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Can Bakken Break Even at $30?

Crude Plunges to Six Year Low Crude oil has fallen to a six year low in recent weeks, but even at the current price of around $43, analysts speculate the Bakken will remain strong. Related: Oil Plunges to Six Year Low West Texas Intermediate crude is now down more than 30% in just the last few months after a 50% rebound earlier this spring. Bloomberg reported this week that a lower profitability point from producers has allowed U.S. oil production to remain near a 40-year high. Bloomberg Analyst, William Foile said, “A single break-even price doesn’t actually exist. Rather, what the model indicates is that at a realized oil price of $29.42, half of wells will generate returns exceeding 10%. This price is considerably lower than the $70 breakeven estimated by industry watchers at the start of the oil price slump.” In McKenzie County, North Dakota, one estimate is […]

Posted On : Published By : Tom Whipple
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Shale-rich Colorado welcomes EPA methane proposals

Colorado Gov. John Hickenlooper says EPA proposals for methane emissions for the oil and gas industry model rules on the books for shale companies working in his state. File Photo by UPI/Mike Theiler DENVER, Aug. 19 (UPI) — The proposal to cut methane emissions from the oil and gas industry models Western state shale rules is already on the books, Colorado’s governor said. The U.S. Environmental Protection Agency called for the first-ever mandates regarding methane emissions generated by the oil and gas industry. Over the next decade, the industry would need to cut methane emissions by at least 40 percent from their 2012 levels. "We are underscoring our commitment to reducing the pollution fueling climate change and protecting public health while supporting responsible energy development, transparency and accountability," EPA Administrator Gina McCarthy said in a statement. The EPA described methane as the second-most prevalent greenhouse gas emitted from human […]

Posted On : Published By : Tom Whipple
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Rail fading from North Dakota oil transit

State data from North Dakota show rail transport of crude oil falling back after peaking in December 2014. Graph courtesy of the North Dakota Pipeline Authority BISMARCK, N.D., Aug. 18 (UPI) — New pipelines operating in North Dakota have pushed the volume of crude oil by rail lower during the first half of the year, a state official said. Rail broke away from pipelines as the main source of crude oil delivery in 2012. The boom in shale oil production from the so-called Williston basin, hosting the Bakken and Three Forks shale formations, had outpaced pipeline capacity, leaving companies with rail as the primary alternative transit option. After peaking in December 2014, when the state set its crude oil production record at 1.22 million barrels per day, transport by rail has been in a general decline and is now at parity with pipeline transport. Justin Kringstad, director of the […]

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ND oil production numbers released today

“It could last two years”, Helms said. Officials believe the capacity exists to maintain production in North Dakota for another two full years even with the sustained lower prices. The industry, facing continued low crude oil prices, is finishing off previously drilled wells to get oil and some revenue flowing and to meet regulated completion timetables, state officials said Friday. Helms said the current number of active drilling rigs – 74 on Friday – and the inventory of wells that needs to be completed is sufficient to maintain production of 1.2 million barrels per day for 24 months. The state reached a milestone in June – passing the 10,000 mark for shale oil wells – but it comes amid rising uncertainty for the oil industry prompted by plummeting barrel prices that has caused the shutdown of numerous rigs in North Dakota. “Even though we have the low prices, there […]

Posted On : Published By : Tom Whipple
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The Divergence Of Rig Count, Oil Price And Production Explained

Summary Since June, oil prices have plummeted 30% on concerns of a worldwide supply glut. Paradoxically, during this same period, the oil rig count has climbed by 74 rigs or 7%. This article analyzes this relationship between rig count and oil price to predict in which direction the rig count will move next. It also analyzes the relationship between oil production and rig count to complete the circuit and determine the evolution of oil supply in response to a change in oil price. Finally, I use this data to pinpoint a 3-month period during which I expect both domestic oil production and rig count to fall which will maximize bullish prospects for oil. My trading strategy based on this analysis is discussed in detail. Since June 24th, crude oil prices have plummeted 31%, as fears of a global storage surplus, weakening Chinese demand, and a strong U.S. dollar have […]

Posted On : Published By : Tom Whipple
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Bakken Production Data and STEO Predictions

The Bakken Production Statistics and the ND Production Statistics with June production numbers has been published. Bakken & ND BPD Bakken production was up by 10,887 barrels per day to 1,152,455 BPD while all North Dakota production was up by 8,565 barrels per day to 1,211,180 BPD. Bakken production is still 11,068 bpd below their December high while all North Dakota production is still 17,240 bpd below their December high. Bakken BPD Per Well Bakken barrels per day per well dropped by 2 to 116 and all North Dakota barrels per day per well dropped by 1 to 97. From the Director’s Cut , bold mine. May Producing Wells = 12,679 June Producing Wells = 12,864 (preliminary)(NEW all-time high) May Permitting: 150 drilling and 0 seismic June Permitting: 192 drilling and 0 seismic July Permitting: 233 drilling and 1 seismic (all time high was 370 in 10/2012) May Sweet […]

Posted On : Published By : Tom Whipple
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KKR’s Samson Resources Plans Chapter 11 Filing by Mid-September

George Roberts is co-chairman and co-chief executive of KKR. The filing would represent the biggest corporate casualty yet of a slump in oil and gas prices and another black mark in energy for the private-equity pioneer. The Tulsa, Okla.-based oil and gas producer agreed to hand ownership to a group of its lenders in bankruptcy, the company said in a statement Friday, confirming an earlier Wall Street Journal report. The move would wipe out the roughly $4.1 billion in cash KKR and its partners invested in the company. The private-equity firm led a $7.2 billion leveraged buyout of Samson in 2011, the biggest-ever such deal for an oil and gas producer. Samson’s board approved the restructuring agreement Friday afternoon, according to a person familiar with the deal. The energy producer intends to skip a bond payment due Monday and use a 30-day grace period to seek broader creditor support […]

Posted On : Published By : Tom Whipple
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U.S. shale firms turn to private equity as market funding tails off

A pumpjack brings oil to the surface in the Monterey Shale, California, April 29, 2013. A renewed slide in crude prices is having the effect U.S. energy sector dealmakers and private equity managers have been looking for: oil companies are now returning calls from potential buyers. Throughout much of the crude market rout that started in mid-2014 oil firms could rely on generous capital markets investors betting on a quick recovery in prices, which made any asset sales look unattractive. But since crude prices began tanking again in early July after a partial three-month recovery, oil firms have finally started to feel the squeeze. A torrent of $44 billion in high-yield debt and share sales in the first half of this year has slowed to a trickle with oil now at just above $42 a barrel, 30 percent below its June levels and 60 percent down from June 2014, […]

Posted On : Published By : Tom Whipple
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Oil at $30 Is No Problem for Some Bakken Drillers Cutting Costs

The lowest crude prices in six years might not be enough to put the brakes on the U.S. energy renaissance. Some parts of North Dakota’s Bakken shale play are profitable at less than $30 a barrel as companies tap bigger wells and benefit from lower drilling costs, according to a Bloomberg Intelligence analysis. That’s less than half the level of some estimates when the oil rout began last year. The lower bar for profitability is one reason why U.S. oil production has remained near a 40-year high even as crude prices fell more than 50 percent over the past year to the lowest level since March 2009. “One of the explanations for why production hasn’t fallen off is that the cost has gone down so much,” David Hackett, president of Stillwater Associates LLC, an energy consulting firm in Irvine, California, said by phone. “The marginal cost to produce has […]

Posted On : Published By : Tom Whipple
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Fracking Pullbacks Fail to Diminish Water Management Market Value

Despite a decline in hydraulic fracturing activity, the value of the fracking water management market remains at $1.9 billion, Lux Research reports. The estimated value of the hydraulic fracturing water management market remains at $1.9 billion for 2015 – not including water transportation and disposal opportunities – despite the sharp decline in fracking activity due to weakened global oil prices. U.S. frac activity remained strong for several months following the start of oil’s decline in July 2014, but finally started to start slow in January. The number of fracs in the United States declined from around 2,300 in October 2014 to 1,350 in February 2015, as companies refocused their efforts on their core regions and most economic resources, according to a recent study by Boston-based Lux Research. Significant pullbacks occurred in the Permian, Eagle Ford and Barnett plays in Texas, while the Marcellus play in northeastern Pennsylvania, which produces […]

Posted On : Published By : Tom Whipple