ENERGY SUPPLIERS FIND FRESH LIFT FROM OFFSHORE WIND
Gulf Island Fabrication Inc. is one of several firms trying to turn its expertise with building offshore oil platforms into an edge in a new business: offshore wind, writes The Wall Street Journal’s Erin Ailworth.
The Houston-based company—which recently built the foundations for the first U.S. offshore wind farm, near Rhode Island—is one of many oil-and-gas industry suppliers seeking to diversify into offshore wind, as lower oil prices take a bite out of that business.
Overall 18 wind projects are proposed for U.S. waters.
“For energy-services companies, finding new revenue streams is crucial as oil and gas from onshore shale formations continue to flood the market. Over the past three years, the number of rigs drilling for oil and gas in the U.S. Gulf of Mexico has dropped by roughly 75%, to 16 rigs on Friday from 63 in late August 2014,” the Journal reports.
Oil futures edged down on Monday, on concerns about major oil producers’ wavering commitment to output caps and ahead of a meeting of the Organization of the Petroleum Exporting Countries.
The two-day gathering in Abu Dhabi will discuss members’ compliance level to the output pact the cartel agreed with 10 other oil suppliers, including Russia, in late 2016. The deal so far hasn’t produced meaningful effects to tamp down global output or inventories.
Brent crude, the global oil benchmark, fell 1.2% to $51.79 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1.2% at $48.98 a barrel.
TROUBLED SHERIDAN PRODUCTION ENERGY FUND IN RESCUE TALKS
Houston oil-and-gas investment firm Sheridan Production Partners is in talks to shore up a troubled $1.8 billion fund that has amassed about $1 billion in debt, write Dawn Lim and Soma Biswas.
The Sheridan fund borrowed heavily to buy producing oil fields—several of which are in Texas—but slumped after energy prices nose-dived in 2014.
Now a London-based asset manager, Pantheon, has stepped up with a proposed deal to provide $350 million in junior capital to the fund, also backed by Warburg Pincus executives and other investors.
The Sheridan fund is the latest example of how depressed oil and gas prices continue to haunt investors in companies that borrowed heavily before the downturn in oil.
“For example, EnerVest Ltd, a private-equity firm that levered portfolios of energy assets with debt is in danger of seeing its equity investments wiped out in at least one fund. Dozens of listed energy companies filed for chapter 11 last year, from Samson Resources to Ultra Petroleum Corp.,” the Journal reports.