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Timchenko’s Gunvor Thrives As Gas Prices Rise in Europe February 22, 2012

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Energy trader Gennady Timchenko, head of Geneva-based Gunvor Group, has his work cut out for him this year as Europe sees gasoline prices soar to new highs among fears of European economic destabilization.

Bloomberg on February 1, 2012 reported that gasoline was at a four-month high while jet fuel premiums climbed for the first time in a week. The rising price of gasoil may or may not be here to stay, analysts speculate. Just days ago, European gasoline barge prices had weakened and were down by about 1.9 percent (around $994 to $995 a tonne) following outages at various refineries, according to news sources. Hovensa LLC moved to close its refinery in the U.S. Virgin Islands, and Petroplus Holdings saw reduced and stopped runs at five of its refineries. The outages were speculated to account for the boost in refining profits.

America has witnessed heightened tensions in the oil industry in recent weeks. U.S. oil refinery workers have been threatening to strike—which traders fear could close 6 percent of America’s refinery capacity. The current situation in America with possible refinery closures seems to be yet another hurdle the industry has overcome—so far. By agreeing to a new three-year contract, the United Steelworkers union and Royal Dutch Shell Plc avoided a labor strike that would have closed around 70 refineries. 

Gennady Timchenko and Torbjorn Tornqvist, co-founders of Gunvor, have seen—and surpassed—turbulent markets such as these before. After all, it wasn’t so long ago that BP’s well blew out in the Gulf, resulting in an environmental disaster as millions of gallons of oil flowed into the ocean and washed ashore.  

Adroit at navigating fluctuating markets, Gunvor is not Gennady Timchenko’s only successful business venture. The Finnish energy trader also co-heads publicly traded Novatek with Leonid Mikhelson.  Gennady Timchenko and Leonid Mikhelson recently announced tentative plans to try and boost the capacity of liquefied natural gas production in the Arctic Yamal region, in partnership with Total SA, among others.

 

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Chevron: production low, but profits hit the roof October 28, 2011

Posted by mytruthaboutoil in Oil giants, Oil prices, Oil trading.
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Chevron’s profits more than doubled in the third quarter, powered by rising prices for crude oil, eventhough production sliped.

San Ramon-based Chevron earned $7.83 billion, up 108 percent from the $3.77 billion Chevron earned in the year-ago quarter. Revenue jumped 29.6 percent and totaled $64.43 billion in the July-September quarter.

Profits topped Wall Street’s predictions. The company earned $3.92 a share, while a FactSet Research survey of analysts projected $3.47 a share. Revenue, though, fell short of the expectations of $70.4 billion.

Chevron’s shares rose slightly, 0.2 percent, during the first two hours of trading.

The company’s energy production slipped in the quarter. Chevron product 2.6 million barrels a day in the 2011 third quarter, down 5 percent from a year ago.

“We had another successful quarter,” CEO John Watson said.

The company said the trend of rising oil prices bolstered its exploration, development and production operations, also known as the upstream business. Asset sales and improved margins at its refiners boosted its refining, retail and transportation activities, known as the downstream operations.

Profits from the upstream operations totaled $6.2 billion, up 74 percent from the year before. Downstream profits totaled $1.99 billion, more than triple, or a 252 percent increase from the year-ago quarter.

The company’s refinery operations in the U.S. appear to be faring better. U.S. downstream profits doubled and increased 102 percent, totaling $704 million. The company said margins improved for sales of refined products such as gasoline.

Downstream results in the U.S. also benefitted from lower operating expenses, Chevron said. The company has been trimming its staff in locations such as San Ramon, Concord, Richmond and Houston.

In recent days, Exxon Mobil, Royal Dutch Shell and BP reported a surge in quarterly profits even though they’re producing less oil from fields around the world. Although oil companies, including Chevron, are spending billions to develop new oil and natural gas fields, it could take years or even decades before the fields produce energy and revenue.

Chevron said it continues to make strides in its major capital projects, such as those in Australia.

“The Wheatstone and Gorgon liquefied natural gas projects are expected to provide substantial new energy supplies to meet growing demand in the Asia-Pacific region,” Watson said.

Glencore sells naphta, Hin Leong buys gasoil October 19, 2011

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Glencore International AG sold naphtha for a third day in Singapore, Asia’s biggest oil-trading center. Hin Leong Trading Pte paid a higher premium for two gasoil cargoes.

Light Distillates Glencore, the world’s largest commodities trader, sold a 25,000 metric-ton, open-specification naphtha contract for the first half of December, according to a Bloomberg survey of traders monitoring transactions on the Platts window.

The company received $907 a ton from BP Plc. Naphtha’s premium to London-traded Brent crude futures increased 83 cents from yesterday to $67.42 a ton at 6 p.m. Singapore time, based on data compiled by Bloomberg.

This crack spread, a measure of refining profit, widened for the second time in three days.

Middle Distillates Hin Leong bought gasoil, or diesel, with 0.5 percent sulfur for a second day in Singapore, according to the Bloomberg survey. The closely held trader paid 40 cents a barrel over benchmark quotes to ConocoPhillips and BP for 170,000 barrels each.

That’s a higher premium than 10 cents in yesterday’s transactions. Gasoil’s premium to Asian marker Dubai crude fell 91 cents to $15.22 a barrel at 2:31 p.m. Singapore time, based on data from PVM Oil Associates Ltd.

A British firm will control Libyan oil field company October 7, 2011

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British company Heritage Oil PLC said Tuesday that it has acquired a controlling interest in a Libyan company licensed to provide oil field services including offshore and land-based drilling.

Heritage said it paid $19.5 million for a 51 percent stake in Sahara Oil Services Holdings Ltd. Heritage said the acquisition will allow it to play a significant role in Libya’s oil and gas industry.

Sahara Oil Services was established in 2009 and is based in Benghazi.

Heritage established a base in Benghazi this year and has been dealing with senior members of the National Transitional Council, the company said.

Richard Griffith, analyst at Evolution Securities, said the move “could prove to be a very shrewd investment” by the company.

Heritage Oil shares, however, were down 2.9 percent at 217.8 pence in early trading on the London Stock Exchange.

The company’s CEO Tony Buckingham said they are “well placed to play a significant role in the future oil and gas industry in Libya.”

“This acquisition is consistent with Heritage’s first mover strategy of entering regions with vast hydrocarbon wealth where we have a strategic advantage,” Buckingham said.

Heritage has exploration projects in the Kurdistan Region of Iraq, the Democratic Republic of Congo, Malta, Pakistan, Tanzania and Mali, and a producing property in Russia.

Marathon oil to a record 52 weeks low October 3, 2011

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Marathon Oil traded today at a new 52-week low of $20.83. So far today approximately 7.2 million shares have been exchanged, as compared to an average 30-day volume of 8.5 million shares.

Marathon Oil Corporation, through its subsidiaries, is an integrated oil firm with operations worldwide. The Company explores for and produces and markets liquid hydrocarbons and natural gas on a worldwide basis. Marathon also mines, extracts and transports bitumen from oil sands deposits in Alberta, Canada and refines, markets and transports crude oil and petroleum products.

There is potential upside of 73.5% for shares of Marathon Oil based on a current price of $21.19 and an average consensus analyst price target of $36.76. Marathon Oil shares should first meet resistance at the 50-day moving average (MA) of $26.13 and find additional resistance at the 200-day MA of $41.59.

Marathon Oil share prices have moved between a 52-week high of $54.33 and the current low of $20.83 and are currently at $21.19 per share. Over the last five market days, the 200-day moving average (MA) has gone down 0.7% while the 50-day MA has declined 3.3%.

Oil volatility: will the Fed make its effect? September 21, 2011

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Oil options volatility slipped as the underlying futures rose for the first time in three days on speculation the Federal Reserve will take steps to bolster the U.S. economy, increasing fuel consumption.

Implied volatility for at-the-money options expiring in November, a measure of expected price swings in futures and a gauge of options prices, was 40.9 percent at 1:18 p.m. in New York, down from 42 percent yesterday.

Oil for October delivery gained $1.02, or 1.2 percent, to $86.72 a barrel on the New York Mercantile Exchange. Prices have fallen 5.1 percent this year. October futures expire at the close of floor trading today. The more active November contract advanced $1.09 to $86.90 a barrel.

The most active contract in electronic trading today was November $70 puts, with 1,473 lots changing hands. The options fell 12 cents to $1.43 a barrel. December $85 puts, the next- most-active options, slipped 36 cents to $5.12 a barrel on volume of 1,449 lots. One contract covers 1,000 barrels of crude.

The volume of puts outnumbered calls by more than two to one in electronic trading.

The exchange distributes real-time data for electronic trading and releases information on floor trading, where the bulk of options trading occur the next business day.

November $105 calls were the most active options traded in the previous session, with 7,374 lots changing hands. They fell 3 cents to 14 cents a barrel. The next-most active options, November $75 puts, gained 33 cents to $1.20 a barrel on volume of 4,664.

Open interest was highest for December $100 calls with 52,308 contracts. Next were December $70 puts with 45,925 and December $50 puts with 45,258.

Gennady Timchenko to control construction giant ARKS September 13, 2011

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Gennady Timchenko’s energy trading company Gunvor recently acquired a stake in construction giant ARKS and bought an option to take control of the company. A new step forward for the Finnish businessman’s diversification strategy.

A month after gaining control of mining company Kolmar Coal (51%) for approximatively $400 million, Gennady Timchenko’s Gunvor, the third independent energy trading company in the world, goes further with ARKS.

The company acquired last week 21% of one of the leading Russian construction company, ARKS, in order to diversify from oil and gas business. The Moscow-based company is notably specializing in building roads and highways in the Moscow region.

According to Russian newspaper Kommersant, Gennady Timchenko bought 21% of the building company for $200 million. Moreover, the businessman received an option to take control within a few months.

Founded in 2003, the ARKS group was formerly known as UM #4, Russian oldest construction company (since 1926). The group has three main affiliates: Create Story (construction), UM #4 (demolition) and Nataland (engineering services).

Since 2010, Gunvor has launched a wide diversification strategy. According to analysts Gunvor’s recent moves are a bid to curb the company’s reliance on oil and gas, which currently represent most of Gunvor’s turnover.

Gunvor founder and co-owner Gennady Timchenko is a Finnish businessman with Russian origins, specializing for decades on Russian oil and infrastructures.

Seneca Resources not giving up Marcellus partnership September 8, 2011

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Natural gas and oil company Seneca Resources Corp. said Thursday that it expects the production rate at its operations in the Marcellus Shale to reach 150 million cubic feet per day by Sept. 30, and 240 million cubic feet per day 12 months later.

Those dates coincide with the end of the National Fuel Gas unit’s fiscal 2011 and 2012.

The Marcellus Shale is rock containing a rich deposit of natural gas that extends through the Appalachian Basin.

“Our production rates will be ramping up substantially in the last quarter of this fiscal year as groups of new wells are brought on line,” said Matthew Cabell, Seneca’s president.

The production rate forecast is the same regardless of whether Seneca is working the Marcellus shale alone or takes on a partner, the company said.

Seneca has been in talks with potential partners in a joint venture to develop the Marcellus Shale, and has received several offers, the company said.

National Fuel Gas Co., an energy company based in Williamsville, N.Y., had anticipated reaching a decision on a partner by the end of last month, but it is still evaluating the offers, said David Smith, National Fuel’s chairman and CEO.

“While discussions are ongoing, as we’ve said in the past, we will only move forward with a transaction on terms that we believe add value to our shareholders over and above the value that Seneca will likely achieve through its currently planned operations,” he said.

Shares of National Fuel Gas Co. ended the regular session down $1.20 at $69.62.

$12 billion shale gas deal for BHP Billiton August 26, 2011

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BHP Billiton has made another big bet on energy in the US, announcing an agreement to buy Petrohawk, an independent oil and gas company, for $12.1bn in cash.

In its biggest acquisition to date, the Anglo-Australian mining group said on Thursday it had agreed to pay $38.75 a share for Petrohawk, which operates in three leading areas of shale gas and oil production in the US. The deal values Petrohawk at $15.1bn including net debt.

Marius Kloppers, BHP chief executive, said the acquisition would be earnings accretive in its first full year of consolidation as he defended the 65 per cent premium the miner had agreed pay for Houston-based Petrohawk shares compared to their Thursday closing level.

“Petrohawk is attractive to us because it is in the large, liquid North American market where you can sell the gas,” Mr Kloppers said. “When making an acquisition, particularly one like this, the majority of the value is paid for the resources in the ground.”

BHP boosted its energy business in February with a deal to buy Chesapeake Energy’s Arkansas-based gas business for $4.75bn – its first acquisition since last year’s failed $39bn attempt to buy PotashCorp of Canada. That deal represented the group’s first venture into US shale, giving the company 87,000 acres of leasehold gas properties.

Exxon Mobil, Chevron, BP, Total and Statoil have also bought US shale assets in recent years. The sector has boomed because the gas is considered a better alternative to coal for power generation due to its lower carbon dioxide emissions

The gas, trapped thousands of feet underground, is released by opening up the shale rock with a process known as hydraulic fracturing, or “fracking”, in which thousands of tonnes of water, sand and other additives are pumped underground under high pressure.

BHP said on Thursday that the Petrohawk deal would more than double its petroleum division’s resource base and increase proved reserves by 30 per cent.

With the acquisitions of Chesapeake and Petrohawk, the company will have more than tripled its resource base from 3.7bn barrels of oil equivalent to 11bn boe within the last year.

It forecast its energy business would expand to a 1m boe per day business within five years, compared to less than 500,000 boe per day in the 2010-11 financial year.

Petrohawk had been undervalued relative to peers, people familiar with the deal said, as the company faced capital constraints in developing its large portfolio of assets. The price on offer from BHP reflects about 7.5 times forecast earnings before interest, tax, depreciation and amortisation in 2012, in line with where other companies in the sector trade, they added.

Petrohawk, in contrast, has recently traded closer to 4.5 to 5 times forecast ebitda.

Petrohawk operates in the Eagle Ford and Haynesville shales in Texas and Louisiana as well as owning substantial acreage in the Permian Basin, an oil-rich shale in Texas.

Its assets cover about 1m acres and are expected to produce about 158,000 boe per day in 2011. At the end of last year the company, which was founded by energy entrepreneur Floyd Wilson in 2003, reported proved reserves of 3,400bn cubic feet of natural gas equivalent.

Barclays Capital and Scotia Waterous advised BHP on the deal. Goldman Sachs advised Petrohawk.

The offer will be financed from BHP’s cash balances and a new credit facility.

Just as BHP bought Athabasca Potash in Saskatchewan, Canada for under $1bn a few months before launching a $39bn bid for PotashCorp, its acquisition of the Fayetteville shale gas assets this year was a precursor to a much larger play in an alternative commodity class.

Like potash, the market for shale gas follows different economic cycles to iron ore, copper, and coal, BHP’s principal commodities. BHP’s strategy is to buffer itself against the price volatility inherent in all commodities by positioning itself in top-tier assets across the commodities spectrum.

The Petrohawk deal comes as investors scrutinise the company’s use of cash. BHP last month completed a $10bn share buy-back programme and is pumping money in to the expansion of its iron ore mining complex in Australia.

But the highly cash generative company, which analysts believe could slip into a net cash position this month, has failed to deploy capital on large-scale mergers and acquisitions in the past year.

ENI invests in Venezuelan oil August 14, 2011

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Italian energy company Eni said it would contribute as much as $1.5 billion to a state energy company to develop the Junin 5 block off the coast of Venezuela.

Eni Chief Executive Officer Paul Scaroni met in Caracas with Venezuela’s Energy Minister Rafael Ramirez, also president of state oil company Petroleos de Venezuela SA to discuss projects in the Orinoco belt.

Eni signed deal in Venezuelan to exploit the Junin 5 oil block in the Orinoco oil belt in the Caribbean Sea last year.

Eni had said it hopes to produce around 75,000 barrels of oil per day from the site during early production phases set for 2013. Long-term production, the company said, could reach 240,000 bpd in 2018.

Eni in a statement Friday said the “primary topic of discussion” was developing Junin 5. The company said the reserve holds 35 billion barrels of certified oil in place.

Eni in its statement said it agreed to provide up to $1.5 billion to help PDVSA develop its share of the production phase of Junin 5.