Costs Hit Big Oil; Shale Surge Lifts Smaller Producers

Apache Corp reported a higher quarterly profit, in line with Wall Street expectations. It sold its Gulf of Mexico shelf assets last month to focus on onshore production. It said its North American onshore liquids production rose 42 percent to 175,000 barrels per day in the latest quarter.

"We expect Apache to have an improved asset mix that will drive more predictable production growth and strong returns," Chief Executive Steve Farris said in a statement.

Chesapeake Energy Corp's new chief executive, Doug Lawler, said the company was reviewing its partnerships and assets as the second-largest U.S. natural gas provider tries to simplify its structure and improve financial discipline.

The company, which experienced a severe liquidity crunch in 2012 after spending heavily for years to acquire drilling acreage, reported a better-than-expected quarterly profit as it produced more crude oil than Wall Street targeted. Its shares rose 7 percent to the highest level in more than a year.

Refiners Hope for Wider Margins

Among refiners, Marathon Petroleum Corp and its peers are betting on new pipelines and higher volumes to win back margins that have shrunk as discounts on U.S. crude relative to the more expensive European benchmark have narrowed.

That has erased a cost advantage that U.S. refiners had enjoyed for nearly three years.

The spreads could widen again as extra pipeline capacity comes on stream to move Texas crude to the Gulf Coast. Higher U.S. oil output will also offset crude draws from the U.S. crude futures hub at Cushing, Oklahoma.


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