Libya exposure for US firms ranges from 2-16% of oil output: Oppenheimer
New York (Platts)--25Feb2011/533 pm EST/2233 GMT
The exposure of US companies operating in Libya ranges from 2.4% to 16.8%
of their oil and liquids production, according to numbers provided by
Oppenheimer analyst Fadel Gheit Friday.
By Gheit's count, Hess produces 23,000 b/d of Libyan oil, or 7.5% of the
company's total oil and liquids production. Marathon produces 46,000 b/d in
Libya, 16.8% of its total oil and liquids output, Gheit said.
Meanwhile, 7% of ConocoPhillips' production portfolio is Libya-generated
at 46,000 b/d, Gheit said. About 2.4% of Occidental Petroleum's portfolio is
Libya-sourced at about 13,000 b/d, Gheit said.
Excluding Oxy, US companies -- including Hess, Marathon, and
ConocoPhillips -- have declined to recently comment on the current status of
their Libyan production efforts as tensions there accelerate.
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Oxy said February 22 that its Libyan production is ongoing and that there
had been "no significant change" in its oil production volumes.
Marathon said February 21 it had evacuated dependents of expatriate staff
from Libya and was unaware of any impact on oil production, but has declined
to comment since. ConocoPhillips and Hess have not commented on their
"It's not clear" if US companies have shut production in or not, Gheit
said Friday. "If they're not saying, I'm not going to assume that I know.
Obviously, people are freaking out."
The US companies take slight issue with Gheit's numbers, which the
analyst said came from the companies themselves.
Marathon estimated its Libyan 2010 "net liquid hydrocarbon sales" at
45,000 b/d, not 46,000 b/d. A Hess spokesman said in an email its Libyan
production was 22,000 b/d, not Gheit's 23,000 b/d.
"We don't break out percentages of earnings by country... In our 
10K [US Securities and Exchange Commission filing), we had Libya at 22,000
b/d -- roughly 5% of [total barrel of oil equivalent] production," the
spokesman said Friday.
According to a Hess filing Friday, 18% of Hess's total proved reserves
were in Africa, with about 11% located in Libya. Hess and its Oasis Group
partners have oil and natural gas production operations in the Waha
concessions in Libya, with Hess' stake at about 8.13%.
The Oasis partners include operator National Oil Co. with a 59.16% stake,
ConocoPhillips with 16.33% and Marathon Oil with 16.33%.
Hess also owns a 100% stake in offshore exploration Area 54 in the
Mediterranean Sea, where a successful exploration well was drilled in 2008,
Hess said Friday in an SEC filing.
In 2009, Hess "successfully" drilled a down-dip appraisal well and in
2010, Hess received a five-year extension to the Area 54 license, the filing
Libya's 93% tax rate on oil production makes production not especially
profitable, Gheit said, estimating that the unit profit/barrel of production
was well below the company's average at about $6-$7/b. "Pound for pound the
impact on earnings is less than 5%" for the US companies, Gheit said.
In commentary earlier this week, Barclays analyst Paul Cheng said "even
at $100/b Brent, we estimate the companies are making only about $5.5/b."
"Assuming full production loss, this translates to $0.14/share for [Hess]
and $0.13/share for [Marathon] annually, which is a relatively minor impact,"
Cheng said. "Both companies should be net beneficiaries of rising oil prices
compared to the risk of production loss in the country."
--Leslie Moore Mira, firstname.lastname@example.org