TechnipFMC Shares Slide After Company Says It Overstated Earnings

TechnipFMC’s shares slid on July 25, a day after the oil services company said it had overstated its first-quarter net income by $209.5 million.

The company said late on July 24 that the overstatement stemmed from accounting errors related to its auditing of foreign exchange movements after examining the matter with its management and PricewaterhouseCoopers.

TechnipFMC’s accounting error added to negative sentiment hitting the oil services sector, with Italian rival Saipem—controlled by oil major Eni—also issuing a profit warning on July 25.

TechnipFMC shares were down by about 4% in New York and in Paris, where the company has a secondary stock market listing, while Saipem shares were down 1.5%.

Oil service companies have been struggling to fill order books as oil majors defer projects and cut billions of dollars in costs to offset low crude prices.

“We are steering clear of these stocks for now, due to the tough market conditions facing them,” said Keren Finance fund manager Benoit de Broissia.

Delek Completes Spinoff Of 9.25% Stake In Tamar

Delek Drilling said it has completed spinning off a 9.25% stake in Israel’s Tamar natural gas field into a new company, Tamar Petroleum , which was scheduled to begin trading in Tel Aviv on July 24.

The Israel-headquartered company has said it expects to get $980 million from selling the stake—about $837 million in cash and the rest in Tamar Petroleum shares, which it will begin selling off in about six months.

Tamar Petroleum in June raised $650 million in a Tel Aviv debt offering and another $330 million in a share offering.

Delek Drilling, a unit of conglomerate Delek Group, said in a statement to the bourse that it had received the necessary regulatory approvals to complete the transaction. It still has a 22% stake in Tamar.

Anadarko Shrinks Quarterly Loss, Slashes Capex For Rest Of 2017

U.S. oil producer Anadarko Petroleum Corp. on July 24 said its quarterly loss shrank and that it would cut its 2017 capital budget by $300 million because of depressed oil prices.

The company posted a loss of $415 million, or 76 cents per share, compared to $692 million, or $1.36 per share, in the year-ago period.

Average daily sales volumes, the physical amount of crude and natural gas sold, fell 20% to 631,000 boe/d.

The U.S. Gulf of Mexico (GoM), where Anadarko has 10 operated assets, remains one of Anadarko’s core focus areas. Anadarko reported GoM average sales volumes for second-quarter 2017 were 140,000 boe/d, which was down 12% compared to first-quarter 2017. “The reduction in volume was largely a result of planned maintenance and upgrades on multiple facilities during the quarter,” the company said in its operations report.

The Woodlands, Texas-headquartered company also has assets in the U.S. onshore and Algeria as well as offshore Brazil, Colombia, Côte d’Ivoire, Ghana, Kenya, Mozambique and New Zealand.

Paragon Completes Restructuring Plan, Emerges From Chapter 11

Paragon Offshore Ltd., the Cayman Islands successor company to Paragon Offshore Plc, said the group has completed its corporate and financial reorganization.

The plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code eliminated about $2.3 billion of secured and unsecured debt for the company. The new Paragon emerges with eight rigs currently operating plus a ninth rig expected to begin operations in August 2017, about $165 million of available cash on its balance sheet and $85 million of new debt, according to a news release.

“With a clean balance sheet and good liquidity, we emerge from bankruptcy as a stronger company—more focused on our core operating areas in the North Sea, Middle East, and India and better positioned to compete in the recovering, but still very challenging, offshore drilling industry,” said Dean E. Taylor, the company’s CEO and interim president.

In addition, the company has named a new board of directors. James Swent, a director of Energy XXI Gulf Coast Inc. and retired executive vice president and CFO of ENSCO, is the chairman. Other board members are:

  • Mark G. Barberio, a director of Life Storage Inc., Exide Technologies and principal and founder of Markapital;
  • Michael Clark, a director of Halcón Resources Corp. and a former partner and portfolio manager at SIR Capital Management;
  • Paul P. Huffard IV, a director of Vubiq Networks and a former senior managing director in Blackstone’s restructuring and reorganization advisory group;
  • George Sandison, a director of Aspire Holdings and retired senior vice president of global E&P services for Hess Corp; and
  • Zaki Selim, a director of Parker Drilling and GlassPoint Solar Inc. and retired president of Schlumberger Oilfield Services, Middle East and Asia.

A search, led by Korn Ferry, is also in progress to find a CEO for the company.

Centrica, Bayerngas Agree To Merge North Sea Oil Businesses

Centrica has agreed with Bayerngas Norge AS to merge the companies’ North Sea assets, creating the region’s largest non-major oil and gas producer and allowing Centrica access to younger fields and to lower its decommissioning liabilities.

The joint venture (JV), to be led by Centrica’s head of E&P, will produce 50 MMbbl to 55 MMbbl in 2017 and have access to 625 MMbbl of proved and probable oil and gas reserves.

Centrica will own 69% of the new entity and raise its interests in younger fields, including the Cygnus gas field which started producing in December, as well as dilute its decommissioning costs and reduce its capital expenditure needs.

Bayerngas Norge, in return, gets access to a profitable business, further expertise and a bigger balance sheet.

“This joint venture creates a larger, more sustainable and more capable European E&P business,” Centrica CEO Iain Conn said in a statement.

The British utility has been trying to reduce reliance on its oil and gas business following its decision to focus more on providing services in the energy retail market.

Hess Posts Bigger Loss As Oil Production Dips

Oil producer Hess Corp. reported a bigger loss in the second quarter as the company produced fewer barrels of oil due to a cutback in drilling.

The company said losses in the E&P unit—its biggest—climbed to $354 million in the second quarter ended June 30, from $328 million a year earlier.

Net production, excluding Libya, fell to 294,000 boe/d from 313,000 boe/d.

Hess cut its 2017 E&P capex to $2.15 billion from its previous guidance of $2.25 billion.

Like many of its peers, Hess is struggling to adapt to the dip in oil prices this year, which was not expected when 2017 capital budgets were crafted. Earlier this week, rival Anadarko Petroleum Corp cut its 2017 capital budget because of depressed oil prices.

Hess’s total revenue fell to $1.23 billion from $1.27 billion. Net loss attributable to the company was $449 million, or $1.46 per share, in the reported quarter, compared with a loss of $392 million, or $1.29 per share, a year earlier. Hess said its corporate and interest expenses rose to $111 million from $75 million.

Seadrill Warns Again Of Chapter 11 As Debt Talks Continue

Offshore drilling contractor Seadrill again delayed restructuring its $14 billion in debt and liabilities on July 26 and reiterated that Chapter 11 bankruptcy was likely.

Once the biggest offshore rig firm by market value and the crown jewel in the business empire of Norwegian billionaire John Fredriksen Seadrill shares have fallen 99% from a September 2013 peak. The company’s business has struggled as energy firms have slashed investment due to a more than 50% fall in the price of crude oil since 2014.

“(Seadrill) has reached an agreement with its bank group to extend the comprehensive restructuring plan negotiating period until Sept. 12,” the firm said in a statement, pushing back a previous July 31 deadline and the latest of several delays.

The company is negotiating with more than 40 banks, including Norway’s DNB, Sweden’s Nordea and Denmark’s Danske Bank as well as with bondholders and several rig-building yards.

In April, Seadrill warned its shares would lose almost all of their value and its bonds would be hit as it was preparing for potential bankruptcy proceedings.

African Petroleum Lets Blocks Sale Exclusivity Clause Lapse

African Petroleum has agreed to let an exclusive agreement lapse in talks to sell oil licenses in Gambia and Senegal, the company said.

African Petroleum had been in negotiations to sell a 70% stake in blocks A1 and A4 offshore Gambia to an unnamed third party along with another license in neighboring Senegal. The blocks, which could contain more than 3 Bbbl of oil, are adjacent to ones in Senegal where large discoveries have been made.

“The parties have mutually agreed to not extend the exclusivity agreement which expired today,” African Petroleum said in a statement. “The company has been approached by other industry players that are interested to join the company in the A1 and A4 licenses when the situation with the Gambian government is resolved.

The oil ministry told Reuters that African Petroleum had failed a number of times to meet its commitments. The company has acknowledged that it did not meet a requirement to drill a well within the timeframe of the agreement.

African Petroleum CEO Jens Pace met with Gambian President Adama Barrow on July 13 to discuss the state of the exploration licenses and resolve the situation.

“The company expects formal feedback from the Gambian government in early August,” it said, adding it had reiterated its position over its legal rights over the licenses.

Uncertainty over the status of some the most promising licenses in West Africa provoked a sharp drop in Oslo-listed African Petroleum’s shares earlier this month.

Tele-Fonika Kable To Purchase JDR Cable Systems

JDR Cable Systems (Holdings) Ltd., a subsea umbilicals and power cables supplier, will be acquired by Tele-Fonika Kable (TFKable), a Poland-headquartered wires and cables producer.

The transaction, which is subject to regulatory approval and other customary closing conditions, is expected to close in third-quarter 2017.

Plans are for JDR, which is based in the U.K., to continue operating in its current locations.

The two companies are building on their long-term relationship.

“Both companies have a long history of collaboration, with TFKable being JDR’s important business partner providing water blocked power cores for its cable and umbilical systems JDR’s highly technical subsea systems, used in the global offshore oil, gas and renewable industries, allow its customers to power and control their offshore operations, and will enhance the range of cable solutions TFKable can provide to its customers,” JDR said in a news release.

SBM Offshore, Repsol To Get $247 Million in Yme Insurance Settlement

Dutch oil industry services group SBM Offshore and Spanish energy firm Repsol will share an insurance payment of $247 million, less legal costs, related to a troubled Norwegian offshore project, SBM said.

SBM said it had reached an agreement in principle with nearly three quarters of the insurers who provided $500 million of primary cover for the Yme project with a final agreement expected to be wrapped up in the coming weeks.

SBM will receive a cash payment of around $247 million in full and final settlement with these insurers. After legal fees and other expenses have been paid, the proceeds will be shared equally with Repsol in line with a 2013 agreement, the company said.

The group said it continues to pursue its claim against all remaining insurers. The total claim presented by SBM Offshore to its insurers in 2014 in relation to the Yme platform was for $1.28 billion.

“The news is positive because it wipes out a big scar from the past,” KBC analyst Tom Simonts said.

SBM built the Yme oil platform for Canadian oil company Talisman Energy and its partners but faced technical difficulties completing the project, which was evacuated in the summer of 2012 due to safety concerns. Talisman was later bought by Repsol.

Simonts also said the focus for SBM now shifts to Brazil, where the company is looking to settle a corruption probe that has prevented it from bidding for work in a major market.

Aker BP Ups 2017 Output View, Lowers Cost Outlook

Oil firm Aker BP, the second-largest operator of oil and gas platforms off Norway, raised its 2017 output guidance and lowered its production cost outlook as it posted second-quarter earnings roughly in line on July 14.

The company is the result of a merger between the Norwegian business of oil major BP and the Norwegian oil company Det norske controlled by billionaire Kjell Inge Roekke.

Aker BP said its output guidance for 2017 would be raised to a range of 135,000 bbl/d and 140,000 bbl/d of oil, against an earlier view of between 128,000 bbl/d and 135,000 bbl/d, while its production cost would be lowered by one dollar to $10/boe.

Its earnings before interest, tax, depreciation and amortization came in at $395 million, while a Reuters poll of analysts had expected $403 million, up from $175 million at the same time a year ago.

Aker BP offered a dividend of $0.185 per share, in line with expectations and at the same level as the dividend it offered in the last quarter.

—Staff & Reuters Reports

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