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Report tracks Saudi market defense in Asia
Saudi Arabia’s defense of it share of the crude oil market is most
intense in Asia, where its dominance has been challenged by
other exporters, points out a report by Wood Mackenzie.
“Saudi Arabia had to cut its price in Asia to ensure its crude
oil remained attractive to the region’s refiners,” writes Shushant
Dupta, head of Asia downstream research. “Other suppliers
looking to position themselves will have to pay close attention
to the Saudi pricing strategy for Asia.”
Until September 2014, the official selling price (OSP) for
Arab Light crude to Asia had exceeded the average of Oman
and Dubai crude, a regional marker. Since then, the premium
has become a discount, which reached $2.30/bbl in March.
“This means Arab Light’s price to Asia is at its lowest level in
more than a decade,” Gupta says. Without the discount, Arab
Light wouldn’t be competitive with comparable crudes from
Russia and Nigeria. If Saudi Arabia continued to export crude
to Asia at the current rate, its share of that growing market
would slip to 21% from 23%.
Asia’s share of Saudi crude oil exports has risen to 65% in
2014 from 60% in 2006.
During 2010-14, exports to Asia from Iraq, Russia, and
the United Arab Emirates increased by more than those from
Saudi, while competition strengthened from Latin America and
Gupta notes rising production of oil from unconventional plays
in the US and Canada has changed trade flows in the past 4 years.
“The US has increased its heavy crude imports from Canada, backing off crude volumes from Latin America,” he says.
“Similarly, higher use of domestic tight oil resulted in the redi-rection of West African crude supplies. As such, these suppliers
have turned to Asia, providing more options for Asian refiners.”
New firm to target Rockies, Midcontinent
Independence Resources Management (IRM), Houston, has
started work with a line-of-equity investment of as much as
$500 million from Warburg Pincus affiliates as an independent oil and gas company focused on the US Midcontinent and
Rocky Mountain regions.
“The company will focus on plays with large amounts of hy-
drocarbons in place and low recovery factors, where advanced
drilling and completion techniques can create compelling risk-
adjusted returns,” Warburg Pincus said in a statement.
Members of the founding staff previously worked together
at Enron Oil & Gas. Mike Van Horn, recently senior vice-president of exploration and then vice-president of geoscience at
Newfield Exploration, is IRM chief executive officer.
Others include John Nicholas, chief operating officer, recently general manager for the Appalachia Division at Southwestern Energy; Rod Steward, chief corporate officer, manager
of exploitation, capital planning, and analysis for Sheridan Production Partners; and Charles Minero, chief geosciences officer,
senior staff geologist at Shell Oil Co.
Gulfport Energy to acquire Paloma Partners III
Gulfport Energy Corp., Oklahoma City, has agreed to acquire
Paloma Partners III LLC, Houston, for $300 million. The deal is
expected to close in the third quarter.
Paloma holds 24,000 net nonproducing acres in the core of
the dry gas window of the Utica shale in Belmont and Jefferson counties in Ohio. Following completion of the deal, Gulfport’s Utica holdings are expected to total 212,000 gross acres
(208,000 net) under lease in the core of the play.
Gulfport in 2012 agreed to buy 30,000 net acres in the Utica
from Wexford Capital LP affiliate Windsor Ohio LLC for $300
million (OGJ Online, Dec, 18, 2012). That was followed in 2013
by the purchase of an additional 22,000 net Utica acres from
Windsor Ohio for $220 million (OGJ Online, Feb. 11, 2013).
Paloma Partners III is funded by EnCap Investments LP and
a subsidiary of Macquarie Group. Paloma Partners II, whose
leasehold resided in the Eagle Ford shale of South Texas, was
acquired in 2012 by Marathon Oil Corp. for $750 million (OGJ
Online, May 9, 2012).
Paloma Partners IV, meanwhile, holds 33,000 acres in the
Tuscaloosa Marine shale of Louisiana and Mississippi, where it
began nonoperated development drilling in late 2014.
Gulfport’s first quarter Utica production totaled 396 MMcfd
of gas equivalent, or 93% of the company’s aggregate net produc-
tion, compared with 93% and 78% of its aggregate production
during fourth-quarter 2014 and first-quarter 2015, respectively.
The company’s first-quarter 2015 production represented
an 11% increase over fourth-quarter 2014 production of 381.9