Oil rallies, Leviathan starts, McDermott stock plunges
Tough year, big finish
Crude oil prices rose by 35 percent in 2019 for the biggest annual gain in three years, but those numbers don’t capture what was generally a disappointing year for the U.S. oil sector as drilling activity plunged and employment levels fell. The year saw the U.S. crude benchmark begin at just $45 per barrel and end above $60, but crude prices spent the vast majority of 2019 stuck in the frustrating range of $50 to $60 per barrel, essentially a state of limbo — purgatory, if you’re less charitable — for the energy sector.
Leviathan project starts up
Noble Energy started production early Tuesday on the massive Leviathan natural gas project offshore of Israel, achieving a major milestone for a discovery made nearly a decade ago. The Leviathan startup by the Houston oil and gas producer puts Israel on the path of becoming a natural gas exporter after decades of relying on energy imports and coal-fired electricity. The Leviathan is the largest known natural gas field in the growing Eastern Mediterranean region that’s attracting other top oil and gas players, including the Texas energy major Exxon Mobil.
Exxon explores offshore of Egypt
Exxon Mobil secured a large exploration position offshore of Egypt as it expands its role in developing oil and gas resources in the Mediterranean. Exxon, which made a large natural gas discovery offshore of Cyprus 10 months ago, now plans to grow nearby in Egypt’s territorial waters. Exxon Mobil received leases to explore 1.7 million acres offshore of Egypt, including 1.2 million acres in the North Marakia offshore block that’s about five miles offshore of Egypt’s northern coast in the Herodotus basin. The remaining 543,000 acres are in the North East El Amriya in the Nile Delta.
Vistra consolidates acquisition
Vistra Energy, the Irving power company best known for its TXU brand, is cutting costs and jobs as it absorbs its latest acquisition and challenges NRG Energy for the biggest share of the state’s retail electricity market. Vistra said it is trying to create efficiencies after buying Ambit Energy of Dallas for $475 million in an all-cash deal. Vistra said it now controls 32 percent of the retail electricity market in Texas, making it the leading residential retail power company in the state. Vistra’s market share rose from about 25 percent before the Ambit transaction.
Shell exits Haynesville
Royal Dutch Shell is moving out of the Haynesville shale after selling its last package of acreage to a private Houston firm. Houstonbased Castleton Resources, which primarily focuses on the Haynesville in East Texas and Louisiana, will scoop up about 55,000 net acres from Shell that’s currently producing more than 100,000 cubic feet of natural gas per day. Shell previously sold most of its Haynesville position five years ago, but still had some piecemeal remaining acreage. The deal increases Castleton’s Haynesville holdings by about 40 percent.
McDermott shares plunge
McDermott International’s shares plunged after reports that the company is negotiating with lenders ahead of a bankruptcy filing that could come within weeks. The Houston company, which builds oil platforms and gasexport plants for energy companies, is in discussions with lenders including Baupost Group LLC and HPS Investment Partners LLC about providing a $2 billion bankruptcy loan, according to people with knowledge of the matter. Representatives for McDermott, Baupost and HPS declined to comment on the negotiations.