KeNo's Housing and Economic Portal: Monday December 22 Housing and Economic stories

Sunday, December 21, 2014

Monday December 22 Housing and Economic stories

Goodrich, Oasis Petroleum cut spending for 2015 as oil slides - (www.reuters.com) Goodrich Petroleum Corp and Oasis Petroleum Inc said they expect to spend much less on exploration and production next year, joining a list of U.S. oil and gas companies cutting capital spending as oil prices plunge. Goodrich shares fell as much as 14.7 percent to $3.57 in early trading. Oasis' shares fell as much as 13.3 percent to a record low of $11.01. Both stocks were among the top losers on the New York Stock Exchange on Wednesday. Several large oil producers, including ConocoPhillips and Apache Corp, have set lower capital spending budgets for 2015, rattled by a near 40 percent drop in global crude prices since June. Some have said they will deploy fewer drilling rigs next year.

BP to spend $1 billion on thousands of job cuts - (www.reuters.com) BP will cut thousands of jobs cut across its global oil and gas business by the end of next year in a $1 billion restructuring programme announced on Wednesday following steep falls in oil prices. The British oil major said it was also considering deeper cuts to its 2015 budget beyond the $1-$2 billion reduction already announced in October, as a result of the oil slump. "Given the recent position taken by OPEC and with oil prices where they are today, we will continue to review this further," BP head of upstream Lamar McKay said in a presentation during an investor day in London. The bulk of the restructuring costs will go towards staff redundancies in all segments, including oil exploration and production, refining and trading and administration, a company spokesman said. BP said a first charge will be taken in the fourth quarter of 2014 as it implements a plan drawn up over the past 18 months to increase efficiency. "We expect the group to incur about $1 billion of non-operating restructuring charges over the next five quarters, including the current quarter," the company said.

Canada Heavy Oil Nearing $40 Threatens New Oil Sands Projects - (www.bloomberg.com) Canadian heavy crude fell to near $40 a barrel, threatening projects under construction as producers boosted output and space on a pipeline was rationed. Imperial Oil Ltd. (IMO) is increasing output at its Kearl oil sands project to 110,000 barrels a day after a shutdown last month, Pius Rolheiser, a Calgary-based spokesman, said by phone yesterday. Enbridge Inc. apportioned space on the Spearhead pipeline, which carries Canadian crude south to Cushing, Oklahoma, after demand to ship on the line exceeded capacity, according to a company statement. Heavy West Canadian Select rose 32 cents to $42.51 a barrel after falling to $42.19 a barrel yesterday, the lowest since April 2009, data compiled by Bloomberg showed. Crude has fallen into abear market as U.S. output surges to the highest in more than three decades. Calgary-based Cenovus Energy Inc. (CVE) said today it will review its capital expenditure program in the first quarter. Canadian Natural Resources Ltd. has said it may scale back investment plans if oil pricesremain near current levels.

Fed Bubble Bursts in $550 Billion of Energy Debt: Credit Markets - (www.bloomberg.com) The danger of stimulus-induced bubbles is starting to play out in the market for energy-company debt. Since early 2010, energy producers have raised $550 billion of new bonds and loans as the Federal Reserve held borrowing costs near zero, according to Deutsche Bank AG. With oil prices plunging, investors are questioning the ability of some issuers to meet their debt obligations. Research firm CreditSights Inc. predicts the default rate for energy junk bonds will double to eight percent next year. “Anything that becomes a mania -- it ends badly,” said Tim Gramatovich, who helps manage more than $800 million as chief investment officer of Santa Barbara, California-based Peritus Asset Management. “And this is a mania.”

China’s State Firms May Default on More Loans: Moody’s - (www.bloomberg.com) Loan defaults at China’s state-owned enterprises may increase as growth in the world’s second-biggest economy slows, according to Moody’s Investors Service. Risks are greatest in industries with excess production capacity, Kai Hu, a senior credit officer at the rating company, said at a conference in Shanghai today. Economic growth will cool from “slightly below 7.5 percent” this year to about 7 percent in 2015, Thomas Byrne, the credit assessor’s head of Asia-Pacific sovereign risk group, said at the gathering. The People’s Bank of China, which cut its benchmark lending rate 40 basis points to 5.6 percent last month, must balance efforts to ease access to cash with steps to stem bad loans that soared the most since 2005 last quarter. Regulators stepped up efforts to curb local-government debt on Dec. 8, prompting borrowing costs to jump and companies to cancel or postpone at least 46.6 billion yuan($7.5 billion) of note sales this week.

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