Hi readers, today i wanted to share with you news on our press conference that took place this past Wednesday at the Thomson Reuter Time Square offices in NYC….
John Kingston’s regular industry blog summarised what was a fantastic morning of discussion….
Around the horn with a group of execs
By John Kingston on October 7, 2010 1:36 PM
The Oil Council is spreading its wings into the Americas, and it announced itself in a breakfast meeting with reporters Tuesday morning that covered a lot of ground.
The group, which was described by its CEO Ross Campbell as a “community-based network of high-ranking oil and gas executives,” is holding the Energy Capital Assembly in New York later this month. In preparation for that meeting, it brought together several executives involved in putting together capital for the oil and gas business.
There was no overriding theme at the meeting, but a great deal of ground was covered. So The Barrel will share with its readers a few of the key soundbites from the gathering. (Direct quotes only where noted).
Edward Morse, Managing Director and the head of global commodities research at Credit Suisse
Central bank easing has led to a depreciating dollar, and we’re seeing phenomenal growth of the flows of capital into passive investments…It’s a heavy maintenance season and European runs this month are going to be down aboug 1 million b/d as a result, and US runs will be down about 1.5 million b/d….non-OPEC growth is surprisingly strong, and with that growth, it means there won’t be significant inventory change in 2011, so the fundamentals will keep the price rangebound.
Back in 2008, with capital costs high, most capex in the marginal barrel projects — like the oil sands — needed a price of $95/b. But now, that range is $45-$75. Even if the cost is $75, the forward curve allows a developer to lay off a lot of risk. “The futures curve should be supporting any project.” The “wedge” of lost production because of the Gulf of Mexico moratorium could be up to 500,000 b/d by 2017.
Terry Newendorp, chairman and CEO of Taylor DeJongh, an energy-specific investment banking firm
There’s substantially more dollar flow into the market from the bond side.. the banks are not back to the full precrisis levels. Bonds are now preferred for raising capital, and on a global basis, capital raising from the bond market in energy is now running ahead of a boom year like 2007.
In the services sector, in the first nine months of the year, the capital raising has been $120 billion from the bond market, and only about $15 billion from banks. Companies often say that their bankers don’t want to talk to them anymore…”and they’re right.”
Ian Fay, the founding partner of investment bank Odin Advisors
The Chinese are driving deal values, and they are overpaying. Shale gas is providing about 1/3 of all upstream deals worldwide, and that doesn’t even include the XTO deal, which was announced in 2009. The acquisition of XTO by ExxonMobil was impressive. ExxonMobil got punished right after that, but XOM lacked a very long term perspective. When ExxonMobil takes a bite, they need to take a big bite.
Because of the growing spread between the price of natural gas and price of liquids produced from the shale, it has caused the price of acreage to quadruple in some cases.
If you are a 500 million capitalization company you should be looking for a merger partner. The debt markets are back but through the bond markets. Banker relationships are “dry.”
John H. Maalouf, Senior Partner, Maalouf Ashford & Talbot
The recent changes in the Gulf of Mexico by the Bureau of Offshore Energy Management, which aren’t even complete, are gross overreaching. They will cause imports to rise from areas that aren’t as environmentally rigorous as the US, and that’s going to cause the environment to get worse. Lots of smaller player won’t be able to offset these costs.
iainpitt
laurentlafont
Ross Stewart Campbell
Vikash Magdani
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