Devon Energy to buy shale peer WPX for USD2.56B in Delaware push

MOSCOW (MRC) -- U.S. oil and gas producer Devon Energy Corp announced it will buy Permian basin peer WPX Energy Inc for USD2.56 billion as it looks to boost its presence in the Delaware portion of the prolific shale field, said Hydrocarbonprocessing.

The deal comes as U.S. shale companies post losses due to weak crude prices and struggle to raise new capital to restructure debt. But as producers seek out combinations to survive a coronavirus-induced slump in demand, deals at little or no premium are becoming the norm.

"Sector consolidation remains a critical focus, though we think news of a DVN/WPX combination is somewhat unexpected and could be complicated by likely shareholder votes on both sides given relatively similar market caps," Cowen analysts said.

Devon's deal is the second big merger after a price shock in April. In July, Chevron Corp agreed to buy Noble Energy Inc for USD5 billion. Devon said the deal, expected to close in early 2021, will help cut costs and increase annual cash flow by USD575 million by the end of next year.

The combined company, in which Devon will own 57% stake, will hold 400,000 net acres in the Delaware and can produce 277,000 barrels of oil per day. It will pay dividends using a "fixed plus variable" strategy, issuing a set 11 cents per share per quarter along with up to 50% of the remaining free cash flow.

Such a payout plan is seen as a new model for the industry that has fallen out of favor with investors after years of poor returns. As part of the deal, WPX shareholders will get 0.5165 shares of Devon common stock for each share of WPX common stock owned.

As MRC informed earlier, Devon Energy agreed with chemicals major Dow to jointly develop a portion of Devon’s STACK oil and gas acreage in central Oklahoma. Under the agreement, Devon will monetise half of its working interest in 133 undrilled locations in exchange for about USD100m, over the next four years.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC

Sika profits slip on lower sales, confirms 2023 targets

MOSCOW (MRC) -- Construction chemicals company Sika (Baar, Switzerland) says its net profits for the first nine months of 2020 were lower by almost 1% on a year-on-year (YOY) basis, to 561.5 million Swiss francs (USD619.5 million) on sales down 3.4% YOY, to SFr5.81 billion, reported Chemweek.

The company says that lower sales in the March-to-May period had a negative impact on profits, with nine-month EBIT slipping by approximately 1% YOY, to SFr797.4 million. However, EBITDA increased 3.1% YOY, to SFr1.07 billion. Third-quarter figures have not been disclosed.

“The 2020 financial year to date has been dominated by the coronavirus pandemic. With our decentralized organization, we have been able to adapt swiftly to changed local conditions in all 100 countries and gain market share,” says Paul Schuler, CEO at Sika.

Sika's sales in the first nine months includes a strong acquisition effect of 9.2%, the company says. The EMEA region business reported a 3.8% increase in sales in local currency compared with 10.8% in the same period of the previous year. The Americas region business recorded sales growth in local currencies of 0.9%, compared with 18.1% in third-quarter 2019, and in the APAC region growth amounted to 13.9%, compared with 31.1% a year earlier. Sika’s worldwide business unit recorded a decline in sales of 16.1%, compared with 3.6% growth in 2019.

Sika says that it has been observing a modest upward trend in construction markets since June, with sales returning to more normal levels due to the gradual opening of building sites. For 2020, Sika expects slightly lower sales in local currency but EBIT broadly in line with last year, which implies an over-proportional rise in EBIT in the second half, it says. Sika’s forecasts assume that markets will no longer face almost complete lockdowns, the company says.

As announced previously, Sika has confirmed its 2023 targets. It is seeking to grow by 6-8% annually in local currencies until 2023. From 2021, the company aims to increase its EBIT margin to 15-18%. Projects in the areas of operations, logistics, procurement, and product formulation should result in an annualized improvement in operating costs equivalent to 0.5% of sales, the company says.

As MRC reported earlier, in August 2015, Swiss specialty chemicals company Sika opened its forth production site in Russia. A new mortar factory and a plant to produce concrete admixtures were opened in Volgograd, in southern Russia. Thus, at the existing site in Lobnya, 30 km north of Moscow, a new production facility, which manufactures polymers for concrete admixtures, came on stream.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Sika is a specialty chemicals company with a leading position in the development and production of systems and products for bonding, sealing, damping, reinforcing, and protecting in the building sector and motor vehicle industry. Sika has subsidiaries in 101 countries around the world and manufactures in over 200 factories. Its more than 20,000 employees generated annual sales of CHF 7.09 billion in 2018.
MRC

Qatar Petroleum to supply ultra low sulfur diesel to the local market from its refinery in Mesaieed

MOSCOW (MRC) -- Qatar Petroleum is pleased to announce the commencement of supply of ultra low sulfur diesel (ULSD) by the QP Refinery in Mesaieed for the domestic transportation market, effective from today, bringing all diesel sold in the country to the highest specifications, said Hydrocarbonprocessing.

The ULSD is a higher grade and cleaner premium diesel fuel, which meets the European Emission Standard ‘Euro 5’ – specifications. With this announcement, Qatar Petroleum reaffirms its commitment towards the environment in the State of Qatar and globally.

The start of ULSD production follows the successful upgrade of the QP Refinery’s Diesel Hydro-treating Units, resulting in a maximum of 10 ppm sulfur diesel.

On this occasion, His Excellency Mr. Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs, the President and CEO of Qatar Petroleum, said, “We are pleased to announce this new addition to our products, which supports two of our strategic objectives – continuous efficiency improvements and environmental excellence. The production of ULSD by Qatar Petroleum is an important milestone for our downstream business, and I would like to thank my colleagues in QP operations who have worked diligently and safely to ensure that we achieve this important environmental milestone, which meets the stringent ‘Euro 5’ specifications."

This important step is an integral part of Qatar Petroleum’s strategy of maximizing the added value of Qatar’s downstream businesses, and delivering on our commitment to protect and enhance the environment through world-class standards and practices.

As MRC informed earlier, in July, the Chevron Phillips joint venture postponed final approval for a USD8 billion Gulf Coast plant, which it planned to approve next year with Qatar Petroleum.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC

Sasol outlines Lake Charles production hit from hurricanes, first quarter volumes

MOSCOW (MRC) -- Sasol (Johannesburg, South Africa) says it has taken a hit of approximately 170,000 net saleable tons on its operations at Lake Charles, Louisiana, due to the impact of Hurricanes Laura and Delta, reported Chemweek.

The impact of the hurricanes on its North American operations was outlined in a quarterly production and sales update for the first quarter of its 2021 financial year, ended 30 September. Sasol says seven of its chemical manufacturing units at Lake Charles have returned to operation, with all remaining units that were operating prior to Hurricane Laura “expected to return to operation by end October.” The availability of “sufficient industrial-level power from the local provider” resulted in the commencement of a coordinated startup of the chemicals complex, it says.

Commissioning activities at the last new unit planned to come online at the company’s Lake Charles Chemicals Project (LCCP), a low-density polyethylene (LDPE) unit, are continuing, with beneficial operation “still trending” towards the end of this month, it adds.

Sasol says its group base chemicals business saw first quarter sales volumes rise 4% year on year (YOY), due to improved market demand and supported by higher production rates following the lifting of COVID-19 lockdown restrictions.

The company excludes US polymers product sales volumes from this figure. US polymers sales volumes in the quarter were 65% higher YOY at 306,000 metric tons “due to the new ethylene cracker which achieved beneficial operation in August 2019,” it says. The first-quarter US polymers sales volumes were 28% lower than the previous quarter to end June due to the impact of Hurricane Laura, it adds. US polymers sales volumes totaled 1.26 million metric tons for the full-year 2020. The US polymers average sales basket price declined 29% YOY to SD551/metric ton.

Sasol’s group base chemicals average sales basket price for the quarter fell 15% YOY to USD630/metric ton. Base chemicals sales volumes, excluding US polymers, are expected to be 1-2% higher than the prior-year quarter.

In the first quarter, Sasol’s east cracker at Lake Charles produced 67,000 metric tons of ethylene, down 41% YOY, while its newer west cracker produced 217,000 metric tons of ethylene, up from 44,000 metric tons in the prior-year period. Polyethylene (PE) production, including its share of high-density polyethylene (HDPE) declined 24% YOY to 132,000 metric tons, while its ethylene oxide (EO) value chain saw output fall 29% YOY to 67,000 metric tons. Production of Ziegler alcohols, alumina, and Guerbet alcohols declined 22% compared to the equivalent period last year to 25,000 metric tons, it says.

Sales volumes in Sasol’s performance chemicals business fell 11% YOY due mainly to COVID-19 restrictions and the Hurricane Laura outage, it says. Due to the impact of the hurricane on its operations, Sasol has revised its market guidance lower and is now estimating its performance chemicals total sales volumes for the financial year 2021 will be “in line” with the prior financial year.

Earlier this month Sasol agreed to enter into a joint venture with LyondellBasell for its LCCP base chemicals business, including its west ethane cracker, linear low-density polyethylene (LLDPE) and LDPE plants. Sasol will retain full ownership and operational control of the Lake Charles east plant ethane cracker and eight performance chemicals business assets at Lake Charles, as well as its US phenolics business, and HDPE JV with Ineos at LaPorte, TX.

As MRC wrote previously, Sasol's world-scale US ethane cracker with the capacity of 1.5 mln tonnes per year reached beneficial operation on 27 August 2019. Sasol's new cracker, the heart of Lake Charles Chemicals Project (LCCP), is the third and most significant of the seven LCCP facilities to come online and will provide feedstock to the company's six new derivative units at its Lake Charles multi-asset site.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
MRC

COVID-19 - News digest as of 22.10.2020

1. Major construction of USD9.4B Formosa plastics plant in St. James delayed until virus vax

MOSCOW (MRC) -- According to The Advocate, a Formosa Plastics affiliate planning a USD9.4 billion petrochemical complex in St. James Parish will defer "major construction" of the facility until the coronavirus has subsided or "an effective vaccine is widely available," reported Hydrocarbonprocessing with reference to a company spokeswoman's statement. The global pandemic's widespread impacts, "including the challenge it creates in evaluating construction costs and the restrictions it has placed on international travel, are being felt across all industries and businesses," Janile Parks, spokeswoman for FG LA LLC, said in a statement.

MRC