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Private-Equity Firms Plunge Back Into the Oil Patch

EOG Resources CEO Mark Papa Private-equity firms are doubling down on energy, despite heavy damage from their last adventure in the oil patch. These firms’ stakes in a dozen publicly traded energy exploration-and-production companies have lost more than $18 billion in value since last summer, when oil prices began their slide from more than $100 a barrel. Yet with U.S. crude prices down to about $46.75 a barrel at Thursday’s close, private-equity firms are looking for opportunities to spend the hundreds of billions of dollars they have amassed to make new energy investments. They are hoping the commodity-price crash will open up opportunities to pick up assets and entire companies on the cheap. “This is a temporary situation, and investments that are made in this low-price environment are going to look pretty good two or three years out,” said Mark Papa, who joined energy-focused firm Riverstone Holdings LLC earlier […]

Posted On : Published By : Tom Whipple
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Former Bakken Operator Pleads Not-Guilty

Saltwater Waste A Southlake, Texas man charged with illegally injecting saltwater into a disposal well in North Dakota pled not guilty to federal charges last week in federal court. Jason Halek, a former operator of a saltwater well in southwest North Dakota, was indicted on 13 federal counts and fined a record $1.5 million in 2013 for putting drinking water at risk by illegally dumping more than 800,000 gallons of salty, oilfield wastewater into a former oil well in Stark County. He entered not guilty pleas to all charges including violating the Safe Drinking Water Act, making false statements and obstructing grand jury proceedings. The indictment claims Halik conspired to hinder by “craft, trickery, deceit, and dishonest means the lawful and legitimate functions of the EPA, in enforcing federal laws relating to the requirements of the North Dakota underground injection control program.” Saltwater is considered an environmental hazard that […]

Posted On : Published By : Tom Whipple
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Majority of U.S. shale firms pass up second quarter chance to hedge $60 crude

With the benefit of hindsight, last quarter may have been the best chance for cash-strapped U.S. shale oil producers to ensure they would get at least $60 a barrel for the next year or two. Barely a third did so. According to a Reuters analysis of hedging disclosures by the 30 largest such firms, more than half of them did not expand their hedges during the three months ended June or had no hedges at all, exposing them to a plunge that wiped more than $20 off the price of oil in the following months. In total, 12 companies increased their outstanding oil options, swaps or other derivative hedging positions by 36 million barrels at the end of the second quarter compared with the end of the first quarter, according to the data. Another 14 companies ended the quarter with hedging positions reduced by a total 37 million barrels, […]

Posted On : Published By : Tom Whipple
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U.S. tight oil production decline

Nevertheless, U.S. tight oil production continued to climb through April. It has fallen since, but the EIA estimates that September production will only be down 7%, or about 360,000 barrels/day, from the peak in April. Actual or expected average daily production (in million barrels per day) from counties associated with the Permian, Eagle Ford, Bakken, and Niobrara plays, monthly Jan 2007 to September 2015. Data source: EIA Drilling Productivity Report. This is despite the fact that typically output from an existing well falls very quickly after it begins production. The EIA estimates that tight oil production from wells that have been in operation for 3 months or more has declined by 1.6 mb/d since April, as calculated by the sum of the EIA estimated monthly declines in legacy production from May to September. Legacy production change (month-to-month production change, in thousands of barrels per day, coming from wells in […]

Posted On : Published By : Tom Whipple
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U.S. tight oil production decline

Number of active oil rigs in counties associated with the Permian, Eagle Ford, Bakken, and Niobrara plays, monthly Jan 2007 to July 2015. Data source: Nevertheless, U.S. tight oil production continued to climb through April. It has fallen since, but the EIA estimates that September production will only be down 7%, or about 360,000 barrels/day, from the peak in April. Actual or expected average daily production (in million barrels per day) from counties associated with the Permian, Eagle Ford, Bakken, and Niobrara plays, monthly Jan 2007 to September 2015. Data source: EIA Drilling Productivity Report. This is despite the fact that typically output from an existing well falls very quickly after it begins production. The EIA estimates that tight oil production from wells that have been in operation for 3 months or more has declined by 1.6 mb/d since April, as calculated by the sum of the EIA estimated […]

Posted On : Published By : Tom Whipple
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New U.S. oil data shows lower 2015 production: EIA

Stacked rigs are seen along with other idled oil drilling equipment at a depot in Dickinson, North Dakota June 26, 2015. The U.S. oil industry pumped less crude than initially estimated this year, according to new government data that offered the clearest look yet at the impact of drillers’ retrenchment in response to collapsing prices. The downward supply revisions were "unambiguously" bullish for a global market awash with oil, said Credit Suisse global energy economist Jan Stuart, suggesting the oft-cited resilience of U.S. shale producers to lower crude prices might have been overstated. Oil prices surged by as much as $3 a barrel on Monday, with some traders citing the new data. The Energy Information Administration said its new survey-based output data showed the United States pumped a hair below 9.3 million barrels per day in June, down by 100,000 bpd from a revised May figure. The June figure […]

Posted On : Published By : Tom Whipple
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Walking Oil Rigs Spur Cheaper, Quicker Drilling in Supply Glut

Have you ever seen an oil rig walk ? Some of the newest rigs can travel hundreds of yards to the next well under their own power, lurching along like 150-foot-tall robots on pneumatic legs that raise the equipment five inches at a time, nudging forward at about a foot per minute. While that sounds slow, it is faster and cheaper than dismantling a rig and trucking the parts to a new site nearby. More efficient drilling rigs that cost a third less than just a year earlier are changing the face of the U.S. shale industry, helping boost per-rig output in the four largest fields by at least 40 percent since the crude price plunge began in 2014. While helping producers pump more oil, the new rigs have a downside. Companies such as Helmerich & Payne Inc., Nabors Industries Ltd. and Patterson-UTI Energy Inc. that provide the equipment […]

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Texas oil production increased in June

Texas energy regulator reports a net increase in June oil production year-on-year. File Photo by UPI/Shutterstock/Lilac Mountain. AUSTIN, Texas, Aug. 28 (UPI) — A Texas energy regulator said total crude oil production for June, the last full month for complete data, was up around 12 percent year-on-year. The Railroad Commission of Texas said crude oil production in June averaged about 2.43 million barrels per day, up from the 2.15 million bpd reported in June 2014. June data show the third straight month for gains for the No. 1 oil producer in the nation. April crude oil production of 2.31 million bpd was a 13 percent increase year-on-year. Decreases were posted, however, in early 2015. The railroad commission, the state’s energy regulator, said the average Texas rig count as of Aug. 21 was 383, which represented about 45 percent of all U.S. onshore rig activity. A report from Fitch Ratings […]

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Creditors Squeeze the Last Drop Out of Oil-and-Gas Companies

Cash-starved oil-and-gas companies are getting a lot of mileage out of their assets these days. A severe slump in commodity prices has sent energy explorers and producers scrambling to shore up their balance sheets, leading to a flurry of debt sales this year by the industry’s most financially strained firms. The new bonds typically promise creditors ownership of the company’s assets, should it default. But in many cases, that claim sits behind the liens of one or even two higher-priority slices of debt. Halcon Resources Corp. highlighted the trend late Thursday, exchanging $1.57 billion in unsecured bonds for $1.02 billion in new “third-lien” debt , backed by a claim on the company’s assets that sits behind those of its credit line and $700 million in bonds the company sold in May. Halcon followed Midstates Petroleum Co., a Tusla oil-and-gas company that in May issued $504 million in bonds with […]

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What West Texas producers are saying about $40 oil

The aerial view from a Midland, Texas -bound airplane tells the story: thousands of well pads carved into the desert shrubbery as far as the eye can see. It’s all about oil in West Texas. The area is home to the Permian Basin, the most prolific oil-producing formation in the U.S., a hydrocarbon-rich collection of formations that stretch from Texas into New Mexico. Once written off as a place for tumbleweeds, the area has become a boom region in the past decade as the advent of horizontal hydraulic fracturing—"fracking"—brought new investment to waning, vertically drilled oil fields. Crude production in the Permian Basin is at near-record levels, around 2 million barrels per day, according to the Energy Information Agency, for the first time since the early 1970s. But as crude prices have collapsed over the last year amid oversupply and waning global demand, cutbacks have once again starkly taken […]

Posted On : Published By : Tom Whipple