Forcing big oil to give up control of Venezuela's most promising oil fields this week will be relatively easy for Venezuelan President Hugo Chavez. But he'll face a more delicate challenge in getting the world's top oil companies to stay and keep investing. Houston-based ConocoPhillips, Irving-based ExxonMobil, Britain's BP, California-based Chevron, France's Total and Norway's Statoil will turn over their Orinoco operations to Venezuela's state oil company today. Chavez is expected to be accompanied by troops and workers clad in revolutionary red amid fly-bys by the military's new Russian-made fighter jets. He says he's reclaiming the oil industry after years of private exploitation. If he can persuade companies to stick around despite tougher terms, Venezuela will be on track to develop the planet's largest known oil deposit. It could even surpass Saudi Arabia as the nation with the most reserves. But if Chavez scares them away, the Orinoco River region could end up starved of the investment and know-how needed to transform its vast tar deposits into marketable crude oil.
The Offshore Technology conference continues today at Reliant Center. OTC Chairman Arnis Judzis says the spotlight is on the international nature of the oil and gas industry.
"This year's emphasis is only international geopolitics. We have some very, very good sessions related to the growing balance or imbalance of the reserves between the international oil companies—IOCs--and the NOCs—national oil companies. We've got some very, very good panel sessions and another one with OPEC. These deserve a lot of attention." Ed: "Do these sessions get down into the actual politics of geopolitics--you know what I mean?--like Venezuela, or attacks in Nigeria, that kind of thing." "Well, some of the issues that come up by the various countries and their representatives do, indeed, come out. The messages related to offshore leasing, taxation and standards worldwide are all topics, and they're very legitimate topics for discussion here."
Judzis says OTC may not be the only offshore conference, but it's the biggest.
"A lot of societies and a lot of companies do put on programs, and many of these are good programs. OTC is unique and it's the best. The professional societies that contribute to this all contribute to OTC, which is a not-for-profit organization. The proceeds actually go back to the professional societies for the betterment of their membership. They also bring the best in the quality, the best in the mind and the best-educated people so we do provide the best program, overall--both exhibits and the attendees going to the technical sessions. We cover all of the world geopolitics and all the offshore areas of the world, so it's really, it would be an unfair comparison, or anything like that. We bring together the biggest and the best show, and I think people should look at the professional societies and what they bring."
The Offshore Technology Conference is attracting as many as 60,000 professionals in the energy business, from drilling and exploration to production and environmental protection.
The government reports consumer spending rose at the slowest pace in five months in March. At the same time, Americans were enjoying some solid income growth. The Commerce Department says consumer spending rose three-tenths of one percent, while incomes surged seven-tenths. It is the seventh straight month of solid income growth. There is also word that a price gauge tied to consumer spending was unchanged, after excluding the effects of gasoline and food.
Construction spending edged upward last month while the figures for February were revised sharply higher. The Commerce Department says outlays for building projects were up just two-tenths of a percent during March. However, the February figure was revised to show a surge of 1.5 percent. Spending for February was initially reported as having advanced only three-tenths percent. The slump in the housing sector was a major factor in the tiny March increase with residential construction spending down one percent. Outlays for non-residential construction spending rose 1.4 percent, powered by hotel and shopping center construction.
The Supreme Court has sided with Microsoft in a case that restricts the reach of U.S. patents overseas. In a seven-to-one decision, the court found that Microsoft is not liable in a patent dispute with AT&T. The decision could affect other lawsuits against Microsoft and save the company billions because of the global scope of its operations. AT&T had sued Microsoft, alleging computers running the Windows operating system infringe on its technology that compresses speech into computer code. AT&T said it was entitled to damages for every Windows-based computer manufactured outside the U.S., which uses the digital speech coder system.
New figures show U.S. newspaper circulation continues to decline. Weekly circulation among U.S. dailies fell 2.1 percent in the latest six-month reporting period. It is being seen as a fresh indication on the impact of the Internet and other media. Comparable figures for Sunday newspapers fell 3.1 percent, according to the Newspaper Association of America. The calculations are based on reports that newspapers deliver to the Audit Bureau of Circulations. Among large newspapers, the performance was mixed for the six months ending in March, with several showing gains, most notably the New York Post. It is in a fierce competition with the New York Daily News. The Dallas Morning News, owned by Belo, posted a more than 14 percent decline. It reported for the first time since being censured in 2004 for misstating its circulation figures. Newspaper circulation has been declining amid changing reader habits and the emergence of other media for news, particularly 24-hour cable TV news and the Internet. Online readership of newspaper sites continues to grow.
Oklahoma city-based Chesapeake Energy is announcing plans to buy a portion of Houston-based Gastar Exploration's undeveloped interests in east Texas oil and gas property. Chesapeake will pay $92 million in the deal which includes buying ten million shares of Gastar's common stock at $2 per share. The sale gives Chesapeake a 20.5 percent interest in Gastar. The sale will give Cheseapeake over 350,000 acres in the deep bossier play of east Texas. Chief Executive Aubrey McClendon says the company is planning to increase its drilling from one rig to six rigs by the end of the year.
Fort Worth-based RadioShack said its first-quarter profit surged on lower costs and improved margins. The electronics retailer is reporting a five-fold increase in net income from last year's quarter to $42.5 million. That's even though revenue for the quarter fell more than 14 percent to $992.3 million on lower wireless and personal electronics sales. RadioShack says that having 506 fewer stores and kiosks compared with a year earlier also hurt sales. And same-store sales dropped 9.2 percent. But total operating expenses fell almost 18 percent to $442.8 million.