Encana set to top its own 2017 production, profit-margin outlook

Energy producer Encana Corp. announced on Wednesday, January 4, 2017 that company’s results in 2017 will top its predictions released just a few months ago as the company continues to cut costs and boost oil and gas production volumes.

The Calgary-based energy giant announced it predicts a profit margin of $10 (U.S) per barrel of oil equivalent in 2017, up from the $8 a barrel it revealed during an investor day in October. The surge is a result of lower-than-predicted costs and raised volumes this year.

Meanwhile Encana, has find it hard with high debt levels and the sharp plunge in commodity prices that started in the last half of 2014. But on Wednesday Encana announced it had already hit its projected 2017 operational activity and rig count levels in December. That progress is part of the company’s plan to surge production by almost 60 per cent between 2016 and 2021, while plummeting costs and rising its cash flow.

Furthermore Company’s profit-margin predictions are based on price expectations of $55 a barrel for West Texas intermediate crude, and $3 per million British thermal units for benchmark North American natural gas.

Company’s chief executive Doug Suttles turned the focus of Encana from natural gas to more oil-related plays, such as the Eagle Ford basin.

At the moment, much of the company’s emphasis has turned to its assets in the Permian basin, the Texas and New Mexico play is a low-cost and productive area for many producers despite the crude price slump.

Encana also said during announcement that it expects production growth from its four core assets, which also comprise the Duvernay in Alberta will be in the upper range of, or exceed, its previously directed growth estimation of 15% to 20% from the fourth quarter of 2016 to the end of this year.

Non-OPEC oil producers settled to cut output following last month’s OPEC deal

Reports said that prices rose 4% on Monday after oil-producing countries agreed to cut production, a move planned to push the overstocked oil market into a rebalance, or even a shortfall, to sustain a crude market that had been stuck in a two-year slump.

Brent crude, the global oil benchmark, rose $2.34, or 4.3%, to $56.67 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up $2.42, or 4.7%, at $53.92 a barrel.

Meanwhile a group of massive producers outside of the Organization of the Petroleum Exporting Countries, like Russia, decided to scale back their production by 558,000 barrels a day. The move would come on top of the slash of 1.2 million barrels a day settled to by OPEC in late November. The total cut signifies almost 2% of the worldwide supply.

Furthermore this agreement is seen as a plume in the cap for Saudi Arabia the oil cartel’s de facto leader and the world’s largest crude producer.

The non-OPEC cuts, if go through over the first half of 2017, would exemplify an unusual level of cooperation among oil-producing countries that have been examining for ways to lift oil prices out of a two-year slump.

“This is truly a historic event,” Russian Energy Minister Alexander Novak said. “It is the first time that so many oil-producing countries from different parts of the world have gathered in one room to accomplish what we have done.”

Moreover the largest chunk of the cuts, which is 300,000 barrels a day have been vowed by Russia, which produces more crude oil than any other country. Other output cuts are assured by 10 other countries, including Oman, Azerbaijan and Sudan.

OPEC meeting close but not many optimistic on agreement

Crude futures bounced back on Wednesday, on the hope that the Organization of the Petroleum Exporting Countries (OPEC) will settle an agreement on production cuts.

Later today An OPEC deal is planned at cutting into a global glut of oil that has rigorously lowered prices since 2014.

Analyst’s suggested if OPEC settles a deal on production, prices could rise to the low-$50-a-barrel range. In case of failure, oil prices could come down below $40 a barrel.

In the recent years OPEC leaders have been trying to settle on production restrictions, but these attempts have been unsuccessful. In April, this year OPEC leader Saudi Arabia rejected take part in a deal after it asserted that all members agree on production cuts, which didn’t happen. Saudi Arabia is likely to make the similar demand this time around.

One of the major sticking point is strain between Iran and Saudi Arabia in today’s summit in Vienna. Despite the fact Iran has relaxed its position by supportive to hold production levels down, which is indeed a step back from a previous plea, it remains to be perceived whether Saudi Arabia will be happy or not.

Meanwhile another hurdle could be Iraq’s request for omission from the deal, saying it would only go as far as plugging production at existing levels. Iraq claimed it requires the oil money to fight its war against Islamic State.

In the New York Mercantile Exchange, light, sweet crude futures for delivery in January recently traded at $45.51 a barrel, up $0.28 in the Globex electronic session. January Brent crude on London’s ICE Futures exchange surged $0.44 to $46.82 a barrel.

Energy companies are investing again after 2 years gap to bolster overall economy

According to reports U.S. oil and gas companies taken a U-turn to boost investment in oil wells and other energy stocks after a gap of almost two years. That activity has somewhat given a slight encouragement to overall economic growth in this period.

American energy firm completely cut business spending following crude-oil prices plunged in 2014. The stark cutbacks flowed through the economy, pushing down overall progress and hitting the labor market. Now, with oil holding above bottom level prices and firms working at lower costs, some companies are watchfully surging oil production.

“Evidence is emerging that the deep freeze in business investments is beginning to thaw,” said Bernard Baumohl, chief global economist at the Economic Outlook Group. “For one, energy prices are firming, and this has set the stage for the country’s more efficient oil producers to ramp up spending again.”

Although it is true that business investment and the wider economy are barely roaring back. However there are positivity in the air after long time that energy stock has at least reached an inflection point while other sectors seem powerless to gain much traction, one factor that may help balance out otherwise irregular evolution.

In the meantime according to government data, spending on mining equipment surged in the last quarter for the first time in almost two years. Meanwhile Spending on structures related to exploration and drilling, dropped at the gentlest rate since the end of 2014 and looks composed for a minor comeback. The number of rigs boring for oil in the U.S., a proxy for activity in the sector, has surged by 50% to 474 since hitting the bottom in May this year.

ROSNEFT OIL CO followed the market trend by posting downbeat earnings

Russian giant, ROSNEFT OIL CO announced its quarterly results, with 77% drop in third-quarter profits as a result of plunging oil prices.

Meanwhile its net income for the period was $400.7 million, which was way less than the earlier predictions.

Russian government, which is the owner of around three-quarters of Rosneft, announce drecently that it is ready to sell a 20% stake in the company as a part of a money-raising privatization program. 20% of Rosneft is already owned by the UK-based oil producer BP.

According to reports, the sale of the stake is going to make £9 billion for the cash-strapped Russian government, whose income was badly hurt because of the fall in oil prices.

One of the world’s largest oil company Rosneft’s chief executive, Igor Sechin, said the “environment on the commodity markets remained difficult” during the latest quarter of the year.

Not just Rosneft, most of the world’s biggest oil companies have been posting lower profits as the sector find it hard to fight against low crude prices.

Furthermore BP also posted a way lower than expected third-quarter profits, while US giant Exxon announced earnings coming down almost 40%.

Commodities rates was at almost $115 a barrel in the summer of 2014, but then big slump came due to the misjudged gap between supply and demand.

Last month, publication that the Opec oil producers’ cartel had a consensus on a limit of production, sent the oil price to its uppermost in a year, with Brent crude growing above $53 a barrel. Nevertheless, worries over whether Opec will be able to implement production cut have seen prices came down recently.