Gulf Discovery Could Boost U.S. Oil Reserves

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1. Gulf Discovery Could Boost U.S. Oil Reserves
2. Challenger: Layoff Plans Jump 76 Percent
3. Home Prices Slow Sharply
4. IMF Chief: China, India Growth Offsets U.S. Slowdown

1. Gulf Discovery Could Boost U.S. Oil Reserves

U.S. oil reserves could increase by as much as 50 percent if tests of a deep-water well are any indication, according to a report by The Wall Street Journal.

"Test results are very encouraging and may indicate a significant discovery. The full magnitude of the field's potential is still being defined," Statoil said in a statement.

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A test of the Jack 2 well, which was drilled by Chevron Corp. in partnership with Statoil ASA of Norway and Devon Energy Corp. of Oklahoma City, yielded a flow rate of more than 6,000 barrels of oil per day, said Statoil. Chevron owns a 50 percent stake in the field and Statoil and Devon own 25 percent each. Chevron operates the field.

Chevron and Devon officials estimate that the Gulf of Mexico's lower-tertiary formations hold up to 15 billion barrels of oil and gas reserves, says the Journal. That would boost U.S. oil reserves by 50 percent.

In addition, the Journal says that the region where the Jack 2 well is located, Walker Ridge, may be the nation's biggest new domestic source of oil since Alaska's North Slope. Walker Ridge is about 270 miles southwest of New Orleans and 175 miles off the coast. Devon has found three other oil fields in the Gulf: Cascade, St. Malo and Kaskida.

"This area is one of the new and promising deep-water areas in the Gulf of Mexico," said Oivind Reinertsen, senior vice president of Statoil's Gulf of Mexico assets in Houston.

Chevron said in a statement that the well is the deepest well successfully tested in the Gulf of Mexico, among other records. Chevron drilled about 20,000 feet below the sea floor for the discovery.

Chevron, Statoil, and Devon plan to drill another well at the site in 2007. Then they will decide if they want to develop the Jack field. The field would start production in 2013 if development moves forward, says Statoil's Peter Mellbye, head of international operations in an interview with Bloomberg.

"The results so far are promising and confirm that it should be possible to develop this area commercially," Mellbye tells Bloomberg. "Drilling in the deep waters is becoming increasingly important in the industry."

According to Devon senior vice president for exploration and production, Stephen J. Hadden, the company's holdings in the region "could more than double our current reserve base of about two billion equivalent barrels in the coming years."

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2. Challenger: Layoff Plans Jump 76 Percent

Layoff announcements jumped 76 percent in August to 65,278. That's way up from a six-year low the month prior. This is also only the second time this year that layoffs increased.

Year-to-date, corporations have announced 538,914 job cuts. That's down 24 percent from this time last year.

But Challenger, Gray and Christmas say that August may "signal an early start to year-end downsizing."

The company also indicates that the housing slowdown is just beginning to cost people their jobs.

"There are some signs that the housing slowdown is taking a toll on jobs," said the firm's CEO, John Challenger. "Job cutting in real estate this year is nearly double last year's pace." But job cutting in other housing-related sectors, such as finance or consumer goods, has not risen, he said.

"The housing slowdown has not had a major impact on the job market, yet," said Challenger.

The industries with the most planned layoffs are computer companies, with 17,371 job cuts, and the auto industry, with 7,639 planned reductions, says MarketWatch.

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3. Home Prices Slow Sharply

U.S. home prices continued to rise in the second quarter but showed the biggest slowdown in three decades, federal regulators reported Tuesday.

The figures released by the Office of Federal Housing Enterprise Oversight, the agency that oversees the big mortgage-finance companies Fannie Mae and Freddie Mac, provided the latest indication that the housing market is cooling substantially.

Average home prices rose 1.17 percent in the April-June period, compared with 3.65 percent in the second quarter of 2005 - the biggest decline in price growth since OFHEO started keeping track of home prices in 1975, the new report showed.

The agency cited higher interest rates and rising inventories of homes for sale as possible factors in the slowdown in price growth.

"These data are a strong indication that the housing market is cooling in a very significant way," OFHEO Director James B. Lockhart said in a statement. "Indeed, the deceleration appears in almost every region of the country."

Data issued last month provided proof that the housing boom is over. The Commerce Department reported that sales of new homes dropped in July by 4.3 percent, the largest amount since February, while the inventory of unsold homes climbed to a record high. And sales of previously owned homes fell 4.1 percent in July to a 2 1/2-year low, according to the National Association of Realtors.

Sales of both new and existing homes set records for five consecutive years as the housing industry enjoyed a boom powered by the lowest mortgage rates in four decades. But rates have been steadily rising this year as the Federal Reserve tightens credit conditions as a way to slow the economy and keep inflation under control.

Analysts expect home sales to drop by some 10 percent this year.

Still, the OFHEO report noted, house prices grew faster from the second quarter of 2005 to the same period this year - by 10.06 percent - than did prices of other goods and services, which rose 4.41 percent.

The second-quarter figure is derived from an average of home prices in April, May and June. Prices in that April-June period were up 1.17 percent from the first quarter of the year -- the smallest rate of quarterly price growth since a 1.12 percent gain in the fourth quarter of 1999, OFHEO said.

Editor's Note:

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4. IMF Chief: China, India Growth Offsets U.S. Slowdown

Rodrigo Rato, chief of the International Monetary Fund, said that strong growth in both India and China will more than make up for a slowdown in the U.S.

In a speech to the Brookings Institution, Rato says the IMF predicts the global economy will grow by 5 percent this year and next, despite a cooling in the world's largest economy.

Rato says that the slowing U.S. housing market and the impact of two-plus years of rising interest rates is taking its toll on the U.S. economy. But Rato says that even as the U.S. economy slows, China and India are picking up the slack and then some.

Rato calls China and India "important engines of world economic expansions growth," says the AP. In addition, Rato says that Europe and Japan will also "support global growth."

But, Rato did outline some risks to growth. "There are more clouds on the horizon than there were a year ago," says Rato

He pointed to elevated energy prices, inflation risks, and protectionism as hurdles to growth.

Editor's Note:

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Editor's Notes:

In April 2004, Financial Intelligence Report predicted that oil prices would skyrocket from $29 per barrel to over $60 within a year. That forecast was dead-on. Our investors made a fortune on that advice. Since then FIR has been warning that oil prices would collapse in the next 12 months and could go as low as $40 per barrel. Discover the top 5 ways you can profit from the coming Oil Bust. It's already begun! Go Here Now.
A massive demographic tidal wave is about to hit the U.S. as 77 million Baby Boomers retire - swamping pension systems and the health care system. Some sectors will suffer massive, long-term losses as others post huge gains. Find out how you can profit from investing in these sectors. Go here now.
Housing prices nationwide could fall by as much as 40% over the next few years. Find out how the five ways to protect yourself and profit from the coming real estate crisis. Go here now.
Hedge fund investing lets you protect your wealth without investing in a single stock. Go here now.
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