The civil disturbances that are occurring in Libya have put a spotlight on the various energy companies that have operations there. Although the perception among some investors is that only European companies have exposure here, many U.S. firms also have operations that might be impacted by the turmoil.
IN PICTURES: 4 Stages Of The Economic Cycle
Libya's Oil and Gas
Libya has 44 billion barrels of oil reserves and 54 trillion cubic feet of natural gas reserves. Oil and liquids production in 2009 averaged 1.8 million barrels per day, according to the U.S. Energy Information Administration (EIA).
Libya has an ambitious plan to increase oil capacity to 3 million barrels per day, which would bring production close to its 1960s peak. The government expects to reach that level of capacity by 2017, but the recent disturbances in the country may impact that goal. (Learn more about investing in this sector in Oil And Gas Industry Primer.)
U.S. Companies in Libya
Hess Corporation (NYSE:HES), Conoco Philips (NYSE:COP) and Marathon Oil (NYSE:MRO) left Libya in 1986 and returned in 2005. The three companies were part of the Oasis Group, which held concessions in the Waha area in partnership with the Libyan National Oil Company (NOC).
Marathon Oil reported that the Waha concession had gross production of 340,000 barrels of oil equivalent (BOE) per day in 2009, with the company and Conoco Philips each having a 16.33% interest. Hess Corporation owns 8.16% and the NOC controls 59.1% of the Waha concession.
Hess Corporation reported a successful exploratory well in late 2009 on a separate 100% owned offshore block, and in the fourth quarter of 2010 reported average daily production of 99,000 barrels of oil per day from its African operations, which include Algeria, Egypt and Libya.
The three former Oasis Group members also have four growth projects planned in the Waha concession. The Faregh II, North Gialo, NC-98 and Dahra-Jofr projects may all be impacted by the unrest in Libya.
Exxon Mobil (NYSE:XOM) is also exploring in Libya, but announced late last year that an offshore well it had been drilling was not commercially viable.
Occidental Petroleum (NYSE:OXY) signed a 30-year agreement with the NOC in 2008 on fields in the Sirte Basin. The company pledged a $5 billion investment to triple production from this area to 300,000 barrels of oil per day. Occidental Petroleum's plans here included hundreds of new development wells and workovers, and 22 exploration wells by 2013. The company hoped to increase net production from 15,000 barrels of oil per day in 2010 to between 28,000 and 33,000 barrels of oil per day by 2013.
The Bottom Line
The oil and gas business is known for its geopolitical risk, and that risk is on display with the recent civil unrest in Libya. Investors should be aware of the many U.S.-based companies that are impacted by these events and keep an eye on the political situation in the country as it unfolds.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!