July 25, 2012:

ConocoPhillips said Wednesday that net income fell 33 percent in the second quarter as it shed assets and sold oil and natural gas at lower prices. Its results beat Wall Street estimates, but analysts said they’re concerned that the company hasn’t cut back on spending in response to the drop in revenues. Shares fell 2.6 percent Wednesday.   Chairman and CEO Ryan Lance said his company should spend about $16 billion this year on exploration, production and other projects. Lance, who took over ConocoPhillips from Jim Mulva in the second quarter, said it’s important to keep investing in the future even though commodity prices have dropped. “For this reason we do not think it is prudent to reduce our capital spending at this time,” Lance said in a conference call.

The company said crude prices dropped by 6.5 percent while natural gas fell by 19.8 percent in the second quarter, when compared with the same period last year. Prices for other liquid hydrocarbons such as natural gas liquids and bitumen fell during the quarter as well. Oil prices continue to fall on concerns that China’s economy will slow down and Europe will fall back into recession. “As oil prices go down, people are raising red flags about Conoco that they cannot keep spending like they are,” Oppenheimer & Co. analyst Fadel Gheit said. “They either need to cut spending, sell assets or borrow money. None of the above is very pleasant.” ConocoPhillips already has been aggressively selling refineries, pipelines and other assets over the past few years to remake itself as an independent oil and gas producer. It has sold more than $20 billion in assets and investments since 2010, and the company plans to sell billions more this year.

The asset sales should generate more cash, but Gheit said it might be a lot less than expected. The value of oil and gas wells tends to rise and fall with commodity prices. “If everyone knows they’re selling, they may be forced to accept a price that’s lower than they wanted,” he said. During the second quarter, overall production declined by 6 percent, in part because of ConocoPhillips’s asset sales. A decline in the price of oil and gas trimmed sales even further. As a result, the Houston company earned $2.27 billion, or $1.80 per share. That compared with $3.4 billion, or $2.41, a year earlier. Revenue fell 14 percent to $15.17 billion.

Excluding special items, ConocoPhillips earned $1.22. Analysts expected earnings of $1.20 per share on revenue of $9.06 billion, according to FactSet. ConocoPhillips also spun off its downstream business, which includes refineries and pipelines, during the quarter. It made the split on April 30, and ConocoPhillips’ second-quarter results include just one month of downstream earnings. The same period in 2011 includes a full three months of downstream results. The downstream business is now called Phillips 66. Shares fell by $1.40, or 2.6 percent, to close at $53.24 Wednesday. Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

By The Washington Post

July 25, 2012:

Swiss refinery Cressier, formerly owned by the bankrupt Petroplus, and now run in a joint venture between Vitol and Atlas Invest is now fully operational, Vitol said on Wednesday. "With a number of investments made following the acquisition, conditions are now met to fully resume refining and corresponding marketing operations with safety as the key priority," Vitol said in a statement. Swiss-based Petroplus filed for insolvency in January after it defaulted on $1.75 billion of debt. The refinery was one of Petroplus's smaller plants with a capacity of around 68,000 barrels per day.

By Reuters

July 25, 2012:

Bakken oil’s discount to West Texas Intermediate oil weakened after BP Plc slowed production at its Whiting refinery in Indiana following a fire in a coker late yesterday. The fire broke out in one of the unit’s three drums, said two people, who declined to be identified because they aren’t authorized to speak for the company. The fire resulted in the reduction of crude runs at the plant, one of the people said. Bakken oil’s discount to WTI widened $1.75 to $3 a barrel at 2:06 p.m. in New York, according to data compiled by Bloomberg. Western Canada Select’s discount was unchanged at $14 below WTI.

Syncrude’s premium was steady at $3 over WTI. Syncrude is a synthetic oil upgraded from tarlike bitumen in Alberta into refinery-ready crude. Heavy Louisiana Sweet increased 80 cents to $16.25 a barrel over WTI. Light Louisiana Sweet’s premium to the U.S. benchmark added 95 cents to $17. Poseidon’s premium weakened 30 cents to $9 a barrel. Southern Green Canyon rose 15 cents to $8.50 over WTI. Mars Blend lost 40 cents to $9.60 a barrel over the U.S. benchmark. The premium for Thunder Horse, a sour crude with lower sulfur content than Mars, Poseidon and Southern Green Canyon, decreased 10 cents to $11.85.

By Bloomberg

July 25, 2012:

NIAMEY - Niger announced on Tuesday that it had succeeded in renegotiating the terms of a $980 million loan from China's Export-Import Bank that covered the cost of building an oil refinery in the east of the West African nation. The government called for an audit of the cost of the 20,000 barrel-per-day Soraz plant just days before it opened in November after the price tag rose to $980 million from the $600 million agreed at signing. "The commercial loan from Exim Bank will be transformed into a preferential loan, which means the interest rate will not exceed 2 percent," Mamane Mamadou, special advisor to President Mahamadou Issoufou, announced on state radio.

Niger signed a $5 billion joint venture deal with Chinese oil company CNPC in 2008 to build the refinery and develop crude oil from the Agadem field a further 700 km east. China's Exim Bank initially made the loan at an interest rate of 3.5 percent reimbursable over 10 year, but lowered the rate to 3.1 during negotiations last year. The Soraz refinery is 60 percent-owned by CNPC and 40 percent by Niger. Niger, whose uranium supplies the French nuclear industry, initially put its oil reserves from Agadem at 268 million barrels, but the estimate has risen to 480 million barrels following tests. Niger had already awarded four out of a total 35 blocks across the country, with Algerian state energy firm Sonatrach due to start drilling in the northern block of Kafra this year.

By Reuters

July 24, 2012:

PARIS- A French court will on Tuesday decide whether to pick or reject bids submitted to purchase the troubled Petit-Couronne refinery of insolvent oil firm Petroplus, with two offers described as "acceptable" by trade unions keen to preserve jobs. The court could also decide to extend the bidding deadline or simply liquidate the plant, which was placed under legal protection after Swiss-based refinery Petroplus filed for insolvency last year. The refining units, which stopped production on January 10, restarted operations last month under a deal with Royal Dutch Shell, the former owner of the refinery, to deliver 100,000 barrels per day of products.

The refinery, which has a staff of 550, has benefited from improved refining margins in line with lower crude oil prices. "There are two bids which we believe are relevant and acceptable," Nicolas Vincent, union coordinator for the refinery told Reuters, adding the unions had examined all offers. "The refinery workers would not understand if the court did not retain any offers," Vincent said.  According the Paris Normandie newspaper, the two bids are from foreign companies described as "solid". French radio Europe 1 said the firms had offered to keep all 550 staff. France's new Socialist government has taken an active role in managing the situation as it tries to avoid a wave of factory closures after unemployment hit its highest level since 1999.

Vincent declined to detail the offers, which will be examined by the Rouen commercial court, in northwestern France, from 1200 GMT. French refiners, in particular, have been struggling for years due to poor margins, weak demand and a surplus of gasoline capacity while the traditional market for French gasoline exports, the United States, has dried up. Refineries in France have lost 2 billion euros ($2.42 billion) over the last three years, the oil industry lobby says. France's plan for a one-off tax on oil inventories announced earlier this month is likely to further damage the competitiveness of the beleaguered refining industry and discourage investments in unprofitable refineries. The tax is expected to cost the Petit-Couronne plant 8 million euros.

By Reuters