Energy In-depth: Top Privately Held Oil Company Files For Chapter 11 Protection

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TOP PRIVATELY HELD OIL COMPANY FILES FOR CHAPTER 11 PROTECTION
The crude oil downturn knocked out another big victim this week after privately-held Samson Resources Corp. of Tulsa filed for Chapter 11 protection on Wednesday. The proposed restructuring contemplates a significant de-leveraging of the business and will provide Samson with at least $450 million of new capital, the company said.

At its peak, Samson was one of the largest privately held oil and gas firms in the U.S. In 2011, a Wall Street investment firm bought Samson for $7.2 billion from the Schusterman family of Tulsa in a bet to capitalize on shale-based oil and gas production.

Since then, those assets have soured as crude oil prices have dropped below $50 a barrel, and Samson has piled up more than $10.4 billion debt. Fitch Ratings forecasted earlier this year that the default rate in the energy sector is expected to rise above its long-term average of 1.9% in 2015 as low oil prices have pressured cash flows and liquidity of smaller, less competitive exploration and production (E&P) companies.

EIA PROJECTS LOWER GAS PRICES DESPITE RECENT DEMAND GROWTH
Global gasoline demand in the first half of 2015 was higher than expected, at a time when crude oil prices were falling, which contributed to very strong refinery wholesale gasoline margins. However, EIA does not project the same pattern to continue next year.

The short-term energy outlook, which was released on Sept. 9, forecasts slowing gasoline demand growth. In addition to lower expected gasoline demand growth, the outlook for lower margins reflects a forecast rise in Brent crude oil prices during 2016 and the expectation that refinery outages in 2016 will not be as significant for gasoline markets as those experienced in 2015.

The most recent data from the U.S. Federal Highway Administration show Americans drove a record 1.54 trillion miles during the first half of 2015, compared with the previous high of 1.50 trillion miles driven in the first half of 2007, contributing to higher demand for gasoline in the United States. Monthly data show gasoline consumption in the United States increased by 3% during the first half of 2015 compared with the first half of 2014. Click here to see the full report.

EXXON MOBIL COMPLETES NIGERIA DEEPSEA OIL PROJECT AHEAD OF SCHEDULE
Exxon Mobil Corp. announced this week that its subsidiary, Esso Exploration and Production Nigeria Limited, has started oil production ahead of schedule at its Erha North deepwater development located 60 miles offshore Nigeria. The Erha project includes seven wells from three drill centers tied back to the existing Erha North floating production, storage and offloading vessel, reducing additional infrastructure requirements.

The project is estimated to develop an additional 165 million barrels from the currently producing Erha North field.

Peak production from the expansion is currently estimated at 65,000 barrels of oil per day and will increase total Erha North field production to approximately 90,000 barrels per day.

The world’s largest publicly traded oil company expects to increase its global production volumes this year by 2 percent to 4.1 million oil-equivalent barrels per day, driven by 7 percent liquids growth. The volume increase is supported by the ramp up of projects completed in 2014 and the expected startup of major developments in 2015. The Erha North field was discovered in 2004 and initial production commenced in 2006.

ARKANSAS CONGRESSIONAL DELEGATION PUSHES BACK AGAINST CLEAN LINE PROJECT
Just over a week after the Department of Energy (DOE) staff provided an update on the status of the controversial Plains & Eastern Clean Line Transmission development, Arkansas’ congressional delegation fired off a letter Tuesday (Sept. 15) to Energy Secretary Ernest Moniz asking him to address state’s rights concern over the DOE’s oversight of the multi-state, renewable energy project.

The letter, signed by U.S. Sens. John Boozman and Tom Cotton, R-Ark., and U.S. Reps. Rick Crawford, French Hill, Steve Womack and Bruce Westerman, outlines the Arkansas lawmakers’ opposition to the use of the DOE’s application process to approve the project. It also calls on DOE to legally justify its potential actions to approve the project that Clean Line officials hope to begin construction on by 2017.