BP Results Still Hurt by Gulf of Mexico Spill

4/26/16 Wall Street Journal

BPLONDON— BP PLC’s fatal blowout in the Gulf of Mexico in 2010 continues to haunt the company, helping to drag its quarterly earnings into a second consecutive loss and overshadowing the British oil giant’s progress on cost cuts.

BP on Tuesday said its earnings took a $917 million hit in the first quarter related to the Deepwater Horizon explosion that killed 11 workers and caused a massive spill in the Gulf of Mexico, a disaster that changed the course of the British oil giant and cost the company $56.4 billion to date.

The additional spill costs and the weakest oil prices in over a decade cast a cloud over BP’s financial performance, despite signs that heartened investors and caused the firm’s shares to jump over 4%.

Counting the Deepwater Horizon costs, BP said its equivalent of net earnings was a $485 million quarterly loss. Stripping out those and other one-time charges, BP had a profit of $532 million in the first quarter, significantly beating analysts’ consensus forecast for a loss of $140 million.

The spill forced the company to sell more than $40 billion in assets, pull back its ambitions and craft the business around a smaller set of high-value oil and gas fields.

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U.S. Judge Approves BP Settlement for 2010 Gulf of Mexico Oil Spill

4/5/16 Fortune 

BPU.S. Judge Carl Barbier granted final approval on Monday to BP’s civil settlement over its 2010 Gulf of Mexico oil spill after it reached a deal in July 2015 to pay up to $18.7 billion in penalties to the U.S. government and five states.

“Today’s action holds BP accountable with the largest environmental penalty of all time while launching one of the most extensive environmental restoration efforts ever undertaken,” U.S. Attorney General Loretta Lynch said in a statement.

The company at the time said its total pre-tax charges from the spill set aside for criminal and civil penalties and cleanup costs were around $53.8 billion.\

Under the terms of the original agreement with the U.S. Department of Justice and the Gulf Coast states, BP BP -1.83% will pay at least $12.8 billion for Clean Water Act fines and natural resource damages, plus $4.9 billion to states. The payouts will be staggered over as many as 18 years.

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Gulf Oil, Gas Leases Up for Sale; Environmentalists Protest

3/23/16 New York Times

532687354_fdef042d72_zNEW ORLEANS — The federal government is selling off oil and gas leases in the Gulf of Mexico during a sale Wednesday, but environmentalists opposed to fossil fuels development on public lands plan to protest.

The Bureau of Ocean Energy Management is offering about 45 million acres for exploration and development. Companies submit bids in advance to the agency, which announces the results at the sale. It’s held at the Superdome.

Wednesday’s auction will be for lots in the central and eastern sections of the Gulf. The central region is generally the most active part of the Gulf. The Bureau of Ocean Energy Management said Tuesday that it had received 148 bids on 128 blocks in the central section but had received no bids for the eastern region.

Interest has been limited in recent sales as the industry struggles with low energy prices.

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Mexico to Proceed With Auction Round for Shale Fields This Year

3/18/16 Bloomberg

shalegasMexico will hold a private bidding round for the nation’s shale oil fields this year in part to cater to continued interest from U.S. drillers eyeing expansion south of the border, according to Deputy Energy Minister Lourdes Melgar.

The country’s shale auction “will be this year,” Melgar said in an interview at the Foreign Affairs Mexico Energy Future Conference in New York. Mexico temporarily suspended plans for the country’s first-ever auction of its so-called unconventional oil and natural gas fields last year amid falling international crude prices.

“Companies working on the U.S. side of the border have expressed interest in working on other side of the border,” Melgar said. The interested parties are the “usual suspects” that are producing oil and natural gas in U.S. shale fields and are “mostly independent companies that have been very successful in shale development,” she said.

That Didn’t Work as Planned: Mexico’s Oil Monopoly Ends, Then Oil Tanks

2/23/16 Bloomberg

Enrique Pena NietoThe timing couldn’t have been worse. The end of the 76-year Petroleos Mexicanos monopoly was supposed to unleash an investment flood with companies rushing to develop massive oil reserves. It was going to be historic, and then came the rout.

“It’s tragic that Mexico waited so long to open the sector and that when an administration finally passed a meaningful energy reform, the bottom just falls out of oil prices,” said Tim Samples, a Mexican-energy analyst at the University of Georgia in Athens. “The parade did not last very long.”

Now opponents of President Enrique Pena Nieto, who was accused in some quarters of treason when he denationalized the industry in 2014, are saying they’re being proven right. Some want to bring the monopoly back. “A reform needs to be done to the energy reform,” said Jesus Zambrano, president of the Chamber of Deputies, the lower house of the national legislature, last week.

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Mexico Is Failing To Attract Attention From Global Oil Giants

07/17/15 Forbes

energy - gas pumpThe opening of Mexico’s oil industry was supposed to be a cornerstone of Mexican President Enrique Peña Nieto’s policy agenda. In an interview in 2013 Peña Nieto said, “Mexico is a country that has a lot of energy potential” and promised that with the influx of money from oil investors “Mexico can grow, [and] should be growing, by over 4%, 5%.” But in an environment of low oil prices Mexico’s offerings aren’t enticing international investors. On July 15 Mexico’s government auctioned off only two of fourteen possible concessions. According to a recent report from the Inter-American Dialouge, “Nine companies participated in the auction, seven of which submitted bids for one or more of the shallow-water blocks available in the southern Gulf of Mexico. A number of blocks received no offers, and others received bids that fell short of the minimum requirement for profit-sharing with the government.” While most analysts viewed the auction as a disappointment, Mexico’s Finance Minister Luis Videgaray called it “a good first step.”

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Enterprise Products to Sell Gulf of Mexico Business for $1.5 Billion

07/17/15 Wall Street Journal

Enterprise Products Partngulf-of-mexico-map1ers LP, one of the largest pipeline companies in the U.S., has agreed to sell its offshore Gulf of Mexico pipelines and services business to Genesis Energy LP for about $1.5 billion in cash.

The assets include Enterprise’s interest in nine crude oil and nine natural gas pipeline systems, as well as six offshore hub platforms.

Enterprise said the business doesn’t fit with its downstream crude oil or natural gas pipelines. The company said it could use the proceeds from the sale to expand its midstream system, such as acquisitions in the Eagle Ford and Permian shales.

For its part, Genesis expects the deal to be immediately accretive and to improve its credit metrics over time.

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