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What you need to Know About the Sale of BHP's Oil Business

BHP is one of the biggest names in the oil business, and to this end, the announcement that a trade deal has possibly been reached for its purchase is undeniably massive news. Indeed, the sale of BHP’s oil and gas company would also lead to developing a brand new “super independent” oil business between BHP and its purchaser, Woodside Petroleum Ltd.

BHP is an Anglo-Australian group that has its headquarters in Melbourne, and the company has been trading in oil and gas for over 60 years since the 1960s. It is likely that future attention will be turned to high-profit returns to recoup the initial investment. Some such examples of these high-margin short and medium turn focuses could include deepwater oil.

After the announcement of the sale, BHP’s share price fell by around 6%. However, the cause for this drop was less to do with the announcement of the sale and more due to the company’s choice to bring to a close U.K. dual listing. This decision was made as BHP’s shares have traditionally performed poorly here, but this still impacted the company’s share price all the same.

However, more concerning is the sudden fall in Woodside Petroleum’s share price, which suffered a 4% drop after the deal's announcement. Indeed, shareholders and investors seem less thrilled by the announcement.

Of course, one of the biggest concerns raised by shareholders is for the risk associated with investing in the oil and gas industries now. Indeed, the oil and gas industries are currently facing a challenging situation, with the rollout of renewable energy options placing a great deal of pressure on the industry.

In fact, the industry is widely taking the stance that this pressure, coupled with the extensive liability held by one of BHP’s New South Wales mines, is what has triggered the trade deal in the first place. It seems that Woodside’s investors, too, are concerned about the potential riskiness of this move to invest so heavily in oil and gas at a time when the reputation of such is low and sustainable alternatives are becoming ever more available and affordable.

In addition to this, shareholders’ have also questioned whether Woodside Petroleum Ltd. will actually be able to handle a deal of this manner, with its current reputation making it one of the poorest performing post-Covid energy industries. Moreover, Woodside would also have to fund the Scarborough project; shareholders are further concerned about the company’s financial position to accomplish this.

To this end, it is hence understandable that BHP would conclude now to be the ideal time to sell the oil and gas share of their firm to balance the profitability of the sale with the successes of the business.

The announcement for sale was made on the 16th of August and is one that is likely to grow and develop over time. Indeed, while there are currently no set in stone dates, it is believed that the transaction will likely go ahead sometime around the middle of 2022, and the progress of this deal is sure to be followed with the petroleum industry’s great interest.

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San Juan Basin Bankruptcies and Acquisitions - Southland Royalty Co.

Southland Royalty sold its San Juan Basin assets to MorningStar for $17.3 million. We go over the basics with an emphasis on the data needed to evaluate Southland Royalty's acreage in the San Juan Basin.

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Oil output in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. Additionally, gas productivity in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Given that this growth has been expected, recent global market changes make forecasting the output even more challenging. Learning how production will change is easier with early activity tracking, a new service recently launched by Rextag – Pad Activity Monitor. With the help of PAM, you are able to monitor well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days. Additionally, it cuts down activity reporting lag times by at least 98%, from 120-180 days down to just 5-8 days. In order to access reports, charts, tables, and mapping visualizations via Rextag’s Energy DataLink use a web-based application allowing users to filter, download and identify activity on a map or data table. Moreover, customers will be able to set up daily, weekly, and monthly email report notifications.

The EIA forecasts that total output in the main U.S. shale oil basins will increase 142,000 bbl/d to 8.761 million bbl/d in June, the most since March 2020. Oil productivity in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. In the largest shale gas basin, the productivity in Appalachia in Pennsylvania, Ohio and West Virginia will grow up to 35.7 Bcf/d in June, its highest since beating a record 36 Bcf/d in December 2021. Gas output in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Speaking of the Permian future output, putting hands on upcoming changes in production has recently been made easier with the new Rextag's service - Pad Activity Monitor. Thanks to satellite imagery and artificial intelligence, customers are able to monitor the oil and gas wells and are provided with near real-time activity reports related to drilling operations. However, it is noticed that productivity in the largest oil and gas basins has decreased every month since setting records of new oil well production per rig of 1,544 bbl/d in December 2020 in the Permian Basin, and new gas well production per rig of 33.3 MMcf/d in March 2021 in Appalachia.

No sooner had the crude prices soared above $100/bbl than the industry professionals believed in an incredible growth of drilling activity in North America’s largest shale patch. Analysts speculate that additional output of 500,000 barrels of oil daily would become a significant part (4%) of overall U.S. daily production. That is going to flatter oil and gasoline prices. Drilling permits in the Permian Basin are persistently growing, averaging approximately 210 at the beginning of April. Moreover, the permits trend is noticed as an all-time high as a total of 904 horizontal drilling permits were awarded last month. Nowadays, learning and analysing the current situation and predicting the future development become easier with early activity tracking, a new service recently launched by Rextag. Rextag's Pad Activity monitor (PAM) allows you to see well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days with the help of satellite imagery and artificial intelligence. While the increase in drilling will result in higher production, U.S. shale producers will have to overcome several hurdles including labor shortages and supply constraints.