Finance News

piraNYC-based PIRA Energy Group believes that falling crude prices and the resulting pressure on margins seen by producers may directionally provide less headroom for regulators to add additional costs to production via new or intrusive regulations. In the U.S., large stock changes: crude build and product draw. In Japan, typhoons throttle back crude runs, imports, and tempers demand. Specifically, PIRA's analysis of the oil market fundamentals has revealed the following:

Fracking Policy Monitor
Falling crude prices and the resulting pressure on margins seen by producers may directionally provide less headroom for regulators to add additional costs to production via new or intrusive regulations. Federal regulations with potential impacts on fracking production are still expected from President Obama's Methane Strategy, though EPA has shown an inclination towards expanding voluntary efforts as well. A decision on whether and how to regulate is expected soon, with any regulations to follow by end-2016. On the state level, the ability of localities to ban fracking via zoning authority continues to be a hot issue.

Large U.S. Stock Changes: Crude Build, Product Draw
Oil prices have no near-term anchor. This past week saw the second largest weekly crude inventory build of the year which was 1.0 million barrels greater than the rather large product stock decline. Week-on-week product stocks fell as reported demand increased, product imports declined and crude runs dropped to the lowest level since Spring maintenance. The crude inventory deficit narrowed while gasoline's stock deficit increased. Distillate, kero-jet and residual fuel oil inventories are virtually identical to last year.

Japanese Typhoons Throttles Back Crude Runs, Imports, and Tempers Demand
Crude runs eased back due to turnarounds and typhoon related impacts. Crude imports eased and stocks drew slightly. Finished product stocks posted a modest build. Gasoline demand was lower despite the "Sports Day" holiday, which normally should lift demand, but the typhoon impact appears to have dominated. Gasoil demand was predictably lower, with higher yield, and stocks built modestly. Refining margins remain very soft with all the major product cracks weakening.

World LPG Export Volumes Soaring
Global seaborne trade of LPG soared to record levels in September with volumes approaching 7 million metric tons of LPG. Total Middle East exports in September were roughly 3.0 million metric tons in the high end of the range this year but not near July 2013 highs of some 3.5 million. US Exports for September were approximately 1.4 MM metric tons, nearly 50% of the total Middle East volumes. Increasing US exports are the main driver pushing global waterborne trade to record levels.

U.S. Ethanol and Biodiesel Prices Rise
After falling for six straight weeks, U.S. ethanol prices found support at the $1.46-$1.50 per gallon level and increased the week ending October 10.U.S. biodiesel assessments rose back above $3 per gallon last week, but most producers failed to cover cash manufacturing costs.

Ethanol Output and Inventories Decrease
U.S. ethanol production dropped to 885 MB/D the week ending October 10, erasing most of the gains from the preceding week and edging close to the six-month low 881 MB/D set two weeks earlier. Stocks were down 295 thousand barrels to a five-week low 18.4 million barrels.

The information above is part of PIRA Energy Group's weekly Energy Market Recap - which alerts readers to PIRA's current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

DeloitteDeals decrease as operators wait for clarity over the future of the UKCS

Oil and gas operators may be sitting on new investment decisions until the future of the North Sea becomes clearer, according to the latest report from business advisory firm Deloitte.

The report, which details drilling, licensing and deal activity across North West Europe over the third quarter of 2014 and was compiled by Deloitte's Petroleum Services Group (PSG), found that four deals were announced offshore UK. This is slightly down on the five transactions reported in Q2 2014 and substantially lower than the 14 registered during Q3 2013.

Derek Henderson, senior partner in Deloitte's Aberdeen office, said the drop in deals may be down to North Sea operators continuing to wait for further clarity about the future of the UK Continental Shelf (UKCS).

In particular, firms are waiting for more detail about the implementation of the Wood Review, including formation of the Oil & Gas Authority, and changes to the North Sea's fiscal regime. These measures are due to be detailed in Chancellor George Osborne's Autumn Statement on 3 December.

Henderson said: "The industry continues to wait and see how the future of the North Sea will take shape. This is a particularly interesting year for the UKCS as it goes through a period of transition. There remains much change on the horizon and, as a result, many companies will be biding their time.

"All eyes will be on the Chancellor's Autumn Statement, where industry will be looking for measures which support the challenges of operating in this mature basin. Having spoken to a range of investors in the North Sea*, we know that a fiscal regime which is more predictable, with a lower tax burden is key for improving investor confidence. Incentives which will encourage exploration and appraisal activity, as well as new entrants to the region, are also a vital part of the equation.

"Ultimately, the UKCS needs to be internationally competitive if it is to attract the investment it requires to boost its future prospects. We've made all of these views clear in our submission to the fiscal consultation. This is the most important Autumn Statement for some time now, as it could be the last chance to get the fiscal regime right."

Meanwhile, the report also found 11 exploration and appraisal wells were drilled during Q3, up on the seven reported in the previous three months. This is consistent with the 11 announced during the same period last year.

However, price pressure and access to finance have remained issues on the UKCS. A large number of North Sea assets are on the market from some of the larger operators. Smaller companies, in some cases with limited budgets, tend to be the most likely buyers, creating a price differential in the market and potentially stalling deal activity.

Graham Sadler, managing director of Deloitte's PSG, said that although the number of new wells drilled was higher this quarter compared with the previous three months, the figures have been at a steady low for some time.

He said: "While it's encouraging to see an increase in the number of new wells drilled this quarter, we are starting from a low base. Until we see the incentives required to encourage further exploration and appraisal activity, drilling could remain muted in the short to medium term.

"During this period of transition, costs have remained high for North Sea firms, access to finance has remained difficult and the price of oil has dropped to as low as US$95 this quarter. This combination of factors continues to make the economics of extraction more difficult for operators."

The report also found that one field had been approved on the UKCS in Q3 2014, down on the five reported the previous quarter. However, this was consistent with the same period last year when just one field received development approval.

Deloitte will release its report "Making the most of the UKCS: The oil and gas fiscal framework: Is it fit for purpose?" later this month. The report draws insight from interviews conducted with companies from across the oil & gas industry about their views on the North Sea's current fiscal regime.

piraNYC-based PIRA Energy Group reports that PIRA is cautiously optimistic the global economy will withstand the Fed's policy shift. In the U.S., stock build slows. In Japan, crude runs perk up, crude stocks draw. Specifically, PIRA's analysis of the oil market fundamentals has revealed the following:

World Oil Market Forecast, September 2014
PIRA is cautiously optimistic the global economy will withstand the Fed's policy shift and lift into next year with growth above trend. Despite this, and a rebound in oil demand growth, oil market balances are forecast to deteriorate in 2015. Low first half 2014 stocks hid blemishes but now that inventories have rebuilt.

U.S. Stock Build Slows
Overall inventories increased this past week with crude stocks declining, while product stocks increased. The product inventory increase was 4 million barrels greater than the week earlier as reported demand fell, product imports increased and runs were trimmed. Runs were higher than PIRA forecast as the industry ran just about every bit of capacity it could to take advantage of attractive margins before capacity goes down for maintenance.

Japanese Crude Runs Perk Up, Crude Stocks Draw

Crude runs rose and crude imports declined such that crude stocks drew. Finished product stocks continued rising. A good part of the rise has been in kerosene, which is strictly seasonal. But gasoline and gasoil have also posted modest stock builds. Refining margins remain soft.

Latin America Oil Market Forecast
Latin American refining capacity is constrained in 2014 by refinery maintenance leading to increased product import growth and higher crude exports, particularly in the 4th quarter. Latin American economic growth prospects have been ratcheted down in the last few months. With slower demand growth and returning/expanded refinery capacity next year, product import growth will not be as strong. Nearly all other Latin American countries are also seeing substantial product imports from the United States which supplies about 80% of regional import needs for diesel.

Asia Leads World LPG Markets Lower
November propane FEI futures fell 5.1% to $821/MT, the lowest price in six weeks. The markets are posturing for tomorrow's announcement of October contract prices by Aramco. The latest CP futures markets are betting that propane CPs are lowered by $10/MT, while the weighted average of September trading indicates that prices could remain unchanged from September at $745/MT. Butane's premium to propane was stable in September, falling $3 to $34/MT.

Ethanol Prices Plummet
The downward spiral in U.S. ethanol prices accelerated, with values pressured by soaring inventories, weak consumption, and higher production. Cash margins for ethanol manufacture declined for the fifth straight week to the poorest value since February.

The information above is part of PIRA Energy Group's weekly Energy Market Recap - which alerts readers to PIRA's current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

douglas-westwoodAt present we are seeing lower oil prices as a function of softer demand growth in both Europe and China combined with recent output increases from OPEC, particularly Libya, together with the ongoing surge in US production.

In the short-term, supply could start to be taken out of the market quite quickly if lower price levels are sustained – we have earlier noted that returns for most E&P companies have been eroded by rapidly-rising costs. This has pushed hurdle rates for new projects higher often to around $80/bbl, indeed many are described by our E&P clients as 'marginal' at $100/bbl, which means that we could start to see a major shift in oil company strategy if prices fall much further. This is likely to manifest itself in terms of pressure on the supply chain to cut costs, delays in project sanctioning and in major modification projects. So below $85 we are likely going to see investment levels materially impacted.

Further supply-side pressure may well be seen in Russia, albeit in the longer term. There are reports that western activity with 'sanctioned companies' (includes Rosneft, Lukoil, Surgutneftegaz) will have to stop in the coming weeks which could halt the likes of Exxon working with Rosneft in the Arctic and have wider implications for the oil field service community (e.g. Seadrill's provision of rigs for Rosneft). However, in reality, Artic joint ventures such as these are long-term in nature and any impact on the oil supply is most likely to be seen over a 2-5 year period.

Without political interference markets eventually self-correct. Much of the additional production capacity added in recent years is high cost US unconventional oil – and these wells peak early and decline rapidly. So if drilling stops, over-production capacity will quickly evaporate which could bring global oil supply down materially, and as we have stated so often in the past, if investment slows significantly we will be short on oil supply and there will again be upward pressure on oil prices.

douglas-westwoodSingapore has traditionally been regarded as the clear leader in the construction of jack-up rigs, accounting for 55% of global deliveries between 2000 & 2010. However, in the past five years this position has faced increasing challenge from Chinese yards willing to offer highly attractive financing in order to secure market share – China currently accounts for 47% of the orderbook compared to Singapore's 33%. With this trend expected to continue, Singaporean yards have been aggressively pursuing higher value EPC markets signalled by Keppel's "CAN DO" drillship project, which when completed will be arguably the most technically advanced asset of its kind. Both Keppel and Sembcorp have also made major investment in their FLNG capability.

We do not expect Singapore to completely retreat from the Jack-up market. However, this focus on frontier EPC segments is both a clear reaction to the inevitable rise of China (in what was considered "their" business) and a warning shot to South Korean dominance in both drillships and FLNG. The South Korean big three of Samsung, Hyundai & DSME have all struggled in recent years with balancing their traditional efficiency in light of a tighter price environment (see the earlier DW Monday on Capex Compression) and a shift away from heavy construction seems likely as suggested by SHI's recently announced merger with Samsung Engineering.

The offshore EPC landscape is undoubtedly going through some regional realignment.

piraNYC-based PIRA Energy Group reports that midcontinent differentials strengthen. In the U.S., first large stock decline since early August. In Japan, crude runs decline with higher turnaround activity. Specifically, PIRA's analysis of the oil market fundamentals has revealed the following:

Midcontinent Differentials Strengthen
In September, the WTI discount to Brent and LLS narrowed, while differentials to WTI improved for Canadian, Rockies and Midland grades, as crude stocks fell in each of those regions. Forecasts of growth in U.S. shale production next year have been reduced. Higher crude runs, lower imports, more exports, pipeline line fill, and more rail east and west are absorbing this year's production growth.

First Large Stock Decline Since Early August
This past week a dramatic swing in product stocks from a week earlier build to a draw contributed to pulling overall commercial inventories lower. The sharpest week to week decline in runs this year, lower product imports and stronger product demand all contributed to the substantial product inventory decline. The crude stock decline added to the overall decline despite runs falling and despite a recovery in imports.

Japanese Crude Runs Decline with Higher Turnaround Activity
Crude runs dropped as turnarounds gear up. Crude imports rose which built crude stocks. Finished product stocks finally declined after having risen steadily since mid-June. Gasoline and gasoil demands were slightly higher, with small stock draws for each. Kerosene demand perked up due to consumer restocking and the stock build rate came in at 135 MB/D. Refining margins remain soft. Light product cracks were slightly weaker, while fuel oil cracks firmed.

Aramco Announces Another Round of Price Reductions for Differentials in November
Saudi Arabia's formula prices for November were just released. Another round of reductions in differentials was enacted for all the key markets with the most aggressive reductions again being to Asia. U.S. pricing was lowered $0.40/Bbl, for all but the lightest grades, but Saudi crude is still disadvantaged versus domestic grades by $1.50-2.50/Bbl. In Europe, against Urals crude in both NWE and the MED, Saudi crude was competitive based on current pricing in August, but that advantage eroded sharply in September, so the reductions were warranted to restore competitiveness. In Asia, the reduction will be welcome news to refiners as refining margins have only recovered to statistical means after extreme weakness seen during the summer, and have again begun to erode.

U.S. LPG Prices Rebound
U.S. propane prices shrugged off crude oil and gasoline price weakness and rebounded strongly last week from the prior week's selloff. Stronger demand and a smaller stock build propelled prices higher. Butane prices were unchanged, despite RBOB gasoline's 4.2% rout. Next week, U.S. prices should find support in higher seasonal and agricultural demand and the nearing end of inventory increases.

Ethanol Stocks Soar
U.S. ethanol production fell to a six-month low 881 MB/D last week as some plants underwent routine maintenance turnarounds. Stocks were up 236 thousand barrels to 18.8 million barrels, the highest level since March 2013.

The information above is part of PIRA Energy Group's weekly Energy Market Recap - which alerts readers to PIRA's current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

douglas-westwoodIn many of the key deepwater markets, estimated to be worth $72bn by 2018, E&P and OFS companies alike are exposed to challenging local content requirements. Local content agreements are typically motivated by a desire to stimulate industrial development, and promote technology transfer. A typical local content agreement stipulates that E&P companies must procure a minimum percentage of equipment and services from local contractors. Recent examples can be seen in countries such as Brazil (Petrobras new-build FPSO units to use domestically-built hulls), Angola (BP partnering with Sonangol) and Nigeria (Total utilising a 90% local work force for the AKPO FPSO).

Governments in developing countries are now trying to look beyond basic economic multiplier effects, with the aim to improve local yard infrastructures, encourage sustainable and ongoing investment, community support and training, and improve on in-country fabrication and supervision. The typical risks associated with local content include lack of in-country cutting edge technology and a shortage of engineering skills, competitiveness compared to developed economies, government instabilities, all of which can combine to result in delays, re-work and cost overruns.

Local content requirements can cover everything from basic services and manpower to manufacture of more complex capital equipment. While the most critical items in a deepwater development, such as subsea trees, are typically manufactured in the US, Europe and APAC countries, the major vendors have built assembly facilities in order to service key markets such as Angola and Brazil.

The reality of international markets is that local content will remain a key selection criteria for oil and gas projects. For example, in the first round of bidding for Brazilian Pre-Salt, minimum local content of 37% was expected of bidders, increasing to more than 55% in the development phase, and there is little sign of a slowdown in political ambitions with many countries targeting 70%. However, given that deepwater spending in Latin America is expected to reach $24.8bn by 2018, local content needs to be viewed as an opportunity area rather than a threat.

piraNYC-based PIRA Energy Group reports that accounting for the strength of U.S. jet fuel demand this summer. In the U.S., stock excess accelerates. In Japan, stocks draw, but finished product stocks continue to rise. Specifically, PIRA's analysis of the oil market fundamentals has revealed the following:

Accounting for the Strength of U.S. Jet Fuel Demand this Summer

Jet fuel demand spiked in June, July and early August. Because the economy's fundamentals do not support such a high level of domestic demand, we suspect that higher than currently assumed exports will result in a revision downward of the final demand numbers. There is already data from the Bureau of the Census that suggests that July exports will be revised up by 100 MB/D, which will put July demand back to levels more consistent with the underlying fundamentals.

U.S. Stock Excess Accelerates

The year-on-year stock excess widened this past week to the highest this year. The inventory increase was mostly in crude oil as weekly imports jumped to the second highest level this year. The recent relative weakness in dated Brent to U.S. crude prices is encouraging more imports to the United States. The product inventory increase was the smallest in several weeks as reported product demand increased compared to the week before and product imports remained quite low, eliminating most of the huge excess in products the week earlier. The entire excess in inventory over last year is outside of crude oil and the four major products, being mostly in NGLs, where production is soaring.

Japanese Crude Stocks Draw, but Finished Product Stocks Continue to Rise

Crude runs fell back and crude imports declined which drew crude stocks. Finished product stocks continued to rise. Demand impacts from the Respect for the Aged holiday, directionally came in as expected, with gasoline demand higher and gasoil demand lower, but the impacts were muted. Gasoline and gasoil stocks rose modestly, while the kerosene stock build rate came in slightly above seasonal norms. Refining margins improved slightly, but remain soft. Gasoline and fuel oil cracks improved, while middle distillate cracks were little changed.

Freight Market Outlook

A glut of crude oil in the Atlantic Basin has driven the flat price of dated Brent crude below $100 per barrel to its lowest level in over two years and shifted the market structure into contango, encouraging storage. These developments have conjured up memories of the large buildup of crude in floating storage in 2008-2009, when the unfolding financial crisis plunged the global economy into the great recession. At the peak in 2009, over 100 million barrels of crude were placed into floating offshore storage on VLCCs and Suezmax tonnage. Vessel operators are also benefitting from the lowest bunker prices since June 2012 as these have plunged along with the flat price of crude oil.

Inexpensive Naphtha to Check Further Asian LPG Price Gains

Propane contango in Asia widened $14/MT with the FEI curve catching up to consistently steeper Saudi CP structure. Reports of recently lowered Saudi crude production would lead to a corresponding drop in LPG exports. Spot large cargoes jumped 3%, being called at $857/MT for late October and 1st half November arrival. Butane followed, up $15/MT to $886. Naphtha held steady. Steepening Saudi CP structure and stronger seasonal Asian demand should support prices next week while increasingly inexpensive naphtha should limit upside in the region. European prices will trend with Asian and American markets.

Biofuel Demand is Slowing Down in the U.S., Europe and Brazil; Growing Elsewhere

Biofuels programs continue to proceed actively in many countries. Canada will need about 2.2 billon liters (580 million gallons) of ethanol this year to satisfy its 5% ethanol mandate.

The information above is part of PIRA Energy Group's weekly Energy Market Recap, which alerts readers to PIRA's current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

GlobalDatalogoThe Khurais and Manifa projects in Saudi Arabia have the most recoverable reserves among the world's top 100 upstream developments, with approximately 19.4 billion barrels of oil equivalent (boe) and 13.7 billion boe, respectively, according to research and consulting firm GlobalData.

The company's latest report* states that these assets boast substantial recoverable crude oil reserves, with Khurais having 18.2 billion barrels (bbl) and Manifa holding 13.5 billion bbl. The projects also have recoverable natural gas reserves of 6.8 trillion cubic feet (tcf) and 1.4 tcf, respectively.

Robert Stevens, GlobalData's Lead Upstream Analyst covering the Middle East and North Africa, says that despite these impressive reserves, Saudi Aramco, which owns both fields, has encountered a number of difficulties during their development.

Stevens explains: "The Khurais project has the distinction of being one of the largest oil development projects in the world. The most recent activity saw 12 drilling rigs running simultaneously between 2006 and 2009, creating about 300 wells, with production beginning in June 2009.

"A major challenge for operations in the Khurais field is to increase the recovery rate of crude, but given the field's vast size, even a 1% increase in recovery rate would result in millions of additional barrels. Security is also a problem for Khurais, despite the sustained efforts of the Saudi Arabian government and Saudi Aramco."

A different set of issues faced the Manifa field, where most drilling activities and the construction of the central processing facility for crude oil production were undertaken on the coast.

Stevens comments: "Saudi Aramco and the contractors of the Manifa field confronted numerous environmental and economic obstacles during the development of the field.

"Environmental issues in the Arabian Gulf include earthquakes, which the contractors had to ensure the structures could withstand during construction."

Top 100 Global Upstream Developments Overview – Major Project Developments and Key Challenges

douglas-westwoodSince the first successful oil well was drilled by Shell-BP in 1956 at Oloibiri, Nigeria has acclaimed the status of Africa's largest oil producer and the sixth largest in the world. However, the Nigerian oil and gas industry has been engulfed in challenges with few success stories. The statistics are damning: the country loses approximately 215,000bpd to oil theft, at an estimated value of $8 billion a year.

It is pertinent to state that the troubles in the Nigerian oil and gas industry cannot only be blamed on regional instability, oil theft and religious extremism. With the upcoming general elections, the long-awaited Petroleum Industry Bill (PIB) which could help overhaul the beleaguered oil industry appears to be on the back burner, whilst the oil minister's claims of efforts made to secure pipeline infrastructure have not served as a deterrent to oil theft.

However, with the continuous investment of foreign players and the renewed involvement of local players, DW predicts that in 2015 Nigeria could drill 110 development wells both onshore and offshore. By the end of 2019 Nigeria's crude output could be 3.39 million barrels per day from its current output of 2.95 million. However, this is likely to be limited by lack of sufficient infrastructure and potential delays to final investment decisions pending the passing of PIB into law. With the right reforms and stability within the oil rich Niger Delta region, oil output would be sustainable over a longer period which could finally see the Giant of Africa roaring to hit its peak.

helix-logoHelix Energy Solutions Group, Inc. (NYSE: HLX)has  announced that its wholly owned subsidiary, Helix Q5000 Holdings S.A.R.L., has entered into a credit agreement with a syndicated bank lending group for a term loan in the amount up to $250 million. The term loan will be funded at or near the time of delivery of the Q5000 vessel, which is currently estimated in early 2015.

The key features of the new secured credit facility include:
• Debt nonrecourse to Helix
• 5 year term
• Pricing at Libor plus 250 basis points, with an undrawn fee of 87.5 basis points
• Quarterly amortization payments on the term loan based on a seven year straight line repayment profile with a balloon payment at maturity

"This new credit facility provides attractive financing not only for the Q5000, but also allows Helix to maintain the capital resources to execute our capital spending plans for new well intervention vessels, both in progress as well as potential future vessels," commented Anthony Tripodo, Executive Vice President and Chief Financial Officer.
Nordea Bank Finland Plc acted as Lead Arranger and Bookrunner of the new facility. Nordea Bank Finland Plc will serve as Administrative Agent.

douglas-westwoodDenmark is the European Union's (EU) only net exporter of oil. The Nordic state's oil exports totaled approximately 13.7 million barrels of oil equivalent in 2013. This is in stark contrast to the EU's only other significant oil producer, the UK, which became a net importer in 2004 and has experienced a steep decline in output since, as its historically productive North Sea fields reach extreme maturity. Denmark has maintained its status as a net exporter despite peak oil production in 2004. A strong shift towards wind power has seen a decrease in oil used for electricity generation while district heating systems traditionally fuelled by oil are now switching to natural gas and renewable sources.

Denmark's ability to hold on to its status as the EU's last net exporter is likely to diminish in the long-term. Its North Sea fields continue to stutter and decline in output, seeing production half from a peak of 389 kb/d in 2004 to just 192 kb/d in 2014. In 2013, a range of technical issues meant that only 12 of 19 operational fields were producing from August to December. A lack of large discoveries has also inhibited Denmark's upstream sector, seeing oil reserves fall from 1.3 Bnboe in 2006 to 0.8 in 2013. A lack of fresh developments has also led to a decline in drilling, just eight development wells have been drilled over the last three years. Well completions increase slightly in the medium-term with the development of the high-pressure-high-temperature Hejre field – however DW do not expect this to arrest the production decline.

Based on current trends, DW predict Denmark's ongoing issues with North Sea developments will see it become a net importer of oil by 2021. By this time, oil production will likely have waned to around 130 kb/d – the country's lowest daily output in 30 years.

piraNYC-based PIRA Energy Group reports that PIRA's restructured U.S. gasoline balances provide greater clarity and insight. In the U.S., large crude stock build, small product stock draw, and widening commercial stock excess. In Japan, crude stocks build despite higher runs. Specifically, PIRA's analysis of the oil market fundamentals has revealed the following:

PIRA's Restructured U.S. Gasoline Balances Provide Greater Clarity and Insight
PIRA's restructured gasoline balances are in response to the steep decline in volume and the relevance of finished gasoline stocks and imports. The changes to the EIA's finished balance came about as a result of the decline in MTBE and the rise in ethanol, as the oxygenate of choice. We have compiled a total gasoline balance, but one that also separates the major sources of gasoline supply, namely refinery output, ethanol input, and total gasoline imports. In contrast, the EIA's refinery and blender production of gasoline is a combination of refinery production, imported blending components, and ethanol.

Large U.S. Crude Stock Build, Small Product Stock Draw, Widening Commercial Stock Excess
U.S. crude stocks built, but less than the build for the same week last year, so the crude stock deficit increased. The four major refined products built as opposed to a draw last year, so the deficit for this group narrowed. In combination, crude and the four major refined products are in deficit -17.8 million barrels. All other product inventories drew less than last year's draw, widening out the year-on-year excess.

Japanese Crude Stocks Build Despite Higher Runs
Crude runs rose and imports were sufficiently high to build crude stocks. Finished product stocks also rose slightly. Gasoline demand was fractionally lower and stocks built slightly. Gasoil demand was strong and stocks drew. Kerosene demand was surprisingly strong and yield declined, such that stocks built only fractionally and less than would have been expected. Refining margins remain soft with all the major product cracks weakening modestly.

World LPG Prices Plummet
Prices of LPG fell by 10% or more in most key markets last week amid broader energy and financial market weakness. U.S. LPG stocks continue to build to ever higher record levels. Strong price competition by naphtha in Asia has led to subdued petrochemical purchasing, while an unplanned cracker upset in the Netherlands has left the NWE butane market looking long. Perhaps the only bright spot is increased propane demand in Europe in a tighter prompt market, as U.S. arrivals of the product have remained low.

Ethanol Prices and Margins Decline
The descent in U.S. ethanol prices continued though Thursday October 2, driven by building inventories and falling consumption. Cash margins for ethanol manufacture declined for the seventh consecutive week to the poorest level since the beginning of February.

Ethanol Output Increases
U.S. ethanol production rebounded to 901 MB/D the week ending October 3 from a six-month low 881 MB/D during the preceding week as some plants completed their maintenance turnarounds. Stocks were down 177 thousand barrels to 18.7 million barrels.
The information above is part of PIRA Energy Group's weekly Energy Market Recap - which alerts readers to PIRA's current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

Peterson Offshore Group BV, one of the leading energy services groups operating in the North Sea announces its consolidated results for the 12 months ending 31st Peterson-Press-PicDecember 2013.

North Sea revenues increased to £288m and operating profit increased by 9%, to £8.3m. The group's UK based companies, including Peterson UK Ltd and 80:20 Procurement Services Ltd contributed 52% of the group's operating profit, an increase from 33% on the previous year.

Significant growth was seen at Peterson's offshore supply bases in Shetland where it successfully delivered a logistics project in support of capital investment schemes occurring West of Shetland.

The group's operating companies invested a further £3.8m in buildings, plant and equipment in 2013 including a warehouse and office in the port of Aberdeen whilst simultaneously reducing the group's Long Term Liabilities from £9.6m to £5.8m.

In total, 120 new jobs were created within the UK operating companies during 2013. The majority of these roles were in Aberdeen and Lerwick to accommodate growth in demand for Peterson's core services.

Erwin Kooy, CEO of Peterson said: "We have experienced positive growth in all areas of our business, and in particular for our North Sea operations. As an organisation we think in generations, with our continued success testament to the commitment of our team and their focus on our vision and plans for future growth.
We have established international freight forwarding, recruitment, marine operations and procurement in our service offering. Most recently we established our offshore wind capability and will continue to develop our global operations and our range of integrated services."

In 2013, 7600 square metres of warehousing and two additional berths were added in Aberdeen to support growth in its supply base management services and new teams were created to support its logistics consultancy activities following contract wins in the Middle East and India.

Substantial investment was also made in the development of bespoke logistics software in response to a growing demand for smart solutions and innovation from its customers.

"The offshore logistics sector is a competitive environment and as such we constantly strive to improve and innovate our offering for clients," continued Erwin Kooy "With the development of our e-Logistics packages we can meet that challenge and also offer a number of additional benefits including time and cost reduction."

hc2logo-GlobalmarinelogoHC2 Holdings, Inc. ("HC2") (OTCQB: HCHC) announces the acquisition of Bridgehouse Marine Limited ("Bridgehouse"), the parent holding company of Global Marine Systems Limited ("Global Marine").

Global Marine is a leading provider of engineering and underwater services, responding to the subsea cable installation, maintenance and burial requirements of its customers around the world. With a fleet of vessels and specialised subsea trenching and burial equipment, the company brings a 160 year legacy in deep and shallow water cable operations. The company's main operating offices are in Chelmsford, UK and Singapore.

Philip Falcone, HC2's Chairman, President and Chief Executive Officer, stated, "We are acquiring the world's most experienced undersea cable installation and maintenance services provider at a time when significant opportunities exist globally in terms of Telecoms, Oil & Gas and Offshore Power requirements for subsea cabling expertise. This investment in a truly global industry leader gives us the opportunity to support the growth plans of a proven management team."

"I am delighted that our ambitions for Global Marine have the support of an investor that has the vision necessary to enable us to realize the substantial growth potential in the coming years," said Ian Douglas, Chief Executive Officer of Global Marine. "Together we will have the opportunity to develop the services we offer our existing customers and to bring our leading capability and expertise to customers and markets around the world."

The Board of Global Marine will be strengthened with the addition of Dick Fagerstal as Executive Chairman. Mr. Fagerstal brings a wealth of industry-relevant experience to the Board alongside current directors, Ian Douglas and Global Marine's Chief Financial Officer Bill Donaldson.

HC2 acquired Bridgehouse pursuant to a Sale and Purchase Agreement between Global Marine Holdings, LLC, a subsidiary of HC2, and the stockholders of Bridgehouse. The purchase price reflects an enterprise value of approximately $260 million, including assumed indebtedness of Global Marine, and was funded through a new senior secured credit facility provided by Jefferies Finance LLC and a sale of convertible preferred stock to DG Capital Management, LLC and another investor. The sale of preferred stock will also provide HC2 with additional working capital for general corporate purposes.

Keith Hladek, HC2's Chief Operating Officer, commented, "We are pleased with the response to our capital raise. This new capital raise will also allow HC2 to complete the tender for the remaining 30% that is outstanding of Schuff International, Inc. that the company does not already own."

Please refer to HC2's Current Report on Form 8-K to be filed with the Securities and Exchange Commission for a more complete description of the terms of the issuance of preferred stock and the terms of the Credit Agreement.

This press release is not an offer to sell or a solicitation of offers to buy preferred stock. The preferred stock has not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent an effective registration statement

piraNYC-based PIRA Energy Group reports that Asian oil balances remain long, for now. In the U.S., product stock build outpaces crude draw, widening commercial stock excess. In Japan, both crude and finished product stocks rise. Specifically, PIRA's analysis of the oil market fundamentals has revealed the following:

Asian Oil Balances Remain Long, For Now
Oil prices are likely to remain soft. Asian oil demand will pick up in 4Q and support a rising run profile post-turnaround. The continued glut of Atlantic Basin crude will need to be moved to Asia which will keep Brent-Dubai narrow. Eventually, Asian crude demand will rise and some of the surplus should be drawn, thus presenting a floor to prices. Gasoil cracks should be supported by seasonal demand increases, while gasoline cracks will weaken seasonally. Refinery margins should show improvement from weak levels seen earlier, but new refinery capacity both in Saudi Arabia and the UAE will present challenges in arbing product out of the Asian theater.

U.S. Product Stock Build Outpaces Crude Draw, Widening Commercial Stock Excess
The stock data for the week of September 5 reflected a rebenchmarking to the latest (June 2014) monthly, raising the possibility that weekly stock changes might be distorted when one week is indexed to a new benchmark, and the prior week to an older one. We mention this because of the larger than expected light product builds, and the unusual propane draw. Looking at the data as reported, crude stocks drew more this year than last, slightly widening the year-over-year deficit.

Both Crude and Finished Product Stocks in Japan Rise
Crude runs fell back slightly and imports rose, thus building crude stocks. Finished product stocks continued rising, though gasoline and gasoil stocks posted a draw. Gasoline demand continues to come in below expectations, but gasoil demand was quite strong this past week. Kerosene demand was higher on the week and the stock building rate came in slightly less than seasonal norms. Refining margins remain poor, but there was a slight improvement in gasoline and middle distillate cracks.

U.S. LPG Strength Continues, Future Prices Increases Will Face Headwinds
Propane prices reacted to Wednesday's EIA surprise of near unchanged stocks by climbing an additional 2% this week. Butane was dragged a penny lower to $1.27/gal by a large drop in gasoline prices, although butane blending economics remain extremely robust. U.S. LPG price increases will likely moderate or re-trace as stock building resumes in the coming weeks, and as the spot arbitrage to Europe and Asia remains challenged, if not closed.

Ethanol Prices Plunge
Most U.S. ethanol assessments reached seven-month lows September 4 as the DOE reported that stocks built 356 thousand barrels and the production of ethanol-blended gasoline fell 1.1% from the previous week. Corn futures were also the lowest in over four years.

Production of Ethanol-blended Gasoline Declines
U.S. ethanol-blended gasoline manufacture plummeted to 8,553 MB/D the week ending September 5 from 8,802 MB/D during the previous week, as total gasoline output declined. U.S. ethanol output rose to 927 MB/D from 921 MB/D as production outside of PADD II reached another record high.

The information above is part of PIRA Energy Group's weekly Energy Market Recap, which alerts readers to PIRA's current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

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