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Rig numbers not a strong production indicator

Shale oil production in the United States as companies wait for market conditions to improve, analysis finds. File photo by Gary C. Caskey/UPI DENVER, Sept. 18 (UPI) — Even if rig numbers across U.S. shale oil basins hold steady, current economics means production could start to decline, a forecasting unit of Platts reported. Low crude oil prices, down about 50 percent year-on-year, means energy companies have less capital to invest in exploration and production. In Texas, the No. 1 oil producer in the nation, the state energy regulator said the 864 drilling permits awarded in August was 64 percent lower year-on-year. The rig count in North Dakota, the No. 2 oil producer, of 67 is 66 percent lower than this date in 2014. Sami Yahya, an analyst with Bentek, the forecasting unit for Platts, said energy companies are figuring out ways to save money by either drilling en masse […]

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Debt service uses a rising share of U.S. onshore oil producers’ operating cash flow

graph of U.S. onshore oil producers’ debt service as a share of operating cash flow, as explained in the article text Source: U.S. Energy Information Administration, based on Evaluate Energy Note: Each quarter represents a rolling four-quarter sum. Results from second-quarter 2015 financial statements of a number of U.S. companies with onshore oil operations suggest continued financial strain for some companies. Low oil prices have significantly reduced cash flow for U.S. oil producers, and to adjust to lower cash flows, companies have reduced capital expenditures and raised more cash from debt and equity. Because of the large amount of debt accumulated from past years, a higher percentage of operating cash flow is being devoted to servicing debt. Debt service payments consist of principal repayment to creditors and typically are fixed in both amount and frequency, agreed upon before a company receives a bank loan or issues a bond. Some […]

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An Oklahoma of Oil at Risk as Debt Shackles U.S. Shale Drillers

Photographer: Brittany Sowacke/Bloomberg As much as 400,000 barrels a day of oil production is at risk as U.S. shale companies like Samson Resources Co. run out of money and are forced to slow drilling. Total debt for half of the companies in a Bloomberg index of more than 60 producers has risen to a level that represents 40 percent of their enterprise value. It’s a sign of distress that shows equity values falling in the face of oil’s crash, said Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC who helps manage $15.6 billion. The companies facing high debt loads, which include Encana Corp. and Chesapeake Energy Corp., produced 1.1 million barrels of oil a day in the second quarter of this year, according to data compiled by Bloomberg. If more companies file for bankruptcy as Samson did Wednesday, or embrace the kinds of draconian […]

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KKR’s Samson Resources Files Bankruptcy as Shale Bet Sours

Oil and gas driller Samson Resources Corp. filed for bankruptcy in Delaware Wednesday night, undone by a collapse in energy prices and billions in debt that KKR & Co. and other investors piled on to fund a 2011 takeover. Tulsa, Oklahoma-based Samson and its owners were stung by the price drop that put money into the pockets of consumers through lower gasoline and heating costs, while driving other producers, such as Sabine Oil & Gas Corp. and Quicksilver Resources Inc., into Chapter 11. Samson’s filing is among the biggest energy bankruptcies in the U.S. this year, but it probably won’t be the last. The shale-oil driller is, in a way, a victim of its own success. Samson and other producers have rushed to use hydraulic fracturing and horizontal drilling to tap previously hard-to-reach oil and gas deposits in shale formations, triggering a production boom that helped send prices tumbling. […]

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Continental Sidelines Bakken Rigs

Continental Resources Announces More Reductions Continental Resources continues to showcase their flexibility, announcing this week it will be sidelining rigs in the Bakken while reducing its CAPEX once again. Three week after reporting the “excellent results’ of their second quarter, Continental Resources, Inc. says it now plans to spend approximately $300 to $350 million less than its previously approved capital budget for 2015 in order to deal with the current crude pricing environment. This adjusted spending will be $2.35 billion to $2.40 billion. Harold Hamm, Chairman and Chief Executive Officer commented, “While we do not believe today’s low commodity prices are sustainable long term, we are committed to living within cash flow until they recover. We are reducing capital expenditures to protect our balance sheet and to preserve the value of our world-class assets until commodity prices improve.” Continental will also join other producers who are sidelining their rigs […]

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Vanishing CFOs: Why So Many in Oil, Gas are Choosing to Leave

In the months following the sudden dip in crude oil prices that began late 2014, the oil and gas industry has been challenged with finding ways to cope and maintain until the market turns around. The whole “do more with less” approach to work has been adopted by many companies who have had to downsize and restructure within their organizations . But in addition to layoffs and other cost-cutting measures, several companies have had to deal with a few surprises. The most recent downturn has seen a shakeup of many C-suite executives, as some have entered – and departed – their companies. While many smart and resourceful oil and gas companies already have succession plans in place to prepare for senior-level employee departures , for companies that don’t, now is an opportune time to visit the topic and implement some strategies, as the industry can expect to see several […]

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« The Party is Over For Tight Oil but Raymond James Says, “Party On, Dude!”

The party is over for tight oil. Despite brash statements by U.S. producers and misleading analysis by Raymond James, low oil prices are killing tight oil companies. Reports this week from IEA and EIA paint a bleak picture for oil prices as the world production surplus continues. EIA said that U.S. production will fall by 1 million barrels per day over the next year and that, “expected crude oil production declines from May 2015 through mid-2016 are largely attributable to unattractive economic returns .” IEA made the point more strongly. “..the latest price rout could stop US growth in its tracks .” In other words, outside of the very best areas of the Eagle Ford, Bakken and Permian, the tight oil party is over because companies will lose money at forecasted oil prices for the next year. Global Supply and Demand Fundamentals Continue to Worsen IEA data shows that […]

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North Dakota oil sector under pressure

North Dakota Industrial Commission expects slump in crude oil prices to last into next year. Photo by David Gaylor/Shutterstock BISMARCK, N.D., Sept. 15 (UPI) — A weak crude oil market that’s expected to last into 2016 should contribute to downward pressure on oil activity in North Dakota, a state regulator said. The state reported 68 rigs actively exploring for or producing oil or natural gas as of Tuesday, one less than the previous day and down 65 percent from this date in 2014. That North Dakota Industrial Commission in its latest update said oil production in July, the last full month for which data are available, was 1.2 million barrels per day, a decline of about three quarters of a percent from the previous month. More than 95 percent of the oil produced in the state comes from the Bakken and Three Forks shale region in the Williston basin […]

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Bakken Flat but the EIA Predicts Decline

The North Dakota Industrial Commission has published the July production data for The Bakken and for all North Dakota . Bakken production was down 5,430 barrels per day while all North Dakota was down 9,410 bpd. Bakken Amplified Here is a more amplified view of what has happened during the last 12 months. Bakken BPD Per Well Bakken barrels per day per well has been falling faster than for all North Dakota. This is because a lot of very low producing conventional wells are being shut down. North Dakota BPD This is chart reflects the monthly change in North Dakota barrels per day of production. It is quite noisy but the 12 month trailing average reflects a steady decline since December of 2014. From the Director’s Cut , bold mine. June Sweet Crude Price1 = $47.73/barrel July Sweet Crude Price = $39.41/barrel Aug Sweet Crude Price = $29.52/barrel Today’s […]

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Texas Railroad Commission: Drilling Permits in Texas Down 65% in August

Along with oil prices and the rig count, the issuance of new drilling permits has dropped off dramatically in the last 12 months, according to numbers from the Texas Railroad Commission report of 864 permits issued in August. The commission, which regulates oil and gas activity in the state, said in a release that the issuance of drilling permits declined 65 percent year-over-year in August 2015. Among the 864 permits, the breakdown for August this year included 222 oil wells; 59 for gas; 518 for oil or gas; 54 injection wells and 11 other permits. Total well completions for 2015 year to date are 14,665, down from 20,657 recorded during the same period in 2014. At less than $45 per barrel Sept. 15, oil prices are less than half their price from 12 months ago, which was near the beginning of their descent. The rig counts in the United […]

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