Hello from the Offshore Technology Conference in Houston! The focus on energy transition topics is unmistakable in this traditional oil and gas industry meeting. I will share my observations with you next week, but for this week, here are three new developments …
Shangyou Nie
Editor, Well Read
FTC Bars Scott Sheffield From Joining ExxonMobil’s Board, Approves Deal
What happened: The FTC accused Sheffield of having colluded with OPEC and OPEC+ to keep oil production low and oil prices high, potentially hurting American consumers.
What they are saying: “Mr. Sheffield’s past conduct makes it crystal clear that he should be nowhere near Exxon’s boardroom,” said Kyle Mach, deputy director of FTC’s Bureau of Competition.
The FTC’s allegations:
The FTC claimed that Sheffield “through public statements and private communications,” engaged in collusive activity with other producers and members of OPEC and OPEC+.
It added that Sheffield exchanged hundreds of text messages, in-person meetings, and WhatsApp conversations with representatives of OPEC and OPEC+ about production levels and prices.
The FTC alleges that Sheffield said “If Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi and Russia will follow. That was our plan. I was using the tactics of OPEC+ to get a bigger OPEC+ done.”
The ruling
The FTC ordered that ExxonMobil shall not, “directly or indirectly, nominate, designate, or appoint Scott Sheffield, i) to the Exxon Board, or ii) to serve in an advisory capacity in any way to the Exxon Board or Exxon management.”
Pioneer’s response: Pioneer issued a statement last Thursday, saying:
“We disagree and are surprised by the FTC’s complaint.”
“During Mr. Sheffield’s career, it was neither the intent, nor an effect of, Mr. Sheffield’s communications to circumvent the laws and principles protecting market competition.”
“The FTC’s complaint reflects a fundamental misunderstanding of the U.S. and global oil markets and misreads the nature and intent of Mr. Sheffield’s actions.”
Sheffield, who founded Pioneer in 1997, declined to comment beyond Pioneer’s public statement.
According to ExxonMobil, the FTC’s allegations against Mr. Sheffield “are entirely inconsistent with how we do business.”
ExxonMobil agreed not to add Sheffield to its board.
What to watch:
This may balloon into a criminal case. According to theWall Street Journal, the FTC has decided to refer the allegations against Sheffield to the Justice Department for a potential criminal investigation.
This opens the door to FTC accusations against other top executives for similar collusive acts around price fixing.
Why it matters: Shell has narrowed the value gap from its closest rival Chevron, with a strong year-to-date stock performance.
Shell’s Q1 high points:
Integrated Gas business made $3.7 billion in Q1, more than the $1.9 billion in earnings from the traditional Upstream Division. This was thanks to a high realized international gas price of $9 mscf.
Shell benefited from its industry-leading LNG business, with 7.6 million tonnes of equity production and 16.9 million tonnes of sales volume.
Shell returned $5 billon to shareholders in Q1, including $3.5 billion in stock buybacks.
As of May 6, Shell’s stock went up by 9.8 percent year-to-date. Chevron’s year-to-date increase is 7.2 percent.
The number three IOC, Shell’s market cap stands at $231 billion. Number two, Chevron, has a $295 billion market cap. The gap between the competitors is getting smaller.
What could be better for Shell:
Shell’s net debt is still high at $40.5 billion; with a stubbornly high 17.7 percent gearing ratio. This is only slightly lower than a year ago (18.4 percent).
Shell also:
Brought Rydberg onstream as a tie-in to its Appomattox production hub, enhancing its leading position in deepwater in the Gulf of Mexico
What to watch: Shell CEO Wael Sawan said that he is “keeping his options open” in regard to whether to move its listing from London to New York, IF Shell does not catch up to U.S. super majors.
A message from AAPG DPA and SPE OGRC
Join AAPG's DPA and SPE's OGRC for a 1-day short course at the Petroleum Reserves and Resources Forum in Houston, Texas on 23 May.
Resources Evaluation Using PRMS
Class approved by SPE Oil and Gas Reserves Committee
Instructor:Dr. W. John Lee, PhD, Regents Professor and Holder of DVG Endowed Chair, Texas A&M University; Chair SPE Oil and Gas Reserves Committee
This course will cover:
Fundamentals of PRMS
Overview of resources classes and categories
Details of resources categories and classes
Resources assessment methods
Key changes in 2018 PRMS update
Navigating in the PRMS document
When: 23 May, 2024 from8:00 am to 5:00 pm (lunch and coffee provided)
Where:
Office of Subsurface Consultants & Associates, LLC
BP and ENI entered the hot Namibia play by signing an agreement with Rhino Resources last Friday. The companies will begin exploration in PEL 85 in the Orange Basin.
Key takeaways:
BP and ENI used their 50:50 joint venture, Azule Energy in Angola, to sign the deal, which includes a 42.5 percent working interest with an option to take over the operatorship.
PEL 85 has three other partners: Rhino owns 42.5 percent, state-owned Namco 10 percent, and local company Korres Investments 5 percent.
BP and partners have committed to a two-well exploration program for PEL 85. The first well is scheduled to spud in November.
This deal is the first in which Azule will venture outside Angola.
Auchincloss said, “There are very clear structures in the Galp block. There are very clear structures in the Rhino block. They lay in a pattern. They should have the same charge, the same origin.”
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