As oil prices struggle to rebound and crude oil inventories are high, Energy Transfer, owner of the Dakota Access Pipeline, is invoking ‘force majeure’ to prevent shippers from defaulting on contracts to ship through the expanded Dakota Access Pipeline. The force majeure clause in shipper contracts provides a temporary reprieve to Dakota Access from performing on its obligations. Citing difficulty in getting the required permits by the agreed-upon date, Energy Transfer is buying time and preventing shippers from walking away from their commitments.
Some key indicators from OilPrice.com’s June 30, 2020 Intelligence Report:
- Chesapeake Energy files for bankruptcy. Chesapeake Energy (NYSE: CHK) is arguably the highest-profile shale driller to succumb to bankruptcy to date. The bankruptcy will wipe out $7 billion in debt. Chesapeake reported a first quarter loss of $8.3 billion earlier this year.
- Shell takes $22 billion write down. Royal Dutch Shell (NYSE: RDS.A) said it would write down $22 billion, as it revised down its assumed oil price in the years to come.
- BP to sell petrochemical business to Ineos for $5 billion. The oil market downturn has accelerated BP’s plans to transition into a low-carbon energy company. The oil company’s shares jumped on the news.
- ExxonMobil makes job cuts. ExxonMobil (NYSE: XOM) is preparing to let go between 5% and 10% of its US-based employees subject to performance reviewed, anonymous sources told BNN Bloomberg.