Friday Snippets

March 24, 2017

OIPA presents awards to Oklahoma energy industry leaders

The Oklahoma Independent Petroleum Association’s Wildcatters Gala was held at the Skirvin Hotel in Oklahoma City this week and recognized Aubrey McClendon’s role in launching the American energy renaissance as co-founder of Chesapeake Energy Corp.

A “short memory and a thick skin” were among the traits that made Aubrey McClendon an energy industry leader, Jack McClendon said of his late father Tuesday evening as he accepted a “legend of the industry” award on behalf of the McClendon family.

“My father was a visionary who early on recognized that, by combining horizontal drilling and hydraulic fracturing techniques, we could commercially develop the bountiful, unconventional oil and natural gas resources in our country,” McClendon said. “He combined that vision with his indomitable work ethic to help revolutionize the U.S. energy industry, much to the chagrin of the industry naysayers and others who doubted that the vast amount of hydrocarbons trapped in tight rock could be unlocked.”

Jeff McDougall, OIPA chairman and president and owner of JMA Energy Co., introduced a video honoring Aubrey McClendon’s leadership and philanthropy with remembrances from friends, colleagues and elected officials.

Aubrey McClendon died in an automobile crash in Oklahoma City in March 2016. He was 56.

Factoid: US independence on imported oil peaked in 2005.

Closing Oil and Gas Prices, Thursday, March 23rd

Oil prices extended their streak of losses on Thursday, as traders focused on the persistent oversupply of crude in the global market that has weighed on prices in recent years.

Oil prices saw a late-session surge on Wednesday, but still closed lower. Data early Wednesday from the U.S. Energy Information Administration showed that U.S. crude supplies rose by 5 million barrels to a record high of 533.1 million barrels.

On Thursday, May West Texas Intermediate crude CLK7 settled at $47.70 a barrel on the New York Mercantile Exchange. May Brent crude LCOK7 closed down at $50.56 a barrel on London’s ICE Futures exchange.

Natural Gas Outlook

Natural gas inventories and prices
Natural gas prices are impacted by the spread between natural gas inventories and their five-year average. Over the past ten years, whenever natural gas inventories have been higher than their five-year average, prices have fallen.

Recent natural gas inventories and prices
Last winter, natural gas usage for heating was weak due to mild temperatures. At the end of March 2016, US natural gas inventories were at 2.5 trillion cubic feet—67.0% higher than the levels in 2015 and 53.0% higher than the five-year average. As a result, natural gas futures hit a 17-year low of $1.64 on March 3, 2016.

At the start of the injection season on April 1, 2016, the spread between natural gas inventories and their five-year average was at its widest since April 2012. However, the spread narrowed in subsequent months. In the week ending on December 16, 2017, inventories fell below their five-year average for the first time in 19 months. Natural gas active futures prices rose 53.9% between April 1, 2016, and March 22, 2017.

The spread reversed in the week ending January 27, 2017. During the week ending March 10, 2017, natural gas inventories were at 2,242 Bcf—21.4% more than the five-year average. In the six weeks since the reversal, natural gas prices have lost 11.2%. However, inventories are 9.5% lower than they were last year, which should ensure that prices don’t fall to the lows we saw at that time.

Now For This Week’s Snippets:

IPO activity across US shale industry to spike in 2017

The number of drillers, oilfield service companies and pipeline operators expected to go public this year could surge to 30, with a combined value estimated at $8.5 billion, which is close to four times more than in 2016, according to Credit Suisse. Oilfield service companies are expected to account for half of the initial public offerings.

US shale gas commands record prices overseas

Importers of US shale gas paid a record of $7.52 per million British thermal units of liquefied natural gas shipped from Cheniere’s Sabine Pass export terminal in January, up from a high of $6.21 last year. The volume of LNG exported in January and February also climbed to a record of 15 tankers, headed mainly to Mexico, China, Japan and Jordan.

Phillips 66 unveils plans to build Rodeo pipeline in Permian

Houston-based Phillips 66 has announced the Rodeo project, a 130-mile pipeline that would transport oil from Texas’ Reeves County in the Permian’s Delaware sub-basin to the Odessa-Midland area. The pipeline will have an initial capacity of 130,000 barrels of crude per day and is expected to be completed in the second half of 2018.

Kinder Morgan to build natural gas pipeline in Permian Basin

Kinder Morgan on Wednesday unveiled plans for a 430-mile, 42-inch pipeline that would transport natural gas from Waha, Texas, in the Permian Basin to Agua Dulce in the Corpus Christi area. The project is expected to be completed in late 2019.

Marathon Oil boosts Permian position in $700M deal

Marathon Oil announced plans to acquire 21,000 net acres in the Northern Delaware Basin of the Permian Basin for $700 million in a move that will boost its Permian foothold to 90,000 net acres. News of the acquisition comes less than two weeks after Marathon said it would pay $1.1 billion for over 70,000 net acres in the Permian.

EIA: US crude production decreased in 2016

The US produced an average of 8.9 million barrels of crude oil per day in 2016, down from 9.4 million barrels of oil per day in 2015, despite production growth in the Permian Basin and record high average daily output in the Gulf of Mexico, according to the Energy Information Administration. US crude exports surged 12% to 520 thousand barrels of oil per day, while inventories rose by 35 million barrels to 484 million barrels by the end of the year.

Oil majors are doubling down on US shale

Big oil companies such as Chevron, ExxonMobil and Royal Dutch Shell are leaving huge projects behind in favor of fast-growing US shale with plans to invest a combined $10 billion in US shale fields in 2017, up from close to zero a few years ago. This shift will likely raise US production further, keeping oil prices down, and transform US shale with projects such as the Bongo 76-43 in the Permian Basin, where Shell plans to break with tradition and drill five wells in a single pad for the first time.

Goldman Sachs warns of oil oversupply

The US shale revival along with new oil production projects could add one million barrels of extra oil per day, potentially causing an oversupply in the next two years, Goldman Sachs said in a research note. Over the next two years we are “likely to see the largest increase in mega projects’ production in history, as the record 2011-13 capex commitment yields fruit,” the bank wrote.

Texas High Court Weighs Eagle Ford Deed Royalty Dispute

Texas Supreme Court justices on Wednesday wrestled with whether they should overturn decades-old precedent as they interpret an Eagle Ford property deed that granted oil and gas interests and has spurred competing royalty claims.

PROMINENT OILMEN

Another story we release every other week in Friday Snippets is a look back at prominent Oklahoma oilmen who have helped create, shape and transform the oil and gas industry in Oklahoma.

This weeks presentation is on Robert Hefner III, the father of deep natural gas and great prognosticator of the Anadarko Basin. We have a long list of historical characters we will be presenting but we welcome any suggestions of someone you would like to see featured.

If you have someone to nominate, reach out to me via email at [email protected]

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: Robert Hefner III

March 17, 2017

Too Many Headwinds To ExxonMobil/BP?

U.S. energy giant ExxonMobil (NYSE:XOM) has reportedly gauged potential interest among BP’s major shareholders regarding a possible takeover, British newspaper Evening Standard reported on Friday, sending BP’s stock (NYSE:BP) soaring to one-month highs in London and trading nearly 3 percent higher in New York shortly after opening.

Analysts say the two companies would face massive antitrust headwinds in the wake of Brexit and combined with the high debt of BP, especially when viewed relative to cash flow, creates a massive headwind to acquisition.

U.S.-based Chevron is also reportedly among “other interested parties”, Evening Standard said, noting that Exxon and BP said that they do not comment on speculation.

Court approves Chaparral exit plan from bankruptcy

A judge has approved Chaparral Energy Inc.’s plan to exit bankruptcy, wiping out $1.2 billion in debt from the Oklahoma City-based company. Chaparral expects to emerge from bankruptcy by the end of March, the company said Monday.

Under the plan, Chaparral’s unsecured bondholders and general unsecured creditors will own all of the company’s ownership interest, subject to some dilution.

Chaparral said it expects to have liquidity of more than $100 million when it emerges from bankruptcy. The oil and natural gas producer filed for bankruptcy reorganization in May.

Chaparral, founded in 1988, has focused its operations in Oklahoma’s fast-growing STACK play. The company also is the third-largest oil producer in Oklahoma.

Factoid: The United States leads the world in total daily petroleum production (petroleum + liquids), ahead of Saudi Arabia and Russia.

Closing Oil and Gas Prices, Thursday, March 16th

Oil prices on Wednesday climbed for the first time in more than a week on a surprise drawdown in U.S. crude inventories and data from the International Energy Agency (IEA) suggesting OPEC cuts could create a crude deficit in the first half of 2017.

Those increases pushed both Brent and WTI out of technically oversold territory for the first time in six days

Natural Gas News

So far this year, natural gas has performed the worst among major commodities, posting significant losses in January and February. It has rebounded somewhat in the last few weeks, but hovering around $3 per MMBtu, gas prices are still sharply lower compared to the fourth quarter of last year.

“It’s a real risk that a year from now that prices could be below $2,” Brandon Blossman, a managing director at Tudor Pickering Holt, said in a Bloomberg interview. “You have this unfortunate confluence of Permian production ramping right into the teeth of a lot of new takeaway capacity in the Northeast.”

Now For This Week’s Snippets:

US shale drillers unfazed by oil price drop

Oil prices would have to fall to $30 per barrel or less to hurt the finances of US shale producers because many of them, including Pioneer Natural Resources and Parsley Energy, are well-hedged against potential market crashes for the next several years, according to Katherine Richard, founder and CEO of Warwick Energy Investment Group. Richard says oil prices will likely continue to fall over the next few months, but companies operating in the most lucrative shale plays will not be affected.

Pioneer Natural Resources Sells Midland Acreage in $266 Million Deal

Pioneer Natural Resources Co. (NYSE: PXD) continues to high-grade its Midland Basin acreage with the sale of acreage in northeastern Martin County, Texas. Pioneer said an undisclosed buyer will acquire the acreage with an average production of about 1,500 barrels of oil equivalent per day for $266 million. The sale of the Martin acreage comes after January agreements to sell 5,600 net acres in Upton and Andrews counties, Texas for $63 million in gross proceeds.

Increased drilling efficiency putting pressure on prices

US oil and natural gas companies’ rush to lower break-even costs is also putting downward pressure on oil prices. US shale break-even prices have fallen by 46% between 2014 and 2016, but Ernst & Young’s Deborah Byers notes that “everyone is driving break-even prices down,” including deep-water and conventional companies.

US faces shortage of pipeline inspectors

There are 528 government inspectors overseeing the US’ 2.7 million-mile pipeline network, which means that each inspector is responsible for more than 5,000 miles of pipeline. The country’s sprawling network is set to expand by 1,499 miles after the Keystone XL and the Dakota Access pipelines are completed, but it’s still unclear whether the Pipeline and Hazardous Materials Safety Administration will hire new inspectors.

Gas production out of Permian poised to surge dramatically

Tudor Pickering Holt & Co. predicted that an upsurge in drilling activity in the Permian Basin will lead to a 25% increase in natural gas production out of the US’ hottest shale play over the next year, which threatens to send natural gas prices below $2 per million British thermal units. Natural gas production is also accelerating in the Marcellus Shale in Pennsylvania and West Virginia.

Signs of oil market upturn increasingly evident in Texas

The Railroad Commission of Texas reported four oil and natural gas discoveries in Texas in February, up from two in January, and said it issued 991 original drilling permits during the month, compared with 573 in February 2016. However, Texas Alliance of Energy Producers economist Karr Ingham points out that oil production and employment are still weaker compared with a year ago, raising questions about Texas’ future growth.

Trump’s tax plan could be windfall for US drillers

US oil drillers could save up to $10 billion per year as a result of President Donald Trump’s proposed corporate tax cuts, with the extra cash expected to go toward drilling, leading to an upsurge in activity. The Trump administration plans to cut the corporate tax rate to 15% or 20%, down from the current 35%, but it’s unclear when a reform bill will be enacted as there are many challenges.

Noble Energy to cut 197 positions in Texas

Noble Energy announced plans to shut down Clayton Williams Energy’s office in Midland, Texas, by year’s end and lay off about 197 Clayton employees starting in May after its $2.7 billion merger with Clayton Williams is finalized. Noble may choose to keep some of the employees, especially field workers.

Industry CEOs expect natural gas demand to continue

Oil and natural gas industry CEOs told the CERAWeek by IHS Markit conference last week they expect to see continued global demand for natural gas, though production might not be able to keep up. The executives also discussed exploration and production technology, as well as the political climate.

Making a case for natural gas as energy future of US

Market forces dictate that natural gas, not coal, will power America in the future, even though President Donald Trump is pushing to bring back coal. Natural gas was the top electrical power source in the US in 2016 as utility companies increasingly prefer gas over coal because it has become cheaper thanks to the shale boom, is cleaner than coal, benefits from better technology and is in high demand overseas.

PROMINENT OILMEN

Another story we release every other week in Friday Snippets is a look back at prominent Oklahoma oilmen who have helped create, shape and transform the oil and gas industry in Oklahoma.

This weeks presentation is on Charles Page, oilman, industrial developer, philanthropist, and father of Sand Springs, Oklahoma. We have a long list of historical characters we will be presenting but we welcome any suggestions of someone you would like to see featured.

If you have someone to nominate, reach out to me via email at [email protected]

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: Charles Page

 

March 10, 2017

WTI plunges 5% to year-low on oversupply fears

The price of U.S. crude oil has dipped below $50 for the first time since December as a global supply glut persists despite production cuts by big exporters.

Just when oil prices seemed high enough to spur a sustainable revival in domestic drilling, a surge in U.S. petroleum stockpiles and a warning from Saudi Arabia’s energy minister pushed them sharply lower this week.

Senior Saudi energy officials told top independent U.S. oil firms in a closed-door meeting this week that they should not assume OPEC would extend output curbs to offset rising production from U.S. shale fields, two industry sources said on Thursday.

The Saudis called the meeting to exchange views on the market and to gauge the outlook for shale output, both sources said.

Speaking at an industry conference in the U.S. energy capital of Houston on Tuesday, Saudi Arabia’s Energy Minister Khalid al-Falih said that there would be no “free rides” for U.S. shale producers benefiting from the upturn.

Harold Hamm, the billionaire shale oilman, said the U.S. industry could “kill” the oil market if it embarks into another spending binge, a rare warning in a business focused on fast growth to compete with OPEC.

The statement by Mr. Hamm, who is attending the same conference in Houston, comes as top shale companies announce large increases in spending for this year, and the U.S. government says domestic oil output next year will surpass the record high set in 1970. OPEC ministers have said they are keeping a close watch on shale production to decide in late May whether to extend their oil-supply cuts into the second half of the year.

Factoid: What’s lighter than air? Natural gas.

Speculators head for the door, hastening the falling oil price…

Speculators have started exiting the nearly record long positions in oil futures that they had amassed. “It’s a combination of an overhang of (speculative) length and the overhang in inventories … and the other thing unnerving the market is rapid growth in U.S. crude production,” Andrew Lebow, senior partner at Commodity Research Group in Darien, Connecticut, told Reuters on Wednesday.

Closing Oil and Gas Prices, Thursday, March 9th

Natural Gas News

Warmer than normal weather throughout much of the United States resulted in the first recorded net natural gas injection during a week in February since weekly storage data has been collected.

For the week ending February 24, the amount of natural gas in storage in the Lower 48 states increased 7 billion cubic feet (Bcf). While some weeks during March in previous years had recorded injections, net injections of natural gas into storage do not typically occur until at least April.

Now For This Week’s Snippets:

OPEC, US shale producers find common ground in Houston

OPEC Secretary-General Mohammed Barkindo and about 20 US shale executives attended a dinner event in Houston on Sunday during which they reportedly agreed that oil market balance would benefit both sides. However, the shale producers said they didn’t want to miss out on the growth opportunity in front of them, but Barkindo said OPEC will continue to fight for higher oil prices even if shale companies get rich in the process.

API reports bigger-than-expected surge in US crude supplies

US crude stockpiles climbed by 11.6 million barrels in the week ended March 3, compared with analyst estimates for a 1.6 million-barrel build. Gasoline inventories fell by 5 million barrels while distillates declined by 2.9 million barrels.

EIA revises up US oil production forecasts

The Energy Information Administration raised its US crude oil output predictions to an average of 9.21 million barrels per day in 2017 and 9.73 million barrels per day in 2018. That’s up from previous estimates of 8.98 million for this year and 9.53 million for 2018, respectively.

Higher frac-sand prices put pressure on shale drillers’ cash flows

Growing demand from shale drillers has spurred a rebound among producers of sand used in the hydraulic fracturing process, while pushing frac-sand prices to new highs, which in turn is hurting shale drillers’ cash flows. An ordinary well in the Permian Basin could require between $800,000 and $1 million worth of frac sand by late 2017, up from $350,000 last year.

US shale breakeven prices are higher than thought, KLR Group says

Research by KLR Group claims that the breakeven prices for US shale are $50 per barrel of oil and $3.35 per thousand cubic feet of natural gas, well above other estimates. The lowest breakeven prices for oil are achieved in the Permian’s Midland basin and the eastern Eagle Ford, while the Marcellus Shale has the lowest breakevens for natural gas.

ExxonMobil to spend $20B on Gulf Coast downstream projects

ExxonMobil on Monday announced plans to invest $20 billion to build chemical and oil refining plants along the US Gulf Coast through 2022. The plan consists of 11 projects, some of which are already underway, and is expected to create 47,000 temporary and permanent jobs, according to ExxonMobil Chairman and CEO Darren Woods.

Halcon Resources expands Permian footprint

Halcon Resources will pay $22.3 million to acquire 594 acres and 160 barrels of oil equivalent per day in the Permian’s Delaware sub-basin in Pecos County, Texas, adding to the 20,901 net acres it already owns in the county. Halcon also has the option to acquire 15,040 net acres in Ward County, Texas, for $11,000 per acre.

Goldman Sachs predicts oil undersupply in 2017

A report from Goldman Sachs forecast that global oil supply will lag demand in the second quarter of 2017, mainly because of OPEC’s production cuts and some declines in US output. Demand will overtake supply by 170,000 barrels for the year, the report said, but it warned that US shale could push supply above demand again.

Challenges made US shale industry stronger, more efficient

Over 100 shale drillers went bankrupt in the past two years, but those that survived the downturn have emerged stronger, more efficient and more cost-effective and are able to thrive with oil at $55 per barrel. The US rig count climbed by 91% to 602 in the past nine months, production surged by over 550,000 barrels per day since summer 2016 and North American oil companies, including oil giants that shunned shale during the first boom, plan to boost spending by 25% this year.

Shale drillers’ efficiency threatened by soaring costs

Oilfield service and equipment companies are finding it increasingly difficult to hire workers and keep commitments, tightening the supply of services and equipment and leading to higher costs for producers. Drillers face costs of more than $20,000 per day to rent a rig from the biggest land-rig contractor, Nabors Industries, while the average price for a ton of frac sand supplied by US Silica Holdings has climbed 20% to $35.

Permian companies face challenges over wastewater injection

Companies operating in the Permian Basin might need to find new ways to dispose of wastewater resulting from the hydraulic fracturing process because it “will be a huge issue past a certain amount that you can inject,” said BHP Billiton Asset President of Shale Alex Archila. Another challenge for Permian companies is obtaining enough water for fracking, according to Archila.

Resolute Energy acquiring Permian acreage in $160M deal

Resolute Energy has agreed to buy an asset package that includes 4,600 net acres in the Permian’s Delaware sub-basin, two horizontal wells and six drilled but uncompleted wells for $160 million. “The acreage to be acquired is adjacent to our Appaloosa project area and immediately north of our Mustang project area, and 95% of the acquired acreage will be operated by Resolute,” said Resolute CEO and Director Rick Betz.

MMEX Resources to build $450M crude refinery in the Permian

Austin, Texas-based MMEX Resources wants to build a $450 million crude oil refinery in the Permian Basin on a 250-acre site in Pecos County, a project that would create about 500 temporary and permanent jobs. The construction of the refinery, which would have a capacity of 50,000 barrels per day, is expected to begin in 2018 and be completed in 2019.

PROMINENT OILMEN

Another story we release every other week in Friday Snippets is a look back at prominent Oklahoma oilmen who have helped create, shape and transform the oil and gas industry in Oklahoma.

This weeks new presentation is on Charles Page, oilman, industrial developer, philanthropist, and father of Sand Springs, Oklahoma. We have a long list of historical characters we will be presenting but we welcome any suggestions of someone you would like to see featured.

If you have someone to nominate, reach out to me via email at [email protected]

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: Charles Page

 

March 3, 2017

EIA: US crude stockpiles surge to record high

The Energy Information Administration reported the eighth straight week of build, with a build of 1.5 million barrels in U.S. oil inventories, compared to analysts’ expectations for the growth of 1.3 million barrels. This moved inventory levels to an all-time high of 520.2 million barrels in the week ended Feb. 24. Gasoline inventories dropped by 546,000 barrels, while distillates declined by 925,000 barrels.

The latest growth in oil stockpiles was driven by increased imports from Saudi Arabia, Canada and Iraq, while domestic production was also standing above 9 million barrels.

The U.S. oil production increases have turned out to be a big threat for price stabilization despite massive production cuts from OPEC and 11 non-OPEC players. Moreover, U.S. production could expand at a significantly higher rate in the coming months, as North American and global players are increasing their drilling programs in the key U.S. oil plays.

In the last two consecutive months, OPEC producers indicated production compliance above 90%, strengthening future fundamentals for prices. In the short-term, U.S. oil production and the U.S dollar could pressure oil prices.

Factoid: John Rockefeller. He founded Standard Oil in 1870, at the age of 31, and bought up most of the oil refineries in the United States, eventually controlling about 90% of the American oil business.

Brigham Resources Closes $2.55 Billion Southern Delaware Basin Asset Sale to Diamondback Energy

Brigham Resources Operating, LLC and Brigham Resources Midstream, LLC (collectively “Brigham Resources”) announced that it has closed the sale of substantially all of its southern Delaware Basin assets for $2.55 billion to Diamondback Energy, Inc.

Brigham Resources has closed the sale less than four years after receiving its initial private equity commitment in April 2013. The sale to Diamondback included the following assets: 80,185 net leasehold acres in Pecos and Reeves counties, 48 Brigham operated producing horizontal wells accounting for the bulk of its southern Delaware Basin production, 170 miles of natural gas and water gathering and water recycling infrastructure supporting its producing wells, and 5,745 net mineral acres (assuming an average 23% royalty) underlying Brigham Resources’ operated leasehold acres or where its ownership will give Diamondback the right to operate.

Was Aubrey McClendon a Billionaire, or Broke?

On the anniversary of his death yesterday, the Wall Street Journal published an article noting that “lawyers in Oklahoma City are sifting through the tangle of obligations and assets he left behind, trying to determine if he died a wealthy man—or swamped by debt.”

There isn’t much comprehensive historical data on probate cases, but attorneys say that Mr. McClendon’s estate is surely one of the largest and most complex ever to wind through probate.

Read the full article here: https://t.co/USHlf7hLdD

Closing Oil and Gas Prices, Thursday, March 2nd

Oil prices headed lower for a third consecutive session on Thursday to log their lowest finish in about three weeks. Crude oil prices continue to trade in the range of $5 over the last two months, while higher than expected growth in U.S. oil production lowers their potential to breach the recent trading range. U.S. crude oil closed at $52.61 a barrel on Thursday. Brent crude also declined to close at $55.08 a barrel.

Natural Gas Outlook

U.S. natural gas prices have fallen 30% since the start of the year as demand this winter fell to the lowest in four years due to the warmest weather on record in December, January and February.

Since the start of the year, gas futures have collapsed by 30%, with the April contract closing yesterday $2.80 per million British thermal units (MMBtu) from a two-year high of $3.994/MMBtu on Dec. 28.

Now For This Week’s Snippets:

SandRidge Energy Acquires STACK Acreage

SandRidge Energy picked up 700 boe/d & 13,100 net acres (88% operated, priced at $2,456/acre) targeting northwest STACK in Woodward County for $48MM from IOG Capital &Red Mountain Energy.

Halcón Picks Up New Delaware Deal As It Closes Another

The company said it closed its $705 million acquisition and had picked up additional interest in Pecos County, Texas, for $22.3 million. On Feb. 28, the company closed its acquisition of Samson Exploration LLC’s Pecos County, Texas, acreage and in the interim agreed to buy additional interests from a nonoperating owner in the acreage for $22.3 million. The “incremental acquisition” includes 594 additional net acres and average production of about 160 barrels of oil equivalent per day (boe/d). The deal is expected to close in early March.

Post Oak Capital Invests $100 Million in Mineral Fund

Post Oak Energy Capital, LP announced that it led a $100 million equity commitment to Saxet II Minerals, LLC. The management team will co-invest alongside Post Oak. Saxet II Minerals, LLC is the second partnership with Post Oak; the first iteration has aggregated a position of mineral and royalty interests primarily in the SCOOP/STACK play in Oklahoma and the Midland Basin in West Texas.

Current shale boom enjoys greater momentum than first one

US shale companies have increased production by an average of 125,000 barrels per day every month since a September 2016 low, compared with an average monthly increase of 93,000 barrels per day during the first shale boom between 2011 and 2015. This suggests that the current US shale upturn is more powerful than the previous shale boom and particularly dangerous for OPEC’s plans to balance the global oil market with production cuts.

Oil companies plan more drilling in Okla.

Some of the biggest oil and natural gas producers in Oklahoma say they’ll step up their efforts this year after suffering a downturn last year. They’ve cut costs and reduced debt by drilling fewer wells, speeding up drilling time and making better use of sand in the hydraulic fracturing process.

Hi-Crush Partners to buy Permian Basin Sand in $275M deal

Houston-based oilfield services firm Hi-Crush Partners agreed to acquire frac sand provider Permian Basin Sand for $275 million to take advantage of the soaring demand for hydraulic fracturing sand in the Permian. As part of the deal, Hi-Crush will take over Permian Basin Sand’s 1,226-acre sand reserve, which contains over 55 million tons of sand.

Australis to pay $80M for Encana US shale assets

Australian oil and natural gas company Australis agreed to acquire Encana’s assets in the Tuscaloosa Marine Shale along the Louisiana and Mississippi border for $80 million. The asset package includes 122,000 acres and interests in 47 wells with an output of 1,900 barrels per day.

Exporters ship record volume of US crude

The volume of US crude for export reached a record 1.21 million barrels per day in the week ended Feb. 17, the most since 1993, with the Far East as the main destination. “As output moves from 9 million barrels a day to 9.3 million or 9.4 million, three-quarters of that increased output will be for export,” said Gary Morgan, Clarksons Platou Shipping Services USA Analyst Group director.

Oil majors prioritize US shale over Canadian oil sands

An increasing number of major oil companies are shelving their Canadian oil sands projects to pursue more lucrative opportunities in US shale plays, which are less expensive and provide faster profits. ExxonMobil and ConocoPhillips recently de-booked almost 5 billion barrels combined of bitumen at their Alberta oil sands projects, while Statoil and Royal Dutch Shell also abandoned similar projects.

PROMINENT OILMEN

Another story we release every other week in Friday Snippets is a look back at prominent Oklahoma oilmen who have helped create, shape and transform the oil and gas industry in Oklahoma.

The current presentation is on Charles Colcord (1859-1934), a successful cattle rancher, U.S. Marshal, Chief of Police, businessman, and oil man. We have a long list of historical characters we will be presenting but we welcome any suggestions of someone you would like to see featured.

If you have someone to nominate, reach out to me via email at [email protected]

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: Charles Colcord

 

 

February 24, 2017

STACK INTEREST GROWS

Billionaire real-estate investor Sam Zell is joining Continental Resources Inc.’s Harold Hamm in the growing list of enthusiasts of Oklahoma’s Stack shale formation.

Zell, founder of Equity Group Investments Inc., made an investment in the region this week and sees “awesome” prospects for the oil-producing area, he told Alix Steel, David Westin and Jonathan Ferro in a Bloomberg TV interview Wednesday.

The Stack formation, along with the nearby Scoop, is going through a drilling boom as it offers good returns at a $50 oil price. Continental expects to more than double output from the area’s oil-soaked rocks this year, while Marathon Oil Corp. plans to double the number of rigs in Oklahoma.

Factoid: About 40% of all seaborne cargo is oil, and there is literally more seaborne cargo at any given time (by weight) than there are fish in the sea.

Apache Raises 2017 Capex By More Than 60%

Apache Corp. (NYSE: APA) estimated its capex in 2017 would be more than 60% higher than 2016, joining a growing list of shale producers that are ramping up spending to take advantage of recovering oil prices.

Apache said Feb. 23 that it plans to spend $3.1 billion in 2017, higher than the $1.9 billion it spent last year. It spent $4.7 billion in 2015.

Apache joins other producers such as ExxonMobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX) and Hess Corp. (NYSE: HES) who have increased their capital budgets for this year.

Apache earmarked nearly two-thirds of its 2017 budget for the Permian Basin in Texas, with $500 million alone budgeted for developing infrastructure in its Alpine High Field.

The company said last September that it had amassed more than 300,000 acres in the field, most of which is in Reeves County, Texas.

Closing Oil and Gas Prices, Thursday, February 23rd.

WTI prices have maintained within the $50-55/Bbl range, however they have been edging closer to the $55/Bbl mark since the IEA and OPEC reports showed 90%+ compliance with quotas. The high compliance levels appear to be largely factored in to current pricing level . Any bullish sentiment is largely founded on hopes that existing cuts will work to quickly normalize inventories. Expectations of further OPEC cuts, or an extension of the cuts beyond the agreed upon six months are still in play.

Natural Gas Outlook

Front-month gas prices have plummeted, down to the $2.61 mark from the mid-$3.90s we saw in late-December and the $3.20-3.45 range that persisted for January, but began to fall in February.

EIA reported a 114 Bcf storage withdrawal for the week of February 10, which was about 12% below expectations and nearly 30% below the five-year average. Overall, we are now at 2,445 Bcf of gas in storage, or about 11% below last year and 4% above the 5-year average.

Now For This Week’s Snippets:

Chesapeake Energy to invest more in crude projects in 2017

Chesapeake Energy, the second-biggest natural gas producer in the US, is planning to scale back its investments in natural gas in favor of crude oil projects as part of its effort to shed debt and improve investment-grade metrics. The company, which has lost $18.5 billion over the past seven quarters, plans to allocate 60% of its 2017 budget into crude projects and drill 320 new crude wells this year, versus 90 natural gas wells.

Energy Dept.: Peak US shale production to be reached in 2026

Production from US shale and tight oil formations will top out in 2026 as oil reserves start depleting and well productivity declines, according to the Energy Department. Production will begin to drop in the Eagle Ford first after 2020 and the Bakken will start declining after 2030, while production in the Permian Basin will remain strong through 2040.

US gas sector continues to have an edge over rest of the world

Production innovation, over a century’s worth of natural gas reserves and cheap liquefaction put the US at the forefront of the global natural gas industry, said Charif Souki, co-founder and chairman of LNG company Tellurian Investments and former CEO of Cheniere Energy. “Three years ago, I thought they had finished improving, but no, they continue to lower the cost of production in the US dramatically by a factor of 15, 20% every year,” Souki said in an interview.

Production efficiency in Utica improved more than in Permian

Utica Shale wells produced 4.2 times more barrels of oil equivalent in January 2017 than January 2014. By comparison, Permian Basin wells produced 3.4 times more barrels of oil equivalent in January compared with three years earlier, while nationwide, production efficiency per well improved threefold.

Apache looking to sell Goodland Lime assets

Apache is exiting the Goodland Lime play in East Texas two years after entering it to focus more on its Permian Basin position. The company is now looking to sell all its Goodland assets, which include 10,723 undrilled net acres in Smith and Van Zandt counties.

Matador forms Permian joint venture with Five Point Capital Partners

Matador Resources and private equity firm Five Point Capital Partners have formed a 51-49 joint venture named San Mateo Midstream, which will operate and expand Matador’s Delaware Basin midstream assets in New Mexico’s Eddy County and Texas’ Loving County. The two companies plan to invest $150 million in the joint venture.

US shale producers could face frac sand shortage

Shale industry experts are concerned that increased drilling activity across US shale plays will lead to a shortage of frac sand later this year as suppliers fail to keep up with demand. Raymond James estimates demand for frac sand would surge to a record 55 million tons this year and top 80 million tons by 2018 as producers drill wider and longer wells that require more frac sand.

US shale production costs to rise for first time in 5 years

Increased drilling activity and pricier oilfield services will drive up break-even prices for US shale producers for the first time since 2012 this year, data from Rystad Energy suggest. The break-even production cost will average $36.50 per barrel in 2017, up $1.60 from last year.

Moriah Henry Partners raises $200M from Post Oak Energy Capital

Midland, Texas-based exploration and production company Moriah Henry Partners has received a $200 million equity commitment from Houston-based Post Oak Energy Capital to help it boost its position in the Permian Basin. The company will use the capital to acquire and develop acreage in the Midland Basin.

Whiting Petroleum plans to boost US shale production in 2017

US shale producer Whiting Petroleum said it will invest over $1 billion in US shale fields this year, particularly in North Dakota’s Bakken Shale and Colorado’s Niobrara Shale. The company expects to produce an average of 140,000 barrels of oil equivalent per day in the fourth quarter of the year, 23% more than in the first quarter.

BHP Billiton considers expanding US shale footprint

Australia’s BHP Billiton is considering adding more rigs in US shale formations, but said it would take its time to avoid repeating mistakes. The company only has one rig in the Permian Basin and doesn’t plan to add more until it better understands and evaluates the region.

US crude inventories declined last week, API says

The American Petroleum Institute reported an 884,000-barrel drop in US crude stockpiles in the week ended Friday, missing analysts’ expectations for a 3.4-million-barrel surge. Gasoline and distillates supplies also plunged by 893,000 barrels and 4.3 million barrels, respectively.

Exxon wipes 3.5 billion barrels from proved reserves

ExxonMobil slashed its proved crude reserves by 19%, the biggest write-off since at least 1999. The de-booking of the 3.5-billion-barrel Kearl oil sands project in western Canada, once valued at $16 billion, accounted for the reduction.

PROMINENT OILMEN

Another story we release every other week in Friday Snippets is a look back at prominent Oklahoma oilmen who have helped create, shape and transform the oil and gas industry in Oklahoma.

This weeks new presentation is on Charles Colcord (1859-1934), a successful cattle rancher, U.S. Marshal, Chief of Police, businessman, and oil man. We have a long list of historical characters we will be presenting but we welcome any suggestions of someone you would like to see featured.

If you have someone to nominate, reach out to me via email at [email protected]

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: Charles Colcord

 February 17, 2017

NAPE SUMMIT – HOUSTON TEXAS

The NAPE Summit Exhibit Floor opened on Thursday to a crowd of upstream industry leaders that lasted throughout the day. NAPE Week attendance to date has exceeded expectations, with nearly 11,300 attendees and 1,000 new registrants since yesterday.

Attendees buzzed about the exhibit floor, reflecting an optimistic atmosphere and expectation for industry recovery. There are numerous corporate parties and dinners taking place in the space of 48 hours. The restaurants and bars are packed with industry participants catching up and discussing basin activity, pricing and whether the price of oil is headed up or back down.

Retired four-star general and former Secretary of State Colin Powell, the keynote speaker for the NAPE Charities Luncheon, emphasized the exciting ongoing evolution of the global oil and gas industry.

“This is a fascinating time for the industry. It is the time to cut costs and lower risks,” said Powell. “We are experiencing a revolutionary change in the energy industry – shifting toward ways we can go off the grid and decentralize energy.”

Powell explained that while he can sense the anxiety and concerns among the audiences he addresses, he also sees confidence in the American people.

“There is a resiliency in our society,” Powell said. “We are a country that has been separated. We have to bridge the differences in our thinking and [how we] talk to each other, like our founding fathers once did.”

This year’s 700 exhibitors included an array of domestic, international and offshore companies. In addition, two individual domestic and international theaters each ran a full day of prospect previews.

Doors to the NAPE Summit Exhibit Floor open again this morning at 8 a.m.

Factiod: Since June 3, 2016, oil rigs have risen by 266 as of the week ending February 10, 2017—a rise of 87% from the bottom.

Closing Oil and Gas Prices, Thursday, February 16th.

Natural Gas Outlook

Despite a recent blast of winter weather, natural gas prices have quickly been falling. Winter is almost over for the so-called Henry Hub natural gas prices on the NYMEX, since that contract closes on Feb. 24, 2017, and the imminent onset of the refinery buying ahead of the U.S. summer driving season presents additional bullish risks to WTI crude oil prices — and bearish risks to natural gas prices.

Natural gas production volumes in December were 1.6 percent higher than December 2015 and 2016 volumes were 8.4 percent higher than 2015 levels.

Now For This Week’s Snippets:

US shale exports hit record last week

US shale producers exported a record 7 million barrels of oil last week, or 1 million barrels of oil per day, almost double the volume shipped during the previous week. Customers are “looking at other types of crude to fill the gap left by a reduction in OPEC production, and at the same time you’re seeing continuing demand in China, as world oil continues to increase,” said Lipow Oil Associates President Andrew Lipow.

Chesapeake, Ex-CEO’s Estate End Trade Secrets Disagreement

Chesapeake Energy Corp. has reached a deal with the estate of its former CEO to settle a $445-million-plus claim that he stole trade secrets to launch a rival energy company, according to court records.

Noble Energy to nearly double 2017 capital spending

Noble Energy plans to spend between $2.3 billion and $2.6 billion in 2017, up from about $1.3 billion last year, three-quarters of which will be invested in US onshore projects. Noble expects to direct almost half of the onshore budget toward the Denver-Julesburg basin in Colorado, while the Permian’s Delaware Basin should absorb about $500 million.

Drillers shift focus as Permian price bubble continues to inflate

US oil and natural gas companies and investors set their sights on other shale plays such as Oklahoma’s SCOOP and STACK regions, the Bakken formation and the Eagle Ford and Haynesville Shale as land prices in the Permian Basin skyrocket, hitting as much as $60,000 per acre. Williams Capital Group analyst Gabriele Sorbara says out-of-control valuations in the Permian make it nearly impossible for newcomers to get involved.

Diamondback planning to deploy more rigs to Permian Basin this year

Permian-focused Diamondback Energy has set a 2017 budget of up to $1 billion, more than half of which will go toward drilling and completions. Diamondback President and CEO Travis Stice said the company could deploy two more rigs to the Permian’s Delaware and Midland sub-basins by the end of 2017 if oil prices continue to rise.

Applications for new drilling permits spike in Texas

The Texas Railroad Commission issued 956 original drilling permits last month, up from 510 in January 2016, as oil and natural gas companies step up drilling activity to capitalize on higher oil prices even though production has yet to climb. Texas produced 81.5 million barrels of oil in November, a one-million-barrel decline from October.

N.D. posts record decline in oil production

North Dakota oil production fell by over 92,000 daily barrels to 942,455 barrels per day in December, the biggest single-month drop in history, as harsh weather conditions hindered activity. Natural gas output also declined to 1.54 billion cubic feet per day in December, down from 1.76 billion cubic feet per day the previous month.

US shale production in March to gain most barrels since Oct.

US shale drillers are expected to boost production by 79,000 barrels per day to 4.87 million barrels per day in March, the biggest monthly increase in five months, according to the Energy Information Administration. The Permian Basin will drive the gains, with production there predicted to jump by over 70,000 barrels per day to 2.25 million barrels per day.

Williams swaps Permian assets for stakes in Marcellus gathering systems

Williams Partners has agreed to hand over its 50% stake in a natural gas gathering system in the Permian Basin to Western Gas Partners in exchange for interests in two Marcellus Shale gathering systems as well as $155 million in cash. “They want to ‘core down’ to their competency, and their competency is moving gas from the Northeast to end users in the Mid-Atlantic, Southeast and Gulf Coast,” said Tudor Pickering Holt & Co. energy analyst Brandon Blossman.

Occidental Petroleum looks to sell South Texas assets

Occidental Petroleum is reportedly searching for a buyer for its remaining South Texas assets, which comprise 180,000 acres mainly in the Vicksburg Shale, wells and staffed offices worth up to $500 million combined. The asset divestiture follows Occidental’s exit from the Eagle Ford last year and comes as the company increases its focus on the Permian Basin.

No rebound in sight for offshore oil, gas industry

The US offshore oil and natural gas sector continues to be plagued by bankruptcies and declining demand, forcing drillers such as Transocean, Atwood Oceanics and Noble to cut jobs and idle or scrap rigs. Diamond Offshore President and CEO Marc Edwards said he doesn’t expect a rebound earlier than 2019 or 2020 because the industry has yet to “see a floor in the declining demand of deep-water assets.”

Plains All American, Noble form joint venture to buy Permian pipeline system

Plains All American Pipeline and Noble Midstream Partners have entered a 50-50 joint venture agreement to acquire Advantage Pipeline’s assets for $133 million. Advantage Pipeline owns a 70-mile oil pipeline system in the Permian’s Delaware Basin originating in Reeves County and running to Crane County, Texas.

Trump Signs Repeal Of SEC Payment Disclosure Rule

President Donald Trump on Tuesday signed off on legislation that nixed a U.S. Securities and Exchange Commission rule requiring oil and gas extraction companies to disclose their payments to foreign governments, marking the first time in 16 years that a president utilized the Congressional Review Act to overturn a predecessor’s rule.

PROMINENT OILMEN

Another story we release every other week in Friday Snippets is a look back at prominent Oklahoma oilmen who have helped create, shape and transform the oil and gas industry in Oklahoma.

The current video presentation is on J. Paul Getty, one of the most frugal, but wealthiest men to ever live. He drilled his first oil well out near Haskell, OK. We have a long list of historical characters we will be presenting but we welcome any suggestions of someone you would like to see featured.

If you have someone to nominate, reach out to me via email at [email protected]

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: J. Paul Getty

February 10, 2017

Welcome to this week’s Friday Snippets!

With the onslaught of an increase in U.S. oil inventories last week – oil continues to rise, which provided some evidence of stronger-than-expected demand.

With inventories close to 80-year record levels at 508 million barrels, the oil markets do not seem deterred. Wall Street is pouring the most money into oil and gas companies in the U.S. since at least 2000, according to Bloomberg.

In January alone, drillers and oilfield service companies raised $6.64 billion in 13 different equity offerings. “The mood is absolutely different,” Trey Stolz, an analyst at the investment banking firm Coker & Palmer Inc., told Bloomberg. “Go back to a year ago and the knife was still falling. But today, it feels much, much better.” The Permian continues to be the hottest onshore play. In 2016, there was $24 billion spent on mergers and acquisitions.

Wood Mackenzie reports that less than two months into the New Year, the industry has already spent half of that amount in the Permian. In Oklahoma, we have two of the country’s hottest plays, central Oklahoma’s SCOOP and STACK portions of the Anadarko Woodford play. In the coming months, several Oklahoma companies are scheduled to announce their 2016 earnings and 2017 CAPEX. Look for more acquisitions as well. We will be down at NAPE next week, where the sentiment is sure to be more optimistic than last year, when rig counts and the price of oil were much lower. Hope to see you there.

Closing Oil and Gas Prices, Thursday, February 9th.

BP plans to invest more in US shale industry

British oil major BP is considering slowly boosting its position in US shale plays, but it will exercise capital discipline because shale assets are expensive, BP CEO Bob Dudley told analysts. Dudley also said the company may pursue several projects in countries such as Trinidad and Tobago, Oman and India.

Shale rebound could push US oil production to 48-year highs in 2018

The Energy Information Administration predicted that US oil output could climb to an average of 9.53 million barrels per day in 2018 — the most since 1970 — up from an anticipated 8.98 million barrels this year. US shale will drive the increase as bullish shale drillers continue to add rigs.

Targa Resources expands Permian footprint

Targa Resources Corp. has executed definitive agreements for a subsidiary to acquire the membership interests of Outrigger Delaware and Outrigger Midland Operating LLC for US565M.

Senate votes to repeal SEC anti-graft rule targeting energy companies

The Senate on Friday voted 52-47 in favor of rescinding a Securities and Exchange Commission anti-corruption rule that would have required US oil, natural gas and mineral companies to divulge payments made to foreign governments. “Passing this CRA will right the ship and put U.S. companies back on a level playing field with their private and foreign competitors; it will also protect them from a dramatic increase in regulatory compliance costs,” said Sen. James Inhofe, R-Okla.

EQT boosts Marcellus Shale position

EQT has acquired 14,000 net acres in the Marcellus Shale in a $130 million deal that will allow the Pittsburgh-based company to drill lateral wells with an average length of 5,700 feet, up from 1,900 feet. The acreage is in West Virginia’s Marion and Monongalia counties.

Record volume of US crude to head for Asia in coming weeks

Oil companies and trading houses including BP, Shell and Mercuria are expected to export between 700,000 and 900,000 barrels of US crude oil per day in February, mostly to Asian countries such as China, Japan and Singapore. “It’s a good time to buy US crude because of the OPEC cut, but our spot room has limitations so we have to compare every cargo,” a Japanese refiner said

Oilfield services costs skyrocket in Permian Basin

The prices asked by oilfield service companies for drilling and hydraulic fracturing in the Permian Basin have surged by as much as 50% in recent months amid increased demand and a shortage of frack crews. Denver-based Lilis Energy says the lowest daily rate for drilling a well is now $16,000, up from $13,900 per day a couple of months ago, while well-fracking costs surged from $2.2 million two months ago to $3.2 million currently.

US oil rig count increased last week, Baker Hughes reports

The number of US oil rigs surged by 17 to 583 in the week ended Friday, the biggest total since October 2015, according to Baker Hughes. The US oil and natural gas rig count is expected to average 795 this year and 911 in 2018. The number of rigs looking for oil and natural gas in the US increased by 4.4% in January compared with January 2016.

US shale production weighs on oil prices

Signs of a continued jump in US shale production depressed oil prices on Monday, despite OPEC’s compliance, with US light sweet crude for March delivery down 1.5% to $53.01 per barrel and Brent crude for April down 1.9% to $55.72. SEB bank analyst Bjarne Schieldrop expects a “strong revival in US shale oil production” and sees US onshore exploration and production spending up by 30% to 40% this year, while the rig count could top 1,000 by 2019.

EIA reports surge in US crude inventories

US crude stockpiles climbed by 13.8 million barrels last week fueled by a 1.1 million-barrel increase at the Cushing, Okla., oil storage hub, the Energy Information Administration said on Wednesday. Gasoline inventories were down 869,000 barrels while distillates surged by 29,000 barrels.

PROMINENT OILMEN

Another story we release every other week in Friday Snippets is a look back at prominent Oklahoma oilmen who have helped create, shape and transform the oil and gas industry in Oklahoma. This weeks new video presentation is on J. Paul Getty, once named him as the world’s richest private citizen. He founded the Getty Oil Company, but despite his wealth, Getty was notably frugal. The Nancy Taylor No. 1 Oil Well Site near Haskell, Oklahoma, was crucial to his early financial success. This oil well was the first to be drilled by J. P. Getty.

We have a long list of historical characters we will be presenting but we welcome any suggestions of someone you would like to see featured.

If you have someone to nominate, reach out to me via email at [email protected] Have a great weekend from Oklahoma Minerals!

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: J. Paul Getty

 February 3, 2017

Republicans working to repeal Obama’s methane rule

House Republicans are expected to introduce a bill today to overturn former President Barack Obama’s rule targeting methane emissions from venting and flaring at oil and natural gas drilling sites. “These are abusive, last-minute regulations that are grossly inconsistent with congressional intent,” said House Natural Resources Committee Chairman Rob Bishop, R-Utah.

US oil rig count climbed by 15 last week, Baker Hughes reports

The number of US oil rigs increased by 15 to 566 — the highest level since November 2015 — in the week ended Jan. 27, according to Baker Hughes. The total oil and natural gas rig count is expected to climb to an average of 783 this year, 898 in 2018 and 1,009 in 2019.

Border tax could further reduce Mexican oil exports to US

A proposed 20% border tax on Mexican goods will likely encourage Mexico’s oil industry to abandon the American market in favor of Asia and Europe, where demand for Mexican crude is on the rise. The volume of Mexican oil exports to the US is already declining, with 48% of Mexican crude shipped to the US in 2016 compared with 69% in 2014.

US-Mexico dispute unlikely to hinder US shale gas exports

Mexico’s dependence on US shale gas will likely continue to tie the two countries together even if tensions grow. The flow of US shale gas to Mexico more than doubled in the past two years, and ING Groep Chief International Economist Rob Carnell believes Mexico will decide against putting tariffs on US imports in retaliation to President Donald Trump’s proposed 20% border tax because “they would rather have the gas at a decent price.”

Investments keep flowing to the Permian Basin

US shale companies continued their land-buying spree in the Permian Basin into 2017, with about $9 billion in land deals in January. If drillers keep up the current pace, Gesco Sales Manager Josh Clawson estimates that an additional 100 drilling rigs could be deployed to the Permian by June.

Delaware Basin becomes ExxonMobil’s primary focus this year

ExxonMobil announced plans to deploy at least 15 more rigs in the Delaware Basin over time as it seeks to boost production in the region, which has the potential to yield 350,000 barrels of oil equivalent per day at its peak after more than 10 years of sustained drilling. The company, which reported a $2.3 billion loss in the fourth quarter, said it would raise its 2017 budget by 14% to $22 billion.

EV Energy Partners divests Barnett Shale assets to buy Eagle Ford acreage

EnerVest affiliate EV Energy Partners has sold some of its natural gas assets in North Texas’ Barnett Shale for $52 million, with proceeds going toward funding its $59 million acquisition of a 5.8% working interest in 529 net Eagle Ford acres located in Karnes County. “We believe that this position in the Eagle Ford Shale affords many attractive, self-funding, near-term drilling opportunities and will increase our crude production by approximately 25 percent in 2017,” said Michael Mercer, EV Energy president and CEO.

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: Robert S. Kerr

January 27, 2017

Lario Oil & Gas spends $345M on Permian acreage

Lario Oil & Gas has expanded its position in the Permian Basin with the $345 million acquisition of 10,000 net acres in the Midland sub-basin, which have a production of about 1,850 barrels of oil equivalent per day. The assets also include “hundreds” of potential drilling locations in the Spraberry and Wolfcamp shales.

US oil rig count surges by 29, Baker Hughes reports

The number of US oil rigs expanded by 29 to 551 in the week ended Jan. 20, the biggest increase since April 2013, according to Baker Hughes. Thirteen rigs were deployed to the Permian Basin, while the Cana-Woodford Shale gained nine rigs.

EP Energy unveils drilling joint venture targeting Wolfcamp

EP Energy and Apollo Global Management-backed Wolfcamp Drillco Operating have formed a 50-50 joint venture with plans to drill 150 wells in two 75-well tranches in the Wolfcamp formation of the Permian Basin. EP Energy put the value of its Wolfcamp assets at about $20,000 per acre.

Midstream companies get caught in Permian Basin frenzy

The recent spike in acquisitions of gathering infrastructure and announcements of pipeline expansions in the Permian Basin suggest that midstream assets in the shale play are becoming as hot of a purchase as Permian Basin land. Most recently, Plains All American Pipeline said it was acquiring the Alpha Crude Connector System in the Permian’s Delaware Basin for $1.2 billion.

Trump administration working on first energy policy changes

President Donald Trump is reportedly preparing to roll back a number of energy regulations enacted by the previous administration as part of his “America First Energy Plan,” published on the White House’s website after his inauguration. Trump plans to repeal Obama’s Climate Action Plan, accelerate permitting for cross-border pipelines, remove the climate change factor when making government decisions and temporarily stop the use of the social cost of carbon as a metric, according to sources.

OPEC members confident US will continue to import their oil

Saudi Arabia and Venezuela are unfazed by President Donald Trump’s pledges to reduce US reliance on OPEC oil and expect their oil export volumes to the US to stay stable. Bloomberg data show the US imported roughly 3 million barrels of oil per day from OPEC in 2016, 60% of which came from Saudi Arabia and Venezuela.

Energy Dept. sells crude from petroleum reserve to Phillips 66

Phillips 66 earlier this month submitted a winning bid to acquire crude from the Strategic Petroleum Reserve, the company announced Monday without disclosing volume or price. The Energy Department has put up for sale 8 million barrels of sweet crude coming from the Big Hill, Bryan Mound and West Hackberry SPR sites as part of its plan to sell $375 million worth of crude from the strategic reserve in fiscal 2017.

Trump clears path for Keystone XL, Dakota Access pipelines

President Donald Trump signed two executive orders on Tuesday to move forward with construction of the Keystone XL and Dakota Access pipelines and invited TransCanada to resubmit an application for a permit for the Keystone project. “Today’s news is a breath of fresh air, and proof that President Trump won’t let radical special-interest groups stand in the way of doing what’s best for American workers,” said Sen. John Cornyn, R-Texas.

Halcon Resources enters Delaware Basin in $705M deal

Halcon Resources has agreed to pay $705 million to acquire a package of Delaware Basin assets that includes 20,748 net acres in Texas’ Pecos and Reeves counties with a production capacity of 2,600 barrels of oil equivalent per day. The company also said it was selling its El Halcon assets in the Eagle Ford Shale in East Texas for $500 million, which it will use to fund the Delaware Basin acquisition.

API: US crude inventories up 2.9 million barrels

US crude stockpiles rose by 2.9 million barrels in the week ended Jan. 20, surpassing analysts’ forecast of a 1.9 million-barrel build, the American Petroleum Institute reported on Tuesday. Gasoline and distillates inventories also climbed by 4.9 million barrels and 2 million barrels, respectively.

Barclays: Oil production will only increase in the Permian in 2017

The Permian Basin will be the only US shale play where oil production will surge in 2017, according to Barclays commodity analysts. They expect output in the Permian to increase by 490,000 barrels per day from the fourth quarter of 2016 to the final quarter of 2017

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: Robert S. Kerr

January 20, 2017

EIA forecasts higher US shale oil production in Feb.

The Energy Information Administration expects US shale oil production to climb in February for the first time in three months, surging by 40,750 barrels per day to reach 4.748 million barrels per day. The Permian Basin will drive the growth, with production in the region estimated to increase by 53,000 barrels per day to reach 2.180 million barrels per day.

API: US crude inventories decline more than expected

US crude stockpiles shrunk by 5 million barrels in the week ended Jan. 13, exceeding analysts’ forecast for a 900,000-barrel drop, according to the American Petroleum Institute. Gasoline and distillates inventories rose by 9.8 million barrels and 1.2 million barrels, respectively.

Oil executives sound alarm over US shale

Oil industry executives and officials at the World Economic Forum in Davos, Switzerland, are concerned that the growing US shale industry will cause oil prices to fall again. “Physical delivery of oil will force the price back down again in the second half of this year,” said Bjarne Schieldrop, chief commodities analyst at Swedish bank SEB.

Jagged Peak seeks to raise up to $791M in IPO

Denver-based Jagged Peak Energy has launched an initial public offering — this year’s first in the upstream sector — with an eye to raising up to $791 million of gross proceeds, or $421 million of net proceeds. The company operates more than 68,000 acres in the Permian’s Delaware Basin, with a daily output of 6,600 barrels of oil.

ConocoPhillips makes big oil discovery in Alaska

ConocoPhillips has announced the discovery of as much as 300 million barrels of oil in the northeast part of the National Petroleum Reserve in Alaska, which could become a multibillion-dollar project generating up to 100,000 barrels of oil per day once it’s operational. Production could begin in 2023.

US drillers show renewed interest in the Eagle Ford

A recent surge in dealmaking and drilling activity in the Eagle Ford Shale suggests the South Texas shale play may be poised for a comeback in 2017. Two of the most recent Eagle Ford acreage deals sold land at about $15,000 per acre, up from last year’s average of $3,500, while the number of active drilling rigs has climbed by 18 since reaching a low of 29 in June 2016.

ExxonMobil expands Permian Basin footprint with $5.6B acquisition

ExxonMobil has agreed to pay $5.6 billion in stock to the Bass family in Fort Worth, Texas, to purchase a number of companies that control about 275,000 acres, mostly in the Permian Basin. The purchase doubles ExxonMobil’s Permian holdings to about 6 billion barrels of oil equivalent.

Noble Energy to acquire Clayton Williams in $2.7B deal

Noble Energy has agreed to buy Clayton Williams Energy in a $2.7 billion deal that will expand its position in the Permian Basin to 120,000 acres and 4,200 drilling locations. “This makes us a leading player in the core of the core of the Delaware Basin,” said Noble Energy President and CEO David Stover.

SM Energy to divest remaining Williston Basin assets

SM Energy is searching for a buyer for its remaining acreage in Divide County, N.D., as it seeks to exit the Williston Basin to focus on the Permian Basin. “Over the next five years, we intend to focus on generating significant high margin production growth from our operated acreage positions in the Midland Basin and Eagle Ford,” said SM Energy President and CEO Jay Ottoson.

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: William Skelly

January 13, 2017

US shale set to share in $51B cash injection

A capital allocation of $51 billion aimed at the US and Canadian energy sector from the 70 natural resource funds that were launched globally last year may bring particular benefits to US shale oil producers. Industry analyst Dave Forest believes the boost could even lead to what he calls a “second wave” of shale development.

Shale-rich Okla. sees financial pressure easing

Pressure on shale revenues for the state of Oklahoma remain a concern but are showing signs of easing, says State Treasurer Ken Miller. Oklahoma was adversely affected by last year’s oil price downturn, but its rally to prices in the mid-$50-per-barrel range led to a 15.6% jump in oil and natural gas tax revenues in December.

Consultants predict doubling of oil projects in 2017

Analysts at Wood Mackenzie say they are “cautiously optimistic” that oil and natural gas companies will raise their spending this year on the back of increased crude oil prices, resulting in new product developments that could be double last year’s number. This would mark an end to the past two years of relative inactivity, although the rise in spending is still likely to be 40% below the 2014 figure.

Oil companies may boost E&P spending after 2 years of declines

Oil and natural gas companies are expected to return to spending on exploration and production, raising their investment by an estimated 7% after several years of relative frugality. The upturn comes on the back of a 21% oil price rally since November.

US announces sale of 8M barrels from oil reserves

The Energy Department has invited bids for 8 million barrels of light, sweet oil that it seeks to offload in the coming weeks. The sale is part of its plan to sell as much as $375.4 million of crude in fiscal 2017 in order to finance infrastructure revisions to its emergency reserves of around 695 million barrels.

C&J Energy ends bankruptcy with liquidity worth $220M

C&J Energy Services has emerged from Chapter 11 bankruptcy protection with $1.4 billion in debt eliminated and liquid funds of $220 million. The turnaround comes less than a year since the untimely death of then-CEO Josh Comstock and the company’s subsequent bankruptcy filing, and President and CEO Don Gawick called the achievement “an outstanding resolution.”

Drillers back to work after nearly half-million job loss

For the first time in three years, the US oil industry is set to increase spending, paving the way for thousands of oilfield workers to be rehired, as well as for equipment suppliers and contractors to increase productivity. The upturn is a result of rising oil prices following the earlier slump.

Noble to drill 7,200 new acres in Delaware Basin

Noble Energy has spent $300 million to buy drilling rights on a further 7,200 acres in the Delaware Basin, bringing its total Delaware coverage up to 47,200 net acres. The company has also brought a third oil rig to the site, and Executive Vice President of Operations Gary Willingham said Noble is “aggressively moving forward with development.”

Samson Files Amended Ch. 11 Plan After Deal With Creditors

Samson Resources Corp. and its creditors aired full details Wednesday of a proposed global settlement in the oil and gas producer’s long-running, $4 billion Chapter 11 restructuring battle, setting the stage for a Delaware court hearing.

WPX Increases Position In Delaware Basin

WPX Energy Inc., is increasing its Permian operations to more than 120,000 net acres with a bolt-on acquisition, the Tulsa, Okla.-based company said Jan. 12. The sellers are Panther Energy Co. II LLC and Carrier Energy Partners LLC. For $775 million cash, WPX agreed to acquire 18,100 net Delaware Basin acres with about 6,500 barrels of oil equivalent per day (boe/d) of production, of which 55% is oil.

The acreage is located in Reeves, Loving, Ward and Winkler counties in West Texas and includes 920 gross undeveloped locations in the geologic sweet spot of the Delaware. The company is also acquiring 23 producing wells (17 horizontals) and two drilled but uncompleted horizontal laterals.

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: William Skelly

 

January 6, 2017 

American oil companies’ stock offerings pay off

Most of the North American oil companies that were bold enough to sell shares during the past two years got rewarded for their courage and were among the top performers of 2016 as oil prices rebounded. More than 70 oil companies sold stock amounting to about $57 billion combined in the last two years, and while some companies went bankrupt, the majority survived the oil price crash and emerged stronger and less indebted thanks to the stock offerings.

US crude stockpiles decline more than expected

US crude oil stocks fell by 7.4 million barrels in the week ended Dec. 30, far outstripping analysts’ predictions of between 1.7 million and 2.2 million barrels, the American Petroleum Institute reported. Meanwhile, gasoline and distillates inventories surged by 4.25 million barrels and 5.24 million barrels, respectively.

Trans-Alaska Pipeline sees oil volume surge for first time since 2002

The volume of oil moved through the Trans-Alaska Pipeline System increased nearly 2% to 188,887,500 barrels in 2016 — the first year-on-year rise in 14 years, according to operator Alyeska Pipeline Service. The increase can be attributed to a surge in North Slope oil production.

SM Energy divesting $800M worth of assets in the Eagle Ford

SM Energy has agreed to sell a package of assets in the Eagle Ford Shale that includes about 37,500 net acres and related pipeline infrastructure to Venado Oil and Gas for $800 million. The divestment comes as SM Energy shifts its focus to the Permian Basin, where it bought 35,700 net acres for about $1.6 billion in October.

Lucas Energy gets a foothold in the Permian Basin

Houston-based Lucas Energy has acquired 3,630 net acres in the Permian Basin’s San Andres formation as part of an area of mutual interest partnership with a privately held holding company, and it will pay $1.43 million for a 90% interest in the leases. “With this initial leasehold position, we have established our entry into the prolific Permian Basin,” said Lucas Energy President and CEO Anthony Schnur.

DCP Midstream Partners acquires joint venture

DCP Midstream Partners has acquired the assets of a joint venture between Phillips 66 and Spectra Energy to form an $11 billion company, named DCP Midstream, that will be the largest natural gas liquids producer and gas processor in the country. Under the agreement, DCP Midstream is paying DCP Midstream Partners $424 million in cash in exchange for about 31.1 million shares.

2 N.M. counties lead other Permian Basin counties in oil, gas production

New Mexico’s Lea County is the top oil-producing county in the Permian Basin, while Eddy County leads in terms of natural gas production, according to Texas and New Mexico state agencies. Oil production in Lea County exceeded 70.9 million barrels in 2015, while Eddy County produced 311.9 million thousand cubic feet of natural gas.

No boom in sight in the Eagle Ford despite spike in drilling activity

An oil boom in the Eagle Ford Shale is unlikely because it would take a “tremendous and unexpected increase in global demand to get up to over $100 a barrel,” said economist Karr Ingham. However, drilling activity in the Eagle Ford is on the rise, with ConocoPhillips, Pioneer Natural Resources and BHP Billiton among the companies planning to add rigs this year.

PDC Energy boosts its Permian footprint

PDC Energy is expanding its Delaware Basin position with the $118 million acquisition of an asset package that includes 4,500 net acres in Ward County, Texas, one drilled but uncompleted horizontal well and a wastewater disposal well. “Our net acreage, drilling inventory and estimated reserve potential in the basin are expected to increase by approximately 10% with this transaction,” said PDC CEO Bart Brookman.

JPMorgan predicts increased US shale production in later 2017

JPMorgan’s head of regional oil and gas for Asia Pacific Scott Darling predicts an increase in oil production from US shale companies in the second half of 2017, which will likely offset some of the oil price gains triggered by OPEC’s production-cut deal. US shale could add 200,000 barrels per day with prices at $50, up to as much as 1 million barrels per day if prices rise above $60, Darling says.

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: Everette Lee DeGolyer 

December 30, 2016

API reports surge in US crude oil inventories

US crude stockpiles increased by 4.2 million barrels last week, according to the American Petroleum Institute, whereas analysts had expected a 1.5 million barrel decline. Gasoline inventories dropped by 2.8 million barrels while distillate stocks were down 1.7 million barrels.

What will Trump’s impact be for oil, gas production?

The oil and natural gas industry sees President-elect Donald Trump as a good thing for production, pointing to his promises to approve infrastructure projects and expand operations on federal lands. Some analysts say the actions of the incoming administration won’t have as much effect on the industry as market conditions.

A wave of IPOs could hit US oil industry through 2018

As many as 40 North American oil and natural gas companies could go public over the next two years, up from 13 this year, because of higher crude prices and the potential for deregulation, according to Tudor Pickering Holt & Co. CEO Maynard Holt. “The number of companies expressing interest in going into this window is really high, and the number of investors saying we’d like to see something different is really high,” Holt said.

Macquarie: US shale output could surge by 1 million barrels per day

The gains in oil prices from OPEC’s production cut plan would likely be erased by an increase in US shale production by 1 million barrels per day, Macquarie analysts say. Potential cheating by OPEC members, higher output in Libya and Nigeria and an anticipated slowdown in oil demand growth amplify the threat to the recovery in oil prices.

Baker Hughes: US oil rig count surges for 8th week in a row

The number of US rigs drilling for oil rose by 13 to 523 in the week ended Dec. 23, marking the eighth consecutive week of gains, according to Baker Hughes. The Permian Basin added four oil rigs for a total of 262 rigs

US sale of sweet crude from emergency oil reserve to kick off in Jan.

The Energy Department plans to start selling off about 8 million barrels of sweet crude from the Strategic Petroleum Reserve in early to mid-January, with delivery anticipated in March, a department notice to potential bidders revealed. The $375 million sale is the first of several slated to be held over the next few years, with total value estimated at $2 billion.

3 US oil companies to file for bankruptcy

Memorial Production Partners, Forbes Energy Services and Bonanza Creek Energy plan to file for Chapter 11 bankruptcy protection over the next few weeks, joining the more than 200 North American oil and natural gas companies that filed for bankruptcy. However, bankruptcies in the oil and gas industry are expected to decline in 2017 as crude prices rise.

Golden Pass LNG project gets the green light

The Federal Energy Regulatory Commission granted a permit to Golden Pass Products to build a $10 billion liquefied natural gas facility in Sabine Pass, Texas, with a total capacity of 17.2 million tons of LNG per year. The project is expected to create about 3,800 jobs in 25 years of operations.

Iraq commits to OPEC cuts, sends oil prices higher

Iraqi Oil Minister Jabar al-Luaibi told the official Kuwait News Agency his country was committed to cutting as much as 210,000 barrels per day from production starting next month. Iraq, he said, is keen on maintaining balance in the global market and has an eye on oil priced at $60 per barrel.

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: Everette Lee DeGolyer 

December 23, 2016

Chesapeake Energy hopes supersize wells will help it make a comeback

Chesapeake Energy has drilled a supersize oil and natural gas well to a depth and horizontal length of two miles in the Haynesville Shale as part of an experiment which, if successful, could help the company produce more fossil fuels for a cost 75% lower than average and stage a financial recovery. “What we’re learning in the Haynesville, we’re testing in the Eagle Ford, we’re going to apply to the Utica,” said Frank Patterson, the company’s executive vice president of exploration and production.

Operators extend Glass Mountain Pipeline to enter Okla.’s STACK play

SemGroup and NGL Energy Partners have announced plans to build a 44-mile extension of the Glass Mountain Pipeline so it can transport crude oil from the STACK play to Cushing, Okla. The project is expected to be completed in the fourth quarter of 2017.

US energy companies need oil prices at $55 per barrel for turnaround

US independent oil and natural gas companies that survived the oil price crash will be the first oil industry players to make a comeback in 2017 if oil prices stabilize above $55 per barrel, according to energy research firm Wood Mackenzie. Average oil prices above $50 per barrel will allow US independents to boost investments by 25% and in some cases, increase production by an average of 2% in 2017.

Drilling in the Permian is becoming too expensive for some oil companies

Increased competition could make it unsustainable for some oil companies to continue to drill in the Permian Basin at the current rate because it could prompt workers to ask for higher wages and lift oilfield service costs, which in turn would hurt drillers’ already weak profits, analysts say. “We think it’s going to become a big-company game,” said Instinet analyst Lloyd Byrne.

Phillips 66’s liquefied petroleum gas export facility is now operational

Phillips 66’s liquefied petroleum gas export terminal in Freeport, Texas, exported its first contracted cargo Friday aboard the Commander LNG ship. The facility has an export capacity of 4.4 million barrels per month and mostly ships propane and butane.

Forbes Energy Services could file for bankruptcy this month, sources say

US oilfield services firm Forbes Energy Services is reportedly planning to file for bankruptcy protection as soon as this month in an effort to reduce its $300 million debt load. The company posted third-quarter losses of $23.2 million and warned last month in its quarterly financial statement that it could have to file for bankruptcy.

Anadarko Petroleum to divest $1.2B in Marcellus Shale assets

Anadarko Petroleum has agreed to sell 195,000 acres along with associated equipment in Pennsylvania’s Marcellus Shale to a subsidiary of Alta Resources Development for $1.2 billion. The deal, expected to close in early 2017, marks Anadarko’s exit from the Marcellus as the company is shifting its focus to Colorado’s Denver-Julesburg Basin and Texas’ Delaware Basin.

December 16, 2016

Gulfport to buy acreage in Oklahoma’s SCOOP for $1.85 billion

Gulfport Energy Corp (GPOR.O) said it would buy acreage in Oklahoma’s SCOOP region from a privately held company for $1.85 billion. The deal is expected to close in February 2017.

The purchase price consists of $1.35 billion in cash and about 18.8 million of Gulfport’s shares. Oil companies have resumed buying oil and gas acreage in low-cost shale fields in the United States, restocking their inventories on a bet that a two-year slump in the price of oil has abated. Gulfport said it would buy 46,400 acres from Vitruvian II Woodford LLC, a portfolio company of Quantum Energy Partners, a Texas-based private equity and venture capital firm.

The leases include access to the Woodford and Springer rock formations under parts of Grady, Stephens and Garvin counties. The deal also includes 48 producing horizontal wells and an interest in more than 150 non-operated horizontal wells. Existing production was about 183 million cubic feet of natural gas equivalent per day in October. The properties are 80 percent held by production.

Four rigs are currently operating on the acreage and Gulfport plans to add two more rigs in 2017. Gulfport has identified about 1,750 drilling locations in the area, the company said.

BP moves headquarters of Lower 48 onshore business to Denver

BP on Wednesday announced it would move the headquarters of its Lower 48 onshore division from Houston to Denver in the first quarter of 2018 and have at least 200 employees there as a result. “With two-thirds of our operated oil and natural gas production and proved reserves in the Rockies … Denver is a logical — and strategic — place for us to be and a natural fit for our business,” said David Lawler, CEO of BP’s Lower 48 business.

Diamondback boosts its Permian Basin footprint with $2.43B acquisition

Diamondback Energy has agreed to acquire 76,319 net acres in Texas’ Pecos and Reeves counties from Brigham Resources Operating and Brigham Resources Midstream in a cash-and-stock deal worth $2.43 billion. The acreage produced an average of about 9,500 barrels of oil equivalent per day in November.

Panhandle Oil and Gas reports FQ4 results

Michael C. Coffman, President and CEO, said, “As have all companies in the oil and gas industry, Panhandle experienced a very difficult year in 2016, brought on by extremely low product prices. Our average per Mcfe sales price of $2.73 in 2016 compared to $3.97 in 2015 and $5.88 in 2014.

For fiscal 2016, the Company recorded a net loss of $10,286,884. This compared to a net income of $9,321,341 for fiscal 2015. Total revenues for 2016 were $39,063,183, a decrease from $70,882,093 for 2015. Oil, NGL and natural gas sales revenues decreased $23,122,561 or 42% in 2016, as compared to 2015.

Swift Energy completes sale of remaining 25% interest in La. fields

Swift Energy has sold its remaining 25% interest in Louisiana’s Burr Ferry and South Bearhead Creek fields for $8 million, with proceeds going toward reducing debt. “These transactions to date have simplified our business model, as our cost structure is now more representative of our Eagle Ford development program,” Swift Energy CEO Bob Banks said.

Kinder Morgan reportedly plans to divest Permian Basin assets

Kinder Morgan is looking to sell its oil and natural gas assets in the Permian Basin, which produce about 56,000 barrels of oil per day, sources say. Proceeds from the sale could amount to more than $10 billion and will likely be used to clear some of the company’s debt, according to analysts.

Congress authorizes sale of $375M worth of emergency reserve US crude

The US government will sell $375 million worth of crude oil from the Strategic Petroleum Reserve this winter as part of an up to $2 billion overhaul designed to “increase the integrity and extend the life” of the 695 million-barrel oil reserve. Additional annual sales will have to be approved over the next three fiscal years to hit the overhaul target.

US shale recovery to offset oil price gains, Goldman Sachs says

Goldman Sachs analysts predicted that crude prices above $60 a barrel will trigger a rebound in US shale production next year, which in turn will cause prices to fall back to $55 a barrel. The bank’s analysts also said they disagree with Saudi Arabia Energy Minister Khalid al-Falih’s recent comments that the American shale industry will not increase output significantly in response to higher prices.

Trump names ExxonMobil CEO Tillerson secretary of state

President-elect Donald Trump brought an end to his wide-ranging search for a secretary of state by appointing ExxonMobil CEO Rex Tillerson. Trump brushed aside concerns expressed by leaders of both parties that the energy executive’s relationship to Russian President Vladimir Putin was too close to permit him to represent the global interests of the US.

Darren Woods to succeed Rex Tillerson as ExxonMobil CEO

Darren Woods, the former head of ExxonMobil’s refining and supply arm, is set to replace Rex Tillerson as CEO of the company following the latter’s retirement and nomination for secretary of state. Woods has been with the company since 1992 and has served as president and member of the board since January of this year.

Extraction Oil & Gas pays $177M for D-J Basin acreage

Denver-based Extraction Oil & Gas is in the process of acquiring about 16,800 net acres in the Denver-Julesburg Basin for $177 million and will sell about 25 million shares for net proceeds of $442 million to fund the deal. The majority of the acreage is expected to achieve breakeven prices below $45 a barrel.

Patterson-UTI to merge with Seventy Seven Energy in $1.76B deal

US drilling companies Patterson-UTI and Seventy Seven Energy will merge in a $1.76 billion all-stock deal, creating a combined company that would have 201 high-specification rigs and 1.5 million hydraulic fracturing horsepower. The transaction is expected to close in the first quarter of 2017.

Callon Petroleum to acquire Southern Delaware Basin acreage in $615M deal

Callon Petroleum plans to pay $615 million to purchase assets in the Southern Delaware Basin from American Resource Development, American Resource Development Upstream and American Resource Development Midstream. The acreage had a net production of 1,945 barrels of oil equivalent per day in October.

EIA: US shale production to rise for the first time in 5 months in Jan.

The Energy Information Administration expects US shale production to surge by 1,400 barrels per day to 4.542 million barrels per day in January, marking the first month-on-month increase since July. The Permian Basin will lead the gains, with production expected to jump by 37,000 barrels per day to 2.13 million barrels per day.

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: FRANK BUTTRAM 

December 9, 2016

EIA: US crude inventories fall

US crude stockpiles plunged by 2.4 million barrels in the week ending Dec. 2, compared with analysts’ expectations for a draw of 1.7 million barrels, according to the Energy Information Administration. Gasoline inventories rose by 3.4 million barrels, while distillate supplies increased by 2.5 million barrels.

Bankruptcies in oilfield services sector growing

Troubled US oilfield services companies are increasingly filing for Chapter 11 bankruptcy protection as they seek to clear debt and raise funds for investments in preparation for the upturn expected during President-elect Donald Trump’s presidency. About 70 oilfield services companies filed for bankruptcy this year through October, compared with 39 in all of last year.

SM Energy to sell shares to fund Midland acreage acquisition

SM Energy seeks to raise $363.4 million from the sale of 9.5 million common shares, with plans to use part of the proceeds to acquire 4,100 acres in the Midland Basin of the Permian for $120 million. “The bolt-on nature of the acreage acquired will stretch laterals and improve well economics,” Capital One Southcoast analysts said.

Noble Energy expands Delaware Basin position

Noble Energy has paid $216 million for 7,200 acres in the Delaware Basin portion of the Permian and has also increased working interests in certain assets it already operates there. As a result of the deal, the company will boost its Delaware position with 150 new locations.

Dakota Access denial casts shadow over new projects

The US Army Corps of Engineers’ decision to deny an easement needed for the Dakota Access Pipeline could spell uncertainty for future pipeline projects, considering that Energy Transfer Partners had received all necessary permitting approvals. “I think it sends a horrible signal to anyone wanting to invest in a project, and I strongly suspect those policies will be discontinued on Jan. 20th,” said former Pipeline and Hazardous Materials Safety Administration head Brigham McCown.

Asia receives nearly 3 million barrels of US crude from BP

BP has exported almost 3 million barrels of US crude oil to Asia over the past few months as part of a $150 million operation that involved seven tankers and several transfers. More long-haul shipments of US crude such as BP’s are expected in 2017 in the wake of Russia and OPEC’s oil production cuts.

Fraser Institute names Okla. best place for oil and gas investment

Oklahoma, Texas, Kansas, Saskatchewan and Wyoming are the top five most attractive jurisdictions for oil and natural gas investment worldwide thanks to their friendly policies, according to the Fraser Institute’s annual Global Petroleum Survey. “Most US states are bucking the global trend of decreasing confidence for investment, and Oklahoma’s top spot in this year’s ranking demonstrates how coherent environmental policy and sound regulation can improve investor perception,” said Fraser Institute Senior Director of Natural Resource Studies Kenneth Green.

Chesapeake Sells First Of Two Haynesville Packages For $450 Million

Chesapeake Energy Corp. (NYSE: CHK) is delivering on its divestment plans, saying Dec. 5 it agreed to sell a package of producing Haynesville Shale acreage in northern Louisiana for about $450 million. The deal covers 78,000 net acres, with slightly more than half—40,000 net acres—considered core to Oklahoma City-based Chesapeake. Assets include 250 wells producing 30 million cubic feet of gas per day (MMcf/d).

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: HARRY SINCLAIR 

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December 2, 2016

Mary Fallin a Candidate as Secretary of Interior

Oklahoma Gov. Mary Fallin as secretary of the interior would be great news — at least for the state’s oil and gas industry. The Department of Interior, along with the Environmental Protection Agency and, to a lesser extent, the Department of Energy, are important federal agencies for oil and gas producers. Interior oversees the Bureau of Land Management, which is responsible for 245 million surface and 700 million subsurface acres owned by the federal government. Also in the secretary of the interior’s portfolio are the Bureau of Indian Affairs and the Office of the Special Trustee for American Indians, both of which have connections to energy production and the State of Oklahoma.

OPEC Deal Sends Energy Stocks Through The Roof

US energy stocks surged on Wednesday on news of the OPEC production cut agreement, with 16 out of the 36 energy stocks in the S&P 500 posting gains of at least 10%. The top three gainers were Marathon Oil, Transocean and Newfield Exploration, up 21%, 17% and 16%, respectively.

US Becomes A Net Exporter Of Natural Gas

The US has exported 7.4 billion cubic feet a day of natural gas on average this month, compared with an average of 7 billion cubic feet a day in imports, figures from S&P Global Platts show. It’s the first time in almost 60 years that the US has shipped more gas than it has bought.

Low Oil Production Costs In US Shale Plays Threaten OPEC

The ability of US shale drillers to produce oil at costs as low as $15 a barrel threatens to offset any rise in crude prices that an OPEC production cut deal could bring because it would stimulate US shale producers to boost output. Break-even price points in the Bakken Shale have dropped to $29.44 in 2016 from $59.03 in 2014, and the downward trend is expected to persist.

Concho Resources Strengthens Permian Basin Position with $430M Deal

Concho Resources is expanding its Permian Basin acreage with the acquisition of land in the Delaware Basin, part of a $430 million deal that would provide opportunities for denser development for multi-well pads. Concho aims to increase its rig count in the Delaware Basin, a section of the Permian, in 2017 and is targeting 20% production growth.

Baker Hughes Divests Cementing, Fracking Operations to Form Joint Venture

Baker Hughes has divested its cementing and hydraulic fracturing business, which will become part of a new joint venture in partnership with CSL Capital Management and a Goldman Sachs merchant banking division. Baker Hughes will own a 46.7% stake in the venture, called BJ Services, and will receive $150 million in compensation as part of the deal.

Texas Crude Oil Production Stable

Crude oil production in Texas averaged 2.38 million barrels per day in September, 1.6% lower than in September 2015, the Texas Railroad Commission reported. Texas, the top oil producer in the US, produced 995 million barrels of crude over the past 12 months.

US Crude Inventories Fall by 900,000 Barrels, EIA Reports

The U.S. Energy Information Administration reported Wednesday that crude inventories decreased by 900,000 barrels for the week ended Nov. 25, putting inventories at 488.1 million barrels. “At 488.1 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year,” the EIA said in a statement. However, Cushing, Okla., posted a record increase of 2.3 million barrels, the biggest since March 2015. Cushing is still near maximum operating capacity.

STORIES & LEGENDS SERIES ABOUT OKLAHOMA OILMEN: HARRY SINCLAIR 

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November 25, 2016

Results of The Short Rig Count Week

The overall US drilling rig count increased by 5 to 593 during a week ended Nov. 23 that was shortened by the Thanksgiving Day holiday. The latest jump comes after last week’s increase of 20 rigs, the largest since April 2014. Oil-directed rigs gained 3 units this week to 474, an increase of 158 since May 27. Gas-directed rigs rose 2 units to 118, up 35 since Aug. 26. The horizontal count is now up 161 since May 27.

Pawnee Nation Sues US Government in Bid to Cancel Okla. Drilling Permits

The Pawnee Nation of Oklahoma has sued the federal government claiming that the Interior Department, the Bureau of Indian Affairs and the Bureau of Land Management approved drilling permits and leases on tribal lands despite a tribal moratorium on new oil and natural gas wells. The Pawnee Nation, with its tribal headquarters located in Pawnee, has approximately 3,200 members.

Trump Vows to Lift Fossil Fuel Restrictions on First Day in Office

President-elect Donald Trump pledged to eliminate regulations that limit fossil fuel production on his first day in the White House. “On energy, I will cancel job-killing restrictions on the production of American energy — including shale energy and clean coal — creating many millions of high-paying jobs,” Trump said in a video message.

US Rig Use Down This Year, But More Activity Expected in 2017

The use of rigs dropped around the world this year following two years of decline in drilling activity, according to an annual rig census by National Oilwell Varco. The US fleet saw a decrease of 188 rigs, and the number of active global offshore mobile units declined by 29%, but an increase in new wells and rigs is expected next year.

Swift Energy Divests Southeast La. Assets

Swift Energy has sold its 14,000-acre assets in the Lake Washington field in Southeast Louisiana for about $40 million as the company shifts its focus to the Eagle Ford Shale in South Texas. “We’ve had a tremendous amount of success with the development of our assets in South Texas, and this transaction allows us to focus exclusively on our very best rate of return projects,” said Swift Chief Operating Officer, Executive Vice President and interim CEO Bob Banks.

Some US Oil & Gas Companies That Survived Bankruptcy Face Risk of Relapse

US oil and natural gas companies that emerged from Chapter 11 bankruptcy protection with still too much debt or too little cash on hand are vulnerable to “Chapter 22,” a term for firms that failed to solve their problems with a Chapter 11 restructuring. Such is the case of oil and gas industry data provider Global Geophysical Services and offshore driller Hercules Offshore, while other companies such as Vantage Drilling International, ETX Energy and Titan Energy are at risk of a subsequent bankruptcy.

Stories & Legends Series About Oklahoma Oilmen: Frank Phillips

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November 18, 2016

Oklahoma’s earthquake problem, Is There a Solution?

Earthquakes in Oklahoma, such as the magnitude 5.0 temblor that damaged buildings Sunday in Cushing, are related to the underground disposal of wastewater in oil and gas production, and they likely will continue for several years, experts say. Even once injections into the Arbuckle formation under Oklahoma stop, earthquakes will continue because of the time it takes for pressure to spread out from concentrated areas, said Jeremy Boak, director of the Oklahoma Geological Survey.

Entrepreneurs are working on ways to deal with Oklahoma’s earthquake problem, which is believed to be caused by the pumping of salty wastewater back into the ground during the hydraulic fracturing process. Among the ideas are to extract salt from the water and release the water into rivers, turn the salt slurry into disposable brine, and use the water for other parts of the drilling operation.

Wolfcamp Shale Could Contain 20 Billion Untapped Oil Barrels

USGS says the Wolfcamp Shale in West Texas is believed to hold 20 billion undiscovered, recoverable barrels of oil, more than any other oil deposit in the US, the US Geological Survey said in a study released Tuesday. The Wolfcamp could also contain 16 trillion cubic feet of associated natural gas and 1.6 billion barrels of natural gas liquids.

Although the Permian has been gushing crude since the 1920s, its multiple layers of oil-soaked shale remained largely untapped until the last several years, when intensive drilling and fracturing techniques perfected in other U.S. regions were adopted. The Wolfcamp, which is as much as a mile thick in some places, has been one of the primary targets.

API Reports Larger-Than-Expected Inventory Buildup Against Decreasing Shale Oil Output.

US crude oil stockpiles grew by 3.6 million barrels in the week ended Nov. 11, more than twice as much as analysts had predicted, according to the American Petroleum Institute. On the flip side, US shale oil production in December is expected to decline by 20,000 barrels a day, less than in November, for a total of 4.498 million barrels a day, according to a report by the Energy Information Administration.

Output in the Permian Basin is forecast to climb by 27,000 barrels a day, while production at Texas’ Eagle Ford and North Dakota’s Bakken Shale plays will likely fall by 33,000 barrels a day and 14,000 barrels a day, respectively. It will be interesting to see if Donald Trump’s threat to ‘become independent of any need to import energy from the OPEC cartel‘ materializes and whether the President-elect will follow through on his threats to ban Saudi crude imports to the U.S.

Oil Drillers Increasingly Focus on The Permian Basin

With a count of about 220 active oil rigs, the Permian Basin has almost the same number as the rest of the US combined, the Energy Department said in a report. The Permian is also the only US region expected to have an increase in production for a third month in a row.

Double Eagle Receives Up To $450 Million For Midland Deals

Double Eagle Energy Permian LLC formed a strategic relationship to grow and develop its position in the Midland Basin, the company said Nov. 14. As part of a definitive agreement, Magnetar Capital agreed to invest up to $450 million of equity and delayed draw unsecured debt capital to support Double Eagle’s Midland development and A&D activities.

Double Eagle has rapidly grown to become one of the largest pure-play Midland Basin E&Ps following the recent merger of two private equity-backed companies, the release said. In October, Double Eagle Lone Star LLC and Veritas Energy Partners Holdings LLC, both based in Fort Worth, Texas, agreed to combine forming Double Eagle Energy Permian. Combined, the companies control more than 60,000 core Midland net acres (over 70% operated) located predominantly in Midland, Martin, Howard and Glasscock counties in West Texas.

Double Eagle is backed by funds managed by affiliates of Apollo Global Management LLC and Post Oak Energy Capital LP.

Beckham County Well Completion

In far Western portion of the Anadarko Basin, Atalaya Resources LLC completed a Des Moines Granite Wash D well in Section 32-11n-21w of Beckham County, Okla. The #1H Barnett 29/28-11-21 was tested in an acidized and fracture-stimulated horizontal interval at 13,335-17,995 ft. It initially flowed 2.48 MMcf of gas, 566 bbl of 53-degree-gravity condensate and 158 bbl of water per day. The discovery was drilled northward to 18,080 ft and it bottomed in Section 29-11n-21w with at true vertical depth of 13,010 ft. Tested on an 8/64-in. choke, the shut-in tubing pressure was 6,375 psi and the flowing tubing pressure was 6,200 psi. According to the Tulsa-based operator, the estimated ultimate recovery is 5.0 Bcf of gas and 350 Mbbl of condensate

Franco-Nevada Corp. Acquires Stack Interest

Franco-Nevada Corp. has entered into an agreement to acquire royalty interest in STACK assets in Oklahoma for $100 million. The transaction includes ~1.61% royalty interest over 74,880 gross acres in Blaine Co., and Kingfisher Co., OK. The seller is rumored to be Felix Energy II LLC. Franco-Nevada owns rights to precious metals across the world. Felix is now active in the Delaware Basin, where it is permitting wells.

Stories & Legends Series About Oklahoma Oilmen: Frank Phillips

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November 11, 2016

Donald Trump Is President-Elect: What Now?

After an ugly, hard fought campaign, voters chose Republican Donald J. Trump as the next president of the United States. The win completely caught the pollsters and mainstream media by surprise. Many oil and gas industry executives were prepared for a Hillary Clinton administration, they now find themselves asking: What does a Trump administration mean for the industry? Will his economic policies help or hinder economic growth and favor oil and gas exploration? One sure winner is the coal industry which was punished by the Obama administration.

Trump counts among his advisers champions of fracking such as Harold Hamm, chairman and CEO of Continental Resources Inc. (NYSE: CLR). Hamm is considered a contender for U.S. energy secretary.

Anadarko plans to seek more oil, heavy liquids

Anadarko Petroleum intends to move away from natural gas and focus on drilling for oil in West Texas’ Delaware Basin, Colorado’s Denver-Julesburg Basin and the Gulf of Mexico, company executives said in it’s recent third-quarter conference call. Anadarko reported third-quarter losses of $830 million, down from $2.24 billion in the same period of last year. Anadarko announced Oct. 31 that it has a deal to sell its Carthage assets on the eastern border of Texas for more than $1 billion.

Since the end of the second quarter, the company also closed more than $500 million in asset sales through divesting assets in Elm Grove, Hearne, Hugoton and Ozona, Texas, and in Adams County, Colo. With the divestitures, the company exceeded its March goal of selling up to $3 billion worth of assets. This year, Anadarko closed $3.08 billion in sales and, with the Carthage sale, will eclipse $4 billion.

Royal Dutch Shell to sell Permian Basin acreage

Royal Dutch Shell has put up for sale two small properties in the Permian Basin, but it remains open to acquisition opportunities in West Texas, Shell Chief Financial Officer Simon Henry said on an analysts call Tuesday. “The Permian is the crown jewel. Not just in terms of value and quality of the asset but also the capability that is being developed there,” he said.

Värde Partners and Titanium Exploration Partners, LLC Announce Closing of STACK Acquisition

Värde Partners and Titanium Exploration Partners, LLC today announced they have acquired oil and gas assets in the STACK play in Oklahoma. Titanium will manage the STACK Acquisition assets on behalf of Värde, who provided the financing. The STACK Acquisition, which closed on September 9, 2016, consists of non-operated working interests covering approximately 3,600 net acres and 1,100 barrels of oil equivalent of daily production as of the effective date of the acquisition.

The assets consist of non-operated working interests in Blaine and surrounding counties, primarily alongside Continental Resources, Inc., one of the leading operators in the play.

Substantial damage after earthquake rattles Cushing

Dozens of buildings sustained “substantial damage” after a 5.0 magnitude earthquake struck an Oklahoma town that’s home to one of the world’s key oil hubs with almost 600 million barrels of stored crude, but officials said Monday that no damage has been reported at the oil terminal. It was only the sixth 5.0 magnitude or higher to strike Oklahoma since 1882, said George Choy, a geophysicist with the U.S. Geological Survey in Boulder, Colo. Three of those larger quakes occurred this year. The strongest ever recorded in Oklahoma was a 5.8 magnitude that hit Pawnee in September.

The quake struck at 7:44 p.m. Sunday and was felt as far away as Iowa, Illinois and Texas. The U.S. Geological Survey initially said Sunday’s quake was of magnitude 5.3 but later lowered the reading to 5.0. In response to Sunday’s earthquake near Cushing, Oklahoma’s oil and gas regulator says it plans to shut some disposal wells and reduce the volume of others. The Oklahoma Corporation Commission says its plan covers 700 sq. miles but does not say how many wells were affected; when a quake of similar magnitude hit the state in September, the agency ordered 37 wells shut over a 500 sq. mile area

Oil majors’ cash flow improved for 3 straight quarters

The world’s biggest oil companies — ExxonMobil, Royal Dutch Shell, Chevron, Total and BP — saw their combined cash flow surge 67% to almost $26 billion in the July-September period, marking the third consecutive quarter of growth. “Cash deficits should start to shrink in 2017 as oil prices gradually recover and cost-cutting initiatives continue,” Fitch Ratings Senior Director Maxim Edelson said.

US drillers attracted record amount of cash this year

US drilling companies, including Anadarko Petroleum and RSP Permian, have raised an unprecedented $28 billion so far this year from over 60 secondary stock offerings, beating out all but one other industry group. The capital helped companies build up their war chests for mergers and acquisitions.

OKLA Tax Collections on the Rise

State tax collections from oil and natural gas production are up for the first time in almost two years, Oklahoma Treasurer Ken Miller said Tuesday. October gross production collections of $35.1 million were above October 2015 collections by $2.9 million, or 8.9 percent. The last such increase was in December 2014, when receipts totaled $72.1 million.

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November 4, 2016

Devon Reports Earnings

Devon Energy (DVN+3.1%) posted better than expected Q3 earnings and revenues, as it cut expenses and shifted to higher margin production. It expects cost savings to reach $1B this year. David A. Hager of Devon, noted that development programs delivered the best quarterly drillbit results in Devon’s 45-year history, with new wells reaching peak 30-day rates of nearly 2,000 BOE per day. These prolific drilling results were centered in our world-class STACK play, where oil production increased by nearly 40% year over year. DVN says it plans to increase its rig activity in the U.S. from five operated rigs running in Q3 to as many as 10 operated rigs by year end.

Earthquake Shakes Oklahoma

A magnitude 4.5 earthquake rocked north-central Oklahoma Tuesday night at 11:27 p.m. – the strongest and latest in a series of tremors that have been rattling the state for months. The US Geological Survey reports that the epicenter was near Pawnee, some 70 miles northeast of Oklahoma City. Pawnee Police say that preliminary reports show no significant damage. This was the fifth earthquake of the day in the state that registered at least a 2.0 magnitude, according to The Tulsa World.

GE Oil & Gas, Baker Hughes Plan Mega-Merger

Baker Hughes Inc. (NYSE: BHI), left at the altar in the failed merger with Halliburton Co. (NYSE: HAL), will combine with GE Oil & Gas, the companies said Oct. 31. GE (NYSE: GE) and Baker Hughes said they will merge into a new oilfield technology company with a value of $32 billion. As part of the deal, GE will give Baker Hughes shareholders’ a $7.4 billion sweetener, with shareholders receiving a special one-time cash dividend of $17.50 per share. The merger will create a “new Baker Hughes,” with GE owning a 62.5% majority interest in the company. Baker Hughes would hold the remaining 37.5% of the company.

Oxy’s $2 Billion Deal Doubles Permian Basin Holdings

Occidental Petroleum Corp. (NYSE: OXY) will take control of 35,000 net Delaware Basin acres and other Permian Basin interests in a $2 billion deal, the company said Oct. 31. Oxy said the company purchased producing and non-producing leasehold acreage in the Permian as well as interests in enhanced oil recovery (EOR) and CO2 properties and related infrastructure. The seller was undisclosed. In the Southern Delaware, Oxy added acreage in Reeves and Pecos counties, Texas, in areas where the company already holds working interests.

The acquisition:
  • Includes production of about 7,000 net barrels of oil equivalent per day (boe/d) (72% oil) from 68 horizontal wells;
  • Adds an inventory of about 700 gross horizontal drilling locations targeting the Wolfcamp A and B and Bone Spring as well as potential for additional zones; and Boosts the company’s leasehold Delaware position to nearly 59,000 acres

Wall Street Steps Up Investments in Permian Basin

West Texas is attracting new money from investors such as Blackstone Group, Apollo Global Management and WL Ross, which increasingly recognize the long-term potential of the region, particularly the Permian Basin. Contributing to the Permian’s allure for investors are advances in horizontal drilling and fracking, as well as the widespread presence of oilfield services companies, which help keep costs down.

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