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Oil rises 1% on settlement amid fears of supply shortages


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  • yota691 changed the title to Russia tops the world by producing oil
 
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 Arab and international


Economy News _ Baghdad

Russia maintained its leading position in world oil production in June, with oil production in Russia at 11.056 million barrels per day, while the United States and Saudi Arabia ranked second and third respectively.

According to data from the Russian Energy Ministry and the US Energy Information Administration published on the website of the Russian Energy Ministry, Russia produced 45.292 million tons of oil in June, equivalent to 11.066 million tons per day. Average monthly production in Russia increased by 0.85 per cent.

The United States finished second in terms of oil production, according to the US Energy Information Administration, last Friday, the volume of production in June last 10.674 million barrels per day, an increase from the month of 2.2 percent.

Saudi Arabia came third, according to a report issued by OPEC in June, produced 10.44 million barrels per day, an increase of 4.2 percent.

The recovery of the oil market greatly contributed to the efforts of countries to limit oil production, including Russia and Saudi Arabia.

OPEC countries and a number of other countries agreed in late 2016 to reduce their oil production by 1.8 million bpd, while Russia agreed to reduce the volume by 300,000 bpd. The process of implementing the deal has been launched since the beginning of 2017 and has been extended twice.


Views 1   Date Added 09/03/2018

 
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Oil

  

 Arab and international


Economy News Baghdad

Crude oil futures fluctuated in a narrow range, showing a mixed performance during the Asian session as the dollar index rose to its highest since August 27 according to the inverse relationship between them.

At 4:39 am GMT, Brent crude futures for November delivery fell 0.10% to trade at $ 78.07 a barrel, compared to the opening at $ 78.15 a barrel, while the US dollar index rose 0.10% to 95.24 compared to the opening at 95.14.

US crude futures for November delivery rose 0.36% to $ 70.05 a barrel from $ 69.80 a barrel.


Views 9   Date Added 04/09/2018

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Iraq helps assuage OPEC supply concern as crude-oil sales surg

  • In this Dec. 13, 2009, file photo, oil personnel work at the Rumaila oil refinery, near the city of Basra, Iraq.  Photo: Nabil Al-Jurani, STF / Associated Press / AP
Photo: Nabil Al-Jurani, STF / Associated Press
 
In this Dec. 13, 2009, file photo, oil personnel work at the Rumaila oil refinery, near the city of Basra, Iraq. As oil markets show growing global supply concern, Iraq is signaling the jitters may be overdone.

Output from OPEC’s second-biggest producer has jumped to a record and is set to expand further, reflecting higher investment in the country’s southern fields following crude’s rally.

“Iraq has oil that’s cheap and relatively easy to produce,” Mustafa Ansari, a senior economist at Arab Petroleum Investments Corp., said in an interview in Muscat, Oman. Increased output from the south has more than compensated for a halt in production from the shuttered Kirkuk field in the north, he said.

The country pumped 4.64 million barrels a day in August, beating the previous high set two years ago, while exports matched peak levels from 2016, according to a Bloomberg survey and tanker-tracking data.

Oil has averaged more than $70 a barrel this year after the Organization of Petroleum Exporting Countries and its allies curtailed output to eliminate a global glut. But with supply threats on the rise from Iran to Venezuela, there’s mounting concern that the group’s spare capacity now won’t be sufficient be absorb any major supply shocks.

Buyers have already begun shunning Iranian barrels as the market prepares for the onset of fresh U.S. sanctions in November. Iranian oil exports fell 14 percent in August, according to tanker-tracking data compiled by Bloomberg.

“It remains unclear whether OPEC will be able to absorb a potentially massive fall in Iranian oil exports due to the U.S. sanctions,” Commerzbank AG said in a note on Monday.

 

The same day, Nigeria Oil Minister Emmanuel Ibe Kachikwu sought to reassure, saying Saudi Arabia and the United Arab Emirates, along with Nigeria and Angola, can bring enough oil to the market to help meet shortfalls from Iran.

Now add to that group Iraq, which is ready to ship more crude as soon as OPEC reaches an agreement on how members will share a collective supply boost, Alaa Al-Yasiri, acting director-general of the state-run Oil Marketing Co., said Wednesday.

“Spare capacity is limited and that’s creating volatility,” Apicorp’s Ansari said. “Iraq wants to take advantage of the situation in the market -- with prices supported by concern over Iran -- because they know that if they don’t, other countries will.”

https://www.bloomberg.com/news/articles/2018-09-04/iraq-helps-assuage-opec-supply-concern-as-crude-oil-sales-surge

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Oil fell to $ 77.80 a barrel

11:52 - 05/09/2018

 
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The 
price of oil fell on Wednesday as a tropical storm hit the US coast overlooking the Gulf of Mexico with heavy winds and heavy rain, but its impact on production was not as strong as initially expected. 
By 0517 GMT, West Texas Intermediate crude futures were $ 69.31 a barrel, down 56 cents, or 0.8 percent, from the previous settlement. 
Brent crude <CLc1> fell 37 cents, or 0.5 percent, to $ 77.80 a barrel. 
The prices jumped the previous session with the closure of dozens of US oil and gas platforms in the Gulf of Mexico in anticipation of any damage from Tropical Storm Gordon. 
But the storm changed direction east on Wednesday, reducing the risk to producers on the western side of the Gulf.
Stephen Inse, head of trading for Asia and the Pacific at Oanda Futures Brokerage, said crude prices were still showing signs of rising, largely due to US sanctions targeting Iran's oil sector and coming into force in November. 
"With the expected impact of up to 1.5 million barrels per day US sanctions on Iran, prices can be expected to rise in the coming weeks."

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  • yota691 changed the title to Saudi Arabia seeks to keep the price of oil at $ 70-80

Saudi Arabia seeks to keep the price of oil at $ 70-80

   
 

 
 


06/9/2018 12:00 am 

Riyadh / Agencies

(Reuters) - Saudi Arabia wants crude to stay at between $ 70 and $ 80 a barrel at the moment as the kingdom seeks to strike a balance between maximizing revenue and curbing prices until US congressional elections, sources at the Organization of the Petroleum Exporting Countries (OPEC) and the oil sector said.

The sources said, according to the agency, "Reuters" that despite the suspension of Aramco's initial public offering, Saudi Arabia still wants to keep oil prices as high as possible without disturbing Washington. Saudi Arabia wants liquidity to finance a series of economic projects. 
"The Saudis want the price of oil at about $ 80 and do not want the price to drop below $ 70, they want to run the market this way," the sources said. 
By 0517 GMT, US WTI futures were $ 69.31 a barrel, down 56 cents, or 0.8 percent, from the previous settlement. 
Brent crude <CLc1> fell 37 cents, or 0.5 percent, to $ 77.80 a barrel.
Saudi Arabia may have done so last week, a source said, noting that when Brent crude was heading towards $ 80 a barrel, the kingdom told the market it had increased its production last month earlier than it normally did. 
The source said, according to the agency: "The Saudis will probably publish some additional signals to curb prices in light of the price reached." "Everyone is talking about such numbers," said an OPEC delegate from outside the Gulf.

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  • yota691 changed the title to OPEC: Demand for oil touches 100 million barrels per day this year
 
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 Arab and international


Economy News _ Baghdad

 The Organization of the Petroleum Exporting Countries (OPEC) Secretary General Mohamed Barkindo said global oil consumption will reach 100 million barrels per day later this year, a time much earlier than previously expected. 
"The world will reach consumption of 100 million barrels per day later this year, much sooner than we all expected," Barkindo told an oil and electricity conference in Cape Town, South Africa. So the stabilizing factors that create conditions conducive to attracting investments are essential. "

"Confidence is beginning to return in the oil sector, and OPEC is considering ways to institutionalize a declaration of cooperation on oil production between OPEC and a number of independent producers," he said.

"In the future, priority will be to ensure sustainability of stability, confidence in the sector and a climate conducive to the return of investment," he said.

"Global trade disputes will ultimately affect energy demand," Barkindo said, but he hopes the cloud cloud will soon be cleared.

Expectations of a trade confrontation between the United States and China have been triggered by US President Donald J. Trump's threats to impose tariffs on the world's second-largest economy in global market turmoil.

"The escalating trade disputes between some of the world's leading trading partners will ultimately affect global growth and hence energy demand," Barkindo said.


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Oil rises as US drilling disrupted

12:22 - 10/09/2018

 
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Follow - up - the balance of News 
Oil prices rose on Monday , with the disruption of US drilling operations searching for a new production and forecast market shrinking supplies immediately after entry into force of sanctions and Washington on Iran 's crude exports in November. 
West Texas Intermediate crude futures were $ 67.23 a barrel at 0640 GMT, up 48 cents, or 0.7 percent, from the last settlement price. 
Global Brent crude <LCOc1> rose 64 cents, or 0.8 percent, to $ 77.46 a barrel. 
US energy companies cut the number of diggers by two last week to 860 diggers, Baker Hughes Energy Services said on Friday. 
The number of rigs has stabilized since May after recovering since 2016, following a sharp collapse the previous year as crude prices fell.
With US drilling activity and imminent sanctions on Iran stabilizing, market supply is expected to shrink. 
While Washington is pressing other countries to cut imports from Iran, it is urging other major producers to raise production so prices will not rise too much. 
US Energy Secretary Rick Perry is meeting with his Saudi and Russian counterparts on Monday and Thursday respectively, as US President Donald Trump's administration seeks to continue its biggest crude exporter and world's largest producer.

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Russian Energy Minister Alexander Novak

 

  

 Arab and international


Economy News Baghdad:

MOSCOW (Reuters) - The Organization of the Petroleum Exporting Countries (OPEC) and its independent producers may sign a new long-term cooperation agreement at the beginning of December, Russian Energy Minister Alexander Novak said on Tuesday .

OPEC, Russia and other non-OPEC producers agreed in June to return to 100 percent compliance with oil production cuts, which began in January 2017, after shortages in Venezuela and elsewhere over months led to a higher commitment to cuts. Level .


Views 107   Date Added 09/11/2018

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Russia: OPEC and its allies may sign a long-term agreement in December

Russia: OPEC and its allies may sign a long-term agreement in December

 11 September 2018 01:37 PM
Mubasher :

Direct : Russian energy minister said that the Organization of Petroleum Exporting Countries - OPEC - and its allies independents may sign a new long - term agreement in December.

Alexander Novak, who was quoted by the Russian news agency TASS on Tuesday, made no further details about the deal.

Last June OPEC and its independent allies, including Russia, agreed to reduce compliance to a cut-off agreement to 100 percent.

OPEC and its allies began in January 2017 to cut production to counter the price slump that has hit markets for two years.

The Organization of Petroleum Exporting Countries (OPEC) is due to release its monthly production report for August.

It is estimated that the Organization's production recorded a decline last month by 420 thousand barrels per day to the level of 32.74 million barrels per day.

 
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Date of release: 2018/9/11 20:07 • 118 times scheduled
Energy information cuts US oil production estimates
[Ayna-Follow] 
The US Energy Information Administration has reduced estimates of US oil production in the current and next year while raising its forecast for crude prices.

 
The Energy Information Administration said in a report on the outlook for short-term energy on Tuesday that the average US crude production will reach 10.66 million bpd this year, down 0.2 percent from last month's forecast. 
The US administration also reduced estimates of US crude production in 2019 to 11.18 million bpd, down 1.8 percent from previous estimates. 
The Energy Information Administration expects US crude to reach $ 67.03 a barrel this year, up 1.2 percent from August's estimate of $ 67.36 a barrel for the next year, up 4.7 percent from the previous forecast. 
The Energy Information Administration also raised its forecast for the price of Brent crude to $ 72.84 a barrel in 2018, up 1.5% from last month's estimate.
In the coming year, the report said crude oil prices will record $ 73.68 a barrel, up 4.4 percent from previous estimates. 
By 4:30 pm GMT, the benchmark Brent crude for November delivery rose 1.5 percent to $ 78.57 a barrel. 
Nymex crude futures for October delivery rose more than 2.5% to $ 69.23 a barrel.
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 Arab and international


Economy News _ Baghdad

Oil fell on Wednesday after reaching its highest level this year as a drop in US crude inventories and a possible loss of Iranian supply, raising concerns about the delicate balance between consumption and production.

By 0923 GMT, Brent crude futures were down 23 cents at $ 78.83 a barrel, having peaked at $ 79.66, the highest level since late May when $ 80 broke above $ 80.

US crude was up 35 cents at $ 69.60 a barrel. 
"We believe that fundamentals of the oil market are increasingly supporting crude prices, at least at current levels," said Gordon Gray, director of oil and gas market research at HSBC.

"While we do not expect Brent to rise to $ 100 per barrel, we see real risks that this will happen.The fact that there is already a need for much higher supply than producers such as Saudi Arabia - and the low levels of excess capacity left - makes the global system highly vulnerable to any other major disruptions. "

The US Petroleum Institute said on Tuesday that crude inventories in the United States fell 8.6 million barrels in the week ending September 7 to 395.9 million barrels, while the US Energy Information Administration reduced its forecast for the country's production of crude in 2019.


Views 14   Date Added 12/09/2018

 
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http://economy-news.net/content.php?id=13641........

America is exploring Russia and standing on the throne of oil in the world
 
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 Arab and international


Economy News _ Baghdad

The United States may have regained its position as the largest oil producer faster than expected. 
The US Energy Information Administration (EIA) announced that the United States was "likely to have overtaken" Russia in June and August after overtaking Saudi Arabia earlier this year.

The Department added that that information was still based on preliminary estimates.

If these estimates are true, this will be the first time in more than two decades that the United States has topped the list of oil producers in the world.

US oil production has increased in recent years thanks to techniques including hydraulic cracking - a process that uses chemicals, sand and water with high pressure to create cracks in rock formations buried deep underground, leading to the release of more oil and natural gas.

The hydraulic fracture is due to the burgeoning drilling boom in the Texas Basin and New Mexico.

 
 
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Thursday 13 September
 
 
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Alsumaria News / Baghdad 
announced that the International Energy Agency on Thursday that world oil consumption will exceed 100 million barrels per day in the next three months, contributing to the absorption of excess supply in the market and putting pressure on prices. 

"The price range of 70-80 dollars per barrel, which has been moving Brent crude since April," the agency said in its monthly report and was read by Alsumaria News. 

The Paris-based agency has kept its forecast for strong growth in world demand for oil at 1.4 million bpd this year and 1.5 million bpd in 2019, unchanged from previous forecasts.

 


"The imposition of US sanctions on the Iranian energy sector has reduced supply to the lowest level in two years, but the decline in production in Venezuela due to an extended economic crisis along with sudden interruptions in other regions will maintain the balance between supply and demand," the agency said. 

"Global demand will rise to 100.3 million bpd in the fourth quarter of this year before falling to 99.3 million bpd in the first quarter of next year," the agency said. 

The United States went to impose tough sanctions against Iran in two phases, the first came into force in August, and the second package of such sanctions will be implemented in November.

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SINGAPORE - A supertanker carrying the first crude oil cargo for a refinery joint-venture project between Petronas and Saudi Aramco is expected to reach Malaysia by end-September, according to trade sources.

A very large crude carrier (VLCC) Navarin carrying 1 million barrels each of Saudi Arab Medium crude and Iraqi Basra Light crude is scheduled to reach Malaysia on Sept. 20. The project, Refinery and Petrochemical Integrated Development (RAPID), is a $27 billion complex located between the Malacca Strait and the South China Sea, conduits for Middle East oil and gas bound for China, Japan and South Korea. The RAPID complex will have a 300,000-barrel-per-day refinery and petrochemical units with a capacity of 7.7 million tonnes a year. Refinery operations are set to begin in 2019, with petrochemical production to follow in six to 12 months. 

 

https://www.reuters.com/article/us-malaysia-oil-petroliam-saudi-aramco/petronas-saudi-rapid-refinery-to-receive-first-oil-cargo-by-end-sept-idUSKCN1LT1HC?rpc=401&8

 
 
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The Oil Market Is Entering a “Crucial Period”

The International Energy Agency’s latest oil market report suggests that interesting days lie ahead.

Sep 16, 2018 at 9:34AM

The oil market is in a state of flux. While demand continues to grow at a brisk pace, supplies hit a record 100 million barrels per day (BPD) in August, according to the latest oil market report from the International Energy Agency (IEA). That's after Iraq delivered record-setting production while supplies from Libya rebounded. Because of that, there was more than enough oil to meet the market's needs. 

However, the IEA noted a few concerns in its report, which suggested that the oil market could tighten up in the coming months and push crude even higher than its current perch near $80 a barrel for Brent, which is the global oil benchmark. That led the IEA to conclude that the oil market is entering a "crucial period," since it's unclear whether other producers will be able to pick up the slack. If they can't, then oil could head even higher. 

Pump jack backlit by the setting sun after the rain.

IMAGE SOURCE: GETTY IMAGES.

Drilling down into the current situation

While global oil supplies topped the 100-million-BPD mark in August, there's some concern about whether producers can keep up that pace. First of all, output in Venezuela remains in free fall. The IEA noted that production averaged 1.24 million BPD last month and could slip to 1 million BPD by year-end if it continues its current rate of decline. That's a steep drop for a country that produced an average of 2.5 million BPD in the last decade. It's not as if Venezuela is running out of oil since it holds the largest reserves in OPEC. Instead, the country doesn't have the money to invest in maintaining its production due to its current economic problems. 

Meanwhile, oil exports from Iran have started falling in anticipation of the sanctions on that country levied by the Trump administration, which go into effect in early November. So far, Iran's exports are on pace to decline by 500,000 BPD. However, they could potentially fall by as much as 2.5 million BPD, according to some analysts.

While OPEC does have about 2.7 million BPD of spare capacity to help fill in the gaps, "it is not clear exactly how much, beyond what is widely thought to be 'easy' to bring online, will be available to coincide with further falls in Venezuelan exports and a maximization of Iranian sanctions," according to the IEA. The IEA further notes that "if we are looking for additional barrels from elsewhere to help compensate for further export declines from Venezuela and Iran the picture is mixed." That's because output from Brazil hasn't increased as much as expected this year due to a variety of issues. Meanwhile, pipeline constraints are slowing production growth in the Permian Basin, which had been the fastest-growing oil region in the world. That issue likely won't abate until the end of next year when new pipelines should enter service.

An oil worker with a laptop near an oil pump.

IMAGE SOURCE: GETTY IMAGES.

What this means for the oil market

These factors led the IEA to conclude that "we are entering a very crucial period for the oil market." Not only could the situation in Venezuela deteriorate at a faster pace given its economic issues, but strife could return to Libya and knock some of its output back offline, while the deadline on Iran is just around the corner. Because of that, the price range of $70 to $80 a barrel for Brent "could be tested" since "things are tightening up."

While higher oil prices would be bad for oil consumers, it would benefit oil producers, especially those that can capture Brent-based prices, which are currently $10 a barrel more than the U.S. oil benchmark West Texas Intermediate (WTI). Multinational oil companies like ConocoPhillips(NYSE:COP) and Chevron (NYSE:CVX) would be among those that benefit the most. In ConocoPhillips' case, every $1-per-barrel change in the price of Brent would boost its cash flow by $105 million to $125 million during the course of a year, whereas that same increase would only improve its WTI-based cash flows by $45 million to $55 million. Meanwhile, Chevron produces an average of 575,000 BPD of oil and other liquids in the U.S. that fetch WTI-based prices while getting nearly 1.2 million BPD from places that capture Brent pricing. Because of their higher weighting toward Brent, Chevron and ConocoPhillips would earn more money per barrel if global oil prices rise in the wake of supply problems in Venezuela and Iran. 

Global oil producers could emerge as the winners

The oil market could be very volatile over the next few months. If production from Venezuela continues plummeting and supplies from Iran slump due to sanctions, then the price of Brent could blast well past $80 a barrel. That would be great news for oil producers like ConocoPhillips and Chevron, since they sell a larger portion of their oil at Brent-based prices, which could give their stocks more fuel to outperform rivals in the coming months.

 

 

https://www.fool.com/investing/2018/09/16/the-oil-market-is-entering-a-crucial-period.aspx

 

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U.S. Secretary Of State Criticizes Iran-Chinese Oil TiesChina

U.S. Secretary of State Mike Pompeo slammed Iran’s Supreme Leader Ali Khamenei for staying silent on reports of China violating the human rights of Muslim minorities, accusing Iran of turning a blind eye because China is Iran’s number-one oil customer.

“@khamenei_ir fancies himself the leader of the Islamic world, but his regime has been totally silent as China—the top buyer of #Iran’s oil—has persecuted and detained hundreds of thousands of its Muslim citizens,” Pompeo tweeted on Thursday.

While the United States tries to choke off as much Iranian oil exports as possible when sanctions return on November 5, China has said that it will not stop buying Iranian oil. But Beijing is also said to have agreed not to increase its oil purchases from Iran.

 

Over the past few weeks, reports have intensified that China has been detaining and persecuting the Uighur Muslim minority in its Xinjiang autonomous region in northwest China.

At the end of August, the UN Committee on the Elimination of Racial Discrimination said in a report on China that it was alarmed by “Numerous reports of detention of large numbers of ethnic Uighurs and other Muslim minorities held incommunicado and often for long periods, without being charged or tried, under the pretext of countering terrorism and religious extremism.”

“The Committee regrets that there is no official data on how many people are in long-term detention or who have been forced to spend varying periods in political ‘re-education camps’ for even nonthreatening expressions of Muslim ethno-religious culture like daily greetings. Estimates about them range from tens of thousands to upwards of a million,” the UN committee said.

A Human Rights Watch (HRW) report from earlier this month said that Chinese authorities have “dramatically scaled up” repressive policies against the Turkic Muslim people in the Xinjiang region since 2016.

China claims that the detention camps are education centers.

It’s not only Iran that has failed to speak out against the alleged mass repression of Muslims in China. Predominantly Muslim countries like Saudi Arabia and Indonesia have also been silent on the issue, Bloomberg notes.

 

https://oilprice.com/Latest-Energy-News/World-News/US-Secretary-Of-State-Criticizes-Iran-Chinese-Oil-Ties.html

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The Millennials Making Millions In Texas Oil

Midland

John Sellers and Cody Campbell are holding court one hot August evening in the corner of an oil-themed dive bar in Midland, Texas. After flying in on their private jet, they’re shaking hands, cracking jokes and talking deals with aspiring oilmen, contractors and land traders, almost all in their early 30s. A life-size, stuffed grizzly bear stands by a wall wearing a baseball cap embossed with: “Make Oil & Gas Great Again.”

It’s not hard to see why Sellers and Campbell are in such high demand in this hardscrabble city that has become the global center of the shale revolution. Over the past decade, they’ve bought and sold tens of thousands of oil leases in the Permian Basin, making deals blessed with a handshake in diners, on the hoods of trucks and in bars such as this.

The co-CEOs of Double Eagle Energy III Holdings LLC may be the most prolific, and richest, Texas dealmakers you’ve never heard of. At just 36 years old, they’ve personally made at least $500 million combined, according to an analysis by the Bloomberg Billionaires Index, based on typical deals in the sector. They declined comment on their wealth. At just 36 years old, they’ve personally made at least $500 million combined.

The oil industry has produced many billion-dollar fortunes, from H.L. Hunt, who rose to fame in the 1930s, to Harold Hamm, who led the innovations in shale that began in the 2000s. But while most were made from striking oil, the new game in town is land. Sellers and Campbell began as land men, specialists in buying and quickly selling drilling rights, which, in Texas, are all privately owned.

“You can have the best drilling engineer, the best geologist, the best of everything, but if you don’t own an oil and gas lease you can’t drill a well,” Campbell said, wearing a polo shirt, jeans and cowboy boots and sipping whiskey on the rocks. “The land man was always looked down upon because he wasn’t a scientist. Not anymore.”

They’re not alone. Dozens of young entrepreneurs, mostly in their 30s, are running private-equity-backed companies in the frenzied boom in West Texas and New Mexico that may each be worth billions of dollars.

Whether they realize that kind of cash will depend, of course, on the vagaries of the shale industry, where consistent profits remain elusive. Rising costs and pipeline shortages have put the breaks on growth this year. And like any property boom, an early entry can make a career while being late can break one. Many of the young men admire the late Aubrey McClendon, the founder of Chesapeake Energy Corp., who became a billionaire leasing land for natural gas drilling in the 2000s. But he’s a cautionary tale: He was ousted after he had borrowed heavily betting on rising gas prices that never came. He was ousted after he had borrowed heavily betting on rising gas prices that never came.

The young upstarts are unperturbed by all that. With larger rivals continuing to bulk up — $30 billion in deals have been announced in just the past six months — they see themselves as prime takeover targets, and they’re angling for that big payday.

Sellers and Campbell have been friends since their days in junior high school just south of Amarillo. They played football together, first in high school and then at Texas Tech University. Sellers was a defensive lineman and Campbell an offensive lineman who’d go on to have a brief NFL career before a pectoral injury drove him out of the game.

They had gotten into real estate while in college, but business stalled in 2008 due to the financial crisis. So, on the advice of friends, they put whatever they had left into a lease in the Haynesville shale play in East Texas. They were able to quickly sell it to an operator who was looking to drill and made a profit.

For the next four years they perfected the play, expanding to the Eagle Ford in South Texas and the Permian to the west. “It was all in, all in, all in, every time,” Sellers said.

Their model at first was to simply flip leases quickly and then to participate as a non-operating partner in drilling. But they soon saw that the fast-growing world of fracking opened up a massive opportunity, one that fit perfectly with their backgrounds in real estate. They soon saw that the fast-growing world of fracking opened up a massive opportunity, one that fit perfectly with their backgrounds in real estate.

Historically, Permian wells were all vertical, meaning there was no incentive to find adjoining land. But since the late 1990s, when fracking began, shale production has meant drilling sideways, pumping water, sand and chemicals at high pressure to create cracks in rock deep in the ground to release oil or natural gas.

As operators became more sophisticated, they drilled wells longer, running horizontally for two, sometimes three miles. That meant they needed to line up multiple, connected land leases. The shale game became less about finding oil and more about patching together the land needed to drill long wells. That’s what Sellers and Campbell do — put the jigsaw puzzle together. And, of course, several contiguous leases that enable two miles of horizontal drilling are worth exponentially more than by themselves.

“In certain areas we’re in now, it’s thousands of people who could own units you think can be drilled,” Campbell said. In 2013, private equity came knocking. With the shale revolution well underway, Apollo Global Management LLC backed Sellers and Campbell in an Oklahoma deal in which they more than quadrupled the original investment in a year, they said.

Their biggest payout to date came last year, when they sold about 70,000 acres to Parsley Energy Inc. for $2.8 billion. Since then they’ve raised more money from Apollo, assembled an even larger position of 80,000 acres and started a drilling company. Based on recent sales prices, their current holdings could be worth as much as $6 billion. They declined comment on that estimate. Their biggest payout to date came last year, when they sold about 70,000 acres.

The two have a reputation for being aggressive buyers, freely paying broker commissions, a practice that often held up deals in the past.

“If someone brings us a deal, they’re going to be well-compensated,” Sellers said, as he finished a chicken salad, washed down with Tito’s, a Texas-made vodka, mixed with soda. “Our philosophy is we don’t care what other people make as long as we’re OK with the price.”

Here are profiles of other young Permian executives.

The Operators

Sitting by a frack pond in West Texas next to a dirt road one hot August afternoon, Will Hickey, 31, swipes through an app on his phone. It shows the results from a recently drilled well: 2,400 barrels of oil a day. “We’re making a lot of oil, baby!” he says, bumping fists with his business partner James Walter, 30.

Hickey and Walter were working at Pioneer Natural Resources Co. and Denham Capital, respectively, when, in 2015, they decided to go into the oil business together. They moved to Midland and soon spotted an opportunity around the city of Pecos in the Delaware Basin. They raised $75 million from private equity firms Pearl Energy Investment and NGP to start their company, Colgate Energy LLC.

They bought small leases in this less-developed part of the Permian and bet they could buy others nearby or swap with larger companies, Hickey said.

 

Three years on, they have won $450 million of investment from private equity backers, own rights to 30,000 acres of land and moved into drilling, operating two rigs.

Related: Rising Costs Weigh On Permian Gas Production

Of their 30 employees, all but one are under 35 years old.

“It’s so fast-paced out here, the land deals, the data, the technology — it’s become more and more a young man’s game,” said Walter. “Our office feels more like Google than Exxon Mobil. “It’s so fast-paced out here, the land deals, the data, the technology — it’s become more and more a young man’s game.” 

The Investment Banker Mark Hiduke, 31, had always aimed to be an investment banker, but the 2008 financial crisis limited his opportunities as a new graduate of Southern Methodist University. He soon joined Pioneer as part of a seven-member team in charge of buying and selling assets.

He noticed that many deals crossed his desk that were too small for large companies to consider. “Leases were selling for $5,000 an acre,” he said. “I thought, ‘This is crazy, the valuation should be five or six times this.’ ”

With funding obtained from NGP, he started PCORE and bought small, overlooked leases and sold them just 18 months later. The deal made his investors three times their money despite a 68 percent drop in oil prices, he said.

He began a second company, called PCORE II, in 2016, leasing land in the southern part of the Delaware Basin, which was cheaper at the time than the Midland Basin.

The Land Man

While running land and mineral ownership searches for Devon Energy Corp. after graduating from Tarleton State University, Tyler Glover, 33, kept coming across an odd name: Texas Pacific Land Trust.

Created to pay back creditors of the bankrupt Texas Pacific railway in the 1880s, the trust owns large swaths of land and mineral royalties in West Texas. After more than 100 years of selling off land, the trust was lft with areas in Loving, Reeves and Culberson counties that no one wanted to buy.

It just so happened that this was the core of the Delaware Basin, the western part of the Permian and one of the centers of the shale revolution.

Glover joined Texas Pacific as a land man in 2011, the youngest person at the company by at least 15 years, he said. Texas Pacific had a market value then of just over $1 billion.

Related: Major Airlines Expect Oil Prices To Rise

As the market woke up to the size of the company’s land holdings (a 1 million acre mix of surface and royalty rights), its value has surged to $6.4 billion to make it the best-performing major U.S. oil stock never to have pumped a barrel of crude. Glover is the chief executive officer, historically an administrative role.

“There is no way anyone could re-create an asset base like this today,” he said. “Because of the value of the land and resources we sit on now, more active management of Texas Pacific is a necessity. “There is no way anyone could re-create an asset base like this today.”

The Sand Man

After observing his family’s coal business as a child, Kentucky-born Rhett Bennett, 37, didn’t want to get into mining after graduating from the University of Georgia in 2004. So he jumped into the energy industry and, after a few twists and turns, wound up right back in the mining business.

Not mining for coal, though. Mining for sand, the grit that makes fracking possible.

Bennett first moved to Texas back in 2004. He learned about oil leases from friends and started flipping them. In 2015, he bought a big position in southeast New Mexico and sold it 16 months later to Marathon Oil Corp. for $700 million, making five times the original investment for himself and his investors, he said.

Bennett then got into supplying sand for frackers after he noticed that most of the sand used for wells was being transported by train hundreds of miles, from Wisconsin. He opened Black Mountain Sand in West Texas, joining scores of other entrepreneurs trying to muscle out the Wisconsin crowd. He believes his company would be worth about $2 billion on public markets.

“If you’ve been around the last 10 years, you’re as experienced as anybody else,” he said.

 

https://oilprice.com/Energy/Crude-Oil/The-Millennials-Making-Millions-In-Texas-Oil.html

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