December 4, 2016 ~ Energy Update
OPEC Cuts & Shale Producers Win
OPEC’s first production cuts in eight years are intended to shrink the world’s inflated oil stockpiles back to a normal level, clearing the way for rising prices. While analysts remain optimistic that OPEC and non-OPEC producers will abide by the quotas, the last time OPEC set a quota, members exceeded it for 20 of the 24 months before the cap was scrapped at the end of 2015.
Everyone wins, but U.S. shale producers are the big winners.
Crude Prices Rise in Response to OPEC Cuts
With cuts being implemented next year only against end-2016 levels, analysts said there was still a possibility that oversupply, which has halved oil prices since 2014, remains a factor next year.
Oklahoma crude oil prices as of 5 p.m. Friday
Oklahoma Sweet: Sunoco Inc. ☞$48 Oklahoma Sour: Sunoco Inc. ☞$36
Front-month Brent crude futures ended the Friday session up at $54.46 a barrel, up 52 cents. The contract rose more than 15 percent for the week, its biggest gain since early 2009.
U.S. crude settled at $51.68 per barrel, up 62 cents and notched its biggest weekly gain since early 2011, with a rise of 12 percent.
NATURAL GAS PRICING
Natural gas prices pulled back Friday as traders took profits following a dramatic rally on expectations of colder weather. Natural gas futures for January delivery fell 6.9 cents to $3.436 per MMBtu. However, natural gas gained more than 7% this week and is still trading at some of its highest prices in nearly two years.
Rig Count Summary – Source: Baker Hughes
- Summary – Total U.S. rig count (oil and gas) increased by four.
- Total U.S. oil rig count increased by three.
- The horizontal rig count increased by ten.
- The oil rig count in the Permian increased by seven.
- Total natural gas rig count increased by one.
Texas and the Permian Basin again led among states and plays. The Permian count of active rigs now stands at 235 after gaining 7 this week, comfortably above the year-ago level of 217 active rigs. Texas, with 286 rigs running, remains below its year-ago level of 333 rigs. The dry gas-rich Haynesville Shale Basin had the second largest increase in rigs with 3, bringing the total to 26 rigs in that region.
By state, Texas gained seven rigs, Wyoming increased by four and Oklahoma gained two. Louisiana declined by four, Colorado and North Dakota each fell by two and Utah lost one.
Alaska, Arkansas, California, Kansas, New Mexico, Ohio, Pennsylvania and West Virginia were unchanged.
OKLAHOMA NEWS – Rig Count +2 – Now at 81
The Oklahoma rig count now stands at 81, not far from the 2016 high of 88, set back on January 29th. The Scoop and Stack plays continue to hold the highest rig counts with double-digit rig counts in Blaine, Kingfisher and Grady Counties.
In regulatory filings this week, a total of 23 new pooling applications were filed, with the majority concentrated in three counties, Blaine (6), Grady (4) and Kingfisher (7).
Oklahoma Energy Acquisitions had the most with 5 new pooling applications filed and Devon had 4 for the week.
In new permits filed this week, there were 36 entries, with Kingfisher County having the most at 11. Marathon permitted 6 new wells, all in Section 12-T16N-R07W, Kingfisher County.
Compiled and Published by GIB KNIGHT
Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma. ☞Email: [email protected]
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