In this week's news update, the rig count takes another dip, COS rejects Suncor Energy’s bid and California shuts down improperly permitted wells.
California is shutting down 33 oilfield wells that state officials improperly permitted to inject into federally protected water supplies.
It’s the latest development following findings that California gave oil companies permits to dump oilfield waste and production fluid into water aquifers that were supposed to be off-limits. The aquifers hold water clean enough to be current or potential sources of drinking water.
The shutdowns, effective Oct. 15, primarily affect oilfield injection wells in central California’s Kern County. The state has promised a statewide review and federal environmental officials have ordered the state to bring its oilfield regulation back into compliance with the Safe Drinking Water Act.
Canadian Oil Sands Rejects Suncor’s Bid
Canadian Oil Sands (COS) formally rejected Suncor Energy’s $4.5 billion hostile bid, saying it “substantially undervalues” the company.
COS, based in Calgary, Alberta, said on Oct. 19 that its board voted unanimously that shareholders reject the bid. The company also laid out 15 reasons for rejecting the deal, including that the transaction takes unfair advantage of current political, economic and regulatory uncertainty in the industry and the sharp fall in COS’s share price.
COS said in a news release that its board is “looking at a full range of strategic alternatives, from continuing as an independent company, to a merger or partnership with a strategic or financial partner, to a sale reflecting full and fair value for COS.”
Rig Count Drops by Eight
The U.S. drilling rig count dropped by eight last week to 787, according to numbers released by oilfield services company Baker Hughes on Oct. 16.
The rig count, now at its new lowest level since May 3, 2002, has now fallen in eight straight weeks, losing 98 units during that time.
Gas rigs gained three units for a total of 192, while oil rigs fell sharply by 10 to 595 — it’s lowest level since July 23, 2010.
New Mexico dropped by five rigs, while Texas and Oklahoma each gave up two. North Dakota and Colorado went down one unit each, while Pennsylvania, Ohio, West Virginia, Alaska, Kansas, Utah and Arkansas were all unchanged.
Occidental Reportedly Selling Bakken Acreage at Big Discount
Occidental Petroleum Corp. is reportedly selling 300,000 acres of Bakken Shale assets in North Dakota at a steeply discounted price of $500 million to Lime Rock Resources, a private equity firm in Houston, according to Reuters news service.
Houston-based Occidental was shopping the acreage in fall 2014 for as much as $3 billion and was still seeking at least $1 billion this summer, according to Simmons & Company International, which follows oilfield acquisitions.
Simmons & Company says a combination of low oil prices, cash flow pressures and Occidental’s greater successes in Texas likely resulted in the willingness to move forward with the deal at a discounted price.
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