Market volatility dictates a different approach for gas vs. oil. Herve Wilczynski and Al Escher

Size: px
Start display at page:

Download "Market volatility dictates a different approach for gas vs. oil. Herve Wilczynski and Al Escher"

Transcription

1 The North American gas market is structurally more volatile than the global oil market. While some companies have played the cycles brilliantly, the industry as a whole has much room for improvement. Traditional oil thinking is often the root of the problem. In contrast, leading companies have adopted practices around their capital deployment, internal capabilities and talent management that enable them to achieve better returns than their peers. This paper outlines the various approaches and benefits used by industry leaders to manage the highly volatile North American gas market. Herve Wilczynski and Al Escher Figure 1. Historical spot market volatility for selected commodities Average Annual Volatility, % Natural gas behaves more like agricultural commodities Natural Gas Cotton Pork Bellies Source: EIA, Derivatives and Commodity Futures Trading Commission, SBC Analysis Light Sweet Crude Market volatility dictates a different approach for gas vs. oil The oil and gas exploration and production industry (E&P) is certainly used to cycles, even extreme cycles, in activity. The industry also has become used to oil and gas price variations being somewhat out of phase as oil has become a global commodity and gas remains a regional commodity, and there is relatively little switchable demand. However, looking more closely at the difference between global oil and North American gas, the issue is not simply that the cycles do not always coincide. North American gas follows a fundamentally different kind of dynamic, behaving more like an agricultural commodity than like oil. Certainly the results of the recent gas cycle bear witness to a need to re-think how companies manage their North American gas E&P businesses. We need a bit less oil thinking. The big difference in the cycle for oil vs. North American gas is that gas is much more volatile. Of course, the value of oil used in North America is still much higher than the value of gas, so the oil cycle attracts more attention from the media and even Congress. There were Congressional hearings when gasoline went over $ per gallon in 008, but no similar hearings when natural gas went above $1 per MMBtu. But from a producer s perspective, gas prices are twice as volatile as oil prices, putting gas on a par with commodities like cotton and pork bellies (Figure 1). In comparison, the oil business looks staid and predictable! 1

2 Figure. North American Gas Pricing Mechanics The higher volatility of North American gas markets compared to global oil markets is a long term phenomenon, and seems to be structural. Low cost of entry: Companies can enter, or increase their exposure to the North American gas market for a few million, or a few tens of millions of dollars. In contrast, the cost to enter or ramp up in the global oil market, with its larger, mostly offshore or Arctic investments, is easily in the billions of dollars. So, gas is 100 times easier to enter compared to oil. This attracts more players to North American gas 100 s or 1000 s compared to more like 10 s of major companies in the global oil markets. And it means that the gas market has many players who can respond quickly, for example if prices are above long term averages. Time to add capacity: Capacity to produce North American gas, especially onshore and on the Gulf of Mexico shelf, can move from concept to production in under a year. In contrast, oil-related mega-projects take a decade or more to go through the same process. As a result, the gas market can respond much more quickly when prices are above long term averages. Turndown potential: As we have seen during Q 008 and YTD 009, the North American gas industry can shut down roughly /3 of expansion capacity in a matter of months. In contrast, longer term oil projects will tend to remain funded through price cycles, unless the cycle extends through many years. This means that the gas industry $ per MMBtu can turn down capacity much faster. Further, the higher average decline rates of North American gas wells vs. global oil fields means that production rates will fall even more sharply as drilling activity declines. Industry governance: OPEC has a long term interest in the stability of global oil markets, and has shown the willingness and the ability to add incremental production when prices are high, and the discipline to withdraw production when prices are depressed. There is no corresponding group governing North American gas production. Long run price needed to add capacity Development Costs Short run price needed to keep producing (Lifting Costs) Access to Resources: Much like the agricultural industry can increase planted acreage when prices of, for example corn, are high, the North American gas industry is relatively open in terms of access. Granted there are environmental and other restrictions, but they do not impede the market enough to effectively restrict supply. In contrast, access to oil resources is heavily regulated and restricted by governments. So, companies H1 008 price was unsustainable Note: Henry Hub used for historical spot price. Source: EIA, SBC analysis. can respond to changes in North American gas prices in a way that is much more muted with oil. Technology: Tremendous innovations have affected recovery for both oil and gas. Most innovations affecting oil, like deepwater and subsea systems, and improved reservoir management and pressure maintenance techniques, tend to impact feasibility and long term recovery rates. In contrast, most technological innovations affecting gas tend to impact initial production rates, especially completion and stimulation techniques. This difference creates a stronger link between technical innovation and near-term market prices for gas. H1009 price also unsustainable Other external factors such as alternative sources of gas supplies or changes in taxation can add to price volatility For example, the flow of LNG and associated gas can disrupt the supply and demand balance in North America depending on macro trends

3 such as gas consumption in Europe and Asia, These structural factors increase the volatility especially since LNG shipments to North America of the North American gas market. Gas players will be a last stop for unwanted gas that can take quick action when North American gas be priced at variable cost. Another example of prices are away from equilibrium, driving the possible disruption is the current push from the market back and frequently through an Obama administration to raise fees and taxes for equilibrium point (Figure ). gas producers. The ability of the US government The supply response, especially on the downside, can be dramatic. Figure 3 below shows to artificially dampen oil market investment is much less, as most domestic drilling activity is for that the rig count closely mirrors the gas prices with a short time lag of 3 months, just like gas rather than oil. during Figure 3. Conservative drops in price and activity in North American gas. Price Index, Peak = % 0% Month from Peak 10% 0% % -0% Rig Drop % -0% Rig Drop % -60% Price Drop % Price Drop % Note: 001 gas price peak in April, 008 gas price peak in June Source: EIA, SBC analysis Figure. Typical gas strip price projections $ per MMBtu 5 3 While some companies have played the North American gas cycle brilliantly, overall the industry has plenty of room for improvement. The current overhang of inactive leases in danger of relinquishment and the inventory of drilled but uncompleted wells are evidence of overshooting the peak when prices were high. Even concerns about HSE are linked to the cycle 1. And the long term lack of technical professionals is evidence that market volatility is encouraging individual behavior that is detrimental to the industry, but for which the industry seems to have few answers. Finally, the financial distress of many companies is clear evidence that the industry has not sufficiently factored in the extreme cyclicality of the North American gas markets. Clearly, the industry overall is struggling to deal effectively with this volatility. At least some of these issues seem to be rooted in oil thinking. At one level, this should not surprise us since the ratio in value of oil to gas produced globally is 8-10 (we still call it the oil industry for a reason). So, many processes have been oriented around oil. For example, companies generally maintain a price strip for gas that looks much like an oil price strip (Figure ). This kind of gradual reversion to long term equilibrium is at odds with how the North American gas market has worked in practice. Even the curriculum of petroleum engineering programs, the background of many industry Source: Company interviews; SBC Analysis 3

4 executives, is tilted toward oil. So, how might companies start to re-think their approach to the gas business in light of a product that behaves more like an agricultural commodity? Planning: Oil focused companies can afford to plan in over a time horizon of a year or even many years. In contrast, gas companies need a more dynamic way of allocating capital as rapidly changing economic cycles might dictate different moves (e.g. focus on reserve addition, increase production, fast track development). Often, capital allocation should be revisited several times each year. Capital discipline Alarms: Companies should agree on and monitor an equilibrium range for gas prices, and move away from the herd when prices are outside the envelope. This means slowing activity when prices are above equilibrium and ramping up (land acquisition, for example) when prices are below it. The reasoning behind this is more farm-thinking than oil-thinking. The amount of acreage under gas will expand and contract rapidly, and supply with it. Once management convinces itself of this, high-price periods become times to build cash and low-price periods a time to invest some of this cash for the next cycle. The equilibrium range itself will vary with tax rates and regulation, and with changes in technology. Resilience Lever down the Balance Sheet: Many companies borrowed aggressively over the past few years to build their gas production base. But with volatility more like agricultural commodities, it may make sense for companies to consider levering down their balance sheets. Hedging: Hedging (just as partnering or other risk management tools) is of course a familiar tactic, but is used inconsistently across the industry as hedging levels vary from zero to 100%. Again looking to agricultural producers for a benchmark, about 50% of most commodities are hedged annually. If North American gas companies believed in the farm model they would hedge a healthy portion of production both in good times and bad. Cost efficient and scalable processes: Cost efficiency and business scalability are at the heart of the lean manufacturing management philosophy. This time tested approach has been adopted successfully by a number of industries and has led to more economically resilient organizations 3. It is now successfully adopted by E&P leaders as way to manage the volatility of the NA gas market. The hallmark of the lean application to gas is the adoption of factory-like models where well sites are permitted, constructed, drilled, completed and tied in following a continuous and balanced flow of activities, thus allowing for effective labor and equipment utilization (up to 0% reduction in unit cost) and a significant faster time to production (up to 50% faster). Similarly, adoption of lean practices in conjunction with subsurface optimization can lead to 5 to 10% in production uptakes for producing assets. Simplified technical design: Gas wells typically do not require extensive customization. In fact, experience shows that in some cases 80% of the well design can be standard for a given play. As described in the Schlumberger Business Consulting publication Unconventional gas asset challenge conventional filed development, a wellstructured Continuous Design Improvement process, can focus on the 0% customization that matters to increase the profitability of a play. This can lead to significant reduction in cost (fewer engineering hours, reduced inventory, scale purchases) as well as opportunities to re-use equipment for new wells. De-risk commitments: Lease structure and supply chain are two examples of long term commitments that can be de-risked using novel approaches. For example, building mineral leases that take greater account of volatility would of course require market acceptance. However, the current downturn might be a good time to try terms that, for example, shorten leases during high price times and lengthen them during low price periods. The same is true for supply chain where contract terms can help achieve a more equitable risk sharing system between suppliers and producers, providing stability to both parties during up and down cycles. Accelerating people development: Operating in a volatile environment has far reaching implications for a company s human resources as the profile required

5 puts a premium on adaptability. Getting this right now is key, as the industry is pursuing an aggressive recruiting effort to compensate for talent loss due to the aging population. Traditionally, oil and gas companies spend up to 10 years developing autonomous technical professionals. In a volatile industry where technology innovation unlocks new types of reserves quite rapidly (conventional, CBM, tight gas, shale), being able to build competency fast is necessary. In fact, some leading practices are now capable to develop technical professional capable of making reliable original, non standard decision on their own within 3 to years. Implications While many companies employ some aspect of these tools, applying them systematically for a structurally volatile, ag-like market is less common. Figure 5. Gas versus oil thinking. Levers Capital deployment Internal capabilities Human resource management Gas thinking best practices Frequent planning to adjust to shifting market condition Capital discipline to avoid speculative or overly risky investments Resilient capital structure to make it through cycles Cost efficient and scalable processes to adjust to cycles Simplified technical design to reduce engineering and supply chain complexity De-risked external commitments Information technology focused on rapid operational decision and intervention Deployed against large capital investment Functionally aligned competency model Accelerated on-boarding of new talent to provide autonomy faster Traditional oil thinking Structured around long term bets Concentrated around fewer big projects or assets Traditionally cash rich companies are able to weather short term cycles Rigid processes focused on managing risks associated with large bets Custom technical design to deal with increasing asset complexity Information technology traditionally aimed at automating tasks and managing business data (financials, HR) Flexible competency model for easy redeployment of resources Accelerated on-boarding of new talent to provide autonomy faster The difference between industry leaders and others resides in the fact the former make deliberate, long term, choices around the strategy to deploy capital and the type of internal capabilities they need. Clearly there is not one answer, as various companies elect to follow different paths based on their portfolio, capital structure, and reputation with the financial market. However, looking at a representative sample of companies with a strong focus on North American gas, over the past 10 years top quartile companies typically achieve returns 5 to 10% higher than their peers. These industry leaders share a common characteristic around low cost and scalable capabilities (process and people), allowing them to preserve cash in down cycle and harvest the benefits during boom times. Some have specialized in the application of technology while others have excelled at setting alarms so they tend to buy low and sell high. A common thread is a truly customized gas approach to the business a clear divorce from oil thinking. (Figure 5). The differences between the oil and North American gas markets also have implications for major companies. Companies with a large diversified portfolio need to have different business models for oil and for North American gas. Capital budgeting, internal processes, M&A approach, and treasury, all need to be adjusted according to a different risk profile and market dynamics. They will need this to compete with the more nimble style of independent companies as all players improve their skills in this volatile market. 5

6 Summary Natural gas is a core fuel for the North American economy. This is likely to continue as concerns about carbon emissions and a desire for increased reliance on indigenous sources of energy are playing a larger role in the public debate. In this context, US gas producers have a great long-term opportunity, but the rules of the game can be tricky. Too many factors are in play to accurately forecast North American gas prices. In fact, volatility is likely to be the norm, with alternating periods of prices above and below long-term sustainable levels. Structurally building flexibility in the business model is the safest way to succeed in such an environment. Contacts: Al Escher Director, North and South America Herve Wilczynski Vice President, North and South America Schlumberger is the leading oilfield services provider, trusted to deliver superior results and improved exploration and production performance for oil and gas companies around the world. Through our wellsite operations and in our research and engineering facilities, we are working to develop products, services and solutions that optimize customer performance in a safe and environmentally sound manner. Knowledge, technical innovation and teamwork are at the center of who we are. Schlumberger employs more than 76,000 people of over 10 nationalities working in more than 80 countries. Schlumberger Business Consulting is the management consulting arm of Schlumberger. 1 nd Annual IPTC Conference summary, as reported in Journal of Petroleum Technology, February 008 Midwest Market Solutions, a leading agricultural hedging research and advisory firm, January 8, As reported in the March 9, 009 edition of the Wall Street Journal Schlumberger Business Consulting Annual HR survey, 008 6

Unconventional oil and gas: outlook, risks, and potential

Unconventional oil and gas: outlook, risks, and potential 20140519_SBC_International Energy Forum - Paper_v05 Unconventional oil and gas: outlook, risks, and potential May 2014 Moscow Table of Contents KEY INSIGHTS... 2 1. UNCONVENTIONAL RESOURCES ARE SIZEABLE

More information

Natural Gas: Winter 2012-13 Abundance! and Some Confusion

Natural Gas: Winter 2012-13 Abundance! and Some Confusion Natural Gas: Winter 2012-13 Abundance! and Some Confusion NASEO Winter Fuels Outlook Washington, D.C. October 10, 2012 Bruce B. Henning Vice President, Energy Regulatory and Market Analysis BHenning@icfi.com

More information

On October 21, 2008, the Federal Reserve

On October 21, 2008, the Federal Reserve Anticipated Recession Effects Gas Prices Natural Gas Prices in a Recession This is a preprint of an article published in Natural Gas & Electricity 2008, Dec., Wiley Periodicals, Inc. http://www3.interscience.wiley.com/cgi-bin/jhome/105559587

More information

Sourcing critical oil field services for shale plays in a tightening supply market

Sourcing critical oil field services for shale plays in a tightening supply market Sourcing critical oil field services for shale plays in a tightening supply market Successful operators are responding to the market by adopting a more strategic view of the role of their supply management

More information

Low Price Environment and the Impact on Unconventional Resource Developments

Low Price Environment and the Impact on Unconventional Resource Developments Low Price Environment and the Impact on Unconventional Resource Developments Mark Nelson Vice President Commercial & Communications ConocoPhillips China October 16, 2015 Cautionary Statement The following

More information

The Truth About America s Energy: Big Oil Stockpiles Supplies and Pockets Profits

The Truth About America s Energy: Big Oil Stockpiles Supplies and Pockets Profits Introduction The Truth About America s Energy: Big Oil Stockpiles Supplies and Pockets Profits A Special Report by the Committee on Natural Resources Majority Staff June 2008 While the oil industry and

More information

Brisbane Mining Club June Lunch 2014 David Knox Managing Director & CEO, Santos Limited

Brisbane Mining Club June Lunch 2014 David Knox Managing Director & CEO, Santos Limited Brisbane Mining Club June Lunch 2014 David Knox Managing Director & CEO, Santos Limited Thursday, 5 June Brisbane Ladies and Gentlemen Thank you for inviting me here today. Today I want to talk to you

More information

Recent Oil-Market Developments: Causes and Implications

Recent Oil-Market Developments: Causes and Implications Recent Oil-Market Developments: Causes and Implications Statement of Professor Robert J. Weiner Professor of International Business, Public Policy & Public Administration, and International Affairs, George

More information

Energy OIL S WILD RIDE DRIVING VALUE FROM THE SUPPLY CHAIN AUTHORS. Keric Morris, Partner Curt Underwood, Partner Bob Peterson, Partner

Energy OIL S WILD RIDE DRIVING VALUE FROM THE SUPPLY CHAIN AUTHORS. Keric Morris, Partner Curt Underwood, Partner Bob Peterson, Partner Energy OIL S WILD RIDE DRIVING VALUE FROM THE SUPPLY CHAIN AUTHORS Keric Morris, Partner Curt Underwood, Partner Bob Peterson, Partner TAMING THE SUPPLY CHAIN The recent decline in oil prices has begun

More information

Natural Gas Prices and LNG's Dirty Little Secret

Natural Gas Prices and LNG's Dirty Little Secret Natural Gas Prices and LNG's Dirty Little Secret by G. Allen Brooks Parks Paton Hoepfl & Brown Musings from the Oil Patch Optimism about the ending of the U.S. recession and its impact on future demand

More information

The 2024 prospects for EU agricultural markets: drivers and uncertainties. Tassos Haniotis

The 2024 prospects for EU agricultural markets: drivers and uncertainties. Tassos Haniotis 1. Introduction The 2024 prospects for EU agricultural markets: drivers and uncertainties Tassos Haniotis Director of Economic Analysis, Perspectives and Evaluations; Communication DG Agriculture and Rural

More information

NATURAL GAS PRICES TO REMAIN AT HIGHER LEVELS

NATURAL GAS PRICES TO REMAIN AT HIGHER LEVELS I. Summary NATURAL GAS PRICES TO REMAIN AT HIGHER LEVELS This brief white paper on natural gas prices is intended to discuss the continued and sustained level of natural gas prices at overall higher levels.

More information

Oil Companies Capital Expenditure : Business Cycle Perspective

Oil Companies Capital Expenditure : Business Cycle Perspective 15 th U.S. China Oil & Gas Industry Forum Oil Companies Capital Expenditure : Business Cycle Perspective China National Petroleum Corporation: Zhen WANG September 17, 2015 Outline Business Cycle, Oil Price

More information

2015 JET FUEL PRICE FORECAST

2015 JET FUEL PRICE FORECAST 2015 JET FUEL PRICE FORECAST Airlines The prospects for airlines are dependant on economic recovery. There is little to indicate an early end to the downturn. It will be a grim 2009. And while prospects

More information

22 nd WPC Topic Descriptions

22 nd WPC Topic Descriptions 22 nd WPC Topic Descriptions BLOCK 1: Exploration and Production of Oil and Gas FORUMS: F1 Exploration challenges how to reduce risk F2 Unconventional hydrocarbon resource development North American phenomena

More information

The Outlook for Nuclear Energy In a Competitive Electricity Business

The Outlook for Nuclear Energy In a Competitive Electricity Business 1776 I STREET N.W. SUITE 400 WASHINGTON, D.C. 20006 202.739.8000 The Outlook for Nuclear Energy In a Competitive Electricity Business Executive Summary: Nuclear Units Competitive, Profitable in Deregulated

More information

Schlumberger and Cameron Conference Call August 26, 2015

Schlumberger and Cameron Conference Call August 26, 2015 Simon Farrant, Schlumberger Vice President of Investor Relations Thank you for joining us on this conference call. Some of the statements we will be making today are forward-looking. These matters involve

More information

Hedging Natural Gas Prices

Hedging Natural Gas Prices Hedging Natural Gas Prices Luke Miller Assistant Professor of Finance Office of Economic Analysis & Business Research School of Business Administration Fort Lewis College Natural Gas Industry U.S. natural

More information

Displacement of Coal with Natural Gas to Generate Electricity

Displacement of Coal with Natural Gas to Generate Electricity Displacement of Coal with Natural Gas to Generate Electricity The American Coalition for Clean Coal Electricity (ACCCE) supports a balanced energy strategy that will ensure affordable and reliable energy,

More information

Retailers Discover New Ways to Drive Consistent Margins on Fuel Sales

Retailers Discover New Ways to Drive Consistent Margins on Fuel Sales Retailers Discover New Ways to Drive Consistent Margins on Fuel Sales Improving gasoline margins and throughput volumes remain top-of-mind for convenience store operators, high-volume retailers and grocers

More information

Short-Term Energy Outlook Market Prices and Uncertainty Report

Short-Term Energy Outlook Market Prices and Uncertainty Report February 2016 Short-Term Energy Outlook Market Prices and Uncertainty Report Crude Oil Prices: The North Sea Brent front month futures price settled at $34.46/b on February 4 $2.76 per barrel (b) below

More information

NATion and north carolina

NATion and north carolina Energy Challenges for the NATion and north carolina NOIA s mission is to secure reliable access to the nation s valuable offshore energy resources in order that they may be developed, produced and supplied

More information

Oil and Gas Price Forecast Update: Where are Oil and Gas Prices Heading?

Oil and Gas Price Forecast Update: Where are Oil and Gas Prices Heading? RESERVOIR ENGINEERING SOFTWARE & SERVICES Oil and Gas Price Forecast Update: Where are Oil and Gas Prices Heading? Dale Struksnes, Manager - Reserve Evaluations April 13, 2010 Media Commentary on Oil and

More information

Unlocking your Data to Improve Performance in the Shale. Fred Kunzinger Upstream Practice Lead ECIM 2014

Unlocking your Data to Improve Performance in the Shale. Fred Kunzinger Upstream Practice Lead ECIM 2014 Unlocking your Data to Improve Performance in the Shale Fred Kunzinger Upstream Practice Lead ECIM 2014 Agenda Conventional vs. Unconventional The Rise of the Unconventional Play Challenges in the Shale

More information

LNG Poised to Significantly Increase its Share of Global Gas Market David Wood February 2004 Petroleum Review p.38-39

LNG Poised to Significantly Increase its Share of Global Gas Market David Wood February 2004 Petroleum Review p.38-39 LNG Poised to Significantly Increase its Share of Global Gas Market David Wood February 2004 Petroleum Review p.38-39 For the past few years LNG has experienced high levels of activity and investment in

More information

Oil and Natural Gas Outlook: Implications for Alaska The Alliance Meet Alaska. Remarks by Marianne Kah Chief Economist

Oil and Natural Gas Outlook: Implications for Alaska The Alliance Meet Alaska. Remarks by Marianne Kah Chief Economist Oil and Natural Gas Outlook: Implications for Alaska The Alliance Meet Alaska Remarks by Marianne Kah Chief Economist Cautionary Statement The following presentation includes forward-looking statements.

More information

June 30, 2009 DK EQUITY GROWTH FUND

June 30, 2009 DK EQUITY GROWTH FUND June 30, 2009 DK EQUITY GROWTH FUND DK EQUITY GROWTH FUND Quarterly Review June 30, 2009 Rates of Return 1 3 Mths YTD 1 Yr 2 Yrs 3 Yrs 4 Yrs 5 Yrs 10 Yrs Since Inception March 31,1993 DK Equity Growth

More information

Tapping the benefits of business analytics and optimization

Tapping the benefits of business analytics and optimization IBM Sales and Distribution Chemicals and Petroleum White Paper Tapping the benefits of business analytics and optimization A rich source of intelligence for the chemicals and petroleum industries 2 Tapping

More information

LEE BUSI N ESS SCHOOL UNITED STATES QUARTERLY ECONOMIC FORECAST. U.S. Economic Growth to Accelerate. Chart 1. Growth Rate of U.S.

LEE BUSI N ESS SCHOOL UNITED STATES QUARTERLY ECONOMIC FORECAST. U.S. Economic Growth to Accelerate. Chart 1. Growth Rate of U.S. CENTER FOR BUSINESS & ECONOMIC RESEARCH LEE BUSI N ESS SCHOOL UNITED STATES QUARTERLY ECONOMIC FORECAST O U.S. Economic Growth to Accelerate ver the past few years, U.S. economic activity has remained

More information

Energy Projections 2006 2030 Price and Policy Considerations. Dr. Randy Hudson Oak Ridge National Laboratory

Energy Projections 2006 2030 Price and Policy Considerations. Dr. Randy Hudson Oak Ridge National Laboratory Energy Projections 2006 2030 Price and Policy Considerations Dr. Randy Hudson Oak Ridge National Laboratory There is perhaps no single current topic so potentially impacting to all life on this planet

More information

Falling Oil Prices and US Economic Activity: Implications for the Future

Falling Oil Prices and US Economic Activity: Implications for the Future Date Issue Brief # I S S U E B R I E F Falling Oil Prices and US Economic Activity: Implications for the Future Stephen P.A. Brown December 2014 Issue Brief 14-06 Resources for the Future Resources for

More information

CBRE CLARION SECURITIES MLPs OIL & GAS DRILLING TECHNOLOGY LEADS TO EFFICIENCY GAINS

CBRE CLARION SECURITIES MLPs OIL & GAS DRILLING TECHNOLOGY LEADS TO EFFICIENCY GAINS CBRE CLARION SECURITIES MLPs OIL & GAS DRILLING TECHNOLOGY LEADS TO EFFICIENCY GAINS MARCH 2015 Jeremy Anagnos, CFA Senior Global Portfolio Manager Hinds Howard Associate Portfolio Manager EXECUTIVE SUMMARY

More information

Who Will Lose if Natural Gas Prices Keep Falling?

Who Will Lose if Natural Gas Prices Keep Falling? WWW.IBISWORLD.COM March 2013 1 March 2013 Who Will Lose if Natural Gas Prices Keep Falling? By Tony Danova A drop in prices would have uneven effects across the supply chain, with those farthest down the

More information

Oil and Gas Prices. Oil and Gas Investor Summit London 17th-18th June 2014

Oil and Gas Prices. Oil and Gas Investor Summit London 17th-18th June 2014 Oil and Gas Prices Oil and Gas Investor Summit London 17th-18th June 2014 Oil Price Drowning in oil Economist, March 1999 $10 oil might actually be too optimistic. We may be heading for $5. Crude touches

More information

Preparing for Changes in Market Design

Preparing for Changes in Market Design Preparing for Changes in Market Design EMART Conference Didier Lebout, Strategy and Development Director Gazprom Marketing and Trading France Amsterdam, 21 November 2012 In this presentation GM&T Ltd:

More information

U.S. Crude Oil and Natural Gas Production in Federal and Non-Federal Areas

U.S. Crude Oil and Natural Gas Production in Federal and Non-Federal Areas U.S. Crude Oil and Natural Gas Production in Federal and Non-Federal Areas Marc Humphries Specialist in Energy Policy April 10, 2014 Congressional Research Service 7-5700 www.crs.gov R42432 Summary In

More information

JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY RICE UNIVERSITY

JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY RICE UNIVERSITY JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY RICE UNIVERSITY Testimony of Kenneth B. Medlock III, PhD James A. Baker, III, and Susan G. Baker Fellow in Energy and Resource Economics, and Senior Director,

More information

STEO Supplement: Why are oil prices so high?

STEO Supplement: Why are oil prices so high? STEO Supplement: Why are oil prices so high? During most of the 1990s, the West Texas Intermediate (WTI) crude oil price averaged close to $20 per barrel, before plunging to almost $10 per barrel in late

More information

Unconventional Oil and Gas Production Drives Trends in Water Management and Treatment

Unconventional Oil and Gas Production Drives Trends in Water Management and Treatment Unconventional Oil and Gas Production Drives Trends in Water Management and Treatment Jelena Stanic, Global Water Intelligence A research report, Water for the Onshore Oil and Gas, by Global Water Intelligence

More information

U.S. Shale Plays. After The Gold Rush: A Perspective on Future U.S. Natural Gas Supply and Price. Arthur E. Berman

U.S. Shale Plays. After The Gold Rush: A Perspective on Future U.S. Natural Gas Supply and Price. Arthur E. Berman U.S. Shale Plays After The Gold Rush: A Perspective on Future U.S. Natural Gas Supply and Price Arthur E. Berman Labyrinth Consulting Services, Inc. ASPO Conference 2012 Vienna, Austria May 30, 2012 Slide

More information

How Do Energy Suppliers Make Money? Copyright 2015. Solomon Energy. All Rights Reserved.

How Do Energy Suppliers Make Money? Copyright 2015. Solomon Energy. All Rights Reserved. Bills for electricity and natural gas can be a very high proportion of a company and household budget. Accordingly, the way in which commodity prices are set is of material importance to most consumers.

More information

Whither Oil Prices and Volatility?

Whither Oil Prices and Volatility? OIL PRICE VOLATILITY What Do We Know? Robert J. Weiner Professor of International Business, Public Policy & Public Administration, and International Affairs, George Washington University Membre Associé,,

More information

Daniel Smith/Corbis 32

Daniel Smith/Corbis 32 32 Daniel Smith/Corbis MONEY for NOTHING The Case for Eliminating US Fossil Fuel Subsidies Special tax provisions subsidize US oil, gas, and coal companies to the tune of $4.9 billion a year but have little

More information

Oil Market Outlook. March 2016. Compiled by Dr Jeremy Wakeford

Oil Market Outlook. March 2016. Compiled by Dr Jeremy Wakeford Oil Market Outlook March 2016 Compiled by Dr Jeremy Wakeford Highlights Oil prices have remained very weak in recent months, with the Brent benchmark averaging $31/bbl in January and $32/bbl in February

More information

Expanding Natural Gas Service: Opportunities for American Homes and Business

Expanding Natural Gas Service: Opportunities for American Homes and Business Expanding Natural Gas Service: Opportunities for American Homes and Business NARUC Staff Subcommittee on Gas Washington, D.C. February 3, 2013 Bruce B. Henning Vice President, Energy Regulatory and Market

More information

The Future of Energy in Louisiana! March 2014

The Future of Energy in Louisiana! March 2014 The Future of Energy in Louisiana! March 2014 1! GNO, Inc. Overview! GNO, Inc. is the economic development organization serving the ten parishes of Southeast Louisiana.! Logo! Business Development! Business

More information

ARE YOU TAKING THE WRONG FX RISK? Focusing on transaction risks may be a mistake. Structural and portfolio risks require more than hedging

ARE YOU TAKING THE WRONG FX RISK? Focusing on transaction risks may be a mistake. Structural and portfolio risks require more than hedging ARE YOU TAKING THE WRONG FX RISK? Focusing on transaction risks may be a mistake Structural and portfolio risks require more than hedging Companies need to understand not just correlate the relationship

More information

ICC 105 19 Rev. 1. 16 October 2012 Original: English. International Coffee Council 109 th Session 24 28 September 2012 London, United Kingdom

ICC 105 19 Rev. 1. 16 October 2012 Original: English. International Coffee Council 109 th Session 24 28 September 2012 London, United Kingdom ICC 105 19 Rev. 1 16 October 2012 Original: English E International Coffee Council 109 th Session 24 28 September 2012 London, United Kingdom Strategic action plan for the International Coffee Organization

More information

Energy Prices. Presented by: John Heffernan

Energy Prices. Presented by: John Heffernan Global Wholesale Energy Prices Presented by: John Heffernan Energy in 2012 In 2012, the growth in Energy consumption slowed in 2012 90% of this growth came from China & India Consumption & production of

More information

The Challenges in the Oil and Gas Industry through the HR Lens

The Challenges in the Oil and Gas Industry through the HR Lens The Challenges in the Oil and Gas Industry through the HR Lens Darwin, Australia 19 July, 2012 Presenter: Philip Askew Vice President, Australasia 0 By 2015, E&P industry will have achieved its crew change

More information

THE GOVERNMENT THE FEDERAL REPUBLIC OF NIGERIA

THE GOVERNMENT THE FEDERAL REPUBLIC OF NIGERIA THE GOVERNMENT OF THE FEDERAL REPUBLIC OF NIGERIA ----------------------------------------------------------------------- THE NATIONAL GAS SUPPLY AND PRICING POLICY -----------------------------------------------------------------------

More information

Short-Term Energy Outlook

Short-Term Energy Outlook November 2012 Short-Term Energy Outlook Hurricane Sandy resulted in the loss of electric power to about 8.5 million customers on the East Coast and the shutdown of two refineries, major petroleum distribution

More information

First Quarter 2015 Earnings Conference Call. 20 February 2015

First Quarter 2015 Earnings Conference Call. 20 February 2015 First Quarter 2015 Earnings Conference Call 20 February 2015 Safe Harbor Statement & Disclosures The earnings call and accompanying material include forward-looking comments and information concerning

More information

GDF SUEZ. Introduction. Jean-François Cirelli

GDF SUEZ. Introduction. Jean-François Cirelli GDF SUEZ Introduction Jean-François Cirelli Content 1. Focus on gas market dynamics 2. Focus on electricity market dynamics 3. Focus on P&L resilience and sensitivities 4. Focus on synergies and performance

More information

2014 Annual General Meeting. 23 October 2014

2014 Annual General Meeting. 23 October 2014 2014 Annual General Meeting 23 October 2014 Disclaimer This presentation has been prepared by SKILLED Group Limited (ASX:SKE). The information contained in this presentation is of a general nature only,

More information

Q2 2015 Earnings Conference Call. July 30, 2015

Q2 2015 Earnings Conference Call. July 30, 2015 Q2 2015 Earnings Conference Call July 30, 2015 Industry Data and Forward-Looking Statements Disclaimer Broadwind obtained the industry and market data used throughout this presentation from our own research,

More information

September 2013 Harvard Management Company Endowment Report Message from the CEO

September 2013 Harvard Management Company Endowment Report Message from the CEO Introduction For the fiscal year ended June 30, 2013 the return on the Harvard endowment was 11.3% and the endowment was valued at $32.7 billion. The return exceeded our benchmark by a healthy 223 basis

More information

Creating more Value out of Storage

Creating more Value out of Storage Creating more Value out of Storage By Gary Howorth, Founder Energy-Redefined Introduction Gas Storage is a complicated business which carries with it large risks and potentially low rewards. Assets can

More information

Talisman Energy Inc. Transcript from the Q1 Results Analyst Call May 1, 2013

Talisman Energy Inc. Transcript from the Q1 Results Analyst Call May 1, 2013 Talisman Energy Inc. Transcript from the Q1 Results Analyst Call May 1, 2013 Please refer to Talisman s advisories in the May 1, 2013 news release re: forward-looking statements and non-gaap measures.

More information

Australia s Natural Gas Opportunity: Fuelling A Manufacturing Renaissance

Australia s Natural Gas Opportunity: Fuelling A Manufacturing Renaissance Australia s Natural Gas Opportunity: Fuelling A Manufacturing Renaissance Fact Sheet 1: September 2012 Supply Constraints Ahead for Gas Natural gas is essential for Australian industry. It is used as an

More information

THREATS TO INCREASE ENERGY PRICES SHORT AND LONG TERM

THREATS TO INCREASE ENERGY PRICES SHORT AND LONG TERM THREATS TO INCREASE ENERGY PRICES SHORT AND LONG TERM As discussed in a recent CES energy update energy prices increased in 2010 by 17 % after reaching 7 year lows in 2009 due to the recession. Energy

More information

WP-07 Power Rate Case Workshop

WP-07 Power Rate Case Workshop WP-07 Power Rate Case Workshop Date of Workshop: Topic(s): , Overview Results BPA price forecast and comparison with other forecasts Assumptions Supply and demand fundamentals for the short / medium /

More information

About Hedge Funds. What is a Hedge Fund?

About Hedge Funds. What is a Hedge Fund? About Hedge Funds What is a Hedge Fund? A hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds, and invest in almost

More information

Energy BUSINESS PLAN 2015 18 ACCOUNTABILITY STATEMENT THE MINISTRY LINK TO GOVERNMENT OF ALBERTA STRATEGIC DIRECTION

Energy BUSINESS PLAN 2015 18 ACCOUNTABILITY STATEMENT THE MINISTRY LINK TO GOVERNMENT OF ALBERTA STRATEGIC DIRECTION Energy BUSINESS PLAN 205 8 ACCOUNTABILITY STATEMENT This business plan was prepared under my direction, taking into consideration the government s policy decisions as of October 5, 205. original signed

More information

Chapter 3: Commodity Forwards and Futures

Chapter 3: Commodity Forwards and Futures Chapter 3: Commodity Forwards and Futures In the previous chapter we study financial forward and futures contracts and we concluded that are all alike. Each commodity forward, however, has some unique

More information

NPH Fixed Income Research Update. Bob Downing, CFA. NPH Senior Investment & Due Diligence Analyst

NPH Fixed Income Research Update. Bob Downing, CFA. NPH Senior Investment & Due Diligence Analyst White Paper: NPH Fixed Income Research Update Authored By: Bob Downing, CFA NPH Senior Investment & Due Diligence Analyst National Planning Holdings, Inc. Due Diligence Department National Planning Holdings,

More information

Absolute return strategies offer modern diversification

Absolute return strategies offer modern diversification February 2015» White paper Absolute return strategies offer modern diversification Key takeaways Absolute return differs from traditional stock and bond investing. Absolute return seeks to reduce market

More information

China s growing energy demand: some international implications

China s growing energy demand: some international implications China s growing energy demand: some international implications Dr David Robinson Senior Research Fellow OIES 17 October 2013 NOG Stockholm 1 Outline Introduction China s energy demand v. policy objectives

More information

Impact of Big Data Analysis on Strategic Business Planning for Liquid Natural Gas (LNG) and Methanol Pricing in Commodity Markets

Impact of Big Data Analysis on Strategic Business Planning for Liquid Natural Gas (LNG) and Methanol Pricing in Commodity Markets Impact of Big Data Analysis on Strategic Business Planning for Liquid Natural Gas (LNG) and Methanol Pricing in Commodity Markets By Merv Perry MBA MSc CISSP CISM Big data is fundamentally changing the

More information

working capital: challenge and opportunity

working capital: challenge and opportunity working capital: challenge and opportunity A COMMONFUND ROUNDTABLE Beppie Huidekoper Tom LeMarbe Jon Speare Delanie Moler on campus, the thinking about operating asset management is changing with the times

More information

Mutual Fund Investing Exam Study Guide

Mutual Fund Investing Exam Study Guide Mutual Fund Investing Exam Study Guide This document contains the questions that will be included in the final exam, in the order that they will be asked. When you have studied the course materials, reviewed

More information

Integrated Oil Companies

Integrated Oil Companies Integrated Oil Companies Loretta Bu Zhou Fang Suvayan Roy Patrick He Artur Shikhaleev Yang Zeng 1 Key Questions 2 Upstream, Midstream, Downstream, Equipment and Services Companies THE OIL SUPPLY CHAIN

More information

Investments in Private Energy Partnerships

Investments in Private Energy Partnerships Investments in Private Partnerships August 2010 Private energy partnership investments offer a meaningful addition to a diversified private equity or real asset portfolio. Over the past 20 years, private

More information

April 14, 2015 OVERVIEW

April 14, 2015 OVERVIEW April 14, 2015 Congressional Testimony of Jason E. Bordoff Founding Director, Center on Global Energy Policy, and Professor of Professional Practice in International and Public Affairs, Columbia University

More information

What is Financial Planning

What is Financial Planning What is Financial Planning Firms must plan for both the short term and the long term. Short-term planning rarely looks further ahead than the next 12 months. It seeks to ensure that the firm has enough

More information

ECONOMIC OUTLOOK. Quantifying the Shale Gas Revolution s Impact on U.S. Industrial Energy Consumption MAY 2014

ECONOMIC OUTLOOK. Quantifying the Shale Gas Revolution s Impact on U.S. Industrial Energy Consumption MAY 2014 MAY ECONOMIC OUTLOOK Quantifying the Shale Gas Revolution s Impact on U.S. Industrial Energy Consumption THE CARLYLE GROUP 1001 PENNSYLVANIA AVENUE, NW WASHINGTON, DC 20004-2505 202-729-5626 WWW.CARLYLE.COM

More information

3Q15 Conference Call. Oct. 29, 2015

3Q15 Conference Call. Oct. 29, 2015 3Q15 Conference Call Oct. 29, 2015 Cautionary Statement The following presentation includes forward-looking statements. These statements relate to future events, such as anticipated revenues, earnings,

More information

Spectra Energy Builds a Business

Spectra Energy Builds a Business » Introducing Spectra Energy Builds a Business CEO Fowler on Challenges Ahead By Martin Rosenberg Natural gas once again looms as an important fuel for electricity generation, given a spate of cancellations

More information

H.R. 702 A bill to adapt to changing crude oil market conditions

H.R. 702 A bill to adapt to changing crude oil market conditions CONGRESSIONAL BUDGET OFFICE COST ESTIMATE September 29, 2015 H.R. 702 A bill to adapt to changing crude oil market conditions As reported by the House Committee on Energy and Commerce on September 25,

More information

COLORADO OIL AND GAS INDUSTRY

COLORADO OIL AND GAS INDUSTRY COLORADO OIL AND GAS INDUSTRY Updated Economic Assessment of Colorado Oil and Gas Prices Conducted by: BUSINESS RESEARCH DIVISION Leeds School of Business University of Colorado Boulder 420 UCB Boulder,

More information

Changes Underway in the Central Appalachian Coal Industry

Changes Underway in the Central Appalachian Coal Industry July 14, 2014 Changes Underway in the Central Appalachian Coal Industry Changes Underway in the Central Appalachian Coal Industry but first some background on the political drivers of this change 1 Some

More information

Main Street. Economic information. By Jason P. Brown, Economist, and Andres Kodaka, Research Associate

Main Street. Economic information. By Jason P. Brown, Economist, and Andres Kodaka, Research Associate THE Main Street ECONOMIST: ECONOMIST Economic information Agricultural for the and Cornhusker Rural Analysis State S e Issue p t e m b2, e r 214 2 1 Feed de er ra al l RR e es se er rv ve e BBa an nk k

More information

US Economic Outlook. How long will the ride last? IHS ECONOMICS. US Outlook

US Economic Outlook. How long will the ride last? IHS ECONOMICS. US Outlook IHS ECONOMICS US Outlook US Economic Outlook How long will the ride last? December 2014 ihs.com Douglas Handler, IHS Chief US Economist, +1 781 301 9283, doug.handler@ihs.com US Economic Overview 2 Executive

More information

Specialty Insurance Where Are We Headed?

Specialty Insurance Where Are We Headed? 2013 PLUS D&O Symposium Specialty Insurance Where Are We Headed? David Cash Endurance Specialty New York - February 6-7, 2013 Keynote Outline 1. Who are the Specialty Companies? 2. Economic drivers for

More information

Denbury Resources Inc. BUY Price Target: $9.82 Key Statistics as of 4/27/2015. Thesis Points: Company Description: NYSE:DNR

Denbury Resources Inc. BUY Price Target: $9.82 Key Statistics as of 4/27/2015. Thesis Points: Company Description: NYSE:DNR Denbury Resources Inc. NYSE:DNR Analyst: Sector: Ryan Ahlers Energy BUY Price Target: $9.82 Key Statistics as of 4/27/2015 Market Price: Industry: Market Cap: 52-Week Range: Beta: $8.10 Oil and Gas E&P

More information

Performance Food Group Company Reports First-Quarter Fiscal 2016 Earnings

Performance Food Group Company Reports First-Quarter Fiscal 2016 Earnings NEWS RELEASE For Immediate Release November 4, 2015 Investors: Michael D. Neese VP, Investor Relations (804) 287-8126 michael.neese@pfgc.com Media: Joe Vagi Manager, Corporate Communications (804) 484-7737

More information

many in the producing and investment community off guard and caused dramatic changes in producer behavior and balance sheets.

many in the producing and investment community off guard and caused dramatic changes in producer behavior and balance sheets. Testimony of Suzanne Minter Manager, Oil and Gas Consulting Platts Analytics before the U.S. Senate Energy and Natural Resources Committee Hearing to examine challenges and opportunities for oil and gas

More information

Oil & Gas Industry Recent Developments

Oil & Gas Industry Recent Developments Oil & Gas Industry Recent Developments By Dr. Hilmar R. Zeissig Houston International Business Corp. For RIAS BERLIN COMMISSION U.S. Energy Program in Texas Houston, Texas, April 27, 2015 Typical Downstream

More information

NOIA s mission is to secure reliable access to the nation s valuable. and supplied in an environmentally responsible manner.

NOIA s mission is to secure reliable access to the nation s valuable. and supplied in an environmentally responsible manner. Energy Challenges for wisconsin and the NATion NOIA s mission is to secure reliable access to the nation s valuable offshore energy resources in order that they may be developed, produced and supplied

More information

Energy Sector Overview. Kevin Bertelsen & Matt Sedlacek

Energy Sector Overview. Kevin Bertelsen & Matt Sedlacek Energy Sector Overview Kevin Bertelsen & Matt Sedlacek February 18, 2014 Overview The energy sector is one of the sectors defined by the S&P500 s Global Industry Classification Standard s indexes. It consists

More information

Countdown to Natural Gas: Beginning this Year, the Dynamics of the U.S. Natural Gas Market Will Change Forever

Countdown to Natural Gas: Beginning this Year, the Dynamics of the U.S. Natural Gas Market Will Change Forever Countdown to Natural Gas: Beginning this Year, the Dynamics of the U.S. Natural Gas Market Will Change Forever Alan Lammey, Sr. Energy Markets Analyst Who Is PointLogic Energy? PointLogic Energy provides

More information

Talent Management Leadership in Professional Services Firms

Talent Management Leadership in Professional Services Firms Talent Management Leadership in Professional Services Firms Published by KENNEDY KENNEDY Consulting Research Consulting Research & Advisory & Advisory Sponsored by Table of Contents Introduction.... 3

More information

TALISMAN ENERGY INC. TELEPHONE CONFERENCE CALL TO REVIEW 2009 THIRD QUARTER RESULTS

TALISMAN ENERGY INC. TELEPHONE CONFERENCE CALL TO REVIEW 2009 THIRD QUARTER RESULTS Refer to Talisman s advisories in the November 3, 2009 news release concerning forward looking statements and non-gaap measures. TALISMAN ENERGY INC. TELEPHONE CONFERENCE CALL TO REVIEW 2009 THIRD QUARTER

More information

HR TRENDS AND INSIGHTS: FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING - EMPLOYMENT IMPACTS

HR TRENDS AND INSIGHTS: FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING - EMPLOYMENT IMPACTS HR TRENDS AND INSIGHTS: FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING - EMPLOYMENT IMPACTS This project is funded by Government Canada s Sectoral Initiatives Program FOREWORD Over Over last two last

More information

Master Limited. canterburyconsulting.com. CanterburyConsulting Notes from the Investment Office 1

Master Limited. canterburyconsulting.com. CanterburyConsulting Notes from the Investment Office 1 canterburyconsulting.com 2015 Master Limited The answer to this topic which has been the source of much debate, dialogue, and division lies in proper education and personal choice. Partnerships Master

More information

If your company had an extra $41 million, what would you do with it? For every $1 billion in revenue,

If your company had an extra $41 million, what would you do with it? For every $1 billion in revenue, CASH ADVANTAGE Put Working Capital Back to Work There s never been a better time to reduce working capital requirements to speed financing and invest in future growth. By Lisa Higgins If your company had

More information

Statement of Lawrence W. Kavanagh Vice President, Environment and Technology American Iron and Steel Institute Washington, D.C.

Statement of Lawrence W. Kavanagh Vice President, Environment and Technology American Iron and Steel Institute Washington, D.C. Statement of Lawrence W. Kavanagh Vice President, Environment and Technology American Iron and Steel Institute Washington, D.C. Submitted for the Record Committee on Small Business U.S. House of Representatives

More information

Global growth rates Macroeconomic indicators CEDIGAZ Reference Scenario

Global growth rates Macroeconomic indicators CEDIGAZ Reference Scenario Medium and Long Term Natural Gas Outlook CEDIGAZ February 215 Global growth rates Macroeconomic indicators CEDIGAZ Reference Scenario 4 3 %/year 199-213 213-235 6 Main consuming markets - %/year (213-235)

More information

RATING METHODOLOGY FOR STOCK BROKING FIRMS

RATING METHODOLOGY FOR STOCK BROKING FIRMS RATING METHODOLOGY FOR STOCK BROKING FIRMS Stock Broking Firms perform an important role in the capital market by facilitating trades for all categories of investors. The role of intermediaries like Stock

More information