Tag: Oil

Oil Heads for First Annual Decline Since 2020 as Oversupply Weighs

Posted on by slightbourne@noblecapitalmarkets.com

Oil prices are on pace to decline around 10% in 2022, which would mark the first annual drop since the pandemic-driven crash of 2020. After a volatile year, bearish sentiment has taken hold in oil markets amid fears that surging production outside OPEC will lead to an oversupplied market.

With the global economy slowing, especially in key consumer China, demand growth is stalling. Meanwhile, output has hit new highs in the United States, Brazil, Guyana and other non-OPEC countries. This perfect storm of sluggish demand and robust non-OPEC supply has tipped the balance into surplus, putting downward pressure on prices.

West Texas Intermediate futures are trading near $72 per barrel, down from over $120 in June. The international Brent benchmark is hovering under $78, having fallen from summertime highs over $130. Despite ongoing risks, including escalating Iran-related tensions in the Middle East, oil is poised to post its first yearly decline since the Covid crisis cratered prices in 2020.

Supply Surge Outside OPEC Upsets Market Balance

Much of the extra crude swamping the market is coming from the United States. American oil output averaged 13.3 million barrels per day last week, a record high. Exceptional production growth is also happening in Brazil, Guyana, Canada and other countries.

The International Energy Agency expects this non-OPEC supply surge to continue, forecasting growth of 1.2 million barrels per day next year. That will more than satisfy the world’s modest demand growth projected at 1.1 million barrels per day in the IEA’s base case scenario.

With non-OPEC, and chiefly U.S. shale, filling demand, OPEC and its allies have lost their traditional grip on balancing the market. Despite cutting output targets substantially, OPEC+ efforts to lift prices seem futile.

Traders anticipate more discipline will be required to bring inventories down. But further significant cuts could simply provide more space for American drillers to increase production, replacing any barrels OPEC removes.

Tepid Demand Outlook Adds to Gloomy Price Forecast

On top of the supply influx, oil bulls are also contending with a deteriorating demand environment. High inflation, rising interest rates, and frequent Covid outbreaks have slowed China’s economy significantly.

With Chinese oil consumption dropping, global demand growth is expected to decelerate in 2024. Major financial institutions like Morgan Stanley see demand expanding at less than 1 million barrels per day. That’s about half the pace forecast for 2023.

Other major economies in Europe and North America are also wobbling, further dampening the demand outlook. Less robust consumption, together with the supply deluge, points to a market remaining oversupplied through next year.

In futures markets, bearish sentiment has sunk in. Both WTI and Brent futures point to prices averaging around $80 per barrel in 2023, barring a major geopolitical disruption. That would cement the first back-to-back years of oil price declines since 2015-2016.

Wildcard Risks – Can Middle East Tensions Shift Momentum?

As oversupply dominates, the greatest upside risk to prices may be conflict-driven outages that take substantial oil capacity offline. Heightened tensions between Iran and the West pose this type of wildcard geopolitical threat.

Recent attacks on oil tankers near the Strait of Hormuz and Arabian Sea occurred after the U.S. killed an Iranian commander. Iran-backed Houthi rebels in Yemen also launched missiles and drones at facilities in Saudi Arabia.

While no significant disruptions have occurred so far, direct hostilities between Iran and the U.S. or its allies could sparks clashes endangering Middle East output. Iran has threatened to blockade the Strait of Hormuz, which handles a fifth of global oil trade. Any major loss of supply through this chokepoint could upend the bearish outlook.

For now, however, the market remains fixated on bulging inventories and the supply free-for-all outside OPEC. As the world undergoes a historic shift in oil production geography, the industry faces a reckoning over whether unchecked growth risks unsustainably low prices. If the supply surge continues outpacing demand, today’s pessimism over prices could last well beyond 2024.

Take a look at more emerging growth energy companies by taking a look at Noble Capital Markets’ Senior Research Analyst Michael Heim’s coverage universe.

Oil Prices Drop on Angola OPEC Exit, US Production Increases Amid Red Sea Worries

Posted on by slightbourne@noblecapitalmarkets.com

Oil prices fell over $1 a barrel on Thursday after Angola announced its departure from OPEC, while record US crude output and persistent worries over Red Sea shipping added further pressure.

Brent crude futures dropped $1.30 to $78.40 a barrel in afternoon trading, bringing losses to nearly 2% this week. US West Texas Intermediate (WTI) crude also slid $1.19 to $73.03 per barrel.

The declines came after Angola’s oil minister said the country will be leaving OPEC in 2024, saying its membership no longer serves national interests. While Angola’s production of 1.1 million barrels per day (bpd) is minor on a global scale, the move raises uncertainty about the unity and future cohesion of the OPEC+ alliance.

At the same time, surging US oil output continues to weigh on prices. Data from the Energy Information Administration (EIA) showed US production hitting a fresh peak of 13.3 million bpd last week, up from 13.2 million bpd.

The attacks on oil tankers transiting the narrow Bab el-Mandeb strait at the mouth of the Red Sea have forced shipping companies to avoid the area. This is lengthening voyage times and increasing freight rates, adding to oil supply concerns.

So far the disruption has been minimal, as most Middle East crude exports flow through the Strait of Hormuz. But the risks of broader supply chain headaches are mounting.

Balancing Act for Oil Prices

Oil prices have stabilized near $80 per barrel after a volatile year, as slowing economic growth and China’s COVID-19 battles dim demand, while the OPEC+ alliance constrains output.

The expected global demand rise of 1.9 million bpd in 2023 is relatively sluggish. And while the OPEC+ coalition agreed to cut production targets by 2 million bpd from November through 2023, actual output reductions are projected around just 1 million bpd as several countries struggle to pump at quota levels.

As a result, much depends on US producers. EIA predicts America will deliver nearly all new global supply growth next year, churning out an extra 850,000 bpd versus 2022.

With the US now rivaling Saudi Arabia and Russia as the world’s largest oil producer, its drilling rates are pivotal for prices. The problem for OPEC+ is that high prices over $90 per barrel incentivize large gains in US shale output.

Most analysts see Brent prices staying close to $80 per barrel in 2024, though risks are plentiful. A global recession could crater demand, while a resolution on Iranian nuclear talks could unlock over 1 million bpd in sanctions-blocked supply.

The Russia-Ukraine war also continues clouding the market, especially with the EU’s looming ban on Russian seaborne crude imports.

Take a moment to take a look at some emerging growth energy companies by looking at Noble Capital Markets’ Senior Research Analyst Michael Heim’s coverage list.

Impact of Angola’s OPEC Exit

In announcing its departure, Angola complained that OPEC+ was unfairly reducing its production quota for 2024 despite years of over-compliance and output declines.

The country’s oil production has dropped from close to 1.9 million bpd in 2008 to just over 1 million bpd this year. A lack of investment in exploration and development has sapped its oil fields.

The OPEC+ cuts seem to have been the final straw, with Angola saying it needs to focus on national energy strategy rather than coordinating policy within the 13-member cartel.

The move makes Angola the first member to leave OPEC since Qatar exited in 2019. While it holds little sway over global prices, it does spark questions over the unity and future cohesion of OPEC+, especially if other African members follow suit.

Most analysts, however, believe the cartel will hold together as key Gulf members and Russia continue dominating policy. OPEC+ still controls over 40% of global output, giving it unrivaled influence over prices through its supply quotas.

But UBS analyst Giovanni Staunovo points out that “prices still fell on concern of the unity of OPEC+ as a group.” If more unrest and exits occur, it could chip away at the alliance’s price control power.

For now OPEC+ remains focused on its landmark deal with Russia and supporting prices through 2024. Yet US producers are the real wild card, with their response to higher prices determining whether OPEC+ can balance the market or will lose more market share in years ahead.

Endeavor Energy Partners Exploring Potential $30 Billion Sale

Posted on by slightbourne@noblecapitalmarkets.com

Endeavor Energy Partners, the top privately-held oil and gas producer in the prolific Permian Basin of west Texas and New Mexico, is considering a sale that could value the company at an astonishing $25-30 billion, according to a recent Reuters exclusive.

The news comes fresh off the heels of some absolutely massive M&A action among public oil independents, with the $60 billion tie-up between ExxonMobil and Pioneer Natural Resources followed by Chevron announcing the $50+ billion purchase of Hess Corp. Now the private players are looking to capitalize on the consolidation wave by monetizing their substantial acreage as well.

Driving the potential multi-billion dollar valuation is Endeavor’s premier 350,000 net acre position in the coveted Midland sub-basin, the sweet spot of the larger Permian. With oil prices still hovering near $80 per barrel despite recession fears, there remain plenty of companies willing to pay up for high-quality acreage that can drive efficient growth for years to come. And Endeavor’s assets definitely check those boxes.

The Visionary Behind Endeavor’s Rise

Endeavor traces its roots back 45 years when Texas oilman Autry Stephens founded the small independent. The 85-year old Stephens grew the company through shrewd acreage acquisitions and by managing costs tightly with vertically integrated services businesses.

Now with retirement on the horizon, Stephens has apparently decided that the time is right to capitalize on the current market enthusiasm and secure his life’s work’s future by selling Endeavor to one of the large public independents like an Exxon or Chevron. Certainly Stephens’ estate and early investors would realize a tremendous windfall from such a deal.

While Endeavor has reportedly considered offers before, this time the process seems to be progressing firmly with investment bankers at JP Morgan already preparing marketing materials for potential buyers. So while there’s no guarantee that Endeavor finds a buyer or completes a sale, things have moved beyond the tire-kicking stage.

Ripe for the Picking by “Big oil”

As mentioned previously, Endeavor’s footprint in the core of the Permian Basin makes the company a logical target for any number of deep-pocketed suitors from major integrateds to large E&Ps looking to expand their presence.

And most of the likeliest buyers like Exxon, Chevron, and ConocoPhillips have all recently pulled off huge, multi-billion dollar deals to consolidate acreage while still leaving their balance sheets relatively unscathed. Using their equity and maintaining strong investment grade credit ratings remains paramount for the majors.

For example, Chevron structured its takeover of Hess Corp such that the $50 billion price tag amounted to less than half of its current cash position. So the company would have no issues stepping up to buy another large, complementary Permian pure-play.

Of course Exxon is in the same boat having expertly engineered the Pioneer acquisition to be immediately accretive to earnings and cash flow. So whileAbsorbing all of Endeavor’s 350k acres might be a bridge too far for XOM, the supermajor could easily swallow a chunk of the company or join a consortium.

Not to be outdone, ConocoPhillips recently closed its buyout of existing partner Lime Rock’s 50% stake in the Canadian Surmont oil sands project proving its appetite for sizable deals remains healthy. CEO Ryan Lance has also been vocal about wanting to bulk up the company’s Permianpresence over the long term giving it both the strategic rationale and financial means to pursue Endeavor.

Each of these independent E&Ps seem well suited to provide a soft landing for founder Autry Stephens’ life work. Endeavor has quietly built up a world class asset base that now looks poised to fetch an exceptional valuation and secure a new, well-heeled owner. So investors will be following the sales process closely as a potential deal would recalibrate the consolidation environment. Of course, we will have to wait and see what 2024 ultimately has in store for one of the Permian’s great growth stories.

Occidental Petroleum Expands Presence in Permian Basin with $12 Billion CrownRock Acquisition

Posted on by cpatches

In a strategic move to bolster its presence in the prolific Permian Basin, Occidental Petroleum has reached an agreement to acquire CrownRock for a staggering $12 billion. This significant deal, part of a broader consolidation trend in the U.S. energy sector, positions Occidental to fortify its standing as the ninth-largest energy company in the U.S.

CrownRock, a major privately held energy producer operating in the Permian Basin, is currently developing a 100,000-acre position in the Midland Basin, a crucial segment spanning 20 counties in western Texas. The Midland Basin, contributing 15% of U.S. crude production in 2020, is a key focus for Occidental’s goal to increase its scale in the Permian.

The transaction is set to add a substantial 170,000 barrels of oil equivalent per day to Occidental’s production capabilities. Furthermore, with 1,700 undeveloped locations in the Permian, the deal positions Occidental for strategic expansion in a region vital to the nation’s energy landscape.

To finance this significant acquisition, Occidental plans to issue $9.1 billion in new debt, complemented by approximately $1.7 billion in common stock. Despite these financial obligations, Occidental remains committed to its goal of reducing its overall debt to below $15 billion, showcasing confidence in the long-term benefits of the CrownRock acquisition.

This move comes amidst a flurry of major deals in the energy sector, with ExxonMobil announcing a $60 billion acquisition of Pioneer Natural Resources and Chevron taking over Hess for $53 billion in recent months. Occidental’s acquisition of CrownRock underscores the ongoing consolidation trend, particularly in the Permian Basin, the largest oil-producing region in the U.S.

Occidental’s CEO, Vicki Hollub, emphasized the company’s dedication to managing its financial commitments. Despite a 10% drop in Occidental’s stock year-to-date, the acquisition of CrownRock marks the third major deal in the energy sector within a span of two months, highlighting Occidental’s determination to adapt and grow in a rapidly evolving industry.

Berkshire Hathaway, a major holder with about 26% of Occidental’s shares, was not involved in this particular deal. Occidental’s ticker symbol is OXY, and the company anticipates finalizing the CrownRock acquisition in the first quarter of 2024, adding another chapter to its dynamic expansion strategy.

This acquisition is a pivotal moment for Occidental Petroleum as it continues to navigate the evolving energy landscape, strategically positioning itself for future success in the Permian Basin.

Occidental Petroleum Corporation (NYSE: OXY), commonly known as Occidental, has a storied history dating back to its founding in 1920. Established in California, the company evolved from a small oil production venture into one of the largest independent oil and gas exploration and production companies globally. Over the years, Occidental has played a pivotal role in the energy industry, engaging in diverse operations such as oil and gas exploration, production, refining, and marketing. Known for its innovative technologies and strategic acquisitions, Occidental has expanded its reach across the Americas, the Middle East, and North Africa. The company’s commitment to responsible and sustainable energy practices aligns with its pursuit of operational excellence. As the ninth-largest energy company in the U.S., Occidental continues to navigate the dynamic energy landscape, adapting to industry trends and solidifying its position through strategic acquisitions, such as the recent $12 billion CrownRock deal, which reflects its dedication to growth and resilience in an ever-evolving market.

Explore other emerging growth energy companies on Noble Capital Markets’ Senior Analyst Michael Heim’s coverage list

Oil Prices Plunge As OPEC+ Delays Key Output Decision

Posted on by slightbourne@noblecapitalmarkets.com

Oil markets were thrown into turmoil on Wednesday after the OPEC+ alliance unexpectedly postponed a critical meeting to determine production levels. Prices promptly plunged over 5% as hopes for additional output cuts to stabilize crude markets were dashed, at least temporarily.

The closely-watched meeting was originally slated for December 3-4. But OPEC+, which includes the 13 member countries of the Organization of Petroleum Exporting Countries along with Russia and other non-members, said the summit would now take place on December 6 instead, offering no explanation for the delay.

The last-minute postponement fueled speculation that the group is struggling to build consensus around boosting production cuts aimed at reversing oil’s steep two-month slide. Disagreements apparently center on Saudi dissatisfaction with other nations flouting their output quotas. Compliance has emerged as a major flashpoint as oil revenue pressures intensify amid rising recession fears.

Prices Rally on Cut Hopes

In recent weeks, oil had rebounded from mid-October lows on mounting expectations that OPEC+ would intervene to tighten supply and put a floor under prices once more.

The alliance has already removed over 5 million barrels per day since 2023 through unilateral Saudi production cuts and collective OPEC+ reductions. But crude has continued drifting lower, with Brent plunging below $80 per barrel last week for the first time since January.

Demand outlooks have deteriorated significantly, especially in China where crude imports fell in October to their lowest since 2007. At the same time, releases from strategic petroleum reserves and resilient non-OPEC production have expanded inventories, exacerbating the supply glut.

Output Quotas Trigger Internal Rifts

Energy analysts widely anticipate that OPEC+ will finalize plans at next week’s rescheduled talks to extend existing production cuts until mid-2024. Saudi Arabia and Russia, the alliance’s de factor leaders, both support additional trims.

However, firming up commitments from the broader group may prove challenging. Crude exports are critical to the economies of many member nations. With government budgets squeezed by weakened prices, some countries have little incentive to curb production.

Unconfirmed reports suggest that Saudi Arabia demanded Iraq and several other laggards bolster compliance with quotas before it agrees to further output reductions. But getting all parties in line with their assigned targets has long confounded the alliance.

Where Oil Goes Next

For now, oil markets are in limbo awaiting next Thursday’s OPEC+ gathering. Prices could see added volatility until the cartel unveils its plans.

Most analysts still expect that additional cuts will emerge, possibly in the 500,000 barrels per day range. That may be enough to place a temporary floor under the market and keep Brent crude from approaching $70 per barrel.

But if internal dissent paralyzes OPEC+ from reaching an agreement, or one that falls significantly short of projections, another downward spiral is probable. Pressure would only escalate on the alliance to take more drastic actions to stabilize prices in 2024 as economic storm clouds gather.

Mach Natural Resources Makes Major Move with $815 Million Acquisition in Oklahoma’s Anadarko Basin

Posted on by slightbourne@noblecapitalmarkets.com

Oklahoma City-based Mach Natural Resources LP announced Monday that it has agreed to acquire oil and gas assets in Oklahoma’s Anadarko Basin from Paloma Partners IV, LLC for $815 million. The deal marks a significant expansion for Mach as it looks to increase production and proved reserves.

The acquisition includes approximately 62,000 net acres concentrated in the core counties of Canadian and Grady, along with recent production of around 32,000 barrels of oil equivalent per day. Mach cited substantial proved developed producing (PDP) reserves of 75 million barrels of oil equivalent and over a decade’s worth of drilling inventory supporting the transaction.

Mach was attracted to the assets’ high margin oil production and potential for further development. The company said the purchase advances its strategy of focusing on distributions, disciplined acquisitions, maintaining low leverage, and keeping the reinvestment rate under 50%. According to Mach, the deal is accretive to cash available for distribution and cash distribution per unit.

The properties change hands with one rig currently running in Grady County and plans for 6 more wells to be completed before the expected December 29 closing. Post-acquisition, Mach intends to add another rig, continuing its measured approach to capital spending.

The purchase price reflects discounted PDP value, presenting an opportunity for Mach to boost near-term cash flow. At the same time, the company is bringing aboard de-risked SCOOP/STACK drilling locations that can fuel longer-term growth.

To finance the $815 million transaction, Mach has lined up committed debt financing led by Chambers Energy Management and EOC Partners. The senior secured term loan will provide $825 million at the closing date. Mach stated that its leverage ratio will remain below 1.0x debt to EBITDA after absorbing the new debt.

Take a look at more energy companies by taking a look at Noble Capital Market’s Senior Research Analyst Michael Heim’s coverage list.

Mach’s Chief Executive Officer commented, “This transaction creates significant value for our unitholders and represents an important step in executing our strategic vision. We look forward to developing these high-quality assets and welcoming a talented local team to the Mach family.”

The seller, Paloma Partners IV, is backed by private equity firms EnCap Investments and its affiliates. Paloma amassed the properties in 2017 and 2018 when SCOOP/STACK deal activity was high. Its divestiture to Mach comes amidst a cooling of M&A in the play.

Mach was founded in 2021 with an emphasis on shareholder returns and steady growth in Oklahoma’s Anadarko Basin. The company currently runs a two-rig development program on its legacy acreage position.

The Anadarko Basin has seen resurgent activity as producers apply drilling and completion technology to unlock the potential of the SCOOP and STACK plays. Operators continue to drive down costs and improve productivity in the prolific geological formations.

Mach’s new Grady County acreage provides exposure to the volatile oil window of the SCOOP Woodford condensate play. Well results in the area have benefited from longer laterals, increased sand loadings, and optimized well spacing.

Canadian County offers additional Woodford potential plus stacked pays in the Meramec, Osage and Oswego horizons. Together, these reservoirs offer a mix of liquids-rich gas and high-margin oil for Mach’s operated portfolio.

With its firm financial footing and expanded operational scale, Mach appears positioned for further consolidation in the Anadarko Basin. The company now controls over 150,000 net acres in the region. Its proven strategy may attract additional sellers seeking to divest non-core acreage and realize value from their own holdings.

Mach can leverage its expanded position and technical expertise to exploit not only the SCOOP and STACK but also emerging zones like the Osage and Cottage Grove. The company anticipates its enlarged inventory will support steady production growth and consistent cash returns in the years ahead.

Monday’s major acquisition cements Mach Natural Resource’s status as a premier independent operator in the Anadarko Basin. The company seems intent on delivering on its promises of accretive growth, high cash margins, and peer-leading capital discipline. For Mach, size and scale will likely prove critical in generating free cash flow and distributions in a commodity price environment with little room for error.

Crescent Point Bolsters Alberta Montney Position With $2.55B Hammerhead Acquisition

Posted on by slightbourne@noblecapitalmarkets.com

Crescent Point Energy has entered into an agreement to acquire fellow Canadian oil producer Hammerhead Resources in an all-stock deal valued at approximately $2.55 billion. The deal will expand Crescent Point’s presence in the Alberta Montney, adding over 100,000 contiguous net acres directly adjacent to its existing land position.

Under the terms, Hammerhead shareholders will receive 0.46 share of Crescent Point common stock and $21.00 cash for each Hammerhead share. That values Hammerhead at around $45,500 per flowing barrel of production.

Strategic Fit Strengthens Key Focus Areas

The acquisition solidifies Crescent Point’s dominant position in two of Canada’s premier unconventional oil plays. It becomes the largest landholder in both the Alberta Montney and Kaybob Duvernay resource plays.

Crescent Point gains over 800 net high-value drilling locations in the Montney through the deal. This boosts its total premium inventory depth to over 20 years, creating a strong long-term growth profile.

The acquired Montney lands also carry attractive royalty rates and have promising geological characteristics analogous to Crescent Point’s existing acreage. Horizontal drilling and completions technologies have unlocked the vast resource potential of the Montney in recent years.

Significant infrastructure owned by Hammerhead, including oil batteries, water disposal, and gas gathering lines, will also transfer over and support growth plans.

Immediate Impact on Cash Flow and Dividend

According to Crescent Point’s estimates, the deal will increase excess cash flow per share by over 15% on average from 2023-2027. This comes atop the company’s existing 5-10% organic growth outlook.

The increased cash generation provides support for a 15% dividend hike to $0.46 annually upon closing the acquisition. Crescent Point’s balance sheet remains a priority, with net debt expected to decline to 1.1x adjusted funds flow by year-end 2024.

Hammerhead’s current production of 56,000 boe/d (50% oil) is expected to increase to over 80,000 boe/d by 2024. With Hammerhead’s low-decline asset base, Crescent Point sees minimal stabilization capital required to sustain output.

Consolidation Creates Scale

Pro-forma the acquisition, Crescent Point will become Canada’s 7th largest energy producer pumping over 200,000 boe/d. The increased scale provides improved access to capital and potential cost efficiencies.

The company also gains key personnel from Hammerhead to further enhance technical and operational expertise across asset teams.

CEO Craig Bryksa said the deal transforms Crescent Point into a Montney and Duvernay focused producer, complemented by its Saskatchewan assets. The consolidation “is an integral part of our overall portfolio transformation,” Bryksa noted.

Crescent Point says its near-term priorities now center on integrating Hammerhead efficiently, executing planned programs, strengthening its balance sheet, and returning increasing capital to shareholders.

For Hammerhead, the transaction provides liquidity after joining the private equity backed company just two years ago. It also positions shareholders to participate in Crescent Point’s significant free cash flow growth in the coming years.

Subject to shareholder, court, and regulatory approvals, the acquisition is expected to close in Q4 2022. The deal will cement Crescent Point’s standing as a dominant Montney producer and provides visible growth underpinned by its expanded low-risk drilling inventory.

Take a moment to take a look at Noble Capital Markets’ Senior Research Analyst Michael Heim’s coverage list.

Release – InPlay Receives TSX Approval to Renew its Normal Course Issuer Bid

Posted on by aweinsoff@channelchek.com

Research News and Market Data on IPOOF

10 Nov, 2023, 08:00 ET

CALGARY, AB, Nov. 9, 2023 /CNW/ – InPlay Oil Corp. (TSX: IPO) (OTCQX: IPOOF) (“InPlay” or the “Company“) today announced that the Toronto Stock Exchange (“TSX“) has accepted InPlay’s notice of intention to renew its normal course issuer bid for a further one year term (the “NCIB“). The previous NCIB expired on October 16, 2023. Pursuant to the Company’s previous NCIB, the Company purchased in the open market through the facilities of the TSX and through other alternative Canadian trading platforms and cancelled an aggregate of 190,400 common shares (“Common Shares“) of the Company at an average price paid of $2.84 per Common Share.

Under the NCIB, InPlay may purchase for cancellation, from time to time, as InPlay considers advisable, up to a maximum of 6,637,064 Common Shares, which represents 10% of the Company’s public float of 66,370,643 Common Shares as at October 31, 2023. As of the same date, InPlay had 90,925,401 Common Shares issued and outstanding. Purchases of Common Shares may be made on the open market through the facilities of the TSX and through other alternative Canadian trading platforms at the prevailing market price at the time of such transaction. The actual number of Common Shares that may be purchased for cancellation and the timing of any such purchases will be determined by InPlay, subject to a maximum daily purchase limitation of 43,809 Common Shares which equates to 25% of InPlay’s average daily trading volume of 175,239 Common Shares for the six months ended October 31, 2023. InPlay may make one block purchase per calendar week which exceeds the daily repurchase restrictions. Any Common Shares that are purchased by InPlay under the NCIB will be cancelled.

The NCIB will commence on November 14, 2023 and will terminate on November 13, 2024 or such earlier time as the NCIB is completed or terminated at the option of InPlay. 

InPlay believes that renewing the NCIB is a prudent step in this volatile energy market environment, when at times, the prevailing market price does not reflect the underlying value of its Common Shares. The timely repurchase of the Company’s Common Shares for cancellation represents confidence in the long term prospects and sustainability of its business model. This reduction in share count adds per share value to InPlay’s shareholders and adds another tool to management’s disciplined capital allocation strategy.

With the base dividend of $0.015/share per month, NCIB share repurchases and the Company’s continued efforts towards towards overall production per share growth, InPlay will be able to continue with its strategy of providing strong returns to shareholders.   

About InPlay Oil Corp.

InPlay Oil is a junior oil and gas exploration and production company with operations in Alberta focused on light oil production. The Company operates long-lived, low-decline properties with drilling development and enhanced oil recovery potential as well as undeveloped lands with exploration possibilities. The Common Shares on the Toronto Stock Exchange under the symbol IPO and the OTCQX under the symbol IPOOF.

For further information please contact:

Doug Bartole
President and Chief Executive Officer
InPlay Oil Corp.
Telephone: (587) 955-0632		Darren Dittmer
Chief Financial Officer
InPlay Oil Corp.
Telephone: (587) 955-0634

Caution Regarding Forward-Looking Statements 

This news release contains certain statements that may constitute forward-looking information within the meaning of applicable securities laws. This information includes, but is not limited to InPlay’s intentions with respect to the NCIB and purchases thereunder and the effects of repurchases under the NCIB. Although InPlay believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because InPlay can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions by their very nature they involve inherent risks and uncertainties. Actual results could defer materially from those currently anticipated due to a number of factors and risks. Certain of these risks are set out in more detail in InPlay’s Annual Information Form which has been filed on SEDAR+ and can be accessed at www.sedarplus.com.

The forward-looking statements contained in this press release are made as of the date hereof and InPlay undertakes no obligation to update publically or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

SOURCE InPlay Oil Corp.

Israel-Hamas Conflict Could Catapult Oil Prices to Record High of $157 Per Barrel

Posted on by slightbourne@noblecapitalmarkets.com

The ongoing fighting between Israel and Hamas risks causing substantial disruptions to the global oil market, threatening to send crude prices to unprecedented levels according to a new warning from the World Bank.

In a worst-case scenario where the conflict escalates and key oil producing nations impose embargos, oil prices could surge as high as $157 per barrel. That would far surpass the previous record of $147 set in 2008 and have dramatic ripple effects across industries.

The World Bank laid out various scenarios in its latest commodity outlook report. In a “large disruption” comparable to the 1973 Arab oil embargo, global supplies could drop by 6 to 8 million barrels per day. This massive shortage of oil on the international market would cause prices to jump by 56-75%, catapulting prices up to the $140 to $157 range.

The crisis in 1973 quadrupled oil prices after Arab producers like Saudi Arabia and Iraq imposed an export ban on nations supporting Israel in the Yom Kippur War. While neither Israel nor Hamas are major oil exporters themselves, provoking producers in the surrounding region poses a major risk.

Surging crude prices would directly impact consumers at the gas pump. Each $10 rise in the cost of a barrel of crude translates to about a 25 cent increase in gas prices according to analysts. That means if oil hit $150, gas could surge above $4 per gallon nationally, far exceeding the recent highs earlier this year. Areas like California would likely see prices cross $5 or even $6 per gallon.

High fuel costs not only hurt commuters but drive up expenses for the transportation industry. Airlines would be forced to raise ticket prices to cover the inflated expense of jet fuel. Trucking and freight companies would also pass on the costs through higher shipping rates, feeding inflation throughout the economy.

Plastics and chemical manufacturers dependent on petrochemical feedstocks would see margins squeezed as oil prices stay elevated. Other goods with significant transportation expenses embedded in their supply chains would also see prices increased.

The pain would not be limited to oil-reliant sectors. As consumers are forced to spend more on transportation and energy needs, discretionary income gets reduced. This results in lower spending at retailers, restaurants and entertainment venues. Tourism also declines as pricier gas dissuades vacations and trips.

In essence, persistently high oil prices threaten to stall the economy by depressing spending, raising inflation and input costs across many industries all at once. While the US is now a net exporter of crude and refined fuels, it remains exposed to global price movements shaped by international events.

The World Bank warned that an escalation of the Israel-Hamas tensions could create a dual supply shock when combined with reduced oil and gas exports from Russia. Global markets are still reeling from the loss of Russian energy supplies due to Western sanctions and bans.

Prior to Russia’s invasion of Ukraine, investment bank Goldman Sachs had predicted oil could reach $100 per barrel this year. The fighting has already caused prices to spike above $120 at points, showing how geopolitical instability in one region can roil prices worldwide.

The grim scenarios described by the World Bank underscore the interconnectedness binding energy markets across the globe. An event thousands of miles away increasing instability in the Middle East could end up costing American consumers, businesses, and the economy dearly.

While the baseline forecast calls for prices to moderate over the next year, an expansion of the Israel-Hamas conflict could upend those predictions. Investors, businesses, and policymakers must watch the situation closely to prepare for the economic impacts of further turmoil.

All parties involved must also be cognizant of how violence that disrupts oil production and trade risks global fallout. Diplomatic solutions take on new urgency to prevent a worst-case scenario that would inflict widespread hardship as oil races past $150 per barrel into uncharted territory.

Biden Taps Historic Amounts of Emergency Reserve Oil to Fight Prices – But Will it Work?

Posted on by slightbourne@noblecapitalmarkets.com

In a bold move to combat surging fuel prices and rampant inflation, President Biden is unleashing a flood of black gold onto the markets. The White House is planning to tap a massive 180 million barrels of crude oil from the nation’s Strategic Petroleum Reserve (SPR) – the biggest withdrawal in the reserve’s history.

The news sent oil prices tumbling 5% in early trading as speculators reacted to the supply boost. But will the SPR floodgates really succeed in taming the oil price beast that has economists worried about recession?

The sheer size of the release, equivalent to two full days of global oil consumption, grabbed headlines. Set to be gradually emptied over several months, Biden’s SPR unleashing is meant to act like a shot of bear tranquilizer for the raging oil market.

Ever since Russia’s invasion of Ukraine, reduced supply from the world’s No. 2 exporter combined with surging demand has driven prices to their highest levels since 2008. Brent crude already flirted with a mind-boggling $140 per barrel in March. Even after the SPR news-driven dip, benchmark oil remains stubbornly high at around $105.

For Biden, doling out the emergency crude is a midterm elections Hail Mary pass. Painfully high gas prices have contributed to the president’s dismal approval ratings. Tapping the SPR to lower fuel costs may be his best bet to avoid Democrats enduring a disastrous drubbing by the Republicans in November.

Beyond politics, uncorking America’s oil reserves also sends an important message to the market. It signals the Administration’s determination to fight an inflation rate that keeps printing four-decade highs. Few things impact inflation expectations like changes in oil prices. A meaningful drop could help tamp down the runaway price increases eroding consumer confidence.

But will the effort succeed or will it flounder like past attempts? With global crude inventories at historic lows, many analysts see the SPR release as a mere band-aid solution. It provides some short-term relief but doesn’t fix the supply and demand imbalance.

Goldman Sachs estimates the 180 million barrel slug will help rebalance markets this year. But it warned the move doesn’t resolve the structural deficit caused by excluding Russian exports.

Previous SPR releases also failed to produce lasting effects. Oil prices quickly rebounded after 60 million barrels were tapped in November 2021 and another 30 million in March 2022.

This time, the White House is also counting on allies for help. The International Energy Agency meets soon to potentially coordinate a collective release from its members’ reserves.

But Biden’s SPR gambit already seems at odds with other moves meant to restrict oil supply and fight climate change. Canceling the Keystone XL pipeline permit and banning new federal drilling auctions counterproductively worsened the supply crunch. A of couple million extra daily barrels from those sources would have eased pressure on prices.

The Administration now finds itself trying to fix with one hand problems partly created by the other. That internal tension undermines the large SPR release’s credibility.

Traders also scoffed when OPEC refused to boost production more than a token amount after the U.S. lobbied for extra output. With the cartel and allies like Russia benefitting handsomely from $100+ oil, they have little incentive to pump much more.

Meanwhile, risks of a demand-killing recession loom if the Fed’s inflation fight requires jumbo interest rate hikes. And Covid lockdowns in China already hurt oil demand in the world’s largest importer.

So while Biden’s SPR flow should offer some near-term relief at the pump, it may not move the needle much for long. Markets fear what happens if 180 million barrels merely postpones the supply day of reckoning rather than preventing it.

With inventories low, spare capacity shrinking, geopolitical unrest continuing, and ESG considerations constraining investment, oil looks poised to remain highly volatile. While the SPR release was historic in size, it likely won’t fully tranquilize the energy markets.

Take a moment to take a look at Noble Capital Markets’ Senior Research Analyst Michael Heim’s Energy Industry Report.

Middle East Tensions Send Oil Prices Soaring Over Supply Disruption Fears

Posted on by slightbourne@noblecapitalmarkets.com

Oil prices surged over $2 per barrel on Friday as rising geopolitical tensions in the Middle East sparked fears of potential supply disruptions. Brent crude jumped 2.3% to nearly $90 per barrel, while WTI crude also gained 2.3% to exceed $85 per barrel. The abrupt price spike reflects growing worries among traders that intensifying regional conflicts could impact oil exports.

The increase came after U.S. forces conducted airstrikes on Iranian-backed militias in Syria. This retaliatory move followed attacks on American troops in the region by Iran-supported groups. The escalating tit-for-tat strikes raised concerns that oil-rich Iran could get dragged into a wider regional conflagration.

Iran’s foreign minister warned that the U.S. would “not be spared” from retaliation if Israel does not halt its ongoing offensive against Hamas forces in Gaza. Iran is a major oil producer and key Hamas backer, so any disruption to its exports would impact global supply.

The Gaza conflict has already killed dozens and shows no signs of abating despite international efforts. Israel continues to pound Hamas targets and says preparations for a ground invasion are underway. The potential for the violence to spill over into neighboring countries and inflame sectarian divisions adds another worrying dimension for oil markets.

While no direct oil infrastructure has been affected yet, the market is trading on fears of what could transpire if hostilities spread further. Key transit points like the Strait of Hormuz could be threatened if regional clashes escalate. About 17% of global oil shipments flow through this narrow passage from the Persian Gulf.

Even Saudi Arabia, the world’s top oil exporter, could see its supply chains disrupted if the chaotic conflicts metastasize. While its production facilities remain insulated so far, continued attacks between Israel and Hamas, along with the risk of Iranian retaliation on U.S. forces, are setting markets on edge.

Traders are operating with limited visibility into how much further tensions may rise or which countries could get sucked in. Major oil producers like Saudi Arabia, Iraq, and the UAE would be hard pressed to supplant any lost Iranian barrels in a tight market. The low spare capacity leaves oil supplies extremely vulnerable to regional instability.

With myriad conflicts simmering, anxious traders are bidding up prices based on a worst-case scenario of supply shocks. However, this geopolitical risk premium could evaporate quickly if the situation de-escalates. Much depends on how hardline regimes like Iran choose to counter Israeli and U.S. actions in the days ahead.

For now, investors should brace for more volatility as headlines oscillate between conflict and ceasefire. Oil markets will remain on edge, with prices whip-sawing on any indications that Middle East disputes could jeopardize supply flows. While an outright supply crunch may not emerge, the risk has clearly increased.

Traders are weighing these bullish supply disruption anxieties against bearish demand uncertainties. Resurgent Covid cases in China along with broader inflationary pressures and economic weakness continue to dampen the consumption outlook. For oil markets, layers of complexity will drive price gyrations going forward. Strap in for a bumpy ride.

Chevron Agrees to Buy Hess in $53 Billion Mega-Merger

Posted on by cpatches

In a significant move that underscores the ongoing transformation within the energy sector, Chevron (NYSE: CVX) has recently announced its acquisition of Hess (NASDAQ: HES) in a monumental $53 billion all-stock deal. This mega-merger comes on the heels of Exxon Mobil’s $60 billion bid for Pioneer Natural Resources, marking the second colossal consolidation among major U.S. oil players this month.

The strategic significance of this merger revolves around the ambitions of both Chevron and Exxon to unlock the untapped potential of Guyana’s burgeoning oil industry. Guyana, once an inconspicuous player in the oil sector, has rapidly ascended the ranks to become one of Latin America’s foremost oil producers, second only to industry giants Brazil and Mexico, thanks to substantial oil discoveries in recent years.

This high-stakes deal positions Chevron in direct competition with its formidable rival, Exxon, in the race to capitalize on Guyana’s newfound prominence. Chevron’s offer, consisting of 1.025 of its shares for each share of Hess or $171 per share, represents a premium of approximately 4.9% to the stock’s most recent closing price. The total value of the transaction, encompassing debt, amounts to a staggering $60 billion.

Upon the successful completion of this transaction, John Hess, CEO of Hess Corp, is set to join Chevron’s board of directors, cementing the collaborative vision of the two energy giants. Chevron has also expressed its commitment to fortify its share repurchase program, intending to bolster it by an additional $2.5 billion, reaching the upper limit of its annual $20 billion range. This decision underscores Chevron’s confidence in future energy prices and its robust cash generation.

Notably, this merger serves as a testament to Chevron’s unwavering dedication to fossil fuels. In a climate where global energy dynamics are evolving rapidly, Chevron’s move underscores a resolute belief in the enduring strength of oil demand. Large energy producers continue to employ acquisitions as a strategy to replenish their reserves after years of underinvestment, further highlighting the industry’s drive to secure its future in a dynamically shifting landscape.

This merger between Chevron and Hess not only signals the industry’s determination to harness the full potential of Guyana’s oil reserves but also represents a pivotal moment in the evolution of the energy sector, as established players seek new avenues for growth and consolidation in a rapidly changing world. The deal is expected to close around the first half of 2024, setting the stage for a new chapter in the energy industry’s ongoing narrative.

Exxon Makes Largest Deal Since 1999 with $59B Pioneer Purchase

Posted on by slightbourne@noblecapitalmarkets.com

Oil giant Exxon Mobil is making a huge bet on shale with its just-announced $59 billion all-stock acquisition of Pioneer Natural Resources, one of the largest producers in the Permian Basin of West Texas and New Mexico. Shale oil is a type of unconventional oil found in shale rock formations that must be hydraulically fractured to extract the oil.

The deal, which is Exxon’s biggest since its merger with Mobil in 1999, will give it access to Pioneer’s large acreage position in the Permian, allowing Exxon to more than double its current production in the region to over 1 million barrels per day once the deal closes in 2024.

This massive expansion of Exxon’s shale oil production comes even as much of the industry has pulled back investments in new drilling due to investor pressure to improve returns and limit growth. While Exxon is already one of the most active drillers in the Permian, the addition of Pioneer’s operations will make it the largest shale oil producer in the basin by far.

The shale boom propelled U.S. oil production to record highs in recent years, though growth has slowed more recently. The Biden administration has also paused new leases for drilling on federal lands, creating uncertainty around future shale production. However, the industry is still projected to provide most new sources of oil supply worldwide in the coming years.

Exxon’s bet is that shale, especially the Permian where production costs are lowest, will continue to drive future growth. Pioneer outlined an ambitious plan last year to raise Permian production as high as 2 million barrels per day by 2030. Together, the companies expect to capture major cost savings by combining operations.

But analysts say the deal is not without risk for Exxon. While shale helped supercharge U.S. production, the industry has had a mixed track record of profitability. Investors have lost patience with shale companies struggling to deliver consistent returns, pushing firms like Pioneer to focus more on cost discipline and shareholder payouts rather than maximum production growth.

Outside shale, Exxon is also working to develop large, costly conventional oil projects offshore Guyana and in other regions to replenish reserves. Some analysts question whether Exxon might be spreading itself thin trying to balance massive shale drilling with high-stakes conventional projects.

More broadly for the oil industry, concerns around climate change have made the long-term outlook uncertain. With electric vehicles going mainstream and many governments setting net-zero emissions targets, peak oil demand may already be behind us according to some forecasts.

While Exxon says shale oil will be needed to meet global energy demand for decades to come, increasing pressure on the industry to reduce emissions led Pioneer to accelerate its own net zero target from 2050 to 2035 after the acquisition was announced. With shale methane emissions a major focus for policymakers, combining operations could allow for more investment in leak detection and reductions.

For now, Exxon seems confident in the value of shale, and particularly the Permian’s vast oil riches. The Pioneer deal positions it to be the dominant driller in the West Texas region as others pull back. But only time will tell whether the big bet on shale pays off or leaves Exxon overextended. The deal reflects one of the oil majors’ biggest signals of confidence yet that shale will continue driving growth well into the future.

Take a look at other energy and natural resources companies by taking a look at Noble Capital Markets’ Research Analyst Michael Heim’s coverage list.