to about a dozen people familiar with the talks leading up to the company’s latest offer.

Occidental had struggled to win over Anadarko because its first public $38 billion offer of 50 percent cash and 50 percent stock, as well as previous offers made privately, required the approval of Occidental shareholders, and Anadarko was not convinced they would go for the deal, two sources familiar with the discussions told Reuters.

Hollub knew she needed to substantially increase the cash offer – thereby making shareholder approval unnecessary – and moved swiftly to secure it, the sources said.

She was in Paris on April 26, just two weeks after Chevron’s announcement, and struck an $8.8 billion deal with French major Total SA to sell Anadarko assets her company didn’t yet own.

Two days later she was in Omaha, Nebraska, securing $10 billion in financing from billionaire investor Warren Buffett’s Berkshire Hathaway Inc, who typically does not partner with companies pursuing unsolicited takeovers.

Occidental declined to make Hollub available for an interview for this story. The company’s shares are down 9 percent since making their offer public in late April.

The combined company would establish Occidental as the largest operator in the Permian basin in west Texas and New Mexico, the heart of the U.S. shale revolution, where a boom in production has propelled the United States into becoming the world’s largest oil producer.

It would make Occidental the third-largest U.S. oil company with a market value of about $80 billion, dwarfed only by global giants Exxon Mobil and Chevron.

“She’s doing the boldest M&A thing that’s happened since the ‘80s,” said Amy Myers Jaffe, energy consultant and senior fellow at the Council on Foreign Relations. “You’re having an atypical M&A battle in a very competitive space where (usually) the bigger you are, the more you’re going to win.”

Hollub’s challenge has stunned an industry where the last attempt to break up an agreed-upon deal between two U.S. oil companies was in 1984 when Texaco challenged Pennzoil’s acquisition of Getty Oil.

It has also angered some Occidental investors who say Hollub is overstretching the company’s balance sheet in an ill-advised quest for size in a volatile industry.

“Our concern is the willingness of the management team at Occidental to cut very favorable deals against the interests of shareholders on a longer-term basis,” said John Linehan, portfolio manager at T. Rowe Price.

T. Rowe, the sixth-largest holder of Occidental shares, announced it would vote against the board of directors on the annual shareholder meeting Friday. But such a move may be mostly symbolic.

An Occidental spokesman declined to comment on the concerns but pointed to Hollub’s defense of her strategy that it was better to raise cash than issue new debt.

Hollub’s background in the technical aspects of oil production contrasts with her predecessor, a banker and known dealmaker. She has been described as down to earth by former and current employees, differing from flamboyant energy CEOs.

LONGTIME DISCUSSIONS

Buying Anadarko was seen as the best way for Occidental to gain more acreage in the Permian shale basin, where it markets nearly a quarter of all barrels produced in the region.

When Chevron announced a deal on April 12 to buy Anadarko, Hollub gathered the merger team. They were shocked that Anadarko had accepted a bid that was $11 per share below what Occidental had privately offered, three of the people familiar with the discussions said.

“She thought, we’re in it to win it. Let’s make our offer public so their shareholders know what they passed up,” one of the sources said.

In a letter to Anadarko’s board of directors on April 24, Occidental said they “were surprised and disappointed” that Anadarko had not agreed to their previous two offers in April.

Anadarko executives, however, remained concerned that Occidental shareholders could scuttle the deal, leaving them without a buyer, two sources familiar with the situation said. The board of directors wanted to stick with Chevron.

Just two days after sending the letter, Hollub was in Paris meeting with Total CEO Patrick Pouyanne to discuss Anadarko’s African assets, according to two sources familiar with the discussions.

The two already had a relationship stemming from the Dolphin Gas Project, a Middle East cross-border gas initiative where both companies have an equal share. Total had made it known to her that they coveted Anadarko’s properties, including a liquefied natural gas project in Mozambique.

“Vicki wanted to show that she could quickly put the cash on the table. In less than 10 days she had the cash ready,” a Paris-based source said.

Omaha, Nebraska was next. Buffett is known for moving quickly when a deal piques his interest, but he tends to avoid getting involved in hostile takeover bids.

The meeting was set up by BofA CEO Brian Moynihan, whose bank was helping to provide financing for the Anadarko deal. Hollub later said Buffett was “warm and wonderful” in their meeting, a source familiar with the discussions said.

Buffett, cash flush and on the hunt for new deals, agreed to provide $10 billion in financing in return for an 8 percent premium, a concern for dividend-focused shareholders who believe the terms are too pricey.

Slideshow (2 Images)

The two deals enabled Hollub to submit a revised offer on Sunday, increasing the cash component from 50 percent to 78 percent.

On Thursday, Chevron said it would collect its $1 billion termination fee and walk away from the negotiations.

(For a graphic on ‘Oxy-Anadarko would be third largest U.S. oil company’ click tmsnrt.rs/2VSZ3hY)

Reporting By Devika Krishna Kumar and Jessica Resnick Ault; additional reporting by David Gaffen, Bate Felix, David J. French, Jennifer Hiller, Jennifer Ablan; Writing by David Gaffen; Editing by Ross Colvin

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