There will be blood; Shot in the arm for gas drillers; $2.6m for Livengood

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There are no winners in oil markets price war
Dan K. Eberhart, Forbes, March 9, 2020

The collapse of last week’s OPEC meeting launched an all-out price war that will have far-reaching implications for global oil markets and its three largest producers, the United States, Russia and Saudi Arabia.   Much ink has been spilled on the devastating impact that sharply lower prices will have on the U.S. shale oil industry. And it’s true that Monday’s near 30 percent drop in crude prices, which sent benchmark West Texas Intermediate (WTI) below $30 a barrel, spells impending doom for many debt-laden shale producers and will force the entire sector to slash investments.   There will be blood.

Our Take:  Initial shale cutbacks have already been announced and some say  shale could decline by 1-2mbd as most shale wells are unprofitable at prevailing prices.  **Dan Eberhart is CEO of Canary, LLC. and will be in Alaska on March 20th, to speak at the Meet Alaska Conference and Tradeshow.

The First Casualty Of Tanking Oil Prices
Rystad Energy, OilPrice.Com, March 10, 2020

In the wake of one of history’s largest oil price declines in a single day, a Rystad Energy impact analysis shows that US drilled but uncompleted wells (DUCs) will be the first assets to be threatened by the newly formed low price environment, as their breakeven costs are now only dollars away from market prices.  Around 80% of shale DUCs currently have break-even oil prices below $25 West Texas Intermediate ($30 Brent), Rystad Energy’s data show.  “If nobody blinks in this supply war, prices may have to go this low in order to properly reduce production and get supply-demand back in balance,” says Artem Abramov, Rystad Energy’s Head of Shale Research.

From the Washington Examiner Daily on Energy:

OIL INDUSTRY URGES CALM AMID SIGNS OF ESCALATION IN OIL PRICE WAR: Saudi Arabia moved on Tuesday to fulfill its pledge to flood oil markets with low-priced crude, which could cause further turmoil to shale producers already unsettled by low prices and falling demand from coronavirus. But U.S. oil trade groups are urging calm  and resisting the prospect of receiving emergency aid from the Trump administration.

“We are not in discussions with anyone in the administration at this time on any type of program for the industry,” said Mike Sommers, the CEO of the American Petroleum Institute, in response to a question from Josh Monday on a press call. “We believe we shouldn’t be reacting to one day of a market downturn.”

Anne Bradbury, CEO of the American Exploration & Production Council, representing large independent oil and gas companies, said, “the long-term demand outlook remains strong” and companies have planned for “short term disruptions in the market.”

Russia, according to Bloomberg, quickly pledged to retaliate, with Alexander Novak, the country’s energy minister, saying Moscow had the ability to boost production by 500,000 barrels a day, putting the country’s output at a record 11.8 million barrels a day.


Falling oil is a shot in the arm for U.S. gas drillers
Sayer Devlin, World Oil, March 9, 2020

As the collapse of OPEC+ talks on production cuts sent energy stocks into a tailspin, one corner of the industry defied the rout: U.S. natural gas drillers.  Shares of gas producers including Cabot Oil & Gas Corp., Southwestern Energy Co., Range Resources Corp. and EQT Corp. climbed on speculation that the nosedive in crude prices will force oil explorers in the Permian Basin of West Texas and New Mexico to pull back. Soaring gas output from the basin, where the fuel is extracted as a byproduct of oil drilling, has contributed to a massive glut.  “The collapse in the crude market is going to create a more constructive gas setting,” said Matthew Portillo, managing director of exploration and production research at Tudor, Pickering, Holt & Co. “Slowing U.S. growth is going to significantly affect associated gas production.”


Final stages of Livengood optimization
Shane Lasley, March 10, 2020, North of 60 Mining News

International Tower Hill Mines Ltd. March 10 announced that its board has approved US$2.6 million for the 2020 work program at its 11.5-million-ounce Livengood gold project in Interior Alaska.  Lying alongside a paved highway about 70 miles north of Fairbanks, Livengood is a near development gold mine project that could produce 6.8 million oz of gold over a 23-year mine life, or roughly 294,100 oz annually, according to a prefeasibility study completed in 2017.  This is based on 392 million metric tons of reserves averaging 0.71 grams per metric ton (9 million oz) gold. Overall, the Money Knob deposit at Livengood hosts 525 million metric tons of measured and indicated resource averaging 0.68 g/t (11.5 million oz) gold.  Since the completion of the PFS, Tower Hill has focused its efforts on studies to optimize the economics of mining this world-class gold project.


Citing oil price slump, Alaska announces hiring freeze and bans out-of-state-travel by state employees
James Brooks, Anchorage Daily News, March 10, 2020

The state of Alaska has banned out-of-state travel by state employees, according to a memo issued late Monday by Ben Stevens, chief of staff to Gov. Mike Dunleavy. The memo also announced a statewide hiring freeze, saying both actions were required by “recent volatility in the global oil markets and the impacts on our state’s financial resources.” All state employees currently Outside are being asked to return to Alaska as previously scheduled, Stevens’ memo stated.   Oil prices have fallen sharply amid global fears over the coronavirus epidemic and an oil price war between Saudi Arabia and Russia.  The state’s travel ban, effective immediately, was followed by similar actions from the Alaska Legislature, where the leading members of the House and Senate implied a need to fight the coronavirus epidemic.