ONE OF THE ADVANTAGES of being an editor is that I get access to new information quickly, before most regular folks. Thinking about it, that's probably one of the main reasons I went to journalism school. I like getting the facts first and then passing them along to other people.
However, in this new Information Age, we're all very connected with our smartphones and other gadgets, so we have to work hard to gain access to information before our audience - you our readers. One of the advantages of subscribing to OGFJ is that you can get information in a number of different ways - from our website, which is updated frequently as news happens; from any of our eight e-newsletters - four topic specific and four weekly updates; and from our monthly magazine, which is available in both digital and print versions. The magazine content is uploaded to our website as well, and we have special mobile apps that allow users to access all this content.
One of the things we do a little differently at OGFJ is that we utilize industry experts to provide insight and analysis into what is happening in the world of energy and finance. It's not hard to provide the basic facts of a story to our readers, but it's more useful if we can provide context and perspective. Over the 11 years since our inception, we have assembled a sizable contingent of industry leaders to provide this analysis of events and trends.
That said, here are a few of the articles in this issue of OGFJ that we think you will find worth reading:
Hanwen Chang has written the cover story - "There will be blood" - about the fall capital markets outlook. He thinks the fall redeterminations will be significantly more "punitive" towards upstream companies than they were in the spring because the outlook is very different. Earlier this year, expectations were optimistic for a quick recovery from the 2014 plummet in oil prices. As we now know, that brief recovery was simply a glitch. Today, the mood has shifted and few are talking about a recovery until late in 2017 or longer. Borrowers that used large amounts of debt to finance their growth will find their borrowing bases have eroded dramatically. This is the fourth article Chang, an analyst with Nexen, has written for OGFJ.
John Melko, an attorney with Gardere Wynne Sewell LLP, is another regular contributor to OGFJ. This month, he talks about economic indicators in the distressed petroleum industry and provides a representative sample of recent bankruptcy filings with explanations of what drove the companies into Chapter 11 from the companies' own papers and filings. He noted, "Early casualties…are those that are thinly capitalized, overleveraged, or who came late to the party and paid too much to enter. This cycle is no different."
A new contributor is Eugene Khartukov, a professor of economics at Moscow State University. He asks an interesting question: "Which nation is the biggest oil producer?" and then proceeds to explain that the answer isn't so simple. Hint: It depends in part on what your definition of "oil" is. Dr. Khartukov has already indicated he wants to write additional articles to reach OGFJ's global readership.
Justin McCrann, president of Aegis Energy Risk, has written this month's Capital Perspectives column about how to approach oil hedging in the current price environment. He says that oil executives are facing tough decisions as a result of falling oil prices and provides a brief look factors that have affected oil production and consumption the past few years. He says the primary goal of hedging is always: Protect the company from lower prices. To accomplish that goal, he urges companies not to let emotion cloud judgment in response to market vacillations. "Develop and plan and stick with it," he advises. I'm sure we'll be hearing more from Aegis and McCrann.
The EPA has hit the oil and gas industry with a flurry of proposed regulations intended to curb methane emissions, and Sandra Snyder and Tim Wilkins of Bracewell & Giuliani LLP have all the details about how those new rules will likely impact your business. The goal is to reduce emissions in the oil and gas sector by 40% to 45% from 2012 levels by 2025. While the EPA action was not unexpected, the petroleum industry has reacted strongly to oppose the broader reach by the federal agency and is exploring legal options to fight their implementation.
Another industry expert has penned this month's The Final Word column. Dallas Parker is leader of Mayer Brown LLP's Mexico Energy Reform Initiative and serves as leader of the Corporate & Securities practice in the law firm's Houston office. In his column, he discusses the disappointing results of Mexico's Round One bid process in which the Mexican government offered 14 contract areas, but only two were awarded - both to the same consortium. He says the results show that the industry did not believe the blocks had high potential, at least in the current environment. However, he says Mexico has learned from this and has modified the process for Round Two in order to foster competitiveness and transparency as well as creating the stability of long-term contracts. Parker has previously written for OGFJ.