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Texas oil production holds steady

Texas oil production holding steady, though rig activity is on a clear decline, state data show. File photo by Lilac Mountain/Shutterstock AUSTIN, Texas, Sept. 28 (UPI) — Though drilling permits are on the decline, Texas crude oil production held more or less steady month-to-month, state data for July show. The Railroad Commission of Texas, the state’s energy regulator, reports 2.45 million barrels of oil produced per day in July, the last full month for which the state has data. Year-on-year, total crude oil production is up 9.3 percent . Month-to-month, production is up about eight tenths of a percent. The commission said Texas oil production came from 176,810 oil wells in the state. In its latest report on rig activity, the state regulator said the number of drilling permits issued in Texas was down more than half from the same month last year to 864, of which 730 were […]

Posted On : Published By : Tom Whipple
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So far, less pain than feared as U.S. shale firms renew loans

Unused oil tank cars are pictured on Western New York & Pennsylvania Railroad tracks outside Hinsdale, New York August 24, 2015. A number of U.S. shale oil and gas companies are securing unchanged or even increased credit allotments during their semi-annual loan reviews, defying expectations that banks would slash small firms’ credit lines in response to low crude prices. According to a Reuters review of disclosures made by 19 independent U.S. shale oil and gas companies since Aug. 1, at least 11 have said their borrowing bases have been or will be maintained or increased. In contrast, just five talked about cuts. It is too early to tell if the whole sector will emerge equally largely unscathed from the reviews. Many more companies from a batch of about 60 U.S. independents typically tracked by investment banks will probably make disclosures after the usual loan reset deadline of Oct. 1. […]

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Junk-Debt Investors Fight for Scraps as U.S. Shale Rout Deepens

Photographer: Brittany Sowacke/Bloomberg It’s every U.S. shale investor for himself as the worst oil rout in almost 30 years drags down its latest victims. Investors in $158.2 million of Goodrich Petroleum Corp.’s debt agreed to take 47 cents on the dollar in exchange for stock warrants for some note holders and a lien on Goodrich’s oil acreage, according to a company statement today. That puts them second in line if the Houston-based company liquidates its assets in bankruptcy and pushes the remaining holders of $116.8 million in original bonds to the back of the pack. "In the industry it’s called ‘getting primed,’" said Spencer Cutter, a credit analyst with Bloomberg Intelligence. "It’s every man for himself. They’re trying to get in and get exchanged, and if you can’t you’re getting left out in the cold." Wildcatters attracted billions of dollars during the boom after years of near-zero interest rates […]

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Anticosti Island: Environmental groups call for BAPE review of shale-gas drilling

Quebec environmental groups are calling on the government to publish the results of 2015 drilling for shale gas on Anticosti Island and to hold an environmental review. (Radio-Canada) The Quebec government is not being straightforward about the data it has on shale-gas exploration on Anticosti Island, a coalition of environmental and citizens’ groups said Friday. The coalition is asking the Liberal government to order environmental review hearings through its provincial assessment agency, known as the BAPE, and to publish the results of its drilling activities on Anticosti. The director of Nature-Québec, Christian Simard, said there are eleven sites where drilling has been completed over the past two years. Simard said in 2014, the findings were published on the government’s website, however, this year’s findings have yet to be made public. "It is time to have an assessment, and to make it public — to open a debate," he said. […]

Posted On : Published By : ASPO-USA
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Shale Oil and the 2014-15 Price Collapse

Art Berman is out with a new deck: “ The North American Unconventional Revolution & The 2014-2015 Oil Price Collapse ” (pdf) and it’s a great review of US shale, Saudi/OPEC response, and the great price fall over the past year. As always, Art is out to tell you some facts you don’t often see in the headlines: The story of the price collapse is pretty simple: It’s Chinese demand fall + US oil production growth + response of Saudi oil production growth. That’s pretty much it. Lower demand and production gains leading to surplus and lower prices. The heroic tales of rig productivity and drilling efficiency gains are what oil companies have to tell investors to show a brave face. Dig a little deeper to realize – what should be obvious to everyone – that companies are getting killed at these low prices. But future higher oil prices […]

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Oil, bonds go their separate ways

An oil pump is seen near Bakersfield, California October 14, 2014. NEW YORK (IFR) – The rebound in oil prices has not been enough to stop the bleeding at many U.S. energy companies, whose bonds keep weakening – and whose ability to muster fresh capital is dwindling away. Oil and bond prices are moving in opposite directions, underlining the market’s lack of confidence in a cash-strapped sector that is seeing its prospects go from bad to worse. The difficulties will start intensifying next week, when banks begin their twice-yearly review to set ceilings on how much exploration and production (E&P) companies can borrow. And with crude at US$45 per barrel – far below the US$60 minimum that underpins many E&P business models – the expected cut in borrowing bases will come as a double whammy. Revenue is down, capital market access is limited and cash is in short supply […]

Posted On : Published By : Tom Whipple
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East Coast distillate fuel oil inventories higher than in recent years

graph of U.S. east coast distillate fuel oil inventories, as explained in the article text Inventories of distillate fuel oil in the U.S. East Coast are higher now than they have been in the previous three years, reaching 59 million barrels on September 18. Most of the recent increase is in the Central Atlantic region, but inventories are also higher in New England and in the Lower Atlantic, compared with previous late-September levels. Heating oil, a type of distillate fuel oil, is used as a space heating or water heating fuel in about eight million U.S. households, almost all of which are in the Northeast. In the Northeast, 27% of households use heating oil for space heating, while nationwide only 6% of households use heating oil, based on data from EIA’s latest Residential Energy Consumption Survey . The East Coast region (Petroleum Administration for Defense District, or PADD 1) […]

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Oil Prices – What Does “Lower For Longer” Actually Mean?

The latest catch phrase to enter the lexicon of the oilpatch is “lower for longer.” One assumes it simply means oil prices are down and will stay that way for a long time. The difference between a catch phrase and an essay is the detail for purposes of definition. “Lower” must be oil prices below what they used be, although in fact they are not lower than they have ever been. “Longer” refers to an extended period of time, clearly undefined. “Longer” after the oil price collapse of 1985 was over 15 years. Oil is often treated as something a bit more special than a typical commodity because it is so essential to modern life. But let’s take a simple definition for “commodity”, such as, “any useful or valuable thing…something that is bought and sold”, and when the price of this thing falls to the point that it is […]

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EIA expects slump in upstream investments

Federal energy brief says to investments in oil and gas exploration and production to stay lower as crude oil prices remain depressed. Photo by Calin Tatu/Shutterstock WASHINGTON, Sept. 24 (UPI) — Investment in the exploration and production side of the oil and gas sector could flirt with historic lows if oil prices remain depressed, a U.S. brief said. "Low oil prices, if sustained, could mark the beginning of a long-term drop in upstream oil and natural gas investment," a brief from the federal Energy Information Administration said. West Texas Intermediate, the U.S. benchmark for crude oil prices, at around $44 per barrel are roughly 50 percent lower than this date in 2014. EIA explains investments in upstream activity, the exploration and production side of the industry, is "highly sensitive" to fluctuations in crude oil prices. Most companies focused heavily on exploration and production have cut spending and staff in […]

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Sustained low oil prices could reduce exploration and production investment

graph of investment and oil prices, as explained in the article text Source: U.S. Bureau of Economic Analysis, U.S. Energy Information Administration Note: 2015 data are the average of the first two quarters. Low oil prices, if sustained, could mark the beginning of a long-term drop in upstream oil and natural gas investment. Oil prices reflect supply and demand balances, with increasing prices often suggesting a need for greater supply. Greater supply, in turn, typically requires increased investment in exploration and production (E&P) activities. Lower prices reduce investment activity. Overlaying annual averages of the domestic first purchase price (adjusted for inflation) on oil and natural gas investment reveals that upstream investment is highly sensitive to changes in oil prices. Given the fall in oil prices that began in mid-2014 and the relationship between oil prices and upstream investment, it is possible that investment levels over the next several years […]

Posted On : Published By : Tom Whipple