How Significant is Pakistan's Oil Discovery?

Politics, Geopolitics & Conflict

- North Korea used its state news agency to send a message that it is enriching uranium for nuclear weapons. The news agency published a photograph of Kim Jong Un inside what is purportedly a uranium enrichment facility attached to the Nuclear Weapons Institute. The agency quoted Kim as saying that the facility was "dynamically producing nuclear materials", and would now seek to "exponentially increase the nuclear weapons for self-defense".

- Nothing has changed in terms of the contested results of Venezuela's presidential elections. Maduro continues to remain largely unchallenged, and the window of opportunity for removing him is narrowing. Once he is inaugurated in January, the game is over. The opposition does not appear to have a playbook here, and Maduro is a tough target, who is essentially representing a drug cartel that the opposition will find challenging to navigate. Indeed, the opposition presidential candidate is now being forced to political asylum in Spain after Maduro had a warrant for his arrest issued. Nothing can happen for the opposition unless they can poach interior and defense forces to their cause. As of now, there is no indication that they can.

- In Libya, there is still no movement on lifting the oil blockade that began when the interim PM (Dbeibah, head of the Tripoli-based government) made an awkwardly unsuccessful attempt to remove the head of the central bank, which brought the rival Benghazi-based Haftar clan into action at the central bank (where oil revenues are held) and by blocking output and exports. There may be some indications based on loading data that flows are now improving; however, the reality is that they will flow only if Haftar allows them to, intermittently, but he won't unleash the oil until he has enough leverage to make a bigger move, with all eyes on what happens with the central bank standoff next.

Discovery & Development

- A significant discovery of oil and gas reserves has been made in Pakistan's territorial waters, potentially ranking as the world's fourth-largest in terms of reserves. This hydrocarbon find, confirmed after a three-year survey conducted in partnership with an allied nation, could drastically alter Pakistan's economic outlook, which is currently facing severe challenges. Exploration proposals are under review, though actual extraction may take years. The find could help reduce Pakistan's reliance on oil imports or LNG if the reserves are as large and extractable as anticipated, though caution remains due to the high costs and time needed for exploration and drilling.

- Talos Energy Inc. has made a significant oil and gas discovery at its Ewing Bank 953 (EW 953) well in the Gulf of Mexico, encountering around 127 feet of net pay at a depth of 19,000 feet. The find is expected to yield 15-25 MMboe, with an initial production rate of 8,000-10,000 bpd anticipated by mid-2026. Talos holds a 33.3% working interest, with Walter Oil & Gas Corp. as the operator.

-Equinor has made a significant gas and oil discovery in the Haltenbanken Vest Unit prospect in the Norwegian Sea, as announced by the Norwegian Offshore Directorate. The discovery, drilled near the Lavrans discovery in the Kristin field, is estimated to hold between 2 to 4 million standard cubic meters of recoverable oil equivalent, translating to around 25 million barrels. Equinor holds a 54.82% stake in the project, with other partners including Petoro (22.52%), VÃ¥r Energi (16.66%), and TotalEnergies (6%).

- CNOOC has achieved a significant breakthrough with its latest ultra-deepwater gas discovery in the Pearl River Mouth Basin. The Liwan 4-1 well, drilled to nearly 4,400 meters, has produced 430,000 cubic meters per day of natural gas, marking the first major exploration success in China's ultra-deepwater carbonate rocks. This discovery not only reveals the potential of carbonate reservoirs but also complements existing facilities at the nearby Liwan 3-1 gas field, facilitating efficient development. CNOOC's recent activities also include notable finds in the South China Sea and Bohai Bay.

- Bolivia's state-owned YPFB is intensifying efforts to counter a significant decline in oil and gas production by advancing 56 exploration projects. Production has plummeted from a peak of 18.6 million barrels of oil and 768.6 Bcf of gas in 2014 to just 8.6 million barrels and 463.4 Bcf in 2023. Bolivian President Luis Arce highlighted past failures in maintaining exploration efforts, which led to the depletion of key fields like Margarita and Incahuasi. Since 2021, YPFB's renewed exploration program has yielded 18 positive results, including the promising Mayaya Centro-X1 IE discovery, with an estimated 1.7 Tcf of gas.

Deals, Mergers & Acquisitions

- Diamondback Energy (FANG) has finalized its $26 billion merger with Endeavor Energy Resources. The merger enhances Diamondback's high-quality inventory in the Permian. The integration of Endeavor's assets and employees is expected to support Diamondback's focus on low-cost, efficient operations and positions it for long-term growth in unconventional oil and gas production in West Texas.

- Offshore drilling contractor Seadrill is seeking to acquire distressed assets or merge with peers to grow its fleet, according to its CEO. After two debt restructurings, Seadrill is now under the control of its creditors. But it sees opportunities for consolidation in the offshore drilling market, where rates have surged post-2021. Its CEO claims Seadrill has enough cash for strategic acquisitions or mergers, even if it means being the junior partner. Seadrill's top shareholders include investment funds Bybrook Capital, Canyon Capital, and Elliott Management.

- DNO has expanded its footprint on the Norwegian Continental Shelf by acquiring stakes in five oil and gas fields from VÃ¥r Energi, including the operatorship of the Marulk field. This deal adds over 8 MMboe in reserves and resources, with production expected to increase from 3,000 boed to over 5,000 boed by 2026, driven by the Verdande development. All fields are tied to Equinor's Norne FPSO, with a hub life extended to 2036. DNO's exploration efforts continue, including ongoing North Sea drilling projects and a ramp-up in production from new assets in the UK and Norway.

- Pembina Gas Infrastructure (PGI), a joint venture between Pembina Pipeline and KKR, is acquiring Veren Inc.'s oil batteries in Alberta's Gold Creek and Karr areas for $291M CAD. The assets include natural gas handling capacity of 320 MMcf/d and liquids handling of 53,000 bpd, which will tie into PGI's Patterson Creek Gas Plant and Peace Pipeline system. Veren will retain operatorship of the batteries and take on additional operations under a 15-year take-or-pay agreement. This deal strengthens PGI's strategic partnership with Veren and aligns with both companies' growth plans in the Montney and Duvernay regions.

- APA Corp (APA) has agreed to sell non-core drilling assets in the Permian Basin for $950 million, aiming to reduce its $6.7B debt pile. This move is part of the broader industry trend toward asset consolidation and debt reduction, following similar transactions by companies like Occidental Petroleum. APA plans to use the proceeds primarily to pay down $2B in debt over the next three years, with the sale expected to close in Q4 2024. The divested properties produce 21,000 boepd, contributing to APA's projected Q4 production of 307,000 boepd.

- Exxon Mobil has withdrawn from the race to acquire a 40% stake in Galp Energia's large offshore oil discovery in Namibia, known as Mopane, despite initial interest from over 12 major oil companies, including Shell and Petrobras. Galp's stake in the discovery, estimated to hold more than 10 billion barrels of oil and gas equivalent, could be valued at over $10 billion. While the reasons for Exxon's withdrawal remain unclear, other companies continue to engage in the bidding process. The sale is part of a broader trend of offshore discoveries in Namibia that could position the country as a significant oil producer.