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Oil Drillers Face Shrinking Credit Lines as Banks Revalue Assets

Oil producers in the U.S. are about to see their credit lines shrink, just when they need the money most. The latest round of twice-yearly reevaluations is under way, and almost 80 percent of oil and natural gas producers will see a reduction in the maximum amount they can borrow, according to a survey by Haynes and Boone LLP, a law firm with offices in Houston, New York and other cities. Companies’ credit lines will be cut by an average of 39 percent, the survey showed. "There’s going to be a reduction to the majority of these credit lines," said Neal Dingmann, an analyst at SunTrust Robinson Humphrey Inc. "It’ll make a lot of these companies reduce a bit more on spending." In many cases, banks have first claim on assets in a bankruptcy, and the size of a loan is tied to how much an oil producer’s acreage […]

Posted On : Published By : Tom Whipple
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Fracking Firms That Drove Oil Boom Struggle to Survive

As energy companies drill fewer wells, some small firms that frack wells face bankruptcy. A wave of bankruptcies and closures is sweeping across the oil patch, with dozens of hydraulic-fracturing companies at risk, industry experts say. Most of the companies that help oil-and-gas explorers drill and frack wells are small, privately owned and just a few years old. They are part of a flood of new entrants in the energy business—one that is drying up as oil prices languish below $50 a barrel. One of the latest casualties is Pro-Stim Services. Launched in 2011 with backing from Turnbridge Capital LLC, a private-equity firm, the company did work for oil-and-gas producers eager to coax more fuel out of the ground in places like Texas and Louisiana. “The Haynesville Shale was blowing and going at that time,” said Bubba Brooks, who founded the company in Longview, Texas, after working in the […]

Posted On : Published By : Tom Whipple
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How long will fossil fuels last?

The end, said a reincarnated Cassandra, is nigh. Abundant supplies of fossil fuels will end, bringing down the economic order with it. After all, she argued, at current rates of production, oil will run out in 53 years, natural gas in 54, and coal in 110. We have managed to deplete these fossil fuels – which have their origins somewhere between 541 and 66 million years ago – in less than 200 years since we started using them. Cassandra – the Princess of Troy – had been blessed with the gift of prophesy by the Greek God, Apollo. In her modern avatar, she projected how many years these fuels would last by measuring the R/P ratios (that is the ratio of reserves to current rates of production) of fossil fuels. She juxtaposed it with the World Energy Outlook study by the International Energy Agency, which estimated that even with […]

Posted On : Published By : Tom Whipple
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Drilling Contractor Weatherford Cancels Fund-Raising Effort

One of the biggest drilling contractors in the world abandoned its efforts to raise about $1 billion in cash after investors hammered its stock, in sign that Wall Street’s love affair with energy finance is cooling along with hopes that oil prices will rise anytime soon. Weatherford International Ltd. WFT 10.70 % said Monday morning that it planned to sell a combination of shares and convertible bonds for unspecified potential acquisitions. The company’s shares quickly fell about 17%, to $8.41, prompting the company to cancel the offerings just 14 hours after unveiling the plan. “While investor interest was strong for this offering, we are unwilling to sell securities at prices that do not reflect the value we have created at Weatherford,” the company said. A Weatherford spokeswoman declined to comment beyond the company’s press release. The about-face helped Weatherford’s stock regain some of Monday’s losses; in 4 p.m. trading […]

Posted On : Published By : Tom Whipple
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Texas Has Seen Peak Oil Production For Now, Gas Production Still Increasing

The Texas RRC Oil & Gas Production numbers are out. They came out on a weekend this month. All RRC data is through July. The EIA data is through June. Keep in mind that the RRC data is incomplete, that is why the chart lines droop on the end. However the EIA data is from the EIA’s Petroleum Supply Monthly , the data of which the EIA says now comes directly from the states, and reflects the complete best estimate of oil production. (Click to enlarge) According to the EIA data, Texas crude + condensate peaked, so far, in March and declined in April, May and June. However the incomplete data from the RRC shows production likely dropping sharply in April, up in May then flat for June and July. (Click to enlarge) Dr. Dean Fantazzini has an algorithm that uses past and present RRC data and predicts what […]

Posted On : Published By : ASPO-USA
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Oilsands may face severe water shortages, Athabasca River study suggests

The study also confirmed that overall flows in the Athabasca River are declining. That’s something that was already known and thought to be mainly because of the melting and shrinking of glaciers, seen in this photo of the river’s headwaters. (David Sauchyn) The river that provides water to the oilsands industry is much more prone to multi-year droughts than modern records show, suggesting that the industry’s current level of water use may not be sustainable, a new study suggests. The oilsands industry needs 3.1 barrels of fresh water to produce a barrel of crude oil from oilsands mining and 0.4 barrels of fresh water to produce a barrel of crude oil from oilsands drilling, according to the Canadian Association of Petroleum Producers . That water comes mainly from northern Alberta’s Athabasca River, and oilsands account for 72 per cent of estimated water use from the river. The government regulates […]

Posted On : Published By : Tom Whipple
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U.S. Gulf of Mexico share of global active offshore rigs declines since 2000

graph of weekly propane and propylene inventories, as explained in the article text Source: U.S. Energy Information Administration, based on Baker Hughes Inc. Note: GOM is Gulf of Mexico. In response to the decline in crude oil prices since mid-2014, the number of active offshore rigs has declined worldwide, dropping close to 20%—304 offshore rigs were operating in August 2015, down from 377 in August 2014. During this period, the number of active offshore rigs in the U.S. Gulf of Mexico (GOM) dropped more rapidly, falling by 46%. Over the past 15 years, the U.S. GOM’s share of active offshore rigs worldwide has declined significantly—from almost half of all active offshore rigs worldwide in 2000 to less than 20% since 2008. In the U.S. GOM, technology advancements accelerated the development of the deepwater (areas where the water depth is greater than 1,000 feet). The move to deeper waters prompted […]

Posted On : Published By : Tom Whipple
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Texas’ Earthquake Study Gets Off The Ground

The $4.5 million study is intended to provide big picture information on whether there is a link between hydraulic fracturing’s disposal wells and seismic activity. Work is underway on the multi-million dollar TexNet Seismic Monitoring Program, designed by Texas lawmakers to gather and disseminate research on any relationship between disposal wells and an unexpected spate of earthquakes in North Texas. State Rep. Rafael Anchia, a Democrat from Dallas, wrote the legislation this year, which passed as part of the state budget and became effective in September. “Our community is rightfully concerned about the unusually high seismic activity in Dallas, Irving and Farmers Branch,” Anchia said in a statement. The “study should help us get to the bottom of it.” Bringing industry, academia and the government together will ensure that different perspectives will be represented, said Scott Tinker, director of the Bureau of Economic Geology at the University of Texas. […]

Posted On : Published By : Tom Whipple
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Wyoming Seeks More Funds to Clean Up Abandoned Wells

Wyoming is moving forward with sweeping new rules to double the money oil and gas companies must put aside before drilling new wells, a measure prompted by the large number of abandoned wells that litter the state. The new regulations, which would increase the amount of bonding fees companies must pay from $75,000 to $150,000, were given initial approval this month by the state’s oil and gas conservation commission. They are still subject to a 45-day public comment period and a final vote by the commission, which is chaired by Gov. Matt Mead. The office of Mr. Mead, a Republican, didn’t immediately respond to requests for comment Tuesday, but state regulators say he supports the proposed changes. For years, Wyoming and other states have struggled to plug tens of thousands of wells abandoned after the energy booms. Without financially solvent parties to take ownership of the wells, they become […]

Posted On : Published By : Tom Whipple
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US Catholic groups debate divesting from fossil fuels

When Pope Francis speaks to Congress on Thursday, environmentalists expect him to renew his call for rich countries to do more to combat climate change, and some believe that effort should begin with Catholic institutions in the U.S., which are facing a small but vocal effort to pressure them to divest from the fossil fuel industry. “The [divestment] conversations are happening now at a level they weren’t a year ago,” said Kevin Ahern, a religious studies professor at Manhattan College. “Pope Francis is trying to ask the church institutions, ‘How do we really embody what we’re teaching?’” Pope Francis puts GOP in a corner on climate change Pope’s comments on climate sparks debate on coal In an encyclical issued in June, the pope delivered a dramatic and unambiguous rebuke of humanity’s environmental stewardship . “We know that technology based on the use of highly polluting fossil fuels … needs […]

Posted On : Published By : Tom Whipple