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EIA: US shale oil output to plunge 118,000 b/d in December

Crude oil production in December from seven major US shale plays is expected to drop 118,000 b/d to 4.95 million b/d, according to the US Energy Information Administration’s latest Drilling Productivity Report (DPR). The agency projected a 93,000-b/d decline for November ( OGJ Online, Oct. 13, 2015 ). The DPR focuses on the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian, and Utica, which altogether accounted for 95% of US oil production increases and all US natural gas production increases during 2011-13. The Eagle Ford has represented a bulk of the projected oil output losses since EIA began anticipating monthly declines from US shale during the spring. For December, EIA expects Eagle Ford production to fall 78,000 b/d to 1.28 million b/d. The Bakken is projected to drop 27,000 b/d to 1.11 million b/d, and the Niobrara is projected to fall 22,000 b/d to 356,000 b/d. Continued growth is seen […]

Posted On : Published By : Tom Whipple
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Why an Apache Deal Wouldn’t Open the Oil Floodgates

Apache Corp. workers at a drilling rig in Texas There will be deals. Or will there? Shares of oil-and-gas explorer Apache Corp. APA 13.15 % jumped by more than 10% Monday afternoon following a report by Bloomberg News of a takeover approach by an unidentified suitor. This added that the company had hired advisers to mount a defense strategy. If so, the possible suitor isn’t all hat and no cattle. Based on available firepower, a large, integrated energy company would make most sense. Still, the fact that none of Apache’s peers saw anything more than a brief price boost Monday morning suggests two things: that the bargains on offer among North American oil and gas producers aren’t quite compelling enough to kick off a round of consolidation and that the list of buyers is short. For what it is worth, shares of Exxon Mobil XOM -2.14 % were the […]

Posted On : Published By : Tom Whipple
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Steep drop in North Dakota rig count

State data from North Dakota show a steep drop in the number of rigs actively exploring for or producing oil or natural gas. Energy companies are spending less on exploration in the market downturn. File photo by Calin Tatu/Shutterstock BISMARCK, N.D., Nov. 9 (UPI) — Catching up with a national trend showing declines in the exploration and production sector, North Dakota reported an 8.5 percent drop in rig activity. The state reported 64 rigs actively exploring for or producing oil or natural gas in the state as of Monday. That’s down from the 70 reported last week and a sharp reversal in recent trends showing moderate stability in the No. 2 oil-producing state in the nation. Crude oil prices have moved consistently lower as weak economic growth balances against an increase in production, largely from U.S. shale oil basins. That’s left energy companies with less capital to invest in […]

Posted On : Published By : Tom Whipple
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U.S. shale oil output to fall for 8th month in December: EIA

U.S. shale production is expected to fall for an eighth consecutive month in December, according to a forecast on Monday from the U.S. Energy Information Administration (EIA). Total output is set to decline 118,000 barrels per day (bpd) in December, the biggest monthly decline on record, to 4.95 million bpd, the least since Sept. 2014, according to EIA data going back to 2007. Oil production from the Eagle Ford play in South Texas was expected to fall 78,000 bpd to 1.28 million bpd. Bakken oil output in North Dakota was expected to slide 27,000 bpd to 1.11 million bpd. Oil production from the Permian Basin of West Texas, which continues to buck the trend, was projected to rise 11,000 bpd to 2.02 million bpd. U.S. natural gas production, meanwhile, was expected to fall for a sixth month in a row. Total output was set to decline almost 0.4 billion […]

Posted On : Published By : Tom Whipple
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Worldwide Rig Count Dropping Again

Baker Hughes has published its International Rig Count with production numbers for October. This is a monthly rig count and breaks out the international rigs by oil, gas and miscellaneous. Baker Hughes does not include the Former Soviet Union countries in their count or totals. Baker Hughes also includes the US and Canada in their monthly count but they do not break US and Canada monthly totals out by oil and gas. BH Total World All rigs were down 85 rigs in October to 2,086 rigs. October 14 to October 15 total world rigs were down 1,571 rigs of 43%. US total rigs were down 57 rigs in October to 791. October 14 to October 15 US rigs were down 1,134 rigs or 59%. BH Canada Canada was up one rig in October to 194. October 14 to October 15 Canada is down 240 rigs or 56.6%. For several […]

Posted On : Published By : Tom Whipple
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Oil company defaults are coming

Oil companies of all hues loaded up on massive amounts of debt to fund rigs and fancy new drilling equipment. The problem is the companies were banking on oil prices closer to $100 oil when they took on the debt. Now oil is around $45 and no one is expecting prices to hit $100 any time soon. What that means is the likelihood of unpaid debt has gone up for many companies. “Energy has been really treacherous. There are going to be a lot of defaults,” R. Matthew Freund, chief investment officer of USAA Investments, told CNNMoney. It’s a dramatic change from just a few years ago. The roaring junk bond market and low interest rates broadly helped fuel the U.S. energy boom. Cheap credit allowed companies to invest in new technologies like hydraulic fracking that makes it easier to drill oil in difficult to reach places. Back then […]

Posted On : Published By : Tom Whipple
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Only 1 Percent Of Bakken Shale Is Profitable At These Prices

Only 1 percent of the Bakken Play area is commercial at current oil prices based on my analysis that follows. Only 4 percent of horizontal wells drilled since 2000 meet the EUR (estimated ultimate recovery) threshold needed to break even at current oil prices, drilling and completion, and operating costs. The leading producing companies evaluated in this study are losing $11 to $38 on each barrel of oil that they produce, the very definition of waste. Although NYMEX prices are about $46 per barrel, realized wellhead prices in the Bakken are only $30 per barrel according to the North Dakota Department of Mineral Resources . At that price, approximately 125,000 acres of the drilled play area of 10,500,000 acres is commercial (green areas in Figure 1). Figure 1 . Bakken Shale Play commercial area map at $30 per barrel wellhead price. Contours are in barrels of oil estimated ultimate […]

Posted On : Published By : Tom Whipple
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U.S. shale producers see big budget cuts for 2016

A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma September 15, 2015. U.S. shale oil producers, having slashed fat from 2015 budgets after a 50-percent drop in crude prices, risk cutting to the bone next year as they pare spending further and get ready for a prolonged downturn. Top shale companies including Devon Energy Corp, Continental Resources Inc and Marathon Oil Corp this week released preliminary 2016 plans for capital spending that may fall by double digits. The cuts, following reductions of 30 percent to 40 percent by many in the industry this year, would leave budgets at a fraction of levels seen during the height of the shale boom that lasted to mid-2014. Lower costs and improved productivity would allow them to hold shale oil production largely flat. While he did not provide a specific figure, Doug Lawler, the Chief […]

Posted On : Published By : Tom Whipple
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U.S. refineries start to return from maintenance

The Tesoro oil refinery is viewed from the air in Carson, California August 5, 2015. Total stocks of crude oil and refined products in commercial storage across the United States dropped for the second week running last week, the first back-to-back fall since May, according to the U.S. Energy Information Administration (EIA). More than 1.4 million barrels per day (bpd) of refinery capacity is still offline for routine maintenance and upgrades after the end of the summer driving season. Turnarounds have contributed to the accumulation of crude inventories but resulted in a big draw down in stocks of refined products including gasoline and distillate fuel oil. Stocks of crude rose by 2.8 million barrels in the week ending on Oct. 30, and have increased in each of the last six weeks, by a total of almost 29 million barrels. Crude stocks are now nearly 103 million barrels, about 27 […]

Posted On : Published By : Tom Whipple
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U.S. oil drillers cut rigs for 10th week: Baker Hughes

U.S. energy firms cut oil rigs for a tenth week in a row this week, decreasing the pace of decline from recent weeks, data showed on Friday, a sign low prices continued to keep drillers away from the well pad. Drillers removed six oil rigs in the week ended Nov. 6, bringing the total rig count down to 572, the least since June 2010, oil services company Baker Hughes Inc said in its closely followed report. That is around a third of the 1,568 oil rigs operating in same week a year ago. Over the 10 weeks, drillers cut 103 oil rigs. Although U.S. oil futures have averaged $46 a barrel so far this week, up from $45 last week, the front-month December contract was on track to post its third weekly decline in four as an oversupply of physical oil and a strong dollar bedeviled the market. [O/R] […]

Posted On : Published By : Tom Whipple