Tag Archive for: oilandgas

The total number of active drilling rigs for oil & gas in the United States rose this week, according to new data that Baker Hughes on Friday

US oil and gas drilling activity sees rebound

The total number of active drilling rigs for oil and gas in the United States rose this week, according to new data that Baker Hughes published on Friday.

The total rig count rose by 2 to 586 this week, compared to 669 rigs this same time last year.

The number of oil rigs fell by 1 this week, falling by a single rig in the week prior. Oil rigs now stand at 477—down by 53 compared to this time last year. The number of gas rigs rose by 3 this week to 103, a loss of 28 active gas rigs from this time last year. Miscellaneous rigs stayed the same at 6.

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Source: Oil Price

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The Permian basin is projected to produce around $350B in gross product and provide around 1.2M jobs for the nation’s economy by 2050.

Permian basin contributes over $100 billion, 800,000 jobs on leading US oil and gas production

The Permian basin continues to grow rapidly, reflecting the region’s importance as an economic powerhouse for Texas, New Mexico and the country.

This year’s Economic Report from the Permian Strategic Partnership (PSP) highlights the region’s essential role in supporting critical government functions such as road improvements, public schools and teachers, police and fire departments, community hospitals and universities.

The report also emphasizes the area’s status as the second lowest producer of CO2 emissions per barrel of oil equivalent among the major onshore producing basins worldwide.

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Source: Oil & Gas 360

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Unlock the secrets of oil and gas investment success with comprehensive financial modeling techniques. Navigate risks, optimize returns, and make informed decisions.

Financial modeling for oil and gas investments

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DISCLAIMER: We are not financial advisors. The content on this website related to Financial modeling is for educational purposes only and merely cites our own personal opinions. In order to make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a licensed financial advisor if necessary. Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won’t experience any loss when investing. Always remember to make smart decisions and do your own research!

Financial modeling plays a pivotal role in assessing the feasibility and profitability of oil and gas investments. Whether you’re a seasoned investor or a newcomer to the industry, understanding the intricacies of financial modeling is essential for making informed decisions and maximizing returns. This comprehensive guide delves into the fundamentals of financial modeling for oil and gas investments, providing insights, techniques, and best practices to help you navigate this complex landscape.

Financial modeling for oil and gas investments involves analyzing various factors, including commodity prices, production costs, reserves estimation, and regulatory considerations. By constructing accurate and robust financial models, investors can evaluate the potential risks and rewards associated with different projects and optimize their investment portfolios accordingly.

Commodity Price Forecasting | Financial modeling

Commodity prices, particularly crude oil and natural gas, are critical drivers of revenue and profitability in the oil and gas industry. Effective financial modeling requires robust forecasting techniques to anticipate future price movements accurately. From historical data analysis to econometric modeling, investors employ a range of methods to forecast commodity prices and incorporate these projections into their financial models.

Production Cost Analysis

Analyzing production costs is another essential aspect of financial modeling for oil and gas investments. Production costs encompass expenses related to drilling, extraction, transportation, and operations, and can significantly impact project economics. Financial models should account for various cost drivers and factors such as technological advancements, labor expenses, and regulatory compliance to provide accurate cost estimates and assess project viability.

Reserves Estimation

Estimating reserves is a critical component of oil and gas financial modeling, as it directly influences project valuation and investment decision-making. Reserves estimation involves assessing the quantity and quality of recoverable hydrocarbons in a given reservoir, taking into account geological data, reservoir characteristics, and production history. Sophisticated reserve estimation techniques, such as probabilistic methods and decline curve analysis, help investors quantify reserves uncertainty and optimize investment strategies.

Risk Analysis and Sensitivity Modeling

Oil and gas investments are inherently exposed to various risks, including geological, operational, financial, and market risks. Financial modeling enables investors to conduct comprehensive risk analysis and assess the potential impact of risk factors on project economics. Sensitivity analysis, scenario modeling, and Monte Carlo simulation are powerful tools used to quantify risk exposures, evaluate risk-return trade-offs, and make informed investment decisions in volatile market environments.

Regulatory and Tax Considerations

Navigating regulatory and tax considerations is essential in oil and gas financial modeling, as regulatory frameworks and tax regimes vary significantly across jurisdictions. Financial models should incorporate relevant regulatory requirements, such as permitting processes, environmental regulations, and taxation policies, to accurately assess project economics and compliance obligations. Understanding the legal and regulatory landscape is critical for mitigating regulatory risks and optimizing tax efficiency in oil and gas investments.

Capital Structuring and Financing

Capital structuring and financing decisions play a crucial role in oil and gas investment projects, influencing funding sources, capital allocation, and project economics. Financial modeling helps investors evaluate different financing options, such as equity, debt, and project finance, and optimize capital structures to maximize returns and minimize financing costs. By assessing cash flow projections, debt service coverage ratios, and return metrics, investors can structure financing arrangements that align with their investment objectives and risk preferences.

 

Financial modeling is a powerful tool for evaluating the feasibility and profitability of oil and gas investments, enabling investors to assess risks, optimize returns, and make informed decisions in a dynamic and complex industry landscape. By incorporating accurate commodity price forecasts, production cost estimates, reserves assessments, risk analysis, and regulatory considerations into their models, investors can navigate uncertainties, capitalize on opportunities, and achieve success in oil and gas investing.

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BP's latest energy outlook forecasts oil demand to peak in 2025, but the decline will be gradual, with consumption remaining high in 2035.

Oil and gas Stays and Are here to stay

The energy transition is showing signs of losing momentum over the past few months. EV sales are slowing, wind and solar capacity additions are not expanding fast enough, and electricity is getting more instead of less expensive. But experts still believe that Oil and gas Stays!

With those signs, others have been flashing red, too. Despite the push against oil and gas, these are here to stay for the long haul—and demand won’t even decline that much after peaking, according to the latest energy outlook of BP.

The supermajor, which used to compile the Statistical Review of World Energy, now does its own review. And according to its latest edition, oil demand will peak next year. And it’s not the first time it’s called the peak for oil demand.

Statistical Review

The last time its statistical review said that demand growth had peaked—in 2019—it turned out to be very wrong. In reality, oil demand soared after the end of the pandemic lockdowns to reach new all-time highs.

Now, BP has noted that over the past five years, oil demand has been growing at an average of half a million barrels daily since 2019, but that is about to end, with demand on the decline over the next couple of decades. But here’s the thing. Before, BP forecast that this decline would be quite substantial. Now, it expects that in 2035, the world will still consume 97.8 million barrels of oil per day in 2035, which would be a relatively minor decline from the current rate of consumption, which is about 100 million barrels daily, which may rise above that this year if demand strengthens in the second half.

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Source: Oil Price

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Quantum Capital to acquire Caerus Oil and Gas in $1.8bn deal

Quantum Capital to acquire Caerus Oil and Gas in $1.8bn deal

US-based private equity firm Quantum Capital Group has recently finalized an acquisition deal. It is with Caerus Oil and Gas, a prominent energy company. They are operating in the Rocky Mountain region. The agreement, valued at $1.8 billion, marks a significant move in the energy sector. It underscores Quantum Capital’s strategic expansion plans. According to reports from Bloomberg, sources have confirmed the successful acquisition. It involves Quantum Capital purchasing Caerus from its existing investors. Moreover, it includes Oaktree Capital Management, Anschutz Investment Company, and Old Ironsides Energy.

The transaction has garnered attention in the industry, and representatives from Quantum Capital and Caerus have refrained from offering official comments on the matter. The news has sparked curiosity and speculation among industry experts and stakeholders. This is as the acquisition signals a potential shift in ownership dynamics within the energy market. Despite requests for clarification, parties involved in the deal, including Oaktree Capital Management, Anschutz Investment Company, and Old Ironsides Energy, have chosen to remain tight-lipped, leaving room for anticipation and analysis within the investment community.

Caerus currently operates more than 7,400 wells across the Piceance Basin in Colorado and Uinta Basin in Utah.

The company also has related infrastructure including more than 3,862km of gas and water pipelines, as well as numerous water treatment and storage facilities.

“Quantum Capital to acquire Caerus Oil and Gas in $1.8bn deal ” was originally created and published by Offshore Technology, a GlobalData owned brand.

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Source: yahoo!finance

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family oil companies

Family oil companies attract huge M&A attention

Since its initial exploration and development over a century ago, the Permian Basin continues to showcase its enduring value and potential. As the largest resource basin in America, the Permian Basin remains a sought-after location for operators looking to establish a strong foothold in the industry. Amidst this competitive landscape, many operators are now turning their attention to the long-standing families who have been integral to the Permian’s growth since its inception.

Today, family-owned oil and gas companies have emerged as particularly attractive prospects for mergers and acquisitions within the basin. This trend follows a historical pattern of consolidation in the industry, making these companies highly coveted assets for larger operators seeking to expand their presence in the Permian Basin. Despite the shifting dynamics of the industry, the legacy of these families and their enduring contributions to the development of the Permian Basin remain key factors in shaping its future trajectory.

Family Owned Oil and Gas Companies

In recent years, the Permian Basin has witnessed a notable surge in mergers and acquisitions involving family-owned oil and gas companies. This trend can be attributed to the strategic appeal of these entities as sought-after assets within the basin’s landscape. With a historical backdrop of industry consolidation, these family-owned companies have become prime targets for larger operators aiming to bolster their footprint and operational capabilities in the Permian Basin. The allure of these acquisitions lies not only in the potential for expanded production and market share but also in the opportunity to inherit the legacy and expertise that these families have cultivated over generations.

Despite the evolving dynamics of the oil and gas sector, the enduring contributions and legacies of these families continue to play a pivotal role in shaping the future trajectory of the Permian Basin. Their deep-rooted ties to the region, longstanding relationships with stakeholders, and wealth of industry knowledge have established them as integral components of the basin’s ecosystem. As such, the preservation and integration of these family-owned entities into larger corporate structures represent a delicate balance between honoring tradition and embracing innovation in the pursuit of sustainable growth and development in the Permian Basin. With each merger or acquisition, the industry landscape evolves, reflecting a blend of the old guard and the new players striving to navigate the complexities of the energy market.

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Source: HARTENERGY

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Explore state-specific oil and gas royalty laws in the US. Learn about regulations, rates, and compliance for fair compensation. Stay informed!

Oil and Gas Royalty Laws State-by-state Guide

DISCLAIMER: We are not financial advisors. The content on this website related to oil and gas royalty laws is for educational purposes only. We merely cite our personal opinions. Need the best financial decision that suits your own needs? You must conduct your own research and seek the advice of a licensed financial advisor if necessary. Know that all investments involve some form of risk. There is no guarantee that you will be successful in making, saving, or investing money. There no guarantee that you won’t experience any loss when investing. Always remember to make smart decisions and do your own research!

Understanding oil and gas royalty laws is paramount for landowners, investors, and industry professionals. Thos involved in the extraction of these valuable resources must read this. The oil and gas industry playing a pivotal role in the economy. It is navigating the intricate web of state-specific regulations governing royalty payments. Moreover it is essential for ensuring fair compensation and compliance with legal requirements.

Alabama:

In Alabama, oil and gas royalty laws are primarily governed by the Alabama Oil and Gas Board. The state follows the “rule of capture,” meaning that landowners have the right to extract oil and gas from their property, regardless of its impact on neighboring properties. Royalty rates typically range from 12.5% to 25%, with variations based on lease agreements and negotiations.

Alaska:

Alaska boasts significant oil and gas reserves, and its royalty laws reflect the state’s commitment to resource management and revenue generation. The Alaska Department of Natural Resources oversees royalty payments, which are calculated based on production volume and market prices. Landowners can negotiate royalty rates, with the state typically receiving a share of the revenue from oil and gas extraction.

Arizona:

While not traditionally known for its oil and gas production, Arizona has implemented regulations to govern royalty payments in the few areas where extraction occurs. The Arizona State Land Department manages leases and royalty agreements, ensuring that landowners receive fair compensation for the use of their resources. Royalty rates vary depending on factors such as production volume and market demand.

Arkansas:

Arkansas has seen increased oil and gas activity in recent years, prompting the state government to establish clear guidelines for royalty payments. The Arkansas Oil and Gas Commission oversees the industry, setting minimum royalty rates and enforcing compliance with lease agreements. Landowners are entitled to a percentage of the value of extracted resources, typically ranging from 12.5% to 25%.

California:

California’s oil and gas royalty laws are among the most complex in the nation, reflecting the state’s stringent environmental regulations and land use policies. The California Geologic Energy Management Division regulates the industry, imposing strict royalty rates and environmental standards on operators. Landowners receive royalties based on production volume, with rates subject to negotiation and legal requirements.

Colorado:

Colorado is a significant player in the oil and gas industry, with robust regulations governing royalty payments and resource extraction. The Colorado Oil and Gas Conservation Commission oversees operations, ensuring compliance with environmental laws and royalty agreements. Landowners typically receive royalties ranging from 12.5% to 20% of the value of extracted resources, with variations based on lease terms and market conditions.

Connecticut:

While Connecticut does not have significant oil and gas reserves, it has implemented regulations to address royalty payments in areas where extraction occurs. The Connecticut Department of Energy and Environmental Protection oversees the industry, enforcing lease agreements and royalty rates. Landowners are entitled to a share of the revenue from oil and gas production, with rates determined by market conditions and contractual agreements.

Delaware:

Delaware’s oil and gas industry is relatively small compared to other states, but royalty laws still play a crucial role in resource management and revenue generation. The Delaware Department of Natural Resources and Environmental Control regulates the industry, setting minimum royalty rates and monitoring compliance with lease agreements. Landowners typically receive royalties ranging from 12.5% to 20%, depending on production volume and market prices.

Florida:

Florida’s oil and gas reserves have limitation. However, the state has implemented regulations to govern royalty payments in areas where extraction occurs. The Florida Department of Environmental Protection oversees the industry, ensuring compliance with environmental laws and lease agreements. Landowners are int royalties that has production volume and market prices, with rates subject to negotiation and legal requirements.

Georgia:

Georgia’s oil and gas industry is nascent. The state has established regulations to address royalty payments in areas where extraction occurs. The Georgia Environmental Protection Division oversees the industry, enforcing lease agreements and royalty rates. Landowners typically receive royalties ranging from 12.5% to 20% of the value of extracted resources. It has variations based on market conditions and contractual agreements.

Navigating the complex landscape of oil and gas royalty laws across the United States requires a comprehensive understanding of state-specific regulations and industry practices. From Alabama to Wyoming, each state has its own set of laws governing royalty payments, reflecting the diverse interests and priorities of stakeholders involved in resource extraction. By staying informed and seeking legal guidance when necessary, landowners, investors, and industry professionals can ensure compliance with regulatory requirements and maximize the value of their oil and gas assets.

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Unlock transparency and efficiency in oil and gas royalty management with blockchain. Explore its transformative potential in our comprehensive guide.

Role of blockchain in tracking oil and gas royalties

DISCLAIMER: We are not financial advisors. The content on this website related to the role of blockchain is for educational purposes only and merely cites our own personal opinions. In order to make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a licensed financial advisor if necessary. Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won’t experience any loss when investing. Always remember to make smart decisions and do your own research!

Blockchain technology has emerged as a transformative force in various industries, offering unparalleled transparency, security, and efficiency in data management. In the oil and gas sector, blockchain holds immense potential for revolutionizing the way royalties are tracked and managed. By leveraging blockchain-based solutions, stakeholders can streamline royalty payments, mitigate disputes, and enhance trust in the complex ecosystem of oil and gas production. In this comprehensive article, we explore the role of blockchain in tracking oil and gas royalties and its implications for industry stakeholders.

Understanding Blockchain Technology

At its core, blockchain is a decentralized, distributed ledger technology that records transactions across multiple nodes in a secure and immutable manner. Each block in the blockchain contains a timestamped record of transactions, cryptographically linked to the previous block, creating a chain of blocks that cannot be altered retroactively. This tamper-resistant nature of blockchain ensures data integrity and transparency, making it ideal for applications requiring trust and accountability.

Challenges in Royalty Management in the Oil and Gas Industry

The oil and gas industry operates within a complex network of stakeholders, including operators, landowners, investors, and regulatory agencies. Royalty payments, which represent the compensation owed to mineral rights owners for the extraction of oil and gas from their properties, are subject to various challenges, including:

  • Manual Processes: Traditional royalty management systems rely on manual processes. More oever on paper-based records, and disparate databases. This leads to inefficiencies, errors, and delays in payment processing.
  • Data Fragmentation: Royalty data is often fragmented across multiple parties and systems. It makes it difficult to track, reconcile, and audit royalty payments accurately.
  • Disputes and Non-Compliance: Discrepancies in royalty calculations, reporting inaccuracies, and contractual disputes can lead to conflicts. It is between operators and mineral rights owners, resulting in costly litigation and regulatory non-compliance.

Role of Blockchain in Royalty Tracking

Blockchain technology offers several key capabilities that address the challenges associated with royalty tracking in the oil and gas industry:

Immutable Record-Keeping: Blockchain provides a tamper-resistant record of royalty transactions, ensuring data integrity and transparency. Each royalty payment is recorded as a transaction on the blockchain. It is creating an immutable audit trail that can be accessed and verified by all relevant parties.

Smart Contracts: Smart contracts are self-executing agreements coded on the blockchain. It is automating the execution of contractual terms and conditions. In the context of royalty payments, smart contracts can automate payment calculations, distribution, and reconciliation. This is based on predefined rules, eliminating the need for intermediaries and reducing the risk of errors and disputes.

Transparency and Accountability: Blockchain enables real-time visibility into royalty transactions, allowing stakeholders to track the flow of funds and verify payment accuracy. By providing a transparent and auditable record of transactions, blockchain enhances trust and accountability among operators, landowners, and regulatory authorities.

Streamlined Settlements: Blockchain facilitates faster and more efficient settlement of royalty payments by eliminating intermediaries, reducing processing times, and lowering transaction costs. With blockchain-based royalty tracking systems, operators can streamline payment workflows, improve cash flow management, and enhance overall operational efficiency.

Enhanced Security: Blockchain employs cryptographic techniques to secure data integrity and protect against unauthorized access or tampering. By encrypting royalty transactions and storing them across multiple nodes in the network, blockchain mitigates the risk of fraud, cyber attacks, and data breaches, safeguarding sensitive royalty data.

Implementation Considerations and Challenges

While the potential benefits of blockchain in royalty tracking are significant, implementing blockchain-based solutions in the oil and gas industry presents several considerations and challenges:

  • Integration with Existing Systems: Integrating blockchain with legacy systems and industry standards poses technical challenges. It is requiring careful planning, collaboration, and interoperability testing.
  • Regulatory Compliance: Ensuring compliance with existing regulatory frameworks and data privacy laws is essential. Implementing blockchain solutions in the highly regulated oil and gas industry.
  • Scalability and Performance: Scalability and performance limitations of blockchain networks. This includes transaction throughput and latency, may impact the adoption and effectiveness of blockchain-based royalty tracking systems.
  • Industry Collaboration: Successful implementation of blockchain in royalty tracking requires collaboration among industry stakeholders, including operators, landowners, technology providers, and regulatory agencies, to establish common standards, governance models, and data sharing protocols.

Case Studies and Pilot Projects

Several companies and consortia in the oil and gas industry have already initiated blockchain-based pilot projects. They have proof-of-concept initiatives to explore the potential of blockchain in royalty tracking:

Petroteq Energy Inc.: Petroteq Energy, a Canadian oil sands mining company, announced a partnership with PermianChain Technologies. The  will develop a blockchain-based platform for tracking oil and gas production and royalty payments.

Ondiflo: Ondiflo, a blockchain startup, is collaborating with Chevron and Schlumberger. They will pilot a blockchain solution for automating and digitizing field operations. This includes royalty management, in the Permian Basin.

The OOC Oil & Gas Blockchain Consortium: The OOC Oil & Gas Blockchain Consortium, is comprised of major oil and gas companies such as Chevron, ExxonMobil, and Shell. It is exploring blockchain technology for various use cases, including royalty tracking, supply chain management, and trading.

 

Blockchain technology has the potential to transform royalty tracking in the oil and gas industry. It is offering transparency, efficiency, and trust in the management of royalty payments. By leveraging blockchain-based solutions, industry stakeholders can streamline payment processes, reduce disputes, and enhance collaboration across the value chain. However, successful implementation of blockchain in royalty tracking requires careful planning, collaboration, and regulatory compliance. Blockchain has the power to revolutionize royalty management. It will drive greater efficiency and transparency in the dynamic landscape of the oil and gas sector.

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Matador Resources Company has announced the acquisition of Permian Basin oil and gas properties from Ameredev II Parent, LLC for $1.9B.

Oil and Gas M&A momentum continues to build

Deals, Oil and Gas M&A – Matador Resources Company has announced the acquisition of Permian Basin oil and gas properties from Ameredev II Parent, LLC for $1.9 billion. This deal includes a 19% stake in Piñon Midstream and enhances Matador’s existing portfolio with high-quality assets in Lea County, New Mexico, and Loving and Winkler Counties, Texas.

The recent acquisition by Matador Resources marks a significant milestone in the company’s growth and strategic expansion efforts. With the addition of over 33,500 net acres in the Delaware basin, Matador’s total acreage now exceeds 190,000, solidifying its position as a key player in the oil and gas industry. Furthermore, the acquisition boosts the company’s production capabilities, with current production levels exceeding 180,000 barrels of oil equivalent per day and proven reserves totaling over 580 million barrels of oil equivalent. These impressive figures not only demonstrate Matador’s commitment to enhancing its asset base but also highlight the potential for increased free cash flow and profitability in the future.

Prolific Permian Basin

By strengthening its presence in the prolific Permian basin, specifically the Delaware sub-basin, Matador Resources is strategically positioning itself for sustained success in the competitive energy market. The addition of 431 operated drilling locations further enhances Matador’s operational scale and drilling inventory, providing ample opportunities for future growth and development. As a result of this acquisition, Matador’s growth trajectory is expected to accelerate, with market valuation projections now exceeding $10 billion. This strategic move underscores Matador’s commitment to driving value for shareholders while leveraging opportunities in one of the most productive regions in the United States for oil and gas exploration and production.

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Source: Oil Price

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For now, gas prices are right around where they were last year, at $3.49 per gallon

OPEC+ oil cuts probably won’t move gas prices — but this wild card could

Thousands of miles away from Americans budgeting for their summer road trips. OPEC+ leaders decided Sunday to stick with crude-oil production cuts lasting through 2025. This is while laying out a plan to begin phasing out another tier of output curbs beginning in the fourth quarter.

Though crude-oil prices are easily the top cost inside a gallon of gas. Drivers at the pump shouldn’t expect big price moves as a direct result of the OPEC+ decision, gas experts say.

Gas-price increases could hinge on what type of hurricane season comes to the Gulf Coast. Its oil refineries later this summer they note. Weather forecasters have been bracing for a very active hurricane season.

Americans have been holding their breath on upcoming expenses, with many looking to road trips as affordable summer fun.

But first, put it in reverse to see what the Organization of the Petroleum Exporting Countries and its allies decided at its Sunday meeting.

OPEC+ agreed to extend two different production cuts totaling 3.66 million barrels day through 2025. These curbs were supposed to conclude at the end of this year but were widely expected to be rolled over into next year.

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Source: Market Watch

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