He said it will be the world’s largest oil asset sale as no oil asset auction of this magnitude has occurred in many years, and probably won’t be seen in the years to come.

The company intends to cover a funding shortfall which, according Fitch Ratings, may run to $10 billion before the year ends.  If they can’t look for funding sources, it might end up getting cash strapped by 2013.

McClendon declared that, “For a company that wants to get bigger in the Permian or wants to get in the Permian, this is the best opportunity.”

While the Chesapeake is working out the asset sale, it has, in the meantime, turned to the Goldman Sachs Group and another financial institution for a $3.0 billion credit facility.

Texas-based Concho is again investing in oil and gas properties and has purchased assets from Three Rivers Operating Co, including more than 300,000 acres of Permian land.  Experts estimate that Concho is buying said property at $3,000 per acre.

This is Concho’s third oil asset purchase in the region in less than a year, and Timothy Leach, the company’s Chairman and Chief Executive Officer, said it will add more oil rigs in the Permian.

Forbes reported that Occidental Petroleum Corporation submitted a $3.5 billion bid for Chesapeake’s Permian asset but this was reportedly rejected by the owners.

Oil rigs operating in the area went up to 273 by end of 2011, approximately 300 percent increase from 2010.  Apache Corporation actively operates in the area and plans to invest in oil rigs again this year.  Estimated oil reserves in the Permian area are 4.5 billion barrels.

Mclendon expects to unload the company’s Permian holdings by the third quarter of this year.

The company lacks funds thus, much as it wants to, it is unable to step up drilling in the Permian.  He said the existing 12 rigs will have to be supplemented with 24 more rigs to make operations more viable.

Mclendon seems very optimistic about the saleability of its Permian asset and mentioned that, “To imagine that assets are unsellable in the Permian Basin, which is the world’s hottest acquisition basin today, is really unthinkable.”

A reduction of 80 cents was posted by Benchmark West Texas Intermediate crude prices to finish the New York trading at $93.38 a barrel. Oil has not reached that low level since the 19th of December.

Since May started, the oil price has decreased by 11 percent. The latest signs of Europe’s economic weakness as well as other parts of the world led to questions regarding the energy demand’s strength.

Experts have been making forecasts of the world’s demand for oil in the short-term. Simultaneously, Saudi Arabia together with other countries that are rich in oil has raised production. Both have placed pressure on oil prices.

The recent question was where Europe is directed.

Recently, the euro dropped to another low for the fourth month versus the dollar. A stronger dollar leads to more costly oil prices for investors that trade using other currencies.

In the United States, gasoline prices stayed flat at $3.727 a gallon according to the Wright Express, AAA and Oil Price Information Service. One gallon of regular unleaded gas has decreased by almost 21 cents since reaching a high level of $3.936 in the early parts of April.

According to Mastercard SpendingPulse, the group that estimates the demand for gasoline across the U.S., drivers purchased less gasoline for the 60th straight week. Its estimate for consumption of gasoline over a period of four weeks fell by 5.2% at 61.1 million barrels.

Elsewhere in the energy markets, the cost of heating oil increased by less than a cent to finish at $2.933 a gallon. Wholesale gasoline price declined by 1.49 cents to reach $2.9441 a gallon. Natural gas gained 6.9 cents for a price of $2.50 per 1,000 cubic feet.

In London, an additional 45 cents was gained by Brent crude prices to reach $111.45 a barrel. Brent crude is used to assign the price of U.S.-imported oil.

The National Hydrocarbons Commission (NHC) issued a report revealing that last year alone, Pemex disbursed funds equivalent to $1.98 billion for its Chicontepec oil field. This amount already makes up more than 80 percent of budget for investing in oil exploration.  As a component of total exploration and production budget, said expenditure is about 12 percent of total 2011 budget.

Based on the NHC website “Chicontepec projects present the least profitability and highest uncertainty when they are compared to every other project.”

There is a pressing need to refurbish the company to step up production as well as cost effectiveness.  Also, some sectors are pressing for sufficient disclosure on how it is being managed, given that the country substantially depends on Pemex’ earnings for its state budgetary requirements.  In fact, both Mexico’s Revolutionary Party and the National Action Party are calling for big reforms, including changes in Pemex’ administration as well as additional oil investment from private sectors.

Meanwhile, reports disclose that Mexico’s oil output arising from key oil fields are on a decline.  As of the moment, it supplies the U.S. with its major oil needs, but some have commented that if the country fails to come up with new oil finds, it might end up being a net oil importer in the future.
Right now, the company lacks extra funds to invest in oil exploration technology that could have helped in upgrading existing oil exploration facilities especially for deepwater wells.

As a consequence, experts project that for Pemex, deepwater oil drilling projects may not be that feasible  and that exploration in shallow waters could be more viable at the moment. Despite the company’s substantial investments in Chicontepec, it has failed to reach targeted oil outputs.

In 2011, NHC disapproved the company’s growth plans for Chicontepec.  The commission noted that Pemex could be better off concentrating on more viable exploration projects and noted further that these promising projects were funded last year but only up to the extent of 22 percent.

In terms of exploration of new oil wells, Pemex was seen to have expended only a little above 13 percent of total budget.

Historically, prices of gasoline normally go up during the first six months of the year, but unlike the past few years, gas prices surpassed the $3.50 level far too early this year. This year’s price movement may be compared with that in 2008 when crude oil prices per barrel reached $140 in the early summer months. In April 2011, gas prices hit $3.98 then tapered off the following month.

A $4.00 gas price may adversely affect global economy, which had early on shown signs of possible recovery.

Equity analyst for Morningstar, Jason Stevens said, “Anytime the economy spends 4 to 5 percent of GDP on oil, then you’re getting close to stall speed.”  This is what happened a year ago when countries like Japan and Libya blew up and prices went soaring. Demand growth inched a bit, however, economic growth has stalled.

Tom Kloza of Oil Price Information Service stated that it comes as a surprise that gas prices have gone up despite a slack in U.S. demand. The very low gas consumption is comparable with the situation in the summer of 1997. The public is concerned because while consumption is at a low levels, prices are still hovering up in the higher range of their comfort zone.

Kloza presumes that the rise in gas prices cannot be traced to demand but to the influx of funds into gas futures contracts at the onset of the year. “We’ve seen about $11 billion of speculative money come in on the long side of gas futures,” Kloza disclosed.

Current crude oil prices, particularly the way they’re moving up, had adversely affected oil refineries – some have opted to close down because of high operating losses. These oil refineries are not getting enough margin from gas sales because of soaring oil prices. Sales are not enough to gain a comfortable crack spread. Crack spread is the term generally used by refineries for the net amount gained after deducting cost of crude from sales of “cracked” crude, or what we call refined gasoline.  Refining capacities in the United States have declined amid rising prices.

It is noteworthy though that gas prices vary from state to state, prices in California, for instance, are about one dollar higher than those in the state of Wyoming. The cheaper gas in Wyoming and in some other nearby states is due to the cheaper crude marketed by Canada to the upper Midwest states.

Kloza went on to comment that this is the very first time that he’s seen such diversity in crude oil prices and that it’s something quite unexpected.

Crude futures continued to slide down the charts despite some optimism stemming from improving consumer confidence in the US. Commodity prices have spent the bulk of the past two weeks in negative territory, as all environmental cues pointing to the fact that oil investment will not rebound in the near future.

Representatives from the International Energy Agency however, seemed unfazed by the severe drop-off in crude prices, stating that demand would rebound as the year moves along, and the economic woes of Europe abate. Yet both US and foreign traders showed trepidations with the high-risk fuel, choosing instead to gear their investment strategies toward safer havens.

West Texas Intermediate crude oil prices for delivery in June slid down 95 cents to $96.13 per barrel in New York. The contract has been moving further and further away from the coveted and resistant $100 per barrel mark that it had conquered just months before.

On the ICE Futures Exchange in London, Brent prices for June settlement fell 42 cents to settle at $112.26 per barrel. The spread between the two benchmarks currently sit at $16.13 per barrel.

Along with the financial troubles of the US and Europe, China has reported a drop in demand for the fuel, the first such drop in more than three years. That fact was perhaps the largest contributing factor for crude oil investment for the day.

The euro has also been losing steam on the currency index, affecting crude futures accordingly. The two are directly proportional when it comes to momentum and fluctuation.

The most current Brent crude oil price was $112.26. That is way lower than its highest rate of $128 in the month of March this year. Since the early parts of 2011, Brent has been trading at more than $100, keeping fuel prices elevated, a status which threatened to destroy the sensitive world economy.

Saudi Arabia is trying to bring the international benchmark, Brent North Sea, to that level of crude oil prices, Ali al-Naimi added. Being the largest producer of OPEC, the country said that it produced 10.1 million barrels daily in the month of April. That is the highest amount for over 30 years, as it tries to meet increasing demand and limit oil prices.

Current crude oil prices have remained high this year because of concerns regarding the disruption of global oil inventories caused by the sanctions of Europe and the U.S. against Iran. The sanctions are intended to hurt the revenues of the Gulf country’s crude exports and force it to stop its alleged nuclear program.

Last week, Naimi said that oil manufacturers were making enough to handle the sanctions’ effect on the market for crude oil. He also emphasized that oil manufacturers were making 1.3 to 1.5 million barrels daily over demand, which aids in building supplies.

Inventories are equal to about 58 days of demand. However, Saudi Arabia want to see crude stockpiles increase further for the seasonal rise in fuel usage beginning June of this year, said Naimi.

According to the recent statement of the International Energy Agency, oil prices are likely to maintain its high rate even though there is a significant improvement in the global supply and a huge stock build up because of the tensions between the West and Iran.

Investments in West Texas Intermediate rebounded back to a $96.09 oil price per barrel in New York after tumbling as low as $95.17 earlier in the session.

Brent prices managed to hold more or less steady at $112.20 per barrel in London.

Economists and traders fretted over the fact that the relief in inventories is likely short-lived, since despite the fact that gasoline and distillate stocks are significantly down, crude itself is still in drastic oversupply. As a result, the short term prognosis or crude oil investment is a rather grim one, with more sharp downturns expected.

The past six days have seen the largest sell off of crude oil stocks this year, with the bulk of the fuel’s investors fleeing towards safer havens until both Europe and the US manage to bump up demand.

The new governments in France and Greece have placed doubt upon the region’s potential recovery from debt, and have consequently made investing in oil a crapshoot as far the euro zone goes. The new socialist president of France in particular has specifically vowed to halt the severe austerity measures currently being taken by the nation in order to bolster the economy.

This will hold true as long as current crude oil prices, as well as those in the years ahead, continue to pick up.  S&P forecasts that demand for crude will increase by 1.75 percent annually in the next 10 years owing to marked improvements in productive use of energy resources among developed countries, which is somehow balanced by India and China’s growing number of oil-fed vehicles.

On the other hand, the International Energy Agency (IEA) predicts that global crude supply will rise by 1 percent annually. These translate to a possible 0.7 million bpd year-on-year demand-supply deficit which may hasten hikes in crude oil prices in years to come.

Analysts noted, however, that demand-supply forecasts should factor in the marked diversity in costs incurred by countries supplying the world’s oil requirements.  UAE, Kuwait, Iraq, and Saudi Arabia – all GCC member-countries, generate crude from oil fields  at very little cost.  The other group – Canada and the United States generate unconventional oil (shale) which is more costly to produce.

There is a very big difference in marginal costs incurred by the two groups.  The mid-east group spends $17 pb of oil produced while costs for the U.S. go as high as $52 pb.  Both are based on 2008 to 2009 data.

On the subject of strategy, GCC countries are bent on widening the gap between breakeven cost and selling price while, for the U.S. group, the goal is to narrow that gap.  Apparently, between the two groups, the GCC countries will have more impact on crude oil prices per barrel in the future since they already hold 40 percent of the world’s oil reserves.

Saudi Arabia, China, and India will lead the demand for oil in 2012 and 2013.  Emerging markets are seen to increase their demand for oil and this certainly presents a very good opportunity for GCC, since more than 60 percent of its exports are actually earmarked for developing Asian countries.

The oil industry is largely capital intensive rather than labor-intensive, thus GCC states are expanding jobs in the private, non-oil sectors to encourage workforce shifts into these industries.

The bottom line is that GCC countries will fare very well over the medium term as oil prices will tend to go up within this period. Their key strengths lie in having a stable current account, a large share in oil demand from developing markets, vast oil reserves, and minimal external debts. They should, however, continue to achieve job creation targets within the non-oil sector if it wants to maintain steady growth well into the long-term.

TGS-NOPEC announced its bottom line figures for the year may reach above-target levels due to flourishing oil exploration activities especially in very remote areas of the globe.

TGS is generally a geoscience services and data provider with a huge database of digital oil well data which is also available online.

The company independently conducts seismic surveys on areas it chooses and looks for willing clients who need such data. The current boom in oil discovery projects has resulted to order backlogs which only mean that for TGS, business is brisk.

Analyst Joergen Andreas Lande says “These results are fantastic, on all levels.”  He disclosed further that the company is very capable of doing surveys in the frontier areas, and that the rise companies choosing to invest in oil is certainly a boon for them.

The oil industry, including subsectors has actually benefited from the booming oil exploration which is seen to rise further as crude prices soar to $120 a barrel.

The hike in TGS’ traded shares reached a record high of above 7 percent versus 1.1 percent for its competitor, PGS. With more than 100 percent increase in order backlogs, TGS says prospects are indeed very bright.

Robert Hobbs, TGS chief executive announced that these opportunities allowed the company to ramp up investments. It hopes to end the year with over-the-target bottom line figures.

The company looks forward to oil explorations by the U.S. in the Gulf of Mexico area, and off the coast of Norway, as these developments mean more business.

Recently, it has gone into surveys of unconventional oil in North America. This year, it hopes to finish surveying shale liquid. Probing unconventional oil fields is one scope of work it will focus on in the coming years as oil firms continue to invest in oil exploration, especially in the frontier regions.

Its database of surveys has quickly expanded, and it will greatly depend on this wealth of information it has acquired through the years. For the first three months of 2012, income figures were up by more than 50 percent to almost $63 million. Initial projection was only for $49.3 million.

End-of-the-year projected income was up to $760 million, but as the requirement for more oil surveys grow, TGS sees earnings to rise up to $830 million level.

In New York, Benchmark U.S. oil (called West Texas Intermediate or WTI) fell by 20 cents to end at $96.81 a barrel. The drop for six straight days hasn’t been seen in this country since July of 2011.

The decrease in the crude oil prices is a reaction to recent doubts about the ability of Europe to mend its ongoing debt crisis and the disappointing employment numbers in the United States. And with the weakening of the various economies, oil demand slows down, which consequently leads to an increase in crude storage.

The Energy Information Administration recently said that high oil imports and low petroleum domestic demand aided in strengthening the oil supply of the country during the past week to its highest amount since 1990 of 379.5 million barrels.

Moreover, The Commerce Department said that the wholesalers in the United States raised their inventories slowly in the month of March, which caused factories’ slowdown in the country.

Saudi Arabia is also increasing supplies as a way to push down global crude prices. In addition, Iran is set to convene with other nations in the coming weeks, including the United States, to discuss its nuclear program. That meeting has relieved worries of a long standoff that can slow down shipments of oil from the Middle East.

At gas stations, consumer gasoline prices dropped by over a cent to reach $3.75 a gallon nationwide, said the Wright Express, AAA and Oil Price Information Service (OPIS). The gasoline price of one gallon has decreased to an average of 19 cents in around one month. Gasoline prices are cheaper by 21 cents compared to its rate during the same period last year.

According to Tom Kloza, oil department head of OPIS, gasoline prices must gradually lower in the summer. He sees the nationwide average decline to a low rate of $3.50 a gallon by July 4.

Heating oil prices increased by almost a penny to end at $2.991 a gallon. Wholesale gasoline prices grew by 2.97 cents to close at $3.0241 a gallon. In natural gas markets, a 7.2 cent was realized, bringing the price to $2.465 for every 1,000 cubic feet.

In London, Brent crude, the basis of current crude oil prices imported into the United States, increased by 47 cents to end at $113.20 per barrel.